A report from a key committee in the US Congress has accused tech giants Apple, Amazon, Facebook and Google of exploiting their significant market power in anticompetitive ways. After over 16 months of investigation, the House Judiciary Committee's Antitrust Subcommittee concluded that Congress and the antitrust enforcement agencies "need to take action that restores competition, improves innovation, and safeguards our democracy". It will be up to the new Congress elected in November to decide whether to take action on the report.
The committee launched the investigation into competition in digital markets April 2019, at the same time as the main competition regulators in the US, the Federal Trade Commission and the Justice Department, started their own probes into some of the large tech companies. Facebook has already faced action from the FTC over its privacy policies, while Google is reportedly set to hear charges from the DoJ in the coming weeks. State attorney generals are also looking into competition concerns at Google.
The House committee heard from the CEOs of all four companies in July, as well taking submissions from 38 antitrust experts and interviewing more than 240 market participants, former employees of the companies and other individuals. The resulting report of over 400 pages provides recommendations on how to "restore competition in the digital economy, strengthen the antitrust laws and reinvigorate antitrust enforcement".
Structural separation
The remedies proposed notably include structural separation, to prohibit the companies from operating platforms on which they also provide services alongside third-party providers. This conflict of interest is thought to favour their own services or products over those of rivals dependent on the same distribution platform, such as an online marketplace or app store.
Furthermore, the report recommends prohibiting platforms from engaging in self-preferencing; requiring platforms to make services compatible with competing networks to allow for interoperability and data portability; and mandating that platforms provide due process before taking action against market participants.
Consumer harm
In a response to the report, Google suggested the proposed actions could harm consumers. While it supports some of the recommendations, such as data portability and open mobile platforms, other plans like breaking up the companies or diluting the liability protections for internet platforms "would cause real harm to consumers, America's technology leadership and the U.S. economy--all for no clear gain," the company said. "Americans simply don't want Congress to break Google's products or harm the free services they use every day. The goal of antitrust law is to protect consumers, not help commercial rivals."
Amazon took a similar stance, saying these kind of "fringe notions" on antitrust issues would "destroy small businesses and harm consumers". The company defended its market position, saying it accounts for less than 4 percent of US retail spending and has a "mutually beneficial" relationship with third-party sellers on its platform. While it previously tried operating a separate platform for its own products, the two-store approach proved inconvenient and unpopular for both consumers and sellers, the company said.
Legislation awaited
In terms of competition law, the committee's report recommends powers to limit or block acquisitions that reduce competition, even if the takeover target is of a relatively small size. The main legislation - the Clayton Act, the Sherman Act, and the Federal Trade Commission Act - also needs to be updated "in line with the challenges of the digital economy", the report said, along with strengthening the FTC and the Antitrust Division of the Department of Justice.
Similar proposals are under consideration in the EU as part of the planned Digital Services Act, and some of the platform limits were included already in last year's so-called P2B regulation. Apple meanwhile is under investigation in the EU for the noted app market practices.
It will be up to the members of Congress to introduce legislation in the US if the matter is to progress further. With the current Congress divided between Democrats controlling the House and Republicans holding the Senate, there has been little movement in months on any new laws in the US. Any new proposals are likely to come after the new Congress takes its seats early next year.
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