Members of Congress investigating the activity of Amazon, Apple, Facebook, and Google say antitrust law reform is needed to “ensure that our economy remains vibrant and open in the digital age” and safeguard democracy. The findings comes from a document released today (PDF), the culmination of a 16-month long investigation carried out by the antitrust subcommittee, a part of the House Judiciary committee.
The report concludes that although each of the companies maintain different kinds of monopolies, each effectively acts as a gatekeeper in digital markets today with the power to pick winners and dispose of competitors. The document details monopolization and anticompetitive behavior by each of the companies.
“To put it simply, companies that once were 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 report reads. “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.”
Antitrust law in the U.S. began to rein in the power of companies dominant in industries like steel and the railroads starting in the late 1800s, however regulatory officials have been far less active in recent decades regulating companies to ensure open, competitive markets. The report titled “Investigation of Competition in Digital Markets” concludes that each of the companies maintain different kinds of monopolies: Facebook in social media and advertising, Google in search and advertising, Amazon in online retail, and Apple through the App Store.
The report recommends Congress and the antitrust subcommittee pass legislation for stronger enforcement of existing antitrust law, and data portability and interoperability so users can transfer data to another platform in order to promote competition. Also among recommendations:
– Strengthen portions of the Sherman Act which addresses competition and monopoly by adding a prohibition of abuse of dominance or monopoly leveraging.
– Bring back stronger oversight of antitrust enforcement by Congress; multiple incidents were found where regulators failed to stop monopolists from consolidating market share and eliminating competitors
– Put rules in place to prevent favoritism, discrimination, or placing for example an Amazon product ahead of a third-party seller using Amazon’s platform
– Increase scrutiny of merger and acquisition activity to ensure monopolies don’t consume competitors. On the topic of the 2012 acquisition of Instagram by Facebook, an unidentified former senior Instagram employee who testified to the committee last week said “It was collusion, but within an internal monopoly. If you own two social media utilities, they should not be allowed to shore each other up. It’s unclear to me why this should not be illegal.”
– Shift the burden of proving a merger isn’t anticompetitive from regulators to Big Tech companies with merger presumptions. As the report reads: “Under this change, any acquisition by a dominant platform would be presumed anticompetitive unless the merging parties could show that the transaction was necessary for serving the public interest and that similar benefits could not be achieved through internal growth and expansion.”
The report also concludes that every member of the committee led by Democratic members of Congress may not agree with all investigations results or recommendations. Prior to the report’s release, multiple news outlets reported that the report was delayed to include additional Republican feedback, and that portions of the draft document were untenable to some committee members.
Committee members also assert that though companies like Facebook offer services with no monetary cost, people pay a cost due to “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.”
Antitrust is important to small business prosperity, startup innovation, competitive business practices, and democracy. Economists fear the dominance of large companies will grow even larger in the U.S. as a large number of small businesses are wiped out by a recession sparked by COVID-19. By contrast, since July Big Tech companies reported record profits in quarterly earnings. Currently, 8 of the 10 largest companies in the world are in technology.
This is the first significant antitrust investigation by a congressional committee in decades. Antitrust hearings held in the late 1990s preceded a US v. Microsoft lawsuit and settlement, which some say enabled the growth of companies like Amazon, Facebook, and Google. Legislation stemming from the report may not be proposed until a new term begins in 2021, but the document is meant to lay out a menu of options for Congress to regulate Big Tech and antitrust law reform for the coming months and years.
The investigatory process leading up to the release of the report today consisted of seven hearings and more than a million document. The process reached a high point 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 House Judiciary committee.
Antitrust subcommittee chair David Cicilline (D-RI) has referred to the concentrated power of tech giants not just as a threat to the economy but also to democracy. Speaking with antitrust experts at Yale Law School Sunday, Cicilline said he believes some basic recommendations in the report are attainable like enacting separations of power that prevent the owner of a platform from favoring their own products over others, and giving federal agencies that enforce antitrust law — like the Federal Trade Commission (FTC) — resources for more robust enforcement. He also said that any meaningful legislation from Congress will require the help of the American people due to the power and resources available to Amazon, Apple, Facebook, and Google.
In the realm of other actions being taken in Washington DC to limit powerful businesses, the Senate Commerce committee held hearings related to antitrust last month, and recently subpoenaed CEOs of Facebook, Google, and Twitter to testify in the coming weeks about potential Section 230 reforms. President Trump called for Section 230 reforms earlier today after Twitter labeled his tweet as misleading and potentially harmful information about COVID-19. A Cornell University analysis last week have named Trump the biggest source of COVID-19 misinformation in the U.S. today.
The U.S. Department of Justice is expected to launch a case against Google later this week.
Outside of antitrust activity in the U.S., Big Tech companies continue to face antitrust lawsuits and backlash in Australia and the European Union. According to multiple reports last week, a draft of the Digital Services Act being considered by the European Parliament will require dominant tech companies to share some data with rivals and place limits on how companies can use consumer data. Chinese officials are also considering antitrust action against Google due to Android’s dominance of smartphone markets, a person familiar with the matter told Reuters.
More to come.
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