The rise of global technology superstars Amazon, Apple, Facebook and Google created new challenges for the competition watchdogs who enforce antitrust laws.
The companies dominate markets in e-commerce and smartphones, search advertising and social-media traffic. An anti-monopoly crackdown that began under President Donald Trump is expected to continue under President Joe Biden, who is surrounding himself with outspoken advocates for vigorous antitrust enforcement against U.S. tech companies.
How far is the U.S. going?
In the final months of the Trump administration, the U.S. Justice Department sued Alphabet Inc.’s Google and the Federal Trade Commission sued Facebook Inc. over allegations that they violated antitrust laws. Those are the biggest antitrust actions against a tech giant since the U.S. sued Microsoft Corp. more than two decades ago. State attorneys general across the country joined the federal cases against Facebook and Google, while Texas led another group that sued Google over its role in the online advertising market. Also late in 2020, the House Judiciary Committee’s antitrust subcommittee released a report accusing Apple, Amazon, Google and Facebook of abusing their market power. That panel’s chairman, Democrat David Cicilline of Rhode Island, pledged to follow up with legislative proposals.
Are the tech giants really monopolies?
They’re powerful, for sure. In the U.S., Google and Facebook together collect more than half of digital advertising spending and Apple Inc. has about half 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.
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 quash competition.
How do tech giants abuse their power?
As the middlemen for today’s essential products and services, tech platforms have leverage over both producers and consumers. They have control over vast amounts of data about their customers, raising concerns about threats to privacy. And they compete with many of those that depend on their platforms, a potential conflict that is fueling calls for a breakup of the tech companies. 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.
What can be done short breaking up the companies?
Cicilline’s report recommended what he calls a Glass-Steagall law for the tech industry, a reference to the Depression-era law that separated commercial and investment banking. In the Senate, Democrat Amy Klobuchar of Minnesota proposed giving antitrust officials new tools to stop tech company mergers and crack down on anticompetitive conduct.
How often does the U.S. go after monopolies?
Until the Google and Facebook cases last year, the Microsoft lawsuit was the last major monopolization case brought by the U.S. The 20-year dry spell between those events is 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.
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. Lina Khan, whom Biden nominated to the FTC, who was one of the authors of the panel’s report.
What do the companies say?
That 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.