ASHLEY PARSONS—In June of 2019, the House Judiciary Committee commenced its investigation into the four tech giants: Amazon, Apple, Facebook, and Google. This is the first time since the late 1990s, when Microsoft stood trial for antitrust charges, that the Committee has carefully examined the monopoly power of big tech. After 16 months of investigations into these companies, which have a combined market value of more than $5 trillion, the Committee released a 451-page report detailing the dominance these companies have over their respective markets. The Committee’s antitrust panel found that these four corporations “have exploited their power in order to become even more dominant.” While maintaining a monopoly is not necessarily illegal under the current law, preserving monopoly power through corporate wrongdoing to undermine competition can be.
Specifically, the House report found that these four companies maintained their monopoly position by utilizing data they acquired on consumers and other businesses in order to push out rivals and advantage themselves in new product markets, all while curtailing innovation from other firms. With respect to Facebook, the report indicated that Facebook has been able to maintain its monopoly position in the social networking market by using market intelligence data “to identify nascent competitive threats and then acquire, copy, or kill these firms.” The report claims that this anti-competitive conduct has harmed users in two ways. First, the report alleges that the lack of competition has enabled Facebook to provide less privacy protections for its users. Second, the report claims that anti-competitive practices have deteriorated Facebook’s quality, making it more susceptible to misinformation campaigns.
Additionally, the report found that Google has been able to protect its monopoly position in the general online search and search advertising markets due to high entry barriers. One of the anticompetitive tactics used by Google has been likened to that of a gatekeeper: “extorting users for access to its critical distribution channel, even as its search page shows users less relevant results.” Google Chrome, Google Maps, and Google Cloud are all ways in which Google has been able to extract user data and maintain its dominant position. By combining these products, “Google increasingly functions as an ecosystem of interlocking monopolies.”
The report further alleged that Amazon has maintained its market power in the U.S. online retail market by treating third-party sellers on its platform as “internal competitors”— a phrase, the report notes, that Amazon uses to refer to third-party sellers behind closed doors. Furthermore, the report alleges that Amazon has a strong incentive to exploit the conflict of interest inherent in selling its own competing products on the same platform as third-party sellers: that is, using “its access to competing sellers’ data and information” to drive consumers to Amazon’s own products.
According to the report, Apple has exercised monopoly power in the mobile app store market as a result of its dominance in the mobile operating system market. Apple’s control over iOS and the app store enables it “to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings.” The lack of competition Apple faces in software distribution to iOS devices has ultimately resulted in increased prices and reduced choices for consumers. While these are only a small number of examples from the report, they are illustrative of how these companies have “significant and durable market power” in their individual markets, and how each of their positions has adversely affected consumers.
Following the release of the report, the companies denied any wrongdoing. Carl Szabo, vice president at NetChoice, has indicated that these companies, by analyzing data, are fostering competition, and not hindering it. But in the digital age, where should the antitrust law draw the line on market research and conduct? Data utilization is fairly new in the antitrust world and does not fit neatly into the way in which judges have traditionally viewed antitrust cases—“through the lenses of price, choice, and corporate collusion”—which makes the arguments laid out in the report even more challenging. However, in addition to its findings, the report presents proposals for new laws that would make it illegal for tech companies to “own the platforms they compete on, or to discriminate against rivals that rely on their services.” Notably, the report suggests that Congress consider legislation that draws on “structural separation and line of business restrictions.”
It is unclear how far some of the report’s findings and suggestions will go given that the House Judiciary Committee’s antirust panel’s Republican members have indicated some of the ideas are “non-starters.” Rep. Ken Buck, a top Republican on the subcommittee, indicated a non-starter would be forcing companies to separate their lines of business. The differences in antitrust enforcement ideologies between Republicans and Democrats is what makes the upcoming election so pivotal for the future of antitrust. While it is uncertain just how much the antitrust laws and its enforcement are going to change, the implications for big tech and the power they currently hold could be huge. If new antitrust enforcement reigns in big tech, consumers could be the beneficiary. The way each of the companies are currently situated—without facing any competition in their respective markets—enables them to provide products of inferior quality. Even more, this lack of competition leaves consumers with no choice but to use the product since there is no reasonable substitute they may turn to. These big tech companies, on the other hand, may try to argue that their positions in the marketplace is how they are able to provide consumers with superior products and breaking them up may actually harm innovation, thus resulting in inferior products. Regardless of these two differing views, one thing remains the same: a restraint on consumers’ freedom of choice cuts across the core values of American democracy.
