Big Tech In Trouble: New Global Antitrust Laws in Sight?

Facebook, Amazon, Apple and Google had a historic showdown with the US Congress this week. For nearly six-hour, their CEOs fended off inquiries on antitrust issues. This comes after multiple investigations were launched over the years against the Tech Giants.

Facebook CEO Mark Zuckerberg speaks via videoconference during the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law hearing on Online Platforms and Market Power on Capitol Hill on July 29, 2020.Graeme Jennings / Pool via Getty Image

In the United States, antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote competition for the benefit of consumers.

Right now, there are multiple, simultaneous government investigations focused on the business practices of each of the four Big Tech giants — Amazon, Apple, Google, and Facebook — that could someday lead to the breakup of these companies or major changes in how they operate.

Beside the United States, some countries are displeased with the tech industry. From the U.K. to Australia, countries warned that they plan to take action by changing the policies that govern competition.

In the European Union, Margrethe Vestager, the EU’s digital-policy and antitrust czar, detailed for the first time a comprehensive plan of how she aims to rein in U.S. tech giants, using a package of initiatives that the EU has begun to outline individually in recent weeks. The aim is to clearly delineate new legal boundaries for tech companies, rather than just apply existing laws covering fields such as antitrust regulation.

In the end, it is easy to get lost in antitrust talks because of the complexity of antitrust laws and the fact that most discussion are taking place behind doors.

So what is the problem with Big Tech and how are countries worldwide retooling their laws to confront Big Tech?

A few Reasons why Lawmakers want to break up Big Tech

1) Tech giants are using the power to crush competitors

Earlier in January, Sonos CEO Patrick Spence accused Google and Amazon at a Congress hearing to sell their Home and Echo speakers at artificially low prices — he used the term “predatory pricing” — because they make money in other ways, and so their goal isn’t to profit from the speakers. Instead, it’s to use their speakers to collect consumer data that they make money off of through their other business lines.

“They make rules about how the platform should operate, who should have access to permissions and exempt themselves from all those rules,” Kirsten Daru, vice president and general counsel at Tile, said about the Apple app ecosystem. “We need equal access and permissions. … We need rules applied consistently across the board to everyone in the ecosystem, including Apple.”

2) Tech Giants are so big that fair business negotiations are impossible

Spence described negotiations with tech giants as increasingly “take it or leave it” interactions.

At the session, subcommittee Chairman David Cicilline (D-R.I.) said major platforms have grown so powerful that the companies “effectively serve as private regulators” and are “increasingly using their gatekeeper power in abusive and coercive ways.”

3) Tech companies are both participants in and owners of their platforms and so they place their products first

Tile is a startup that makes small Bluetooth trackers that can help users find things like a lost wallet, keys, or phone. To work, the trackers need to be paired with an app on a smartphone or tablet. But Tile’s general counsel, Kirsten Daru, argued at the hearing that Tile’s business has been hurt by Apple giving special treatment to its own “Find My” tracking app.

"Facebook saw Instagram as a threat that could potentially siphon business away from Facebook. And so rather than compete with it, Facebook bought it"

Judiciary Committee Chairman Jerry Nadler, D-N.Y., pressed Facebook CEO Mark Zuckerberg on why his company bought Instagram for $1 billion back in 2012.

Antitrust Law & the current antitrust investigations against Big Tech

Antitrust investigations against Google and Facebook continue, as does a probe by the House Judiciary Committee into potential antitrust violations by large tech companies.

Similarly, Jeff Bezos admitted that he “can’t guarantee'” the online retailer hasn’t misused data from third-party sellers on its platform, building the strongest antitrust claim against Amazon.

Meanwhile, the EU’s Competition Commission is readying itself to open a full-scale investigation into Google’s Fitbit acquisition, Reuters reported Thursday, citing people familiar with the matter.

Margrethe Vestager, the European Union’s competition commissioner, accused Google of distorting Internet search results and began an antitrust investigation into its Android mobile operating system.CreditCredit…John Thys/Agence France-Presse — Getty Images

Antitrust law was originally developed in an era when the concerns were about monopolies and big businesses in industries such as steel, oil, and railroads.Certain practices, such as price-fixing and collusion, are considered per se illegal, while others require closer examination to be considered anti-competitive.

Beginning largely in the 1970s, courts shifted to a consumer welfare standard that looked at whether the current market structure (or proposed changes to market after a merger) was beneficial to the consumers. While this standard still allows for much debate over the definition of the market and many other factors, it has provided an objective standard that is adaptable in many different industries, including technology.

During the pandemic, the benefits of technology to consumers have become perhaps more apparent than ever. The technology market continues to change and respond to consumer demands in innovative ways from both new and existing players. Most of these changes have occurred with no cost to consumers.

Some critics do not deny the benefits of technology but instead have expressed concerns that there is too much concentration in the technology sector and that this concentration necessitates intervention for innovation to continue to flourish.

Antitrust Laws are not enough; requires policy change

The EU, which has already levied multi-million dollar fines on Qualcomm Inc., Apple Inc., and other tech companies, is set to review in 2020 the parameters for how it defines markets in the digital age.

Already in October, German competition authorities proposed legislation that would amend the country’s antitrust rules to better police dominant tech companies’ ability to control the market through large amounts of data. Actions by tech companies that inhibit rivals’ access to data could be prohibited under the proposed German legislation.

Recently, lawmakers in the EU have had it with Apple and other Big Tech firms unfairly favoring their own offerings over those of rivals. So they’re going to introduce several new laws that make this business practice explicitly illegal.

Apple is a classic example. Its App Store charges an egregious 30 percent on all in-app charges, including for some reason subscription services which pay Apple every month or year in perpetuity for doing literally nothing (the free reduces to 15 percent in subsequent years). But in requiring these fees Apple also cuts off each developer’s access to its own customers. It prevents those developers from even telling their customers that they can make these payments elsewhere without incurring Apple’s fees. And Apple does not allow developers to use non-Apple payment systems or load their apps on iPhones or iPads outside of its store.

Now the EU wants to make sure that that behavior is illegal. It seeks to create business practice boundaries for search engines, social networks, and app stores. It wants to slipstream investigations to cut down on the amount time wasted while the abuses continue. And it wishes to enact all this by 2021.

The U.S. to rewrite the rules?

Illustration by boingboing.net

‘Big Tech: “If the USA enforces antitrust laws against us, it means China will win”

“We went from an antitrust culture [in the 1970s] where “the government always wins” to one where enforcers almost always lost, or where fear of losing caused the government not to act at all,” wrote Bill Baer, who headed the Justice Department’s antitrust division during the Obama administration.

A 21st century antitrust law would make clear that the purpose of antitrust law is to protect and enhance competition not only because it lowers prices, increases choice and improves quality for consumers, but also because it stimulates innovation, reduces income inequality and reduces the concentration of economic and political power.

There is urgency to this project. As we dither, European regulators have already taken the lead in trying to rein in the business practices of the tech giants, imposing billion-dollar fines and prompting complaints that their aim is to hamstring their transatlantic rivals. As we are discovering with other policy issues, the dysfunction of our public sector has begun to seriously erode the capacity of our private sector to adapt and innovate. The rest of the world is not about to wait while we get our act together.