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House Subcommittee Says Apple, Amazon, Facebook, and Google Abused Monopoly Power

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  • The House Judiciary subcommittee on antitrust, commercial and administrative law released a major report on four companies: Apple, Amazon, Facebook and Google, saying that they all engaged in anti-competitive monopoly tactics
  • Either via acquiring their competition, using self-preferencing tactics, or taking advantage of their massive stockpiles of consumer data, the report says that these companies have established and maintained dominance and have exploited their power to minimize competition. 
  • The subcommittee has suggested sweeping antitrust reform in response to this, an action that is supported by Democrats but opposed by Republicans. 
  • The companies have responded to this report, defending themselves and their practices. 

Findings in Subcommittee Report

The House Judiciary subcommittee on antitrust, commercial and administrative law released a lengthy report on Tuesday accusing Apple, Amazon, Facebook and Google of engaging in anti-competitive tactics to enjoy monopoly power in their respective arenas. 

The report was the result of a 16-month investigation into those companies and is around 450 pages long. The subcommittee has a Democratic majority and has suggested sweeping reform to antitrust laws as a result of their findings. 

During the investigation, the CEOs of each company gave testimonies about their business practices and the evidence suggesting that they have exploited their power in digital markets in abusive ways. The report says their answers were “often evasive and non-responsive, raising fresh questions about whether they believe they are beyond the reach of democratic oversight.”

While the report notes that each company is different, it concludes that their business practices all have the same issues and that each acts as a gatekeeper in key channels of distribution.

“By controlling access to markets, these giants can pick winners and losers throughout our economy,” the report says. “They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them.”

It also claims that these companies use their gatekeeper status to maintain their power by surveilling potential rivals so they can either buy them out, copy them, or cut out their competitive threats by other means. 

“Whether through self-preferencing, predatory pricing, or exclusionary conduct, the dominant platforms have exploited their power in order to become even more dominant,” the subcommittee wrote. 

“To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons,” the report adds. “Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price.”

Amazon and Facebook Acquisitions

The report says that Amazon got to the top by acquiring competitors, and now, the company’s control reaches across business lines “in ways that undermine free and fair competition.”

“As a result of Amazon’s dominance, other businesses are frequently beholden to Amazon for their success,” the report says. 

Much of the subcommittee’s findings with Amazon pertain to its relationship with its third-party sellers. There are 2.3 million active third-party sellers on the platform, 37% of which rely on Amazon for their sole source of income. While Amazon publicly calls their third party sellers “partners,” documents studied in the report reveal that behind closed doors they are referred to as “internal competitors.” The report says this creates an inherent conflict of interest in the company, which then incