US tech giants accused of 'monopoly power'

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Tech CEOsImage source, Getty Images/EPA/Reuters
Image caption,
Amazon's Jeff Bezos, Apple's Tim Cook, Facebook's Mark Zuckerberg and Google's Sundar Pichai defended their firms

A report backed by Democratic lawmakers has urged changes that could lead to the break-up of some of America's biggest tech companies.

The recommendation follows a 16-month congressional investigation into Google, Amazon, Facebook and Apple.

"These firms have too much power, and that power must be reined in," Democratic lawmakers working on the probe wrote.

But Republicans involved in the effort did not agree with the recommendations.

In a statement, one Republican congressman Jim Jordan dismissed the report as "partisan" and said it advanced "radical proposals that would refashion antitrust law in the vision of the far left."

Others have said they support many of the report's conclusions about the firms' anti-competitive tactics but that remedies proposed by Democrats go too far.

"Antitrust enforcement in Big Tech markets is not a partisan issue," said Republican Ken Buck. "But an ounce of prevention is worth a pound of cure—I would rather see targeted antitrust enforcement over onerous and burdensome regulation that kills industry innovation."

Monopoly power?

US tech companies have faced increased scrutiny in Washington over their size and power in recent years. The investigation by the House Judiciary Committee is just one of multiple probes firms such as Facebook and Apple are facing.

The 449-page report, penned by committee staff, accused the companies of charging high fees, forcing smaller customers into unfavourable contracts and of using "killer acquisitions" to hobble rivals.

"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," it said.

It said the findings should prompt politicians to consider a series of changes.

Those included stronger enforcement of existing competition law, as well as changes to limit the areas in which a firm may do business or prevent companies from operating as players in areas where they are the dominant provider of infrastructure - as Amazon does, for example, when it acts as both a seller and marketplace for other merchants.

This report is blockbuster.

It carries heft too - it's stacked with evidence collected over 16 months.

But the key thing here is these are Democrat suggestions.

This is not a bi-partisan set of recommendations.

In fact, from what we've already heard from Republicans many of the recommendations are "non-starters" for conservatives.

It's also been reported that some Republicans were angered by omissions in the report.

Republicans wanted sections on alleged anti-conservative bias - which was apparently blocked by Democrats.

There are, however, Republicans who want to find common ground on antitrust.

For example, Republican Ken Buck has indicated he'd support some of the recommendations. For example, shifting the anti-competition burden of proof for acquisitions - making it more difficult to buy up the competition.

In truth though, we're unlikely to see any concrete legislative proposals until after the election.

But what's now crystal clear is both Biden and Trump - in their own different ways - offer existential challenges to the power of Big Tech.

'Fringe notions'

In testimony before the committee in July, the bosses of tech firms defended their actions.

On Tuesday, Amazon hit back at what it described as "fringe notions of anti-trust" law, as competition law is known in the US.

"The fact that third parties having the opportunity to sell right alongside a retailer's products is the very competition that most benefits consumers and has made the marketplace model so successful for third-party sellers", the company said in a blog post.

Divisions in Washington between Republicans and Democrats make the prospects of significant action against the firms unlikely, tech analyst Dan Ives of Wedbush Securities said.

"The lack of consensus and divergence among both sides of the aisle on the antitrust issues remains a major issue to move things forward," he said.

While that could change if Democrats gain more power in the upcoming US election, he said, "Despite the report/content and framework for recommendations around Big Tech players (e.g. M&A, business practices) without core law changes we believe this antitrust momentum hits a brick wall."

In response, Facebook said in a statement: "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. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time."

What did the report say?

  • Facebook had "monopoly power" in the market for social networking, which it maintained by using its data advantage to "acquire, copy or kill" nascent threats.
  • Google monopolised online search and advertising using "a series of anti-competitive tactics", including privileging its own content ahead of other websites.
  • Amazon possessed "significant and durable market power" in online shopping, which it furthered in part by "anticompetitive conduct in its treatment of third-party sellers" which it referred to as "internal competitors" behind closed doors.
  • Apple exerted monopoly power via its App store,which it leveraged "to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings".