House recommends anti-trust action against tech giants

Cecilia Kang and David McCabe, House Lawmakers Condemn Big Tech’s ‘Monopoly Power’ and Urge Their Breakups, NYTimes, Oct 6, 2020:

“Our investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation and safeguards our democracy,” Jerrold Nadler, Democrat of New York and chairman of the judiciary committee, and David Cicilline, Democrat of Rhode Island and chairman of the antitrust subcommittee, said in a joint statement.

The House report is the most significant government effort to check the world’s largest tech companies since the government sued Microsoft for antitrust violations in the 1990s. It offers lawmakers a deeply researched road map for turning criticism of Silicon Valley’s influence into concrete actions.

The report is also expected to kick off other actions against the tech giants. The Justice Department has been working to file an antitrust complaint against Google, followed by separate suits against the search giant from state attorneys general. Antitrust investigations of Amazon, Apple and Facebook are also underway at the Justice Department, the Federal Trade Commission and four dozen state attorneys general.

The two parties have their disagreements:

Democrats proposed legal changes that could substantially restructure Facebook, Google, Amazon and Apple. They said Congress should consider making it illegal for the tech giants to provide preferential treatment to their own products, as Google does in search results. They suggested breaking up the companies in “structural separations” and forbidding them from operating in similar businesses to those they were already dominant in. They also recommended adding to antitrust laws, including clearer rules that could block the tech giants’ attempts to buy other companies.

Some Republicans agreed with proposals to bolster funding for antitrust enforcement agencies, but balked at calls for Congress to intervene in restructuring the companies and their business models. Others have refused to endorse any of the Democrats’ findings.

Four gate-keeper giants:

The four companies, which have a combined market value of more than $5 trillion, largely operate in different digital businesses. But the report revealed monopoly abuses across them.

Amazon, Apple, Facebook and Google had roles as “gatekeepers” in common and controlled prices and the distribution of goods and services, the report said. That made third-party businesses — like app developers on Apple’s App Store and sellers on Amazon’s marketplace — beholden to the companies’ demands, the report said. The word monopoly appeared in the report nearly 120 times.

Facebook:

Facebook’s monopoly power over social networking was also “firmly entrenched,” the report said. The company had taken steps, like acquiring new competitors or copying their features, to maintain that power, the lawmakers found. In particular, they said, after Facebook acquired the photo-sharing site Instagram in 2012, the social network’s executives had gone to great lengths to stop the service from overtaking its main product.

“It was collusion, but within an internal monopoly,” a former high-level Instagram employee told the committee during its investigation. “If you own two social media utilities, they should not be allowed to shore each other up. It’s unclear to me why this should not be illegal.”