Legislative Changes on Tech Companies

As Proposed By House Dems

After a sixteen-month investigation, the Democrat-led House panel came to a conclusion. Big tech companies Apple, Amazon, Facebook, and Google enjoy monopoly power. As such, the panel recommends legislative changes to these tech companies. This includes amending antitrust laws and enforcement. Some ideas include spinning off units and making it difficult to buy companies.

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The approximately 450-page report listed findings made by the mostly-Democratic panel. They based the report on hearings, interviews, and over a million documents. Read the full report here.

Apple: Monopoly power over iPhone software distribution

The House panel complimented Apple’s mobile ecosystem. They noted that it produced significant benefits to consumers and app developers. However, they said that Apple has “monopoly power” over software distribution on iPhones. This power lets them make huge profits from the App Store and pull out rents from developers.

Apple denied the claims and said that the company does not have a dominant market share in any category where they do business. 

CEO Tim Cook hoped that the company could “unpeel” from antitrust investigations.  He said that Apple doesn’t have a dominant market share in smartphones. They only have a 45% share in the United States.

Amazon: Dominant in Online Markets and Cloud Computing

The same House panel report said that Amazon is too big in the online marketplace. For instance, its online retail dominance gives it monopoly power over third-party sellers and estimates that Amazon’s stake in the U.S. online retail market is more than 50%. 

Democrats also noted that Amazon dominates the cloud computing market. Its share creates a conflict of interest where customers have to work with competitors. Amazon also imposed barriers to entry for competitors to its Alexa products. As such, Amazon should separate its e-commerce site from the third-party marketplace.

Facebook: A Social Network Bully

The House report concluded that “Facebook’s monopoly power is firmly entrenched.” They find that the company is unlikely to feel pressure from competitors.” Facebook has strong network effects, high switching costs, and data advantage. All this points to a monopoly.

Facebook removes rivals by targeting them and then acquiring, copying, or killing them. When Facebook bought Instagram, CEO Mark Zuckerberg said they’re only buying time. “One way of looking at this is that what we’re really buying is time,” Zuckerberg wrote in an email. “Even if some new competitors spring up, buying Instagram now … will give us a year or more to integrate their dynamics before anyone can get close to their scale again.”

In a statement, Facebook said that “Facebook is an American success story.” It added: “We compete with a wide variety of services with 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 strongly competitive landscape existed at the time of both acquisitions and exists today.” The note added that regulators reviewed each deal and did not see any reason “to stop them at the time.”

Google: Favors Its Own Services

The report claimed that Google created a monopoly that favored its own services.  Google dominated in markets from advertising to maps by choosing themselves. Google is about to buy Fitbit and grow its cloud business. Some lawmakers foresee some “potential” unfair behavior in the future.

The report said: “The overwhelmingly dominant provider of general online search is Google, which captures around 81% of all general search queries in the U.S. on desktop and 94% on mobile. Google abused its gatekeeper power over online search to coerce vertical websites to surrender valuable data and to leverage its search dominance into adjacent markets,” the report states. “Google used its search engine dominance and control over the Android operating system to grow its share of the web browser market and favor its other lines of business,” it added.

What happens next

Upon the conclusion of the report, Congress outlined some solutions. As expected, the companies denied any monopolistic behavior. Each has issued its own statement protesting its label as monopolies.

Watch this as CNBC TV reports on the House antitrust subcommittee recommendations for Big Tech monopolies:

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Do you agree that the big four tech companies are monopolies? Or are they just living the American dream of being the best they can be? Let us know what you think by sharing your comments below.