Congressmen investigating the activities of Amazon, Apple, Facebook and Google say that antitrust reform is needed to ensure democracy and “ensure that our economy remains vibrant and open in the digital age.” The findings come from a document released today (PDF) which is the culmination of a 16-month investigation conducted by the antitrust subcommittee, part of the House Judiciary Committee.
The report concludes that although these Big Tech companies maintain different types of monopoly, they effectively act as gatekeepers in today’s digital markets – with the power to pick winners and acquire or dispose of competitors. The document describes monopolization and anti-competitive behavior from each of the four companies. Members of Congress say their power is used to extract concessions and dictate terms to competitors in ways that would not be possible in a competitive market. Examples include Apple̵
“To put it simply, companies that were once intimidating, underdog start-ups challenging the status quo, have become the kind of monopolies we last saw in a period of oil barons and railway tycoons,” the report said. “Although these companies have provided clear benefits to society, the dominance of Amazon, Apple, Facebook and Google has cost. These companies usually operate the market while also competing in it – a position that allows them to write one set of rules for others while playing another, or to participate in a form of their own private quasi-regulation that does not is responsible for others than themselves. ”
The report recommends that Congress and the Antitrust Subcommittee adopt legislation to strengthen the enforcement of existing antitrust laws. And it supports data portability and interoperability as a way to promote competition by allowing users to transfer data to another platform.
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Additional recommendations include:
– Strengthen parts of the Sherman Act, which addresses competition and monopoly by prohibiting the abuse of dominance or monopoly exploitation.
– Restore stronger oversight of antitrust enforcement by Congress. This comes after the report revealed several cases where regulators failed to prevent monopolists from consolidating market shares and eliminating competitors.
– Put rules in place to prevent favoritism and discrimination, such as the practice of placing an Amazon product in front of a third-party seller using Amazon’s platform.
– Increase control of merger and acquisition activity to ensure that monopolies do not consume competitors. The report found that the four companies have acquired more than 500 start-ups since 1998. On the subject of Facebook’s acquisition of Instagram in 2012, an unidentified former senior Instagram employee who testified to the subcommittee last week said: “It was a secret collaboration, but within a “If you own two social media, they should not be allowed to throw each other up. It is unclear to me why this should not be illegal.”
– Moving the burden of proof for a merger does not restrict competition from regulators to Big Tech companies with merger preconditions. As the report reads: “Under this change, any acquisition of a dominant platform will be presumed to be anti-competitive unless the merging parties could demonstrate that the transaction was necessary to serve the public interest and that similar benefits could not be achieved through internal growth and expansion. ”
– Give news publishers the opportunity to negotiate collectively with Facebook and Google.
VentureBeat has reached out to Amazon, Apple, Facebook and Google for their response to the report and its conclusions. In a statement shared with VentureBeat, Apple argues that the company does not maintain a dominant market share in any category, and that “we have always said that control is reasonable and appropriate, but we completely disagree with the conclusions of this HR report with respect to Apple. . ”
An Amazon blog post in response to the report warned against “misguided intervention” and criticized what it calls “fringe terms about antitrust.” A Google spokesman told VentureBeat in a statement that Google is competing fairly and that “Americans simply do not want Congress to break Google’s products or harm the free services they use every day.”
A spokesperson for the Facebook company told VentureBeat in a statement that there was a competitive landscape when the acquisition of Instagram and WhatsApp took place and still exists today. The spokesman said: “Regulators thoroughly reviewed each agreement and rightly saw no reason to stop them at that time.”
The antitrust law in the United States began to drain the power of companies that dominate industries such as steel and railroads from the late 1800s. But U.S. government officials have been far less likely to act in recent decades to secure open, competitive markets. The congressional report, entitled “Investigating Digital Market Competition,” finds that each of the Big Tech companies maintains a different monopoly: Facebook in social media and advertising, Google in search and advertising, Amazon in online store, and Apple through the App Store. The report also states that online markets were particularly exposed to market concentration and monopolization over the past decade. Its authors outline hundreds of mergers and acquisitions of Big Tech companies in recent years, along with a general decline in start-up financing and early-stage business formation.
