7 Oct 2020

US congressional probe finds Big Tech abuses power but does not urge break-up

2:26 pm on 7 October 2020

A US House of Representatives panel looking into abuses of market power by four of the biggest technology companies found they used "killer acquisitions" to block rivals, charged exorbitant fees and forced small businesses into "oppressive" contracts in the name of profit.

CEOs of Google and Facebook respectively

Google chief executive Sundar Pichai, left, and Facebook CEO Mark Zuckerberg. Photo: AFP

The panel, an antitrust subcommittee of the Judiciary Committee, recommended that Alphabet's Google, Apple, Amazon and Facebook should not both control and compete in related business activities but stopped short of saying they should be broken up.

The scathing 449-page report described dozens of 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.

Started as underdogs

"To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," the report said.

Facebook, Apple and Google did not have an immediate comment.

In anticipation of the report, Amazon warned in a blog post yesterday against "fringe notions of antitrust" and market interventions that "would kill off independent retailers and punish consumers by forcing small businesses out of popular online stores, raising prices and reducing consumer choice".

After more than a year of investigation involving 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".

Commercial and Administrative Law House Subcommittee Chairman Rep. David Cicilline (D-RI) speaks during the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law hearing on Online Platforms and Market Power in Washington

The committee was chaired by Democratic Congressman David Cicilline. Photo: AFP

Coming just weeks before the 3 November presidential election, the content of the report became increasingly political, an opportunity for Republicans and Democrats to boost their credibility in the fight against market domination by big tech companies.

That said, Congress is unlikely to act on the findings this year.

Ultimately, the report reflects the views of the Democratic majority in the House, and two other reports were expected to be authored by Republican members on the panel, two sources told Reuters earlier in the day.

Changes in antitrust law signalled

The panel recommended companies be prohibited from operating in closely aligned businesses. While they did not name any one company, this recommendation would suggest that 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 urged Congress to allow antitrust enforcers more leeway in stopping companies from purchasing potential rivals, something that is now difficult.

Facebook's acquisition of Instagram in 2012 is an example of this. Instagram at the time was small and insignificant, but Facebook chief executive 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 from operating the markets in which it also competes, to the less controversial, like increasing the budgets of the agencies that enforce antitrust law: the Justice Department's Antitrust Division and the Federal Trade Commission.


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