The U.S. big tech firms, including Apple, Amazon, Facebook, and Google have been the subject of intense scrutiny due to an ongoing antitrust investigation conducted by the U.S. House Judiciary Antitrust Subcommittee.
As reported by CNBC, the subcommittee has released its 450-page report [PDF] highlighting findings from multiple hearings, interviews (including those with CEOS for each company), and more than 1.3 million documents. The report also offers recommendations for changes in antitrust laws.
In the report, the subcommittee says tech companies have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.” The report’s recommendations focus on promoting fair competition in digital markets (such as Apple’s App Store), strengthening laws related to mergers and monopolization, and restoring more stringent oversight and enforcement of antitrust laws.
The recommendations from Democratic staff include:
- Imposing structural separations and prohibiting dominant platforms from entering adjacent lines of business. This means that the Democratic staff recommends solutions including forcing tech companies to be broken up or imposing business structures that make different lines of business functionally separate from the parent company. For example, this could include a scenario like forcing Google to divest and separate from YouTube, or for Facebook to do the same with Instagram and WhatsApp. Subcommittee Chairman David Cicilline, D-R.I. has previously referred to this method as a type of “Glass-Steagall” law for the internet, referring to the 1930s era law that separated commercial from investment banking.
- Instructing antitrust agencies to presume mergers by dominant platforms to be anticompetitive, shifting the burden onto the merging parties to prove their deal would not harm competition, rather than making enforcers prove it would.
- Preventing dominant platforms from preferencing their own services, instead making them offer “equal terms for equal products and services.”
- Requiring dominant firms to make their services compatible with competitors and allow users to transfer their data.
- Overriding “problematic precedents” in antitrust case law.
- Requiring the Federal Trade Commission to regularly collect data on concentration.
- Increase budgets for the FTC and Department of Justice Antitrust Division.
- Strengthen private enforcement by eliminating forced arbitration clauses and limits on class action lawsuits.
The Democratic report found that the four tech companies enjoy monopoly power in the following areas:
- Apple: distribution of software apps on iOS devices.
- Amazon: most third-party sellers and many suppliers.
- Facebook: online advertising and social networking.
- Google: online search.
When it comes to Apple specifically, the subcommittee sees Apple as a monopoly in reference to the control it has over the distribution of apps on its iOS platform, saying it provides it with gatekeeper power over software distribution on iOS devices.”
In contrast, Apple owns the iOS operating system as well as the only means to distribute software on iOS devices. Using its role as operating system provider, Apple prohibits alternatives to the App Store and charges fees and commissions for some categories of apps to reach customers. It responds to attempts to circumvent its fees with removal from the App Store. Because of this policy, developers have no other option than to play by Apple’s rules to reach customers who won iOS devices.Owners of iOS devices have no alternative means to install apps on their phones.
The committee cited multiple interviews with App Store developers, including the CEO of the email app “HEY,” the General Counsel of Tile, and representatives of other companies like Airbnb and ClassPass, all of who had conflicts with Apple in the past.
Depending on if and how the proposed antitrust law changes are enacted, Apple and the other tech firms could be affected in numerous ways. We’ll all need to stay tuned to see how this all develops.