Both large and small tech enterprises have found themselves dependent on the capricious whims of Big Tech, one algorithm tweak away from destruction. Because the judgments made by internet behemoths are largely unaccountable, opaque, and have far-reaching implications, the dominating platforms essentially operate as private regulators.
A long-awaited report from top Democratic congressional lawmakers on the four biggest tech giants’ dominance delivered a clear message: Amazon, Apple, Facebook, and Google engage in a variety of anti-competitive behaviour, and US antitrust laws need to be overhauled to allow for more competition in the US internet economy.
“To put it simply,” the report’s introduction notes, “businesses that were once feisty, underdog enterprises that challenged the existing quo have become the types of monopolies we last saw in the period of oil barons and railroad tycoons.”
The 400-plus page report in 2020, written by the majority staff of Democratic members of the House Judiciary Subcommittee on Antitrust, is the result of a 16-month investigation into whether these corporate behemoths abuse their power and whether the country’s antitrust laws need to be reworked to rein them in. The 2020 study lists multiple examples of each tech behemoth engaging in actions that legislators feel has harmed innovation and hampered competition. While the anti-competitive activity mentioned varies by firm, they are all related by the charge that the four internet behemoths misuse their gatekeeper role in multiple online industries to protect and increase their market power in those and other areas.
The research suggests enacting new legislation that might break up tech corporations and make it more difficult for them to seek acquisitions. It also suggests clarifying current antitrust laws to make them simpler to enforce, particularly for internet businesses. For the time being, the suggestions in the study are just high-level directions to Congress for prospective future legislation; they will not result in immediate action against these firms.
However, some differ from Democrats on how to address the issue. They say that instead of enacting new legislation, Congress should finance and empower regulatory agencies and government departments such as the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to pursue Big Tech under existing laws.
William Kovacic, the Republican former FTC chairman, said, “this is the first time a congressional committee has paid this type of attention to dominating corporations… and altering the structure of a major American sector since the 1970s.”
Here’s a summary of some of the report’s key assertions concerning each of the four big tech behemoths:
Amazon accounts for roughly 40% of all e-commerce sales in the US. It is seven times more than the size of No. 2 Walmart in this category. The Democrats’ research claims that the internet behemoth has utilized its dominant position in anti-competitive ways. (According to the paper, Amazon’s US e-commerce market share is closer to 50% or higher in the country, rather than the near-40% number often stated based on projections from the research company eMarketer.) According to the report, the company unfairly obtains data and information from its third-party sellers. It then uses such data to strengthen the retail side of the business. This can be done by taking steps such as favouring its own product brands over competitors’, giving this merchandise exclusive merchandising space on its virtual shelves, and prioritizing it in search results.
Another issue is that Amazon may charge sellers ever-increasing fees because of its dominating position. Then most sellers and brands have little bargaining leverage because they rely on the Amazon sales channel. Amazon also penalizes vendors who sell their products at cheaper prices on other retail websites.
Amazon responded to the study with a corporate blog post, calling it “flawed reasoning” that Amazon is participating in anti-competitive business practices, and that antitrust regulatory action “would have the primary impact of pushing millions of small businesses out of online marketplaces.”
According to the study, Facebook has increased its monopolistic position in the social media market by employing a “copy, acquire, kill” approach against competitors and unfairly harming competing firms such as Instagram (which the company purchased in 2012).
According to the research, Facebook’s acquisition of Instagram was a clear attempt to “neutralize a nascent competitive threat.” According to the article, once Facebook purchased Instagram, it purposefully hindered the photo-sharing app’s progress so that it wouldn’t compete with Facebook internally.
The investigation includes internal emails, memos, and testimony from senior-level Facebook workers, including CEO Mark Zuckerberg, to support the claim that Facebook destroyed Instagram through monopolistic power.
According to the survey, Apple wields monopolistic influence over software that is downloaded on half of all mobile phones in the United States. That’s a blatant allusion to Apple’s App Store. If you have an iPhone, you can only use apps downloaded through Apple’s carefully restricted store. According to the study by the subcommittee staff examining Apple, the corporation has used its dominance to ban certain rivals from its store, unjustly favor its own applications, and collect fees that some app developers informed the panel is “exorbitantly expensive.”
According to the Democrats’ assessment, Google has a monopoly in the internet search and marketing business, establishing an “environment of interlocking monopolies” that it has maintained through anti-competitive actions in two ways.
The first is to undertake an “aggressive campaign to undercut” what the paper refers to as “vertical search providers” – search engines for specialized themes like Yelp for restaurants or Expedia for travel. According to the research, Google utilizes its power to “promote Google’s own inferior” material over the content of some of these other firms in its search results.
The study claims that the second significant method Google has displayed anti-competitive behaviour is through “a series of anti-competitive contracts” that forced customers to rely on Google search while using phones running the Android operating system (Google purchased Android in 2005).