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Facebook, Amazon, Apple, Google Stamping Out Rivals, Stifling Innovation, House Antitrust Investigation Concludes

The dominance of large technology companies limits innovation and comes in the way of competition, a Democratic-led congressional panel has established after a 16-month investigation.

· 10/07/2020 00:23

The dominance of large technology companies limits innovation and comes in the way of competition, a Democratic-led congressional panel has established after a 16-month investigation.

The 450-page report of the panel was released Tuesday and makes recommendations that advocate measures to limit monopolistic business practices of tech giants such as Amazon.com, Inc (NASDAQ:AMZN), Google parent Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), and Apple Inc (NASDAQ:AAPL).

Democrats, Republicans Differ: The Democrats called for stronger antitrust measures to be taken against the tech giants such as a prohibition on dominant players to enter into adjacent lines of businesses, a presumption of mergers by dominant players to be anticompetitive, preventing such companies from giving preference to their own services, and ensuring compatibility with competing products.

The recommendations also include requiring the United States Federal Trade Commission to regularly collect data on concentration and increasing the budget of the agency as well as the Department of Justice Antitrust Division.

Republicans have taken exception to some of the more stringent proposals made by Democrats, with Rep. Ken Buck (R-Colo.) releasing his own response. Committee member Rep Jim Jordan (R-Ohio) also put his own response about the bias of tech platforms against conservatives, which has been denied by the companies, CNBC reported

Notably, Buck said in his response that he is supportive of the investigation and its findings and would push for bipartisan antitrust reforms.

The major findings contained in the report with respect to the tech giants are:

Facebook: The report states that the Mark Zuckerberg-led company has a dominant position in both online advertising and social networking and questions the $1 billion acquisition of Instagram in 2012.

Democrats want to address concerns surrounding “killer acquisitions” by shifting the burden of proof on large players to assure that such deals would not harm competitors. The report touched upon the so-called “Cunningham memo” from 2018, which was prepared for Zuckerberg and senior company executives. 

A former senior Instagram employee told the subcommittee staff that the document was intended to answer how the company could “position Facebook and Instagram to not compete with each other.” 

Amazon: The majority of antitrust committee staff alleged in the report that the Jeff Bezos-led company enjoyed a monopoly over most of its third-party sellers and many of its suppliers. The report claims that the tech giant’s share of the online retail pie is “likely understated” at 40%, and a more credible figure would be near 50% or higher.

“Publicly, Amazon describes third-party sellers as ‘partners.’ But internal documents show that, behind closed doors, the company refers to them as ‘internal competitors,” the report said.

The report also questioned how acquisitions made by the retail giant such as Diapers.com and Zappos along with other adjacent businesses resulted in its "current dominant position."

Alphabet: According to the antitrust committee, Google has a monopoly over online general search and search advertising markets. The authors of the report say Google operates “as an ecosystem of interlocking monopolies.”

The tech giant is able to link together its services and capitalize on the plethora of user data and thus reinforce its dominance, according to the report. The Sundar Pichai-led company allegedly tracked its potential and actual competitors through projects like Android Lockbox.

Google is accused of bolstering its own offerings by content appropriation in the report. The tech giant has allegedly blurred distinctions between paid ads and organic results.

“As a result of these tactics, Google appears to be siphoning off traffic from the rest of the web, while entities seeking to reach users must pay Google steadily increasing sums for ads,” the report said.

Google has been able to leverage its dominance to ask smartphone manufacturers to pre-install Google apps and give them default status, documents reviewed by the subcommittee staff revealed. The report claims this harmed competition in search and app markets.

Apple: The report finds that the Cupertino, California-based company’s control over its mobile ecosystem allowed it to “to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings.”

The authors of the report claim that Apple used its dominance to “exploit app developers” as it misappropriated competitively sensitive information and charges “app developers supra-competitive prices within the App Store.”

Apple’s monopoly over software distribution to iOS devices “has resulted in harm to competitors and competition, reducing quality and innovation among app developers, and increasing prices and reducing choices for consumers,” as per the report.

Tech Giants Have Their Say: All the companies issued rebuttals to the report's findings, as per CNBC. Facebook termed itself an “American success story” defending its acquisition of Instagram. 

Amazon said it welcomed the “scrutiny” but “large companies are not dominant by definition.” 

Google said its products “help millions of Americans and we’ve invested billions of dollars in research and development to build and improve them.” 

Apple claimed that developers have been primary beneficiaries of its ecosystem and that its commissions were firmly in the “mainstream of those charged by other app stores and gaming marketplaces.”