The House Judiciary Committee released its findings into suspected antitrust behavior by tech giants Amazon, Apple, Facebook and Google on Tuesday. After a 16-month investigation, the 449-page House Antitrust Report on Big Tech said the companies have essentially become monopolies who show preferences to their own products and services, buy smaller competitors and have an advantage over smaller businesses who use their platforms. The report also includes recommendations for how to change this anticompetitive behavior.
“To put it simply, companies that were once scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons,” the committee wrote.
“Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook and Google has come at a price. These firms typically run the marketplace while also competing in it – a position that enables them to write one set of rules for others, while they play by another, or to engage in a form of their own private quasi regulation that is unaccountable to anyone but themselves,” added the committee.
Among the recommendations is that Congress define new standards for antitrust violations, saying that the current laws are not adequate. Instead, the laws should be “designed to protect not just consumers, but also workers, entrepreneurs, independent businesses, open markets, a fair economy, and democratic ideals,” reports The Verge.
The House Judiciary Committee said they collected close to 1.3 million documents from third parties and they held seven years to learn more about the effects of market power online, including the impact on free and diverse press, innovation and privacy. A final hearing was held to review potential solutions. Jeff Bezos (Amazon), Tim Cook (Apple), Mark Zuckerberg (Facebook) and Sundar Pichai (Google and Alphabet) testified before the committee this summer. The also had testimony from 38 witness, held hearings and roundtables and consultations with subject matter efforts.
Understand what you need to master to be successful at your subscription business.
House Judiciary Committee report findings
The report’s executive summary (pages 9 through 19) offered the following findings:
- Amazon, Apple, Facebook and Google play an important role in the economy, serving as the underlying infrastructure for communications, information, and goods and services. The combined valuation of these tech companies is more than $5 million.
- These companies have “captured control over key channels of distribution” and have essentially become gatekeepers which the companies have used to exploit their power and dictate terms to partners and competitors.
- The four companies in question have acquired hundreds of smaller companies over the last 10 years, further solidifying their dominance in the marketplace.
- Market dominance “has diminished consumer choice, eroded innovation and entrepreneurship in the U.S. economy, weakened the vibrancy of the free and diverse press, and undermined Americans’ privacy.”
- Facebook has monopoly power for social networking.
- Google has monopoly power in the areas of general online search and search advertising.
- Amazon has monopoly power in the U.S. online retail market.
- Apple has monopoly power in the mobile operating system market and the mobile app store market.
House Judiciary Committee recommendations
Here is a summary of the report’s recommendations. The full text begins on page 20 of the report, reprinted in its entirety by The New York Times.
- Restoring competition in the digital economy through structural separations and prohibitions of certain platforms from operating in adjacent lines of business, prohibiting future mergers and acquisitions, safe harbor for news publishers to ensure a free and diverse press, among other measures
- Strengthening antitrust laws, including strengthening portions of the Clayton Act Sherman Act, and taking measures that will strengthen enforcement
- Reviving antitrust enforcement through congressional oversight, federal antitrust agencies and private enforcement
“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,” Jerrold Nadler, Democrat of New York and chairman of the judiciary committee, and David Cicilline, Democrat of Rhode Island and chairman of the antitrust subcommittee, said in a joint statement.
Reactions from Amazon, Apple, Facebook and Google
Amazon’s initial reaction came in the form of a post on its Day One Blog titled “Fringe Notions on Antitrust Would Destroy Small Businesses and Hurt Consumers.” Amazon said that being a large retailer does not in and of itself make it guilty of anticompetitive behavior. The online marketplace pointed out that is not even the largest retailer (Walmart has double Amazon’s revenue). Amazon also benefits consumers by providing them with choice while also benefit the third-part sellers who use the Amazon marketplace to sell their goods.
“All large organizations attract the attention of regulators, and we welcome that scrutiny. But large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong,” wrote Amazon.
“And yet, despite overwhelming evidence to the contrary, those fallacies are at the core of regulatory spit-balling on antitrust. The flawed thinking would have the primary effect of forcing millions of independent retailers out of online stores, thereby depriving these small businesses of one of the fastest and most profitable ways available to reach customers. For consumers, the result would be less choice and higher prices. Far from enhancing competition, these uninformed notions would instead reduce it,” the company added.
In its response to the House Judiciary Committee recommendations, Apple reiterated many of the statements it has made in the past, including the idea that Apple “does not have a dominant market share in any category” where they do business. Apple also noted that, in terms of App Store fees which are the subject of a battle with Epic Games and the reason for the Coalition for App Fairness, they charge commission rates in line with those of other app stores, including the Google Play Store.
Facebook also had a response to the House Judiciary’s recommendations. A spokesperson for the social media platform told CNBC.
“We compete with a wide variety of services will millions, even billions, of people using them. Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people. Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses,” a Facebook spokesperson said in a statement, reported CNBC. “A strongly competitive landscape existed at the time of both acquisitions and exists today. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time.”
Google responded to the allegations in a blog post from their public policy division Tuesday.
“Google’s free products like Search, Maps and Gmail help millions of Americans and we’ve invested billions of dollars in research and development to build and improve them. We compete fairly in a fast-moving and highly competitive industry. We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services,” said Google.
“Americans simply don’t want Congress to break Google’s products or harm the free services they use every day. The goal of antitrust law is to protect consumers, not help commercial rivals. Many of the proposals bandied about in today’s reports—whether breaking up companies or undercutting Section 230—would cause real harm to consumers, America’s technology leadership and the U.S. economy—all for no clear gain,” Google added.
There is way more going on here than just the House Judiciary Committee's 449-page report and close to 1.3 million documents, and there isn’t anything we can do or say in this brief space to encapsulate the magnitude of the allegations or potential repercussions of implementing any of the recommendations. There are economic, political, privacy and other implications that we can’t begin to comprehend or even summarize here. This report has the potential to change so many aspects of our lives, but it will take a lot of work and legal and political manipulation before we can expect any of the recommendations to come to fruition. Suffice it to say, we’ll continue to follow this story, and let you know as substantive updates become available.