Members of Congress examining the activities of Amazon, Apple, Facebook and Google say antitrust reform is needed to protect democracy and “ensure that our economy stays alive and open in the digital age.” The findings come from a document (PDF) released today that marks the culmination of a 16-month investigation conducted by the Antitrust Subcommittee, part of the House Judiciary Committee.
The report concludes that while each big tech company has different types of monopolies, it is now effectively a gatekeeper in the digital markets, with the ability to pick winners and buy or sell competitors. The document describes the monopoly and the anti-competitive behavior of the individual companies. Members of Congress say power is used to extract concessions and dictate terms to competitors in ways that would not be possible in a highly competitive market, like Apple’s high App Store fee or Amazon’s millions of third-party seller fees small business.
“To put it simply, companies that were once seedy, inferior startups that challenged the status quo have become monopolies that we last saw in the era of oil barons and railroad tycoons,” the report said. “While these companies have brought clear benefits to society, the dominance of Amazon, Apple, Facebook and Google comes at a price. These firms tend to operate the market while competing at the same time – a position that allows them to write one set of rules for another while playing after another, or to engage in some form of their own private quasi-regulation that is only accountable to himself by anyone else than himself. “
The report recommends that Congress and the Antitrust Subcommittee pass laws to strengthen enforcement of existing antitrust law and support data portability and interoperability so that users can move data to another platform to encourage competition. Also under recommendations:
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– Strengthening parts of the Sherman Act dealing with competition and monopoly by adding a ban on abuse of dominance or the leverage of monopolies.
– Bring back stronger control of antitrust enforcement by Congress; Several incidents have been identified where regulators did not prevent monopolists from consolidating market share and eliminating competitors
– Use rules to prevent favoritism, discrimination or the placement of an Amazon product in front of a third party via the Amazon platform
– Reinforce control of merger and acquisition activities to ensure that monopolies do not consume competitors. The report found that the four companies have acquired more than 500 startups since 1998. On the subject of Facebook’s takeover of Instagram in 2012, an unidentified former Instagram executive who testified to the committee last week said, “It was an arrangement but within an internal monopoly. If you have two social media utilities, they shouldn’t be allowed to support each other. I don’t know why this shouldn’t be illegal. “
– Shifting the burden of proof of a merger is not anti-competitive from regulators to big tech companies with merger assumptions. The report states: “Under this change, any acquisition by a dominant platform would be considered anti-competitive unless the merging parties could demonstrate that the transaction is necessary for the public interest and that similar benefits cannot be derived from internal growth and Expansion can be achieved. ”
– Enable news publishers to negotiate with Facebook and Google
VentureBeat reached out to Amazon, Apple, Facebook, and Google to respond to the report and its conclusions. In a statement shared with VentureBeat, Apple argues that the company does not hold a dominant market share in any category and that “we have always said that an audit is appropriate and appropriate, but we strongly disagree with the conclusions drawn in this employee report regarding it became apple. “
An Amazon blog post in response to Tuesday’s report warned of “misguided interventions” and criticized what he calls “marginal concepts of antitrust law”. A Google spokesman told VentureBeat in a statement that Google competes fairly and that “Americans just don’t want Congress to break Google’s products or affect the free services they use every day.”
A Facebook company spokesperson told VentureBeat in a statement that there was a competitive landscape as the Instagram and WhatsApp acquisitions took place and that “regulators thoroughly examined every deal and rightly saw no reason to stop at this point. “
Antitrust law in the United States began in the late 19th century to curb the power of companies that dominate industries like steel and railways. However, in the past few decades, US regulators have been far less likely to take action to keep markets open and competitive. The report, titled “Investigating Competition in Digital Markets,” states that each company has different monopolies: Facebook on social media and advertising, Google in search and advertising, Amazon in online retail, and Apple through the App Store. According to the report, online markets have been particularly vulnerable to market concentration and monopoly over the past decade. The report details hundreds of big tech company mergers and acquisitions in recent years, as well as general declines in start-up and early-stage start-up funding.
User data, use of existing monopolies, acquisitions, and anti-competitive practices all helped defend the dominance of big tech companies. All four tech firms have recently focused on acquiring startups in other emerging artificial intelligence technology markets to “control tomorrow’s technology,” the report said. Subcommittee members and staff also describe the growing political power of technology companies.
“Through a combination of direct lobbying and financing of think tanks and scientists, the dominant platforms have expanded their sphere of influence and further shaped their control and regulation,” the report says.
The report’s authors also claim that while companies like Facebook offer services at no financial cost, people pay a cost because “it narrows consumer choice, undermines innovation and entrepreneurship in the US economy, the vibrancy of the free and diverse The press has weakened and undermined American privacy. “
The report concludes that not every member of the Democratic Congressman-chaired committee may agree to all of the findings or recommendations. At about the same time that the committee’s report was published, five Republican members of the Antitrust Committee published their own report. The 28-page employee document states: “Big Tech is looking for conservatives” and calls for a reform of liability protection in accordance with Section 230, which will be extended to social media platforms on the Internet. Prior to the expected release of the report on Monday, several news outlets reported that the release of the report had been postponed to include additional Republican feedback and to address portions of the draft document that some committee members considered unsustainable.
Antitrust law is important to small business prosperity, startup innovation, competitive business practices, and democracy. Economists fear that the dominance of large corporations in the US will increase as a large number of small businesses are wiped out by a recession triggered by COVID-19. In contrast, big tech companies have seen record quarterly earnings gains since July. Currently, 8 of the 10 largest companies in the world are in technology.
This is the first major antitrust investigation by a congressional committee in decades. The antitrust hearings in the late 1990s preceded a lawsuit and settlement between the US and Microsoft, some of which are said to have allowed companies like Amazon, Facebook and Google to grow. The legislation resulting from the report may not be proposed until a new term begins in 2021. However, the document aims to provide a number of options for Congress to regulate reform of big tech and antitrust law for the months and years ahead.
The investigation process that led to the report’s publication today consisted of seven hearings and over a million documents. The trial culminated in July when Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Google and Alphabet CEO Sundar Pichai, and Facebook CEO Mark Zuckerberg testified before the House Judiciary Committee.
David Cicilline (D-RI), Chair of the Antitrust Subcommittee, spoke to antitrust experts at Yale Law School on Sunday that some basic recommendations are achievable in the report, such as the separation of powers that prevents the owner of a platform from preferring its own products to others; and providing federal antitrust enforcement agencies – such as the Federal Trade Commission (FTC) – with resources for more robust enforcement. He also said that any meaningful legislation by Congress will require the help of the American people because of the power and resources available to Amazon, Apple, Facebook and Google.
As part of other measures being taken in Washington DC to curb powerful corporations, the Senate Commerce Committee held antitrust hearings last month and recently summoned CEOs from Facebook, Google, and Twitter to discuss possible reforms in the coming weeks Section 230 testify. President Trump called for reforms to Section 230 earlier today after Twitter labeled his tweet as misleading and potentially harmful information about COVID-19. A Cornell University analysis last week declared Trump the largest source of COVID-19 misinformation in the United States today.
The US Department of Justice is expected to initiate proceedings against Google later this week.
Outside of US antitrust activity, big tech companies continue to face antitrust lawsuits and setbacks in Australia and the European Union. According to several reports last week, a draft digital services law under scrutiny by the European Parliament will require dominant tech companies to share some data with competitors and restrict corporate use of consumer data. Chinese officials are also considering antitrust proceedings against Google over Android’s dominance in smartphone markets, a person familiar with the matter told Reuters.
Updated at 6:29 PM to include responses from Amazon, Apple, and Google, and at 7:01 PM to include a Facebook response.