- Reports in recent days suggest that the wheels are turning on blockbuster antitrust investigations into Apple, Amazon, Facebook, and Google.
- The Federal Trade Commission and the Department of Justice have apparently carved up which of the big tech companies they would examine, should they begin antitrust proceedings.
- If investigations are launched, it could transform the big-tech landscape, potentially resulting in seismic breakups or giant fines.
- Read on to find out what antitrust proceedings could look like for the giant companies and which US agencies are likely to take the lead on any investigations.
- Visit Business Insider’s homepage for more stories.
The wheels are turning on what would be blockbuster US antitrust investigations into big tech.
Reports in recent days suggest that Apple, Amazon, Facebook, and Google could all face scrutiny after the Federal Trade Commission and the Department of Justice carved up which of the big tech companies they might examine.
President Donald Trump last year said the firms could be “very antitrust,” and appetite among Republicans and Democrats has increased for greater oversight of the tech monoliths.
Politicians from both major parties have been ramping up their rhetoric. Sen. Elizabeth Warren of Massachusetts has made breaking up big tech the rallying cry of her presidential candidacy, and Republican lawmakers have laid into the Silicon Valley elite with accusations of anti-conservative bias.
Add this to the fact that some of the companies have already received antitrust fines in the European Union – not to mention ongoing complaints and investigations – and it looks as if big tech could be headed for turbulence.
There is little detail about the substance of any investigations, but read on to find out what antitrust proceedings could look like for Apple, Amazon, Facebook, and Google and which US agencies are likely to take the lead.
Why: Apple is facing at least two antitrust complaints from tech-industry players relating to its control of the App Store. This could provide a clue as to where investigators might ask questions of Apple.
The music-streaming service Spotify filed an antitrust complaint with the EU in March, accusing Apple of “acting as both a player and referee to deliberately disadvantage other app developers.” Apple said Spotify was simply bidding to increase its profit margins.
Three months later two app makers filed a class-action suit in federal court in California, similarly complaining about Apple’s 30% cut. They also took issue with the $US99 annual fee Apple charges developers to host on the App Store.
Elsewhere, two parental screen-time-control apps complained after Apple removed them from its App Store. Apple said they were using a “highly invasive” technology called Mobile Device Management – the app developers said the decision to remove them coincided with Apple releasing its own Screen Time feature.
Apple was emphatic in its denial that the decision was rooted in quashing competition, asserting it had to do with security. On Monday, however, Apple backtracked, saying it would allow some apps to use MDM.
Who:Reuters reported that Apple had been designated as the territory of the Department of Justice in the recent divvying up of tech firms between the DOJ and the Federal Trade Commission.
No reports have said the DOJ is ready to investigate Apple, but should it receive a complaint, Apple will be within its purview.
The Supreme Court also paved the way for antitrust complaints against Apple in May, waving through a lawsuit by iPhone owners accusing the company of abusing the dominance of the App Store.
Why: Amazon’s size makes it a target for lawmakers looking to break up big tech, but more specifically its role as both a marketplace and a vendor has come under scrutiny.
Amazon tries to downplay its size – in his 2018 letter to shareholders, CEO Jeff Bezos insisted the company was still a “small player” in retail, as roughly 90% of shopping still happens offline.
But when it comes to online sales, Amazon is the biggest fish by a considerable margin, taking up 49% of market share. The next-biggest player, eBay, commands a little over 6% of the market.
The presidential hopeful Sen. Elizabeth Warren has consistently attacked Amazon’s business practices concerning small vendors, arguing that Amazon can use its masses of retail data to decide when to knock out smaller competitors with its own products.
“When Amazon can tilt the online marketplace in its own favour, small businesses see an immediate impact in their profits,”Warren said.
In a rare response, Amazon countered Warren, saying it didn’t use sellers’ data to plan its private product launches. “And sellers aren’t being ‘knocked out’ – they’re seeing record sales every year,” Amazon tweeted.
But it’s not just Warren who wants to put Amazon’s treatment of sellers under the microscope. Europe’s competition commissioner, Margrethe Vestager, announced in September that she was launching a preliminary investigation into Amazon. She said Amazon’s use of seller data would be scrutinised.
Who:The Washington Post reported that the FTC would be responsible for Amazon. It is not immediately clear whether the agency plans to launch any kind of investigation, although Vox reported shortly afterwards that the FTC has been questioning Amazon’s rivals about its business practices – namely the pricing for its logisitics service, its dual role as vendor and marketplace, and whether Amazon Prime undercuts competition.
Why: Though details about what a Facebook antitrust investigation might look like are thin, it would not be a big leap to assume that regulators might choose to inspect its ownership of Instagram and WhatsApp.
Calls for Facebook to be broken up have grown in volume after a series of missteps, including election interference on the social network in 2016 and the giant Cambridge Analytica data breach last year.
Leading those calls have been former Zuckerberg allies, including the early investor Roger McNamee and, more recently, the cofounder Chris Hughes. In a New York Times op-ed article, Hughes said Facebook, Instagram, and WhatsApp should be divided into three publicly traded companies.
“The American government needs to do two things: break up Facebook’s monopoly and regulate the company to make it more accountable to the American people,” he added. Facebook CEOMark Zuckerberg said the proposal “isn’t going to do anything to help.”
Facebook has already been clobbered with one antitrust ruling this year. Germany’s antitrust regulator told the firm it must stop forcing users to allow it to collect and combine their data from sources outside Facebook, like Instagram and WhatsApp.
Who: Reuters was among those to report that it would be the Federal Trade Commission that would oversee a Facebook antitrust investigation. The FTC is thought to be winding down an investigation into the Cambridge Analytica breach, which could result in a fine of up to $US5 billion for Facebook.
Why: Google’s sheer ubiquity as the world’s most popular search engine, which hoovers up reams of data about its users, and as the source of the mobile operating system for the vast majority of non-Apple smartphones (while also selling its own Pixel smartphones) could be sources of concern for lawmakers.
In Europe, the company has already been hit with three antitrust fines over the past three years. The European Commission has fined Google:
- $US2.7 billion in 2017 for promoting its own shopping service above competitors.
- A record $US5 billion in 2018 for abusing the dominance of its Android operating system.
- $US1.7 billion in 2019 over its AdSense advertising service.
Google is appealing all three fines, but the Android ruling has already resulted in change, with Google announcing it would make it easier for Android users to select competing browsers and search apps.
Who:The Wall Street Journal reported that the DOJ was gearing up to launch an antitrust investigation into Google. The scope of the investigation is unclear, but a Washington insider source told Business Insider that it’s likely to examine everything including Adtech, privacy, and Google search.
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