Big Tech responds to report claiming it enjoys ‘monopoly power’ in the US

7 Oct 2020150 Views

Image: © Daniel/Stock.adobe.com

A 16-month investigation by members of the US government has found that Apple, Amazon, Google and Facebook enjoy ‘monopoly power’ in the tech ecosystem.

Four of the biggest tech companies on the planet are facing increasing pressure regarding regulation in the US following the publication of the ‘Investigation of Competition in Digital Markets’ report. The findings are the culmination of a 16-month investigation by the US Congress into the practices of Apple, Google, Facebook and Amazon to determine any antitrust violations and evidence of having unfair control of the tech market.

The four Big Tech CEOs – Facebook’s Mark Zuckerberg, Apple’s Tim Cook, Google’s Sundar Pichai and Amazon’s Jeff Bezos – defended their behaviour and acquisitions in an antirust hearing in July.

But the authors of the report said investigations had “found evidence of monopolisation and monopoly power”. In one particular example, the report said Facebook’s various products – such as WhatsApp and Instagram – compete with each other rather than “actual competitors”.

They also claimed that Facebook enjoys monopoly power in the areas of online advertising and social networking by engaging in “killer acquisitions” where a company buys out a competitor to kill off the latter’s product.

In response to the report, Facebook claimed that the company is an “American success story”.

“A strongly competitive landscape existed at the time of [the Instagram and WhatsApp acquisitions] and exists today. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time.”

Apple

Apple was accused of having an unfair advantage in the distribution of apps on its iOS operating system, with the report saying the company uses its control over the App Store to “exploit” app developers by charging them “supra-competitive prices” within the store.

Epic Games, the publisher of the video game Fortnite, recently launched a legal challenge against Apple over its policy of taking a 30pc cut of all in-app transactions. This came after Epic created its own in-app payments system to circumvent the App Store policy, and Apple responded by removing Fortnite from the App Store.

Responding to the allegations in the report, Apple said the App Store provided $138bn in sales in the US, of which 85pc went to third-party developers.

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“Apple’s commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces,” it said. “Competition drives innovation, and innovation has always defined us at Apple.”

Amazon

The report also claimed that Amazon has a monopoly power over many of its suppliers and that much of its dominance in the e-commerce space has come from acquisitions of competitors and adjacent businesses.

The authors wrote that, based on seeing internal documents, Amazon publicly describes third-party sellers as ‘partners’ but privately refers to them as ‘internal competitors’. This, they said, results in a dual role of being a marketplace operator and competitor, which is “an inherent conflict of interest”.

Amazon responded to say that it welcomes scrutiny and expects that “all large organisations attract the attention of regulators”.

“But large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behaviour is simply wrong,” it said. “And yet, despite overwhelming evidence to the contrary, those fallacies are at the core of this regulatory spit-balling on antitrust.”

Google

Finally, with regard to Google, the report’s authors said they had found sufficient evidence that the company’s dominance over the search market and search advertising markets resulted in an “ecosystem of interlocking monopolies”.

Because of Google’s scale, the report said, the company has “near-perfect market intelligence” by tracking data in real time across markets. Furthermore, Google was accused of setting up programmes to track competitors, such as Android Lockbox.

Google also has “blurred the distinction between paid ads and organic results” and established “anticompetitive contracts” by making smartphone manufacturers install its apps by default on their phones, the report said.

In response, Google said its free products such as Maps and Gmail “help millions of Americans”.

“We compete fairly in a fast-moving and highly competitive industry,” it said. “We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services.”

Colm Gorey is a senior journalist with Siliconrepublic.com

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