The report also describes how Big Tech companies have aggressively defended their dominance through acquisitions, anti-competitive practices, collecting user data and exploiting existing monopolies. And all four technology companies have recently focused on acquiring artificial intelligence (AI) startups in other emerging markets to “control tomorrow’s technology,” according to the report. Members of the subcommittee and employees also describe the growing political power of technology companies.
“Through a combination of direct lobbying and funding for think tanks and academics, the dominant platforms have expanded their sphere of influence, and further shaped how they are managed and regulated,” the document states.
The authors of the report also claim that although companies like Facebook offer services that are free to use, consumers pay a steep price. The report says that these technology giants have “reduced consumer choice, destroyed innovation and entrepreneurship in the US economy, weakened the vitality of the free and diverse press, and undermined American privacy.”
The report acknowledges that individuals in the subcommittee, led by Democratic members of Congress, may not fully agree with all the results or recommendations of the survey. Approximately coinciding with the publication of the report, five Republican members of the Antitrust Subcommittee issued their own report. Their 28-page personnel document is entitled “Big Tech is looking to get conservatives” and calls for a reform of section 230 liability protection extended to social media platforms.
The congressional sub-committee report was expected Monday, but several news outlets reported that the release was postponed to include further feedback from Republicans and address parts of the draft document that some members consider unsustainable.
Antitrust protection is important for the prosperity of small businesses, start-up innovation, competitive business practices and a functioning democracy. Economists fear that the dominance of large companies in the US will grow even more markedly as small businesses are wiped out by a pandemic-induced recession. On the other hand, Big Tech companies have reported record profits in quarterly revenue since July. Currently, eight of the 10 largest companies in the world are in the field of technology.
Today’s report marks the first significant antitrust investigation by a congressional committee in decades. Antitrust hearings held in the late 1990s preceded a USA vs. Microsoft lawsuits and settlements, as some say, enabled the growth of companies such as Amazon, Facebook and Google. Legislation coming from the congressional report may not arrive until a new term begins in 2021, but the document is intended to provide Congress with a menu of options for regulating Big Tech and monopoly reform in the coming months and years.
The investigation process leading up to the report included seven hearings and more than one million documents. The process 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 housing court committee.
In a conversation with antitrust experts at Yale Law School on Sunday, antitrust commissioner David Cicilline (D-RI) said he believes some basic recommendations in the report are achievable, such as adopting power separations that prevent a platform owner from favoring their own products. over others and provide federal agencies that enforce antitrust law – such as the Federal Trade Commission (FTC) – resources for more robust enforcement. He also said that any meaningful legislation from Congress would require help from the American people because of the power and resources available to Amazon, Apple, Facebook and Google.
In similar trials currently underway in Washington, DC, the Senate Commerce Committee held hearings related to antitrust issues last month and recently summoned CEOs of Facebook, Google and Twitter to testify in the coming weeks about potential reforms of Section 230, which protect owners of any “interactive data service” from third party content publishers. US President Donald Trump called for sections of 230 reforms earlier today after Twitter branded his COVID-19 tweet misleading and potentially harmful. By the way, a Cornell University analysis last week named Trump the biggest source of COVID-19 misinformation in the United States today. And the U.S. Department of Justice is expected to launch a lawsuit against Google later this week.
In addition to antitrust activity in the United States, Big Tech companies continue to face antitrust lawsuits and setbacks in Australia and the EU. According to several reports last week, a draft law on digital services being considered by the European Parliament will require dominant technology companies to share some data with rivals, and will set limits on how companies can use consumer data. Chinese officials are also considering antitrust action against Google in response to Android’s dominance over smartphone markets, a person familiar with the matter told Reuters.
Updated at 18:29 to include responses from Amazon, Apple and Google and at 19:01 to include a Facebook response.