U.S. LAWMAKERS EXAMINE BIG TECH'S MARKET ABUSES AND URGE
A United States (U.S.) House of Representatives panel is examining the abuses of market power by four big technology companies found they used "killer acquisitions" to smite rivals, charged exorbitant fees and forced small businesses into "oppressive" contracts in the name of profit.
The antitrust subcommittee of the Judiciary Committee recommended that Alphabet Inc's Google, Apple Inc, Amazon.com and Facebook – with a combined market value of over $5 trillion – should not both control and compete in related businesses.
The panel's report also broadly recommended structural separations. This is the first ever congressional review of the tech industry and the 449-page report has suggested expansive changes to antitrust law and pointed out various instances where the companies misused their power, revealing corporate cultures apparently bent on doing what they could to maintain dominance over large portions of the internet.
In response, Google said in a statement that it competes "fairly in a fast-moving and highly competitive industry. We disagree with today's reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services."
Facebook called itself "an American success story" in response to the report and said, "We compete with a wide variety of services with millions, even billions, of people using them. Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people."
Apple said, "Scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions." The company also defended its commission rates and said it would issue a more extensive response in the coming days.
The investigation has been going on for more than a year and involves 1.3 million documents and more than 300 interviews. The committee led by Democratic Congressman David Cicilline found companies were running marketplaces where they also competed, creating "a position that enables them to write one set of rules for others, while they play by another."
Also, the report is likely to inform existing antitrust probes against the companies. Counsels for the committee, said that they have been speaking to the Federal Trade Commission (FTC), which is investigating Facebook and Amazon. Also, Chairman Cicilline has been in contact with state attorneys general, who are investigating Facebook and Google, they said.
Separately, the U.S. Justice Department is investigating large technology companies and is expected to bring a lawsuit against Google soon.
The panel recommended companies be prohibited from operating in closely aligned businesses. As per this recommendation, Google which runs the auctions for online ad space and participates in those auctions should potentially be required to separate clearly, or not even operate, the two businesses.
The report also pointed out Facebook's acquisition of Instagram in 2012 at a time when Instagram was small and insignificant. However, Facebook CEO Mark Zuckerberg saw its potential and noted that it was "building networks that are competitive with our own" and "could be very disruptive to us," the report said.
As part of the report, the committee staff drew up a menu of potential changes in antitrust law. The suggestions ranged from the aggressive, such as potentially barring companies like Amazon.com from operating the markets in which they also compete, to the less controversial, like increasing the budgets of the agencies that enforce antitrust law: the Justice Department's Antitrust Division and the FTC.
The report also urged Congress to allow antitrust enforcers more leeway in stopping companies from purchasing potential rivals.
The counsels for the committee said that the antitrust panel will take up the majority report after the October recess for formal adoption and will have a vote on it.