Silicon Valley is wielding way too much monopoly power and Amazon, Facebook, Apple and Google each need to be broken up, Congress recently declared.
This conclusion comes after an in-depth, 16-month investigation that was launched by the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law. The subcommittee looked at whether the players in big tech play by the rules or if they “cheat to stay at the top,” Ars Technica reported.
The investigation included hearings, research, and analysis. The result were published in October in a mammoth 450-page report entitled “Antitrust 101: Why everyone is probing Amazon, Apple, Facebook, and Google.”
There were seven hearings, a review of more than 1.3 million internal documents, more than 240 interviews conducted, and 38 antitrust experts reviewed the evidence, Ars Technica reported.
These tech giants have abused “monopoly power” according to the report.
“As they exist today, Apple, Amazon, Google, and Facebook each possess significant market power over large swaths of our economy,” Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) and antitrust subcommittee Chairman David Cicilline (D-R.I.) said in a joint statement. “In recent years, each company has expanded and exploited their power of the marketplace in anticompetitive ways. Our investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation, and safeguards our democracy.”
Under antitrust law, companies can become dominant from natural growth and deal fairly with other companies and with consumers, but if a company used its power to get rid of competition by unfairly leveraging different parts of its business, then it’s an issue. The latter is what the report concluded the tech companies have done.
Here’s how. Between its first-party sales and its third-party marketplace, Amazon controls about 50 percent of the U.S. e-commerce market and a much higher percentage in certain sectors, such as e-books, Ars Technica reported. The tech giant uses its monopoly power unfairly to stay on top, the committee concluded.
It does so by leveraging its power on both sellers and manufacturers to “break agreements, push for unfairly favorable terms in negotiations, and lock would-be competitors into its ecosystem,” the report concluded.
Numerous sellers told subcommittee staff in interviews that they cannot turn to alternative marketplaces, regardless of how much Amazon may increase their costs of doing business or how badly they are treated, according to the report. “Sellers feel forced to be on Amazon because that is where the buyers are.”
Meanwhile, Apple has monopolistic control over what users can do with its iPhone product. “You can only put apps on your phone through the Apple App Store, and Apple has total gatekeeper control over that App Store,” Ars Technica reported.
With this monopoly control, Apple can “generate supra-normal profits” from the App Store, which generates billions.
On top of this, Apple ties its in-app payment system (IAP) to the app store in an anticompetitive way, the report stated. “Apple has leveraged its power over the App Store to require developers to implement IAP or risk being thrown out of the App Store.”
Facebook has outright monopoly power in the market for social networking, according to the report,
Its top four apps —Facebook, Instagram, Messenger, and WhatsApp—comprise four of the seven most-popular mobile apps inside the U.S.
Another problem, the report said, is that Facebook hides its data portability settings from users, which leads users to keep their accounts active so they don’t lose information such as photo albums.
Google is misusing its power as the dominant search engine. The company is ranking search results based on what is best for Google, rather than what is best for search users, the report concluded, “be it preferencing its own vertical sites or allocating more space for ads.”
One witness told the committee, “Google is now not only a seller and broker of digital advertising across the internet, but they now also control significant portions of the web browsers, operating systems, and platforms upon which these digital ads are delivered. This gives Google the ability to single-handedly shift an entire ecosystem in nearly any direction they decide, based simply on their scale.”
Is there an issue when the tech giants use their power for what they deem is for the greater good? This issue is being debated with the ban of Parler on Google, Amazon, and Apple following the attack on the Capitol building by Trump supporters. Parler has a large user base of Trump supporters.
“To some degree it was surprising, simply given how momentous and unprecedented a decision it was,” Professor Dietram Scheufele of UW-Madison told Channel 3000. “But on the other hand, these are all corporate players, which means they need to pay attention to their consumers. Very much like Nike changed their stance on Colin Kaepernick and Black Lives Matter and really aligned themselves with where public opinion is going, I think Twitter and Facebook are seeing the exact same thing.”