Anti-Trust Report Hints At Tech Firm Break-Ups

After a 16 month long investigation, followed by a virtual hearing with the CEO’s of Apple, Amazon, Facebook and Google (Alphabet), the US House Judiciary committee released a 449 page report at the beginning of this month, detailing the results of their investigation into anti-trust allegations against the companies that are commonly seen as the “Big Four” firms of the tech revolution.

Once small start-ups themselves, the report describes them as having become the kind of monopolies that the US last saw in “the era of oil barons and railroad tycoons,” and recommends that the companies, with a combined market value of over US$ 5 Trillion should not both control, and compete in, related businesses.

Evasive Responses

Having interviewed Tim Cook from Apple, Jeff Bezos from Amazon, Mark Zuckerberg from Facebook, and Sundar Pichai, from Google’s holding company Alphabet, the compilers of the report pointed out that they were often evasive or non-responsive in answering questions, leading them to wonder whether these companies simply considered themselves above the law, (referencing the on-going non-compliance with for example EU privacy regulations), beyond the reach of “democratic oversight,” or whether they simply considered breaking the law to be an unavoidable cost of business.

Structural Separations

Although the report stopped short of suggesting that any specific company should be broken up, it did recommend structural separations, as well as multiple amendments to existing anti-trust laws to cover areas where the companies were perceived as “mis-using” their power.

Another area where the report suggested changes was to give lawmakers more leeway to prevent companies from purchasing potential rivals, something that Facebook in particular demonstrated with its purchase of Instagram and WhatsApp as younger users migrated toward those previously independent platforms.

The fact that these companies not only run the marketplaces in which other businesses compete, but also compete in those same marketplaces themselves, led investigators to point out that this enabled them to “write one set of rules for others, while they play by another.”

One example of this is the 30% transaction fee Apple charges developers for transactions through its App store, thereby increasing the cost for consumers as highlighted by the recent Fortnite “scandal.”

Corporate Denials

Each of the companies have so far responded by questioning the conclusions of the report.

Amazon warned against “fringe notions of anti-trust” and “market interventions that would kill off independent retailers and reduce customer choice. (Interestingly, the report also found that the market dominance of these companies resulted in “less innovation” and “fewer choices for consumers.”)

Google registered its disagreement as well, saying the allegations are inaccurate and outdated, and stem from claims by commercial rivals.

Facebook claimed that they compete with a wide variety of services, and that acquisitions were part of any industry, and just one of the ways in which they “innovate new technoloigies to deliver more value…”

And Apple responded that while scrutiny was reasonable and appropriate, they vehemently disagreed with the conclusions, and defended their commission rates.

Existing Investigations

There are several other investigations into anti-trust allegations still ongoing, and the US Justice Department is expected to bring a separate case against Google in the near future. It’s therefore expected that this report will have some bearing in informing those cases.

However, that being America, where everything is politicised, even the report itself was split along political lines, with the Democrat members of the panel recommending the restructuring at least, and the Republican members criticising the exclusion of claimed bias against some platforms from the report, as well as stating that they would not be calling for the companies break-ups.

Much then may depend on the outcome of the imminent US election with regards to whether the investigations, and the publication of the report, have any impact on the future business practices of these tech giants.