Google, Facebook are super monopolies on the scale of Standard Oil: Roger McNamee, in 2017
Of Tech giants, monopolies, and antitrust!
Big tech giants have face antitrust and anticompetitive reports, fines, judgements for years! The latest one could be the biggest of them all.
Antitrust laws apply to every industry and to every business level. They are designed by governments to ensure there’s fair competition in open markets!
They restrain and prohibit practices that include, but not limited to price fixing, anti-competitive mergers, predatory acts, etc. In simpler terms, it prevents companies from profiting or using their dominant positions to play dirty.
In India, every merger or acquisition comes under the purview of the Competition Act, 2002. According to mondaq.com,
“The Competition Act apart from prohibiting anti-competitive agreements and the abuse of dominant position, also mandates the Competition Commission of India (“CCI”) to regulate combinations (mergers and acquisitions) with a view to ensure that there is no adverse effect on the competition in India.”
Without such regulations and laws in place, us consumers would be forced to pay higher prices for goods and services they need!
Some companies position themselves as market leaders, allowing them to dictate market norms, but the government has stepped in to stop their motives!
One such case I can recall is Microsoft’s Antitrust case from way back in the 1990s? I was 10 years old then, but did read about it via a case study on monopolistic behaviours a few years ago!
For the virtually unknown, back in 1998, The Department of Justice (DoJ) filed antitrust charges against Microsoft to determine whether their bundling of additional programs constituted monopolistic actions!
When charges were levied, DoJ passed a judgement to partition Microsoft into two distinct entities. Microsoft eventually appealed the verdict, where the DoJ decided to settle with Microsoft and abandon the requirement to break up the company!
Since then, Microsoft did lose market share. The lessons Microsoft learned continue to resound in their business practices!
History repeated itself 2 days ago, when The House Judiciary Committee, a standing committee of the United States House of Representatives, released a 449-page report with conclusions on whether Amazon, Facebook, Google, and Facebook are violating antitrust laws.
The report talks about criticizes these companies for buying competitors in their space to create a monopoly, preferring own services, and holding power over small businesses that use their platform, this degrading competition and stifling innovation!
Such a monopoly, according to the report, was last seen during the days’ of oil barons and railroad tycoons. It mentions concrete recommendations that could help make the tech industry competitive again.
majority recommendations, which would ensure regulation of the goliaths like cable companies and phone networks are, would restrict which lines of business they could operate in with the potential of splitting the companies into multiple entities.
To put it simply, today, these goliaths are managing the marketplace and competing on it, at the same time, taking advantage of their power over the smaller players!
The recommendations would prevent the tech giants from using their privileged position to gain an unfair advantage.
There is an additional recommendation that all acquisitions by the tech giants be considered anti-competitive! They would only be competitive if they could prove it is necessary for serving the public interest at large. That means the tech giants cannot buy anyone unless they can prove the acquisition is for the common good!
It has also urged Congress to consider commercial non-discrimination rules that would make the platforms an even playing field for everyone!
The findings also mention that due to the lack of oversight, it has tremendously degraded the user experience in many cases because tech companies don’t have any competition to do better — particularly when it comes to privacy!
Antitrust laws are not only there in the US, but all across the world!
Since 2010, Google has been hit with three antitrust charges in the EU. The last antitrust fine of €1.5 billion was levied last year. According to the Verge: it was on the grounds of “Using their dominant position by forcing customers of its AdSense business to sign contracts stating they would not accept advertising from rival search engines. The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate!”
Over the past few months, Apple and Google have had encounters with Spotify, Fortnight, PayTM, etc. They banned the apps from their platform, following disagreements over not following policies.
Closer to home, Google is reeling off a recent furore over its Google Tax and pressuring apps to use its platform system, both of which have been pushed out to 2022.
Yesterday, they had their fourth encounter with the CCI, since 2018. This time, it’s on accusations of abusing its Android operating system’s position in the smart television segment.
The CCI, since June, has been looking into the barriers Google creates to allow TV makers to create Operating Systems using Amazon Fire TV’s OS.
What makes this case with CCI even stronger is, according to Inc42, a recent antitrust case has been filed that alleges Google’s agreement stops Xiaomi and TCL from using the Android system and a modified version on different devices. That means if they sell phones using Android, they cannot sell TVs using Amazon’s Fire TV OS.
Of course, with all antitrust cases, judgements, or fines, the tech giants will not keep quiet. Amazon has already released a statement that it is not anti-competitive because it controls 4% of the US retail market. In contrast, the report by the committee pegged Amazon at controlling 40% of all online US retail sales!
For the US, the next set of actions will depend on the November elections, but one thing is sure, this could trigger other antitrust suits across the globe against the tech giants!
What do you think the outcome would be on the proceedings against the tech giants in the US? Would that have repercussions on how they do business in India or elsewhere in the world?