House lawmakers call Big Tech's power monopolistic, recommend sweeping changes
The U.S. House Judiciary is recommending sweeping changes to antitrust law after it found that Apple, Amazon, Facebook and Google enjoy monopoly powers over their respective domains.
Credit: WikiCommons
On Tuesday, the House Judiciary antitrust subcommittee released a nearly 450-page report concluding a broad investigation into dominant technology giants that it launched in June 2019. The report finds that the four tech giants engaged in anticompetitive and monopolistic behavior to gain their positions as dominant companies.
In the report, the antitrust subcommittee laid out their findings from interviews, hearings, and nearly 1.3 million documents that they examined. It concluded that "although these four corporations differ in important ways, studying their business practices has revealed common problems."
Although they investigated aspects of Google's advertising business and the Android operating system, the majority of their focus was on the company's dominance in online searches. One conclusion, for example, was that Google had scraped rival websites and forced its technology on third parties to gain and maintain its dominant position.
Apple and Amazon were examined for their marketplace dominance. The subcommittee found that both exerted monopoly power in their respective online marketplaces -- Amazon's retail site, and Apple's App Store -- and introduced rules meant to squash competition in those marketplaces.
"To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," the panel said. "Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price."
Alongside the investigation's findings, the House Judiciary also recommended broad changes to antitrust law and enforcement to reign in the power of dominant technology giants.
Those changes include prohibiting dominant platforms from entering adjacent lines of business; instructing regulators to assume mergers by dominant platforms are anticompetitive; and preventing dominant platforms from preferring first-party services.
Additionally, the panel recommended overriding "problematic precedents" in antitrust case law; increasing the budget of the Federal Trade Commission and the Justice Department's antitrust division; requiring the FTC to collect data on concentration; and strengthening private enforcement by nixing forced arbitration clauses and limits on class action lawsuits.
Credit: WikiCommons
On Tuesday, the House Judiciary antitrust subcommittee released a nearly 450-page report concluding a broad investigation into dominant technology giants that it launched in June 2019. The report finds that the four tech giants engaged in anticompetitive and monopolistic behavior to gain their positions as dominant companies.
In the report, the antitrust subcommittee laid out their findings from interviews, hearings, and nearly 1.3 million documents that they examined. It concluded that "although these four corporations differ in important ways, studying their business practices has revealed common problems."
The panel, for example, scrutinized Facebook's dominance in social media and online advertising -- including the 2012 acquisition of competitor Instagram. Documents were unearthed, for example, that suggested Instagram was a fast-growing rival of Facebook's, rather than a company that only survived because of the acquisition.First, each platform now serves as a gatekeeper over a key channel of distribution. By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them. Second, each platform uses its gatekeeper position to maintain its market power. By controlling the infrastructure of the digital age, they have surveilled other businesses to identify potential rivals, and have ultimately bought out, copied, or cut off their competitive threats. And, finally, these firms have abused their role as intermediaries to further entrench and expand their dominance. Whether through self-preferencing, predatory pricing, or exclusionary conduct, the dominant platforms have exploited their power in order to become even more dominant.
Although they investigated aspects of Google's advertising business and the Android operating system, the majority of their focus was on the company's dominance in online searches. One conclusion, for example, was that Google had scraped rival websites and forced its technology on third parties to gain and maintain its dominant position.
Apple and Amazon were examined for their marketplace dominance. The subcommittee found that both exerted monopoly power in their respective online marketplaces -- Amazon's retail site, and Apple's App Store -- and introduced rules meant to squash competition in those marketplaces.
"To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," the panel said. "Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price."
Alongside the investigation's findings, the House Judiciary also recommended broad changes to antitrust law and enforcement to reign in the power of dominant technology giants.
Those changes include prohibiting dominant platforms from entering adjacent lines of business; instructing regulators to assume mergers by dominant platforms are anticompetitive; and preventing dominant platforms from preferring first-party services.
Additionally, the panel recommended overriding "problematic precedents" in antitrust case law; increasing the budget of the Federal Trade Commission and the Justice Department's antitrust division; requiring the FTC to collect data on concentration; and strengthening private enforcement by nixing forced arbitration clauses and limits on class action lawsuits.
Comments
The "trolls and iHaters" - or more accurately people who are not as loyal and devoted to Apple as you are - do not claim that the iPhone is a small player in the smartphone market.
Also - for the who knows how many time - Android generates more revenue than does iOS. What you see commonly reported is that the App Store generates more revenue than does Google Play. The revenue from all Android app stores - most specifically Amazon (which earns 3 times more per device than does Google Play devices), the China app stores and Google Play - does in fact exceed that of the iOS store and has for years.
Finally, the issue is that due to its size, influence and revenue - something that "trolls and Android haters" love to mention in every other context - people argue that iOS constitutes its own market or industry. You have automobiles, movies and TV, textiles, restaurants ... and iOS apps. So if taken as a commercial sector all its own, then the App Store monopolizes it.
It is a new legal theory, a new definition of "trust", "monopoly" etc. that has been adapted to the current landscape that is defined by 3 things that weren't the case when our monopoly laws were written:
1. Globalism
2. Assets being intangible - i.e. data and code - as opposed to tangible (real estate, gold, oil, transmission lines, rail lines, factories, farmland)
3. Companies adapting to anti-monopoly laws by focusing on vertical/horizontal integration (getting a decent market share in any number of industries) as opposed to dominating a single sector or related industries (i.e. Standard Oil owning oil wells, refineries and gas stations). The thinking is that Apple (and Google, Facebook, Amazon ... strange that Microsoft is absent) having a critical mass in so many industries makes avoiding doing business with them practically impossible and gives them even more influence than a company with, say, 80% of the tobacco market would have.
Whether this new theory gets traction in the United States - and more to the point in Europe which would consider it if only to find yet another way to express their disdain for us Yanks - remains to be seen.
That said, they patently do not have a monopoly, any more than Keurig or Tesla has a monopoly. The consumer can always choose a different platform.
There is surely a term for what Apple is doing, but monopoly ain't it.
"A lot... unethical... anticompetitive" please explain.
Apple makes hardware/devices... offers software and services for those devices and also ALLOWS 3rd parties to create and offer software, services and peripherals to users of their devices/hardware.
They make developers censor descriptions of their applications, even in countries where the description discusses legal features. A lot of that article is nonsense, but the section which starts "In January 2020" is relevant, and other developers have reported similar problems. Unethical.
When Epic made the decision to sue Apple, Apple retaliated by threatening to cut off a separate developer account without any allegations of that account breaking any rules. Unethical.
They allow obvious ripoff applications into the store and the search is easy enough to manipulate that these ripoffs can get higher placement when you search for the exact name of the original application. Unethical.
If applications allow users to buy a service (such as a Netflix subscription or Kindle books), but they don't use Apple's In-App Purchase platform, the applications are not allowed to offer their own payment platform, and are not allowed to even tell users how to pay them outside the application (section beginning with "Another change applies"). Anticompetitive.
Separately from the App Store, Apple makes a big deal about how they think privacy is a human right, but they still manufacture most of their products in China and they censor things at the behest of mainland China's government. Clearly they don't think privacy is worth protecting at the expense of manufacturing costs or sales. Unethical.