1. How far is the U.S. going?
The Justice Department, the Federal Trade Commission and a nationwide group of state attorneys general have all opened antitrust investigations of one or more of the four tech giants. A monopoly-abuse lawsuit in the works by the Justice Department against Alphabet Inc.’s Google has the potential to become the biggest U.S. antitrust case since the one against Microsoft Corp. in 1998 for abusing its monopoly in computer-operating systems. In Congress, Representative David Cicilline, a Rhode Island Democrat, is preparing to propose legislation at the start of the next Congress in January based on a House antitrust subcommittee report alleging wide-ranging antitrust violations by Amazon, Apple, Facebook and Google.
2. Are the tech giants really monopolies?
They’re powerful, for sure. In the U.S., Google and Facebook Inc. together collect more than half of digital advertising spending and Apple Inc. has about 46% of the smartphone market. The House antitrust report estimated that 50% or more of U.S. e-commerce sales goes through Amazon.com Inc.; that 99% of mobile devices in the U.S. and globally run on Apple’s iOS or Google’s Android systems; that Google captures about 89% of all general search queries in the U.S.; and that Facebook’s app reached 74% of U.S. smartphone users as of December 2019. But under modern antitrust enforcement, those percentages alone aren’t enough to alarm regulators in the U.S., which long ago stopped equating big with bad. Google’s market share now rivals that of Standard Oil in the 19th century, for example.
3. What’s the point of antitrust enforcement, then?
What’s illegal is for a monopoly to abuse its market power to prevent rivals from threatening its position. (In the U.S. case against Microsoft, a federal judge ruled the software giant did exactly that.) U.S. law sets a higher bar than the European Union for finding abuse of dominance, meaning it’s easier to run afoul of antitrust restrictions in Europe. The EU brought three antitrust actions against Google in as many years carrying penalties that totaled $9.3 billion, while the U.S. chose not to bring charges for some of the same conduct. Still, Google, Amazon, Facebook and Apple are all grappling with criticism that they have crossed a line by taking steps to squash competition.
4. Have the tech giants abused their power?
As the middlemen for today’s essential products and services, tech platforms have leverage over both producers and consumers. They also compete with many of those that depend on their platforms That potential conflict led Senator Elizabeth Warren to call for the breakup of tech companies when she was running for president. The tech giants are also growing by snapping up potential rivals that might threaten market share. Data compiled by Bloomberg show the big five -- Alphabet, Amazon, Apple, Facebook and Microsoft -- made more than 600 acquisitions in the last decade worth more than $200 billion. None may be more controversial than Facebook’s acquisition of Instagram in 2012, a takeover critics say eliminated an emerging competitor that on its own would have come to rival Facebook in social media. (In defense of the deal, Facebook Chief Executive Officer Mark Zuckerberg says Instagram in 2012 wasn’t large enough to be a real competitor.) The companies also have control over vast amounts of data about their customers, raising concerns about threats to privacy.
5. How often does the U.S. go after monopolies?
The Microsoft lawsuit was the last major monopolization case brought by the U.S. The ensuing 20-year dry spell is often cited by those who argue enforcement has been too timid. President Barack Obama’s administration vowed to get tough on dominant companies in 2009 but didn’t follow through. The number of monopoly cases brought by the U.S. dropped sharply from an average of 15.7 cases per year from 1970 to 1999 to less than three between 2000 and 2014.
6. Is antitrust thinking outdated?
Some lawyers and economists think it’s time to move past conventional antitrust enforcement to take into account the effects of concentration on innovation, employment and consumer privacy. A fresh line of thinking labeled the New Brandeis School (derided as “hipster antitrust” by critics) would rewrite the playbook entirely and prevent, for example, tech platforms from vertically integrating into other lines of business. Cicilline has noted that key antitrust laws were “written more than 100 years ago” -- the Sherman Act of 1890 and the Clayton Act of 1914. The House antitrust report that Cicilline oversaw calls for curbs on further mergers, a rethinking of antitrust beyond consumer welfare and, potentially, the forced breakup of tech companies.
7. What do the companies say?
The tech giants say they face competition across their businesses, both from established tech companies and new startups. Google might be the world’s dominant search engine, but nearly half of all Americans start their product searches on Amazon, according to one survey. Facebook says countless services like TikTok, Snapchat and Twitter are competing for users’ attention. Amazon says its own line of products that compete with third-party sellers means more choice for consumers and is no different than brick-and-mortar retailers that sell their own branded products next to name-brands on their shelves.
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