After 16 months of investigation, the U.S. House of Representatives Judiciary Committee’s antitrust investigation into Facebook, Amazon, Apple and Google has seen substantial progress. On October 6, local time, the U.S. House of Representatives Committee on the Judiciary released a 449-page investigation report, found that these four companies use their monopoly position to suppress competitors, suppress industry innovation, and recommended that the U.S. Congress on the antitrust law to carry out a comprehensive reform to adapt to the changes in the Internet era.
The report notes that these once weak and unpopular startups have become the kind of monopolies we saw in the days of the oil barons and railroad barons. By controlling market access, these companies choose who the winners or losers will be throughout the digital economy. They have enormous power to enforce tyranny and make huge profits from it.
The report also lists recommended legislative measures for Congress to take, including prohibiting tech companies from owning different business categories, which could lead to some companies spinning off existing businesses.
U.S. House Judiciary Committee member Valley Demings said, “Through this investigation, we have uncovered an alarming business model. This model suppresses competitors and stifles innovation in other businesses. We will take the necessary steps to hold violators accountable for their actions.”
Facebook.
Facebook enjoys a monopoly in the online advertising and social networking market, the report said.
An attorney for the Judiciary Committee’s antitrust subcommittee pointed to the suspicion that Facebook’s $715 million acquisition of Instagram in 2012 was stifling potential competitors.
A former senior employee of Instagram revealed that at the time, Instagram chief executive Kevin Systrom wanted Instagram to grow naturally and develop its business extensively. But Zuckerberg made it clear that it “couldn’t compete with us”.
Currently, Instagram has more than 1 billion users. According to Bloomberg, 2019 Instagram for Facebook to bring about $ 20 billion in advertising revenue, accounting for a quarter of Facebook’s total annual revenue that year. Instagram has become the future focus of Facebook’s business development direction.
Amazon.
The report argues that Amazon, the largest online retailer in the United States, uses its market dominance to hinder the growth of potential competitors.
According to the report, Amazon collects and analyzes sales and product data to identify hot sellers and replicate them in order to launch its own competing products.
Amazon has a conflict of interest as a seller on an online platform and as an operator managing third-party sellers, acting as both a player and a referee. Such a conflict of interest drives Amazon to use its access to data and information to engage in unfair competitive practices that prevent small businesses from taking advantage of favorable ways to attract customers, resulting in millions of independent retailers being forced out of online stores.
The report also notes that Amazon has dominated the e-commerce industry by acquiring sites such as Diapers, a mother-and-baby e-commerce site, and Zappos, an online shoe store, to expand its user data and increase its competitive advantage.
Apple.
The report states that Apple has a major monopoly on the iOS device app installation market.
Apple uses its monopoly position to make extraordinary profits from the app store and its services business. As per the Apple App Store’s policy, users cannot pay app developers directly for using apps or digital services, but only to Apple, which takes a 30 percent commission from them.
Apple also uses its control over the App Store to punish competitors, including by lowering their rankings in search results, limiting how they communicate with customers, and removing them directly from the store, according to the report. This business model hurts competitors, reduces the quality and innovation of app development, and reduces consumer choice even more.
Google.
According to the report, Google’s monopoly power is primarily found in the online search and search advertising markets.
Google exploits information asymmetries and secretly tweaks its search algorithm so that the line between paid ad terms and naturally searched out terms is not clear. Often Google’s own vertical content or ads are placed more prominently.
When users use their browsers to find information or products, search results will be directed preferentially to Google’s own products, including business services, travel bookings, and regional business listings. In addition to the aforementioned issues, Google’s signing with smartphone manufacturers such as Apple to use Google as the default search engine is also considered to be a monopoly in the online search space.
The report concludes that these companies have been using their dominant market power to consolidate their monopoly positions in their respective fields, undermining orderly competition in their industries. In addition, their control over data and information in their fields is threatening the development of the digital economy.
After the release of the antitrust investigation report, the four technology giants have objected to the investigation report. They challenged the conclusions reached in the antitrust investigation report and argued that the Company did not engage in monopolistic and anti-competitive behavior.
At present, the antitrust investigation report of the U.S. Congress is not the final conclusion, but the final ruling by the court. But in the meantime, the sound of “splitting the technology giant” has been heard in the U.S. government and legislative bodies.
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