Bombshell development. Scathing US antitrust report recommends structural separations of big tech firms, and slams monopolistic behaviour
Big name tech firms Amazon, Apple, Google and Facebook have been slated in a report from the antitrust subcommittee of the US Judiciary Committee.
The report was scathing of technology firms, and the central thrust of its findings is that tech firms have become so big they now flout anti-competition rules.
And to make matters worse, the report comes from a Democrat-led committee, but some Republicans on the US House of Representatives antitrust panel also support the central argument of the report, which is that tech giants have become too big and change is needed.
The report found that the big four big technology companies used ‘killer acquisitions’ to hurt rivals; charged exorbitant fees; and forced small businesses into ‘oppressive’ contracts in the name of profit.
“Together, the firms investigated by the Subcommittee have acquired hundreds of companies just in the last ten years,” said the report. “In some cases, a dominant firm evidently acquired nascent or potential competitors to neutralise a competitive threat or to maintain and expand the firm’s dominance. In other cases, a dominant firm acquired smaller companies to shut them down or discontinue underlying products entirely – transactions aptly described as ‘killer acquisitions.’”
After a 16 month investigation, the committee also recommended that Google, Apple, Amazon and Facebook should not both control and compete in related businesses.
That could entail a huge change in the tech sector, as it could potentially stop companies such as Google owning YouTube or the Android operating system.
Or Facebook owning Instagram and WhatsApp, or even Amazon owning a giant e-commerce retail operation and large cloud business.
The report also found that the digital economy is ‘highly concentrated’ and is ‘impacted by monopoly power.’
And in a move sure to send ripples of concern among senior management at these firms, it said there is a ‘clear and compelling need to strengthen antitrust enforcement and consider a range of forceful options, including structural separations and prohibitions on anticompetitive conduct.’
However the report did stop short of naming a specific company that should be broken up.
The full report can be downloaded here.
“As they exist today, Apple, Amazon, Google, and Facebook each possess significant market power over large swaths of our economy,” said judiciary committee chairman Jerrold Nadler and antitrust subcommittee chairman David N. Cicilline in a joint statement.
“In recent years, each company has expanded and exploited their power of the marketplace in anticompetitive ways,” they said. “
Our investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation, and safeguards our democracy,” they stated. “This Report outlines a roadmap for achieving that goal.”
The report recommends a number of possible remedies to restore competition in the digital economy, as well as strengthen antitrust laws, and reinvigorating antitrust enforcement.
No More Self-regulation?
Others on the committee also weighed in, and issued equally damning assessments of Apple, Amazon, Google and Facebook.
“After conducting this country’s first major congressional antitrust investigation in decades in which we held hearings, heard from experts and questioned the CEOs of dominant tech platforms, I can say conclusively that self-regulation by Big Tech comes at the expense of our communities, small businesses, consumers, the free press and innovation,” said Congresswoman Pramila Jayapal.
“By reasserting the power of Congress, we now have a thoroughly researched and meticulously reasoned roadmap for the work ahead as we rein in anti-competitive behavior, help prevent monopolistic practices and allow innovation to thrive,” she added.
“Our investigation revealed an alarming pattern of business practices that degrade competition and stifle innovation,” added Rep. Val Demings. “These companies have made remarkable advancements that have shaped our markets and our culture, but their anticompetitive acts have come at a cost for consumers and small businesses.”
“We will take steps necessary to hold rulebreakers accountable,” he added.
And this is not the last of problems for big tech firms.
Last week the US Senate Commerce Committee on Thursday unanimously voted to approve a plan to subpoena chief executives of Twitter, Alphabet’s Google and Facebook for a hearing.
That came after after tech bosses refuse to appear on a voluntary basis before the US Senate panel on reform of Section 230 legal immunity.
The last time big name tech bosses appeared in Washington DC was in the summer when Mark Zuckerberg, Tim Cook, Jeff Bezos and Sundar Pichai appeared virtually before a US committee to answer antitrust and anticompetitive allegations.