Home / Apple / House: Amazon, Facebook, Apple, Google have “monopoly power”, should be shared

House: Amazon, Facebook, Apple, Google have “monopoly power”, should be shared



United States Capitol Building, seat of Congress, at the National Mall in Washington, DC.
Enlarge / United States Capitol Building, seat of Congress, at the National Mall in Washington, DC.

In June last year, the Antitrust, Commercial and Administrative Law Judiciary Committee began a thorough investigation of four major companies ̵

1; Amazon, Apple, Facebook and Google. The subcommittee wanted to answer a key question: did Big Tech play big by the rules, or is it cheating to stay on top? After 16 months of hearings, investigations and analyzes, the panel’s findings are out … and the results look very bad for all the companies involved.

The technology sector is in fact suffering from the abuse of “monopoly power”, the subcommittee concluded in the huge 450-page report (PDF) published late yesterday afternoon.

“As they exist today, Apple, Amazon, Google and Facebook have significant market power over large parts of our economy. In recent years, each company has expanded and exploited its power in the market in ways that restrict competition,” Justice Director Jerrold Nadler (DN .Y.) And chairman of the antitrust subcommittee David Cicilline (DR.I.) said in a joint statement. “Our investigation leaves no doubt that there is a clear and convincing need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation and safeguards our democracy.”

What was Congress looking for?

As we have explained before, monopoly law is not just about monopoly. Being the biggest player in a sector – even if you are so big that you dwarf any potential competition – is not in itself illegal. Sometimes it can just be such a market shakes out.

The Antitrust Act is instead concerned with what you did to become dominant and what you do with the oversized power that comes from being the greatest. If you have a market share of 90 percent, but everything comes from natural growth, and you trade fairly with other companies and with consumers, antitrust regulators will probably leave you alone. But if start-ups can demonstrate that you used bulk to knock them out before they could become real competition, or if competitors can show you unfairly exploiting different parts of your business to squeeze them out? The are problems.

After conducting seven hearings, reviewing more than 1.3 million internal documents, conducting more than 240 interviews and submitting contributions from 38 antitrust experts, the Committee found evidence that all four companies have acted competitively and continue to do so today.

Amazon: That’s all

Amazon is dominant in online sales, the committee found. Between first-party sales and third-party markets, Amazon controls about 50 percent of the U.S. e-commerce market and a much higher percentage in certain sectors, such as e-books. And the company is using that gatekeeper, the monopoly power unfairly, the committee concluded.

Amazon is using its power on both sellers and manufacturers to break agreements, push for unfairly favorable terms in the negotiations, and lock future competitors into its ecosystem, the report concluded. The problems were particularly pronounced in the company’s third-party market. About 2.3 million suppliers worldwide sell their wares through Amazon’s marketplace, and just over a third of them are “dependent on Amazon as their only source of revenue.” In other words, Amazon is their storefront, and Amazon uses that influence to twist metaphorical arms whenever it wants.

“Many salespeople told subcommittee employees in interviews that they can not turn to alternative marketplaces, no matter how much Amazon may increase the cost of doing business or how badly they are treated,” the report said. “Sellers feel compelled to be on Amazon because that’s where buyers are.”

And of course Amazon is also a reseller, and in many product categories, it competes directly with the vendors for whom it provides infrastructure. It hovers data from third-party sales to inform its own product launches, then it competes directly with the sellers who trust it to live. It also runs a logistics business that it arms sellers to use by letting the opaque “buy box” algorithm penalize sellers who do not.

Amazon also behaved competitively around several of its dozens of acquisitions over the past decade, the committee found. Not only have these acquisitions led to less consumer choice and greatly expanded Amazon’s range of consumer data, but in at least one case, Amazon used predatory pricing to disrupt and eventually acquire a competing company competitively.

The report finds that Amazon continues to harness the power up and down the chain to make the cost of going away too high for most businesses and consumers – in antitrust terms, these are called switching costs and networking effects. “Amazon expanded its market power by evading taxes, withdrawing government subsidies and engaging in anti-competitive behavior – tactics that have given the company an unfair advantage over actual and potential competitors,” the report concludes. “Amazon’s market power is sustainable and is unlikely to erode in the foreseeable future.”

Apple: It’s the App Store

Apple controls about 45 percent of the U.S. smartphone market and 20 percent of the global smartphone market, the committee found, and is expected to sell its $ 2 billion iPhone in 2021. It’s true that Apple in the smartphone market is not a monopoly. Instead, iOS and Android have an effective duopoly in mobile operating systems.

However, the report concludes with Apple do have a monopolistic grip on what you can do with an iPhone. You can only place apps on your phone via the Apple App Store, and Apple has total gatekeeper control over the App Store – that’s what Epic is suing the company over.

This monopoly control allows Apple to “generate supra-normal profits” from the App Store, the report finds, and profits have become a dramatically higher percentage of Apple’s revenue over time, now generating billions more than the company spends annually running the app. Shop.

Apple also links its payment system (IAP) to the app store in a competition-restrictive way, the committee found. Referring to internal Apple communications and testimonies from, among others, the founders of ProtonMail and Hey, the report finds that “Apple has used its power over the App Store to demand that developers implement IAP or risk being thrown out of the App Store.”

Using IAP increases costs for developers, several testify. For apps that compete directly with Apple’s own first-party services, they said, and it does not make financial sense to pay Apple for the privilege of making less money – that is the heart of Spotify’s complaint against Apple. But developers also say they can not leave iOS, because although iPhone users are a minority of the market, they generally tend to have more money and be bigger spenders than Android users. (Several of these developers joined together earlier this fall to start a trading group that pushed for Apple to lower fees and release the App Store from the IAP.)

The committee found internal documents showing that the company’s management, including former CEO Steve Jobs, “recognized that the IAP requirement would stifle competition and restrict the apps available to Apple customers.” The report concludes that Apple has also unfairly used control over APIs, search rankings and standard apps to restrict competitors’ access to iPhone users.

Facebook: It’s the procurements (and the data)

The report simply concludes with “monopoly power in the social networking market,” and that power is “firmly entrenched and will hardly be destroyed by competitive pressure” from anyone at all due to “high barriers to entry – including strong networking effects, high switching costs, and Facebook’s significant data advantage – which counteracts direct competition from other companies to offer new products and services. “

Facebook claims that it competes heavily for users with other platforms such as Twitter, TikTok, Snapchat and Pinterest. But it does not compete with other major platforms, such as Instagram, because it bought them up before they could become real competition. The company’s four largest apps, combined – Facebook, Instagram, Messenger and WhatsApp – consist of four of the seven most popular mobile apps in the United States. Facebook’s flagship app alone reaches 200 million US users, or 74 percent of smartphone users.

This range alone allows people to use the product. There are high switching costs for social media platforms because users want to go where their friends are. “Either everyone uses them or no one uses them,” concluded an internal Facebook document. Facebook also hides the data portability settings from users, the report concluded, which keeps users active so they do not lose information such as photo albums.

Merger notification should guarantee that you can not buy out your rivals if this would reduce competition in the sector. For example, if company A has 40 percent of the market, company B has 10 percent of the market, and company C has 50 percent of the market, companies A and B are likely to merge, and company C may be able to buy company B, but companies A and C would not be allowed to merge because the combined company would then have a market share of 90 percent. Competition in the sector would be destroyed.

So many acquisitions

But regulators did not block Facebook’s successful acquisitions of either Instagram or WhatsApp, and they did not stop 60 other Facebook acquisitions. This led to what a former employee described to the committee as a collaboration between the platforms, “but with an internal monopoly.” The employee added: “If you own two social media sites, they should not be allowed to throw each other up. It is unclear to me why this should not be illegal. You can cooperate by acquiring competitors and banning competition.”

Facebook used some of these acquisitions, such as the Onavo VPN service, to collect non-public data about other companies’ apps, and then use that data to further inform its own procurement strategy. Snapchat legendary maintained a dossier, called “Project Voldemort”, about Facebook’s attempts to subjugate Snapchat’s business and provide the company with a cut.

This strategy was deliberate, the committee found. As evidence, the report cited internal communications from Facebook CEO Mark Zuckerberg and other company management. “Facebook’s series acquisitions reflect the company’s interest in buying companies that had the potential to develop into rivals before they could mature into strong competitive threats,” it concludes.

Facebook also used acquisitions, such as the acquisition of the advertising service Atlas from Microsoft, to expand its grip on consumer data and become a major player in the online advertising market, where it now dominates. “Despite Google’s dominance,” the committee wrote, “market participants interviewed by the subcommittee consider Facebook to be ‘inevitable’ or ‘must have’ because of the reach and scope of the platform.”

Together with Google, Facebook is half of a duopoly that controls online advertising to the detriment of competition, the committee concluded.


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