What’s at Stake in the Big Tech Antitrust Fight

Yesterday I shared information on the House Judiciary report and its scathing findings on tech biggies Amazon, Apple, Google and Facebook. Today we take a closer look at what’s really at stake for these companies.

As Alex Castro notes in The Verge, the politics of the report are “byzantine” yet the report sent a clear message in its 449 pages: “Apple, Amazon, Facebook, and Google have gotten too powerful. “

“The report is comprehensive, and it takes on each company from a different angle, laying out different problems and proposing different solutions,” Castro writes. “Despite the ‘Big Tech’ moniker, these are four very different companies, and the usual antitrust remedies will affect them very differently.”

At Amazon, Castro distills the problem succinctly: “Amazon is running too many businesses at once.” As a data company they have immediate access to enormous amounts of consumer data, which they leverage in real time to benefit their own brands and favored sale partners over competitors.

The suggested remedy for Amazon is new non-discrimination rules that would effectively prevent Amazon from giving its own products (specifically the Amazon Basics brand) a privileged edge over competitors’ products on their platform.

At Facebook, their monopoly rests in the fact that their closest competitors — Instagram, WhatsApp and Messenger — are their own products. And no one seriously believes new entrants in the market stand much of a chance to become real competition. So consumers put up with its bad behavior, poor data protection and misinformation because they really have little alternative.

The recommendations for Facebook is rather weak. Future acquisitions (traditionally they have gobbled up for their own any competitor that seriously threatened their market share) would be “scrutinized,” and the privacy issues would become the headache of the Justice Department. Meaning the real winners in this would be the lawyers.

Apple’s case is, at first glance, a story of consumer demand growing beyond the point of being good for consumers. But it goes deeper than that. According to the report, “Apple exerts monopoly power in the mobile app store market, controlling access to more than 100 million iPhones and iPads in the U.S. In the absence of competition, Apple’s monopoly power over software distribution to iOS devices has resulted in harms to competitors and competition, reducing quality and innovation among app developers, and increasing prices and reducing choices for consumers.”

The result for Apple could be fairly immediate, Castro notes.

“For years, Apple has refused to let third-party apps use NFC on the iPhone — a crucial barrier for any third-party payment apps hoping to compete with Apple Pay,” Castro explains. “Default apps for music and weather would get a close look from regulators, and it’s likely that the App Store rankings would become more transparent and equitable.”

Finally, Google, the company whose motto is “don’t be evil.” While it might fall outside the definition of “evil,” Google has been evasive in answering years of questioning on their dominance of the search engine market.

“But if you accept that Google holds a central position on the web, a lot of other conduct starts to look more suspicious,” Castro notes. “The report details intense data-scraping from sites like Genius and Celebrity Net Worth, essentially turning the sites into data-feeders for Google search. Google’s own products like Maps and Shopping have been steadily eating up real estate on the search page. At the same time, Google has been striking an ever-harder bargain with its business partners. One partner testified that the price of using the Google Maps API skyrocketed in late 2018, changing their bill from $90 to $20,000 a month from October to December of that year. To would-be regulators, that looks a lot like monopoly power at work.”

What might Google look like in the future? While European regulators have been “paring back” the company’s reach, it’s still hazy what might “fix” the problem and what exactly needs to be done.

Is the genie completely out of the bottle on these companies, especially Google? Or can legislators and regulators come to some kind of understanding of the depth of the problem and craft a workable solution that doesn’t entirely disrupt the tech industry?

Either way, it’s going to get interesting.