House Democrats say tech companies have monopoly that needs broken up
House Democrats want major changes that could impact the big four tech companies.
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."
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.
Update, October 7, 2020 (12:00 pm ET) —Google has released a statement on the report.
Windows Central Newsletter
Get the best of Windows Central in your inbox, every day!
Protectionism is only okay if Merica does it!
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
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.
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.
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.
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.
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.