Antitrust Behavior of 4 Tech Juggernauts


This past June the House Judiciary Subcommitte on Antitrust, Commercial, and Administrative Law investigated antitrust complaints on four tech giants: Amazon, Apple, Facebook, and Google.

For better or worse, their findings look pretty bleak for all four companies. Here’s a very broad summary of what they found.

Apple

While Apple is not a monopoly (Android does exist, after all), Apple is holding a monopoly over what you can do on an iPhone with the App Store.

Since the App Store is the only way to put apps on a phone, and Apple requires developers collecting payments to use the Apple’s on in-app payment (IAP) service, this is anticompetitive.

Additionally, the report found that there are many apps that compete with Apple’s own services and are required to use Apple’s payment system (and lose 30% of their revenue).

Amazon

The report found that Amazon, as both a seller and a manufacturer of products, unfairly leverages its position over almost everyone.

Some of the behavior mentioned includes:

  • Collecting 3rd-party sales data
  • Using that sales data to create Amazon’s own product line, which then compete with the 3rd party sellers.
  • The “buy box” algorithim which can be used to penalize sellers that don’t use Amazon’s own shipping options
  • Anticompetitive acquisitions (including the Diapers.com acquisition).
  • Strong-arming state and local governments to avoid taxes and receive subsidies.

Facebook

Facebook is probably the company that comes the closest to a monopoly.

Since social networks depend so much on the “network effect”, the report states that Facebook “has monopoly power in the market for social networking” and it is “firmly entrenched and unlikely to be eroded by competitive pressure”.

This is especially true, according to the report, because while Facebook does compete with some smaller services (Twitter, Snapchat, etc.) it does not compete with other major platforms (Instagram, Messenger, WhatsApp) since Facebook owns those platforms.

According to the report a mind-blowing 74 percent of US smartphone users use the Facebook app. When you add in the other Facebook-owned products, you have 4 of the top 7 most popular apps used in America.

The report also found that Facebook hides its data portability settings, “encouraging” users to keep their accounts active so they don’t lose photos and other personal information.

Facebook also used some of its non-social acquisitions, like when they acquired the VPN service Onavo, or used a enterprise certificate to get a look at what users were doing on their phones.

Along with Google, Facebook is half of the advertising duopoly that controls online ads to the detriment of their competition.

Google

While Google is well-known as the dominant search engine, the committee found that it had used its broad reach to push results best on “what is best for Google, rather than what is best for users”.

You can see some examples of this in these three Google search engine results pages (SERPs):

The red boxes outline “non-organic” content on three Google SERPs.

The non-organic content leads to other Google pages (SERPs for other Google searches, Local results, YouTube links), are paid ads, or would keep users from “clicking through” to other pages.

You can see that in all three cases, it’s more than half of the visible content. There are more organic links below the part in the screenshot, but only about 10% of users even make it to the bottom of the page.

Google’s dominant position also came from acquisitions that probably should not have happened. In rapid succession Google acquired DoubleClick (2007), AdMob (2010), and AdMeld (2011). These three acquisitions gave it a huge portion of the online ad market. It’s also worth noting that Google had promised not to combine DoubleClick ad data with its internal data from other Google properties, but abandoned that promise in 2016.

Additionally, the committee had concerns about Google’s use of Android by “conditioning access to Google’s must-have apps on favorable treatment for Google Search”.

What Happens Next?

The committee doesn’t have actual power to take action against any of these tech juggernauts.

What it can do, though, is send its recommendations to the Federal Trade Commission, Department of Justice, and Congress.

The recommendations by the committee include a wide variety of things:

  • Splitting up companies
  • Enact legislation to prevent favoring your own content over third parties
  • Make mergers more difficult
  • Require data interoperability

What I’m Doing

Since it seems increasingly likely that Congress is not going to do much (at least for the rest of 2020) here are a few actions I’m taking.

  • Switching from Google search to DuckDuckGo (you could also use Bing). While it’s not quite as good at delivering personalized results, I find that it’s pretty good in most other respects. Every browser and smartphone allows you to set your default search engine to something other than Google.
  • Buy from non-Amazon retailers. This one is especially challenging, since Amazon often has the fastest shipping options for online orders (especially if you’re a Prime member).
  • Stop using Facebook/Instagram/WhatsApp. Not only is this bad for Facebook, it’s good for mental health.
  • If you subscribe to any services on an iPhone or iPad, email the developers to find out if they offer payments outside the App Store. You may not get a discount, but at least all of your money is going to support the app developers.

About Colin Dorman

Colin is a freelance horn player and teacher, as well as a fan of tech of all sorts, aviation, and increasingly complex flight simulators. He also enjoys beer, bourbon and fitness - but not at the same time. You can find him on Facebook, Twitter, as well as right here at ColinDorman.com!