Big Tech Companies Under Fire in Congress

This report claims that Google has a monopoly in both "search" and "search advertising." Google uses “anti-competitive tactics” such as showing information from third-party providers, such as Yelp, without their permission in order to better the quality of their own search engine. Google also used data from Gmail and their search engine in finding out which web browsers were the most popular, which gave Google an advantage when it launched Chrome, now the world’s most successful browser. Chrome gives back user data to Google, continuing this cycle and giving Google even more power. 

Amazon, on the other hand, was found to promote their own products instead of other sellers' on their online commerce platform. About 2.3 million third-party sellers conduct business through Amazon globally and 37% of them rely on the site as their sole source of income, leaving Amazon in control of their income stream. “With no restrictions of tech companies to own and compete on their own platforms, which are the only options for so many small businesses, it takes away any real sense of competition,” said Representative Pramila Jayapal, a Democrat of Washington.

Tech giant, Apple, was proven to have a monopoly over its App Store, which forces developers to abide by Apple’s requirements in order to make their apps available to the public. On top of this, Apple takes 30% of many apps’ sales which leads to higher prices for consumers. Additionally, Apple collects user data on which apps are doing the best in the market. Using this proprietary information, they launch their own apps that are bound to succeed. 

Finally, Facebook was said to exercise monopoly power over social networks, facing heat for buying their competitors, or copying their features to keep their power. The report especially looked at Facebook’s purchase of Instagram in 2012. “It was collusion, but within an internal monopoly,” a former high-level Instagram employee told the committee. “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.” However, Facebook has bought more than Instagram. For instance, as WhatsApp gained popularity, Facebook bought the company for 19 billion dollars. In addition to buying smaller startups, Facebook seemingly competes within itself rather than with outside competitors--for example: Facebook versus Instagram, or Messenger versus WhatsApp. 

To solve these issues, lawmakers have proposed to ban practices that allow tech companies to compete on their own platforms or discriminate against other products in favor of their own. They also call for breaking up the tech giants and creating more hurdles for the companies to overcome when looking to buy smaller start-ups. Lawmakers are additionally looking to reform antitrust laws already in place.

Google defends its practices saying its "free products like Search, Maps and Gmail help millions of Americans. . . and they've invested billions of dollars in research and development to build and improve them."  They claim to "compete fairly in a fast-moving and highly competitive industry.” 

Amazon counters the House's report with the idea that millions of businesses would struggle without its platform. “The flawed thinking would have the primary effect of forcing millions of independent retailers out of online stores, thereby depriving these small businesses of one of the fastest and most profitable ways available to reach customers,” Amazon wrote in a blog post. “Far from enhancing competition, these uninformed notions would instead reduce it.” Amazon also argues that "the fact that third parties have the opportunity to sell right alongside a major retailer's products is the very competition that most benefits consumers and has made the marketplace model so successful for third-party sellers.”

Apple “vehemently disagrees with the conclusions in this staff report.” The company says that “the App Store [enables] new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem… competition drives innovation, and innovation has always defined us at Apple… We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so."

Facebook argues that its merging with Instagram and WhatsApp was not monopolistic. “We compete with a wide variety of services with millions, even billions, of people using them,” the company said in a statement. “Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people.” Mark Zuckerberg, CEO of Facebook, also adds that his company’s data collection is nothing more than just “market research”. 

Surprisingly, several experts in the Technology sector support the big tech companies. Carl Szabo, vice president at the tech advocacy group NetChoice, says the data analysis tech companies engage in is a sign of good competition, not evidence that competition is being destroyed. "Every business always looks at what its competitors do and [observes] what type of new expansions can and should be made," he points out. Garrett Johnson, an assistant professor of marketing at Boston University says that “It’s frustrating that the conversation tends to go along the lines of, ‘These companies are doing bad things, so we want to hurt them by breaking them up.’ If we start breaking up companies wantonly, that’s going to hurt innovation.” 

Hemant Bhargava, Technology Management Chair at the University of California, Davis, argues in favor of these companies, claiming that preventing them from buying smaller start-ups will do more harm than good. For many startups, the initial money they are given by venture capitalists is in hope that they will be bought by a larger company.  “For many of these firms, the only way out is to get acquired by these big tech companies,” he explains. “If you somehow tell them that is not going to happen, then they may never reach the point of developing that ambitious product.” 

Of course, not all experts agree. Tim Wu, a law professor at Columbia University says, "There's got to be some difference between doing your homework like everyone does, and having this extraordinary advantage of owning the platform, knowing everything about your competitors, and who's buying their products and why. . . To call that fair competition is just an insult to the phrase." Echoing Wu, the attorney for the antitrust subcommittee adds "It's the fact that they're able to develop near-perfect market intelligence that does make it feel like we're living in a new world.”

The attempt to pass this legislation has caused partisan disagreements as well. Democrats are pushing for the breakup of these tech companies along with stricter antitrust laws. On the contrary, Republicans do not want to interfere in their businesses. They also claim the Democrats omitted the information collected by Republicans from the report. Representative Jim Jordan of Ohio, the top Republican on the committee, said that the report was “partisan” and that the committee had not looked at conservatives’ allegations that the online platforms were biased against Republican views. Jordan said that ignoring the topic they had put forth “ultimately discredits the draft report’s findings.” Representative Ken Buck, a Republican of Colorado, collaborated with three other Republican lawmakers in writing a separate report, titled “The Third Way”, which outlined their reactions to the Democrats’ proposals.