The report’s recommendations would amount to a seismic change in how the tech industry operates and could even lead to a “breaking up” of big tech companies.
The House Judiciary Committee’s antitrust panel has released its long-awaited investigation into America’s big tech corporations, declaring that “companies that once were scrappy, underdog startups” have now become “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”
The report comes months after big tech executives were grilled in congressional hearings and as companies are facing growing antitrust scrutiny around the world.
The report’s recommendations would amount to a seismic change in how the tech industry operates and could even lead to a “breaking up” of big tech companies.
For now, however, Republicans and Democrats on the committee remain divided over the report’s recommendations, with the report itself authored predominantly by the committee’s Democratic majority.
But both sides are in agreement that greater antitrust scrutiny is needed against America’s large tech corporations, a rare sign of bipartisan agreement that big tech cannot afford to ignore.
Big tech monopolies
The report by the House Judiciary Committee’s antitrust panel makes a number of allegations toward Amazon.com Inc., Facebook Inc., Alphabet Inc and Apple Inc., whose shares took a slight tumble in the wake of the findings.
Summarizing the findings, Committee Member Representative Val Demings (D-FL) stated that “our investigation revealed an alarming pattern of business practices that degrade competition and stifle innovation.”
The Florida congresswoman argued that “competition must reward the best idea, not the biggest corporate account.”
Each of the top four “big tech” companies has had specific allegations and episodes of monopolistic actions levied against them.
Apple has been accused of using its “gatekeeper” position on its App Store to promote its own apps and services and push down competitors. The report argued that Apple’s 30% commission of in-app purchases was “exorbitantly high.” The report added that Apple routinely invented reasons to remove competing apps before offering its own replicated services in their place.
The House Judiciary Committee is not the only body to raise concerns over Apple’s App Store commission as of late. In August, Epic Games, Inc. attempted to institute its own payment system on the iOS version of the popular “Fortnite” video game in a move designed to avoid Apple’s own payment and commission structure.
“Fortnite” was swiftly removed from the App Store and the two companies are now engaged in a lengthy antitrust suit. Epic recently lost another bid for a court injunction allowing the reinstatement of “Fortnite” to the App Store pending the court’s overall ruling.
Jeff Bezos’ e-commerce provider Amazon is also included in the report’s findings. The report alleges that Amazon possesses a monopolistic power over small online sellers in the United States and that it uses its platform dominance to promote its own products in search results and promotions to undermine competitors.
Similar allegations are targeted toward Google, who the report accuses of using its search engine and advertising dominance to promote its own services and products over those of rivals.
Google is also facing pressure around the world, with an expected antitrust suit to come from the US government and increasing pressure from a coalition of Indian startups over the contentious issue of its own Play Store commission on in-app purchases.
Finally, the report also alleges that Facebook constitutes a monopoly, particularly in light of its acquisitions of Instagram and WhatsApp. In particular, the report argues that Facebook’s acquisition of Instagram was tailored to stop the competing social network’s growth.
Facebook itself does not release the number of users on Instagram or the revenue it brings for Facebook, which some have suggested supports the argument that Facebook acquired it in order to defeat a rival, rather than to take advantage of a growing business.
The way forward
The report also makes suggestions on the best course of action to deal with these alleged antitrust abuses, some of which would signal seismic changes in the current tech industry and could even lead to some companies being “broken up.”
The report suggests that dominant companies should be restricted from operating in adjacent lines of business through which they could gain an advantage from their dominance. This would involve regulating tech companies more like their cable and phone network counterparts.
Underlying the entire report is a recommendation for stronger and more vigorous enforcement of existing antitrust laws. In particular, the report suggests that antitrust laws should be updated so as to clarify that they work not just for the protection of consumers, but also for entrepreneurs, independent businesses, a fair economy and democratic ideals. This would represent an overhauling of the “consumer welfare standard” that has driven antitrust law for decades.
Commenting on the report, Democratic Representative Jerrold Nadler, the Judiciary Committee chair, argued that the “investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action.”
On this point alone, there exists a bipartisan consensus. Republican Committee Member Representative Ken Buck claimed that Democrats and Republicans are in agreement that big tech has engaged in “anticompetitive behavior” and “it’s really important to acknowledge that Republicans and Democrats have come together to recognize the problems.”
But Republicans are in disagreement over the methods proposed to deal with these alleged abuses. Buck himself circulated a report that described the Democratic proposals in the antitrust report as “non-starters for conservatives,” with Republicans preferring stricter enforcement of existing antitrust law as opposed to any other decisive action.
Big tech companies themselves are also in vehement disagreement with the allegations contained in the report. Amazon has argued that the report constitutes merely of “fringe notions” and “regulatory spitballing,” while Facebook has argued that its growth and dominance is an “American success story,” with its Instagram and WhatsApp acquisitions being beneficial to those two platforms.
Ultimately, the recommendations contained in the report remain just that, recommendations. But with growing antitrust scrutiny not just in the US, but around the world, big tech appears increasingly assailed on all sides.
Republican and Democratic politicians have reached a rare, if limited, agreement on the nature of big tech’s “anticompetitive behavior.” For now, the tide appears to be turning against big tech, though it remains to be seen how damaging these shifts could yet prove.
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