House Democrats say tech companies have monopoly that needs broken up

Congress (Image credit: Louis Velazquez)


Source: Louis Velazquez (Image credit: Source: Louis Velazquez)

What you need to know

  • A Democratic congressional staff report is making the rounds.
  • The 450-page report details the House Antitrust Committee's findings on its investigation.
  • The report recommends sweeping changes that could impact Apple, Google, Facebook, and Amazon.

Update, October 6, 2020 (8:25 pm ET): Apple has responded, saying that it "vehemently disagrees" with the report and that developers are the "primary beneficiaries" of the App Store.

Update, October 7, 2020 (12:00 pm ET): Google has released a statement on the report.

Reported by CNBC, a Democratic congressional staff report, after its 16-month antitrust investigation which included the testimonies of some of the biggest CEOs in the technology industry, is recommending major changes to antitrust laws that could have major impacts to companies like Apple, Amazon, Facebook, and Google.

According to the report, the staff found that each of the four businesses currently has "monopoly power" that needs to be brought under control by Congress and other government agencies.

CNBC has outlined the major recommendations contained in the 450-page report, which include the potential breakup of some of the company's businesses. For example, Google could have to break YouTube out into its own company.

  • Imposing structural separations and prohibiting dominant platforms from entering adjacent lines of business. This means that the Democratic staff recommends solutions including forcing tech companies to be broken up or imposing business structures that make different lines of business functionally separate from the parent company. For example, this could include a scenario like forcing Google to divest and separate from YouTube, or for Facebook to do the same with Instagram and WhatsApp. Subcommittee Chairman David Cicilline, D-R.I. has previously referred to this method as a type of "Glass-Steagall" law for the internet, referring to the 1930s era law that separated commercial from investment banking.
  • Instructing antitrust agencies to presume mergers by dominant platforms to be anticompetitive, shifting the burden onto the merging parties to prove their deal would not harm competition, rather than making enforcers prove it would. Preventing dominant platforms from preferencing their own services, instead making them offer "equal terms for equal products and services."
  • Requiring dominant firms to make their services compatible with competitors and allow users to transfer their data.
  • Overriding "problematic precedents" in antitrust case law.
  • Requiring the Federal Trade Commission to regularly collect data on concentration.
  • Increase budgets for the FTC and Department of Justice Antitrust Division.
  • Strengthen private enforcement by eliminating forced arbitration clauses and limits on class action lawsuits.

The committee has specifically pointed out Apple's control over the distribution of apps on iOS, a point that is sure to cause eyes to gaze over at its current legal battle with Epic Games, which seems to be heading to the court in 2021. The report also points out Amazon's control over its marketplace, Facebook's control over its advertising, and Google's dominance in online search.

The Democratic report found that the four tech companies enjoy monopoly power in the following areas:

  • Apple: distribution of software apps on iOS devices.
  • Amazon: most third-party sellers and many suppliers.
  • Facebook: online advertising and social networking.
  • Google: online search.

Apple, Google, and Facebook have not yet responded to request for comment on the report. A spokesperson for Amazon has responded to the news, saying that the findings are "flawed thinking."

"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. And yet, despite overwhelming evidence to the contrary, those fallacies are at the core of this regulatory spit-balling on antitrust. This 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."

You can read the full report here.

Update, October 6, 2020 (8:25 pm ET) —Apple has responded, saying that it "vehemently disagrees" with the report and that developers are the "primary beneficiaries" of the App Store.

"We have always said that scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions reached in this staff report with respect to Apple. Our company does not have a dominant market share in any category where we do business. From its beginnings 12 years ago with just 500 apps, we've built the App Store to be a safe and trusted place for users to discover and download apps and a supportive way for developers to create and sell apps globally. Hosting close to two million apps today, the App Store has delivered on that promise and met the highest standards for privacy, security and quality. The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem. Last year in the United States alone, the App Store facilitated $138 billion in commerce with over 85% of that amount accruing solely to third-party developers. Apple's commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces. Competition drives innovation, and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so."

Update, October 7, 2020 (12:00 pm ET) —Google has released a statement on the report.

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.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.We support Congress focusing on areas where clearer laws would help consumers, a few of which are mentioned in today's reports: Google has long championed the importance of data portability and open mobile platforms; we are arguing a case before the Supreme Court tomorrow for the important principle of software interoperability; and we have urged Congress to pass comprehensive federal privacy legislation. We look forward to engaging with Congress on these and other issues moving forward.

Joe Wituschek
  • Of COURSE the Democrats say that. And liberal Republicans. They despise success.
  • Yep, success achieved is when you can squeeze smaller companies out of your space. Hasn't the board game thought anyone anything? 😛
  • Open your market up to allow Chinese tech companies in 😂😂😂
    Protectionism is only okay if Merica does it!
  • By controlling the platform these companies have done everything possible to put up barriers to entry for other competitors. My guess is that these companies will be forced directly or indirectly to adopt more anti-competitive practices or help support competition on their platforms.
  • I don't disagree there should some better regulation on these companies but, this greatly oversteps the needed protections. So much so that in the end instead of getting something they will get nothing.
  • Many Republicans have been saying the same.
  • Interesting how Microsoft avoids being mentioned these days...
  • These four have made themselves way more evil than them.
  • My guess is Microsoft has learned how to stay out of the drama pretty well after the 90s and early 2000s
  • Facts!!! Since that already happened to Microsoft. (I think back then they splitted up in MS Windows & MS Office or something like that)
  • It's okay Apple, just add another layer of bricks to your walled garden. There is a coalition of companies against them and public and developer outcry has never been higher. Plug up your ears with your money, you will always be righteous to your fans.
  • That's exactly what they abuse. It really blows my mind that people from "privileged youtuber tech reviewer" to "earning $50k to $100k a year editor of tech website" they defend apple as if they are some kind of personal brand ambassador for them. 😂 Apple will keep doing **** because their non-employee minions will defend their business practices to death no matter what.
  • I am a Microsoft fan boy.
    But all corporations should be turned into worker coops.
    And a lot of universal basic services should be turned into public utilities.
    Such as housing food medicine Transportation electricity internet Etc
  • Well, a lot of tech companies include shares as part of employee compensation; the number of "Microsoft Millionaires" in Seattle and their counterparts in SiliValley, Austin, Boston, and elsewhere are proof that the model works.
    And nothing stops employees from one company moving on to start tbeir own.
    That is very common in software in particular.
    Or look up the Fairchild Heritage in SiliValley.
    A lot of today's giants started out as employee coops in garages. It's no myth, it really happened.a
    INTEL, HP, MICROSOFT, AMAZON, dozens more.
    They just didn't stay small.
    Excellence leads to growth.
  • I'd say gaming is getting to that point as well.
  • Oh, gaming is evolving.
    The gaming world of 2025 will be nothing like 2015 which was already different from 2005.
    Console gaming in particular will be strongly impacted but PC gaming is where tge biggest changes are coming.
    Look at streaming video and the emerging content silos to see where things are headed.
    Thefe's a big disruption alrdady underway tbat the fan media is completely missing.
  • oh yes, finally !!!
  • They're not totally wrong.
    In some areas they are right.
    But Amazon is correct that size by itself is not anticompetitive and large market shares don't require anticompetitive behavior to emerge; they can be, and often are, the product of unchallenged excellence.
    Some sectors simply aren't profitable at smaller sizes as they need network effects or economies of scale to be viable.
    Instead of focusing on size alone they ought to be looking at corporate behavior and how they treat competition; do they ignore it, challenge it, or try to kill it. It makes a difference.
    WalMart vs Amazon is a good example. For most of its life, WalMart ignored Amazon, happy to love and let live, but once Amazon got big enough, Walmart didn't cry "protect us!" but rather took steps to challenge Amazon. They may have ignored them too long but their response is showing their attitude. The politicians need a crash course in 21st century business economics before they move forward.
  • Totally agree to all points. Size only can't be attributed to monopoly abuse. Apple does it with below 50% mkt share. 😂 It depends on the structure of the business model. Businesses like Telecom Business, cloud computing, airlines, taxi aggregation, brick and mortar stores, etc are high capital business. Even entry requires a lot of money from the start. Small companies won't even be able to Raise that much money not to mention they require experience to make their products better and better. There is one more problem too. Chicken and egg.
    Google, amazon, apple, facebook, MS has so much analytical data of users and past business experience whether from litigation standpoint or consumer behavior that any small company will almost always fail to make similarly good products. If the product is inferior then people don't use it small companies get shut down. Cycle repeats. Outliers of this cycle become the big boys after a decade of business.
  • This really isn't about SIZE, it's about anti-competitive actions taken by the big 4.
    A new startup comes up with something really cool, and one of the Big 4 enters into an agreement to "look at" the tech, then walks away, and magically announces something IDENTICAL to the small company's tech, and takes all the market from them with their advertising muscle and by favoring their own tech in all search and API functions. The small company does not have the $$$ to litigate them, and folds.
    It happens again, and again, and again, sometimes with the big 4 (looking at you Google) buying the company, and deep-sixing the product 3 months later, then announcing their OWN (usually poorer) VERSION
    Facebook does this too. That is anti-competitive behavior.
    Microsoft used to be known for "Embrace, Extend, Extinguish" but lately have been very open to other tech (as long as they can host it in Azure) and have actually been moving towards "standards" while the others move away from it.
  • Was it outdated when Google carbon copied Apple's in-app purchase model last week? Nice try, "Don't be evil."