With a presidential election looming and politicians on both sides of the aisle calling for investigations into their power, big tech companies face a looming antitrust battle with billions of dollars at stake.
Evolved into the world’s 4 most powerful colossal corporates i.e Amazon, Apple, Facebook and Google have been accused of engaging in anti-competitive, monopoly-style tactics for reaching the position they are at right now, by the congressional investigators who called in a wide-ranging report which was released on Tuesday as the US antitrust laws need an overhaul to allow for more competition in the US internet economy.
After 16 months of hearings, research, and analysis, the panel’s findings leave every other citizen curious to find the answer to the question “Does the big corporate company make it big by playing the rules, or do they need to cheat for staying at the top”.The report presented by the House’s top antitrust panel was a 450-page mammoth which layed out a playbook for how to pare back the power and use the conventional tools of antitrust law to reshape the digital world. Later that afternoon (7th October 2020), the subcommittee concluded, “The tech sector does indeed suffer from abuses of monopoly power”.
Technically, there have been three reports: an opinion from Democrats and two others from different Republican factions, a part of an ongoing split in congressional efforts to bring tech companies in line.
Here’s a breakdown of some of the key claims the report makes about each of the four major tech giants:
The new wave of antitrust efforts started with Amazon, so it’s no surprise that this latest report has the best feel for how to take on the e-commerce giant. The case is roughly similar to legal scholar Lina Khan, who laid out in her pivotal 2017 paper “Amazon’s Antitrust Paradox” — no surprise since Khan served as senior counsel to the committee.
One of the criticisms amongst many is amazon charging ever-increasing fees because of its dominant position hence taking away all negotiating powers from the sellers. Amazon also penalizes sellers for selling their merchandise for lower prices on other retail sites.
How did amazon react to the same? Amazon on its company blog post responded to the report by calling it: “flawed thinking” that Amazon is engaging in any such practices. The blog post called out the antitrust regulatory action, by mentioning that it “would have the primary effect of forcing millions of independent retailers out of online stores.”
The Congress investigators criticised Facebook for gobbling up potential competitors with impunity. Specifically, the report argues that Facebook’s acquisition of Instagram was a blatant attempt to “neutralize a nascent competitive threat.”
The report alleges that after Facebook bought Instagram, it intentionally stymied the photo-sharing app’s success so that it wouldn’t compete with Facebook internally.
The Democrats’ report argues that Google has a monopoly in the online search and marketing industry, creating an “ecosystem of interlocking monopolies”.
The investigators’ state that google has maintained anti-competitive practices in two ways, first is by launching an “aggressive campaign to undermine” what the report calls “vertical search providers” and second is by through “a series of anti-competitive contracts” that pushed people to rely on Google search when using phones with the Android operating system (Google purchased Android in 2005).
The company has shifted its behaviour “to rank search results based on what is best for Google, rather than what is best for search users,” the report concludes, “be it preferencing its own vertical sites or allocating more space for ads.” (for example, the search results given in the above picture)
According to Tuesday’s report, Apple exerts monopoly power through its oversight of software that’s downloaded on half of all mobile phones in the US. That’s a direct reference to Apple’s App Store — if you have an iPhone, you can only use apps that you download from the company’s tightly controlled store.
Such a battle between Apple and developers over in-app fees exploded into public spotlight earlier this year when the maker of Fortnite, Epic Games, told its users they could buy the game’s virtual currency directly from Epic rather than through the Apple iOS version of the app. The reason? Epic wanted to avoid the 30 per cent fee Apple charges for such in-app purchases. Duelling lawsuits ensued, and Apple even banned the game from the App Store. This is just one example of many cases like this that the report cites.
Using the European penalties as a benchmark, Morningstar estimates that the U.S. government could impose fines on Google totalling $13 billion for previous potential violations, and fines on Facebook totalling $6 billion. Beyond those penalties, new regulations and consent orders could limit their ability to acquire more businesses, leading them to increase their research and development spend, says Morningstar analyst Ali Mogharabi.
Depending on the results of the November election, Democrats may not need Republicans’ support on antitrust legislation — if Democrats sweep Congress and win the White House. If Joe Biden does win the presidency, “this [report] is a roadmap for how you would tackle this under a President Joe Biden … administration,” a staff member for a Democratic member of the subcommittee told Recode.
No matter what the results of the elections are, Tuesday’s congressional reports are just the beginning of upcoming antitrust regulatory proceedings against Big Tech.