How Are Apple, Amazon, Facebook, Google Monopolies? House Report Counts The Ways

Oct 6, 2020
Originally published on October 6, 2020 2:23 pm

Updated at 8:23 p.m. ET

In a sweeping report spanning 449 pages, House Democrats lay out a detailed case for stripping Apple, Amazon, Facebook and Google of the power than has made each of them dominant in their fields.

The four companies began as "scrappy underdog startups" but are now monopolies that must be restricted and regulated, the report from Democrats on the House Judiciary Committee's antitrust panel says.

"These four corporations increasingly serve as gatekeepers of commerce and communications in the digital age, and this gatekeeper power gives them enormous capacity to abuse that power," a lawyer for the subcommittee's Democratic majority said in a briefing with reporters.

The lawmakers say Congress should overhaul the laws that have let the companies grow so powerful. In particular, the report says, Congress should look at forcing "structural separations" of the companies and beefing up enforcement of existing antitrust laws.

The recommendations, if enacted, could radically change how these companies operate. They could, for example, restrict Amazon from selling its own products in its marketplace, in direct competition with sellers who depend on the platform to reach customers. Google could be banned from using the data the Android operating system collects on users and other apps to refine its products. Facebook could, theoretically, be barred from acquiring another competitor, after concerns over how it bought rivals including Instagram and WhatsApp.

While the investigation was a bipartisan effort by the subcommittee, the final report has been met by partisan division over its recommendations. The Democratic majority staff authored the report, and no Republicans have publicly endorsed it so far.

Rep. Jim Jordan, R-Ohio, the ranking Republican on the Judiciary committee, was quick to dismiss the report.

"Big tech is out to get conservatives," he said in a statement, repeating a frequent but unsupported claim by conservatives. "Unfortunately, the Democrats' partisan report ignores this fundamental problem and potential solutions and instead advances radical proposals that would refashion antitrust law in the vision of the far left."

Rep. Ken Buck, R-Colo., released his own suggestions for tacking tech's power., saying he did not support the report's recommendations. But he said he agreed that Big Tech has grown too big and would work with the subcommittee's Democratic leadership to find solutions.

"An ounce of prevention is worth a pound of cure—I would rather see targeted antitrust enforcement over onerous and burdensome regulation that kills industry innovation," Buck said in a statement.

Democrats say they expect the subcommittee to vote on the report after the House recess.

The report is the culmination of a 16-month long investigation into some of the most valuable and influential companies in the world. Regardless of its uncertain political future and broad recommendations, the report presents a new and fairly comprehensive public database of evidence and internal documents that shed light on long-standing criticisms of Big Tech.

One lawyer for the antitrust subcommittee said one of the most eye-opening discoveries was the fear expressed by Fortune 500 companies in dealing with the tech giants, feeling dependent on their whims.

The tech companies are facing other investigations by federal regulators, state attorneys general and European authorities.

Here are the report's key claims about each company:

Amazon

The report says plainly that "Amazon is the dominant online marketplace" and that evidence "demonstrates that Amazon functions as a gatekeeper for ecommerce."

Investigators detail Amazon's difficult relationship with other sellers on the platform, which it says "live in fear of the company" and which Amazon refers to as "internal competitors."

It describes sellers as "exploited" by the company's dominance: not allowed to contact shoppers directly, often limited in their ability to sell on other platforms, facing "strong-arm tactics in negotiations" and receiving either "atrocious levels of customer service" or better service for a fee.

The authors also write that Amazon profits off ideas and products developed by others, whether that's sellers on its platform, startups it considers buying or even open-source cloud-software developers.

Amazon on Tuesday published a blog post, rebutting "fallacies...at the core of regulatory spit-balling on antitrust." Without directly calling out the report, the post said: "For consumers, the result would be less choice and higher prices. Far from enhancing competition, these uninformed notions would instead reduce it."

Apple

The report says Apple exerts "monopoly power" in the mobile app store market by favoring its own apps and disadvantaging rivals.

That dominance hurts innovation and increases prices and choices for consumers, House investigators found.

Apple, along with Google in its Google Play store, leaves developers with little choice for reaching consumers, the report says, adding that the arrangement leaves developers at the whims of the "arbitrary" enforcement of Apple's app guidelines.

The report found that the controversial 30% commission levied by Apple and Google has resulted in price increases on consumers. Investigators say that Apple generated billions of dollars in profit from the fees, despite costing about less than $100 million to operate.

In a statement, Apple said "we vehemently disagree" with the report's conclusions.

Apple, the most valuable company in the world, says it does not have a dominant market position in any of its business lines.

"Competition drives innovation, and innovation has always defined us at Apple," the company said. "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

The report quotes Facebook's own chief executive, Mark Zuckerberg, and other top management describing the company's strategy of buying its rivals. In one internal communication, Zuckerberg said Facebook "can likely always just buy any competitive startups."

Facebook used data to identify possible rivals and "then acquire, copy, or kill these firms," the report says. Facebook's monopoly power "is firmly entrenched and unlikely to be eroded by competitive pressure," investigators found.

The report said recent internal documents show that Facebook is now more worried about competition between its own products — like its photo-sharing app Instagram and its original namesake network — than outside rivals.

Investigators conclude that because it has so little competition, Facebook has "deteriorated" in quality, harming its users' privacy and leading to a "dramatic rise in misinformation."

Facebook said in a statement that it "compete[s] with a wide variety of services with millions, even billions, of people using them." It added that when it comes to Instagram and WhatsApp, "a strongly competitive landscape existed at the time of both acquisitions and exists today. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time."

Google

The report says Google enjoys a monopoly in search and search advertising, and its dominance is protected by its own data and deals it has struck around the world to be the default search engine in many browsers and devices. "No alternative search engine serves as a substitute," investigators said.

Google has maintained its dominant position by undermining search competitors and favoring its own content in search results, the report says.

The report also calls out how all the data Google collects on its users and competitors reinforces its dominance and allows it to make even more money from ads.

"Through linking these services together, Google increasingly functions as an ecosystem of interlocking monopolies," it says.

Google said in a statement it disagreed with the report, which it said "feature[s] outdated and inaccurate allegations from commercial rivals about search and other services." The company said the proposed remedies "would cause real harm to consumers, America's technology leadership and the U.S. economy — all for no clear gain."

Editor's note: Amazon, Apple, Google and Facebook are among NPR's recent financial supporters.

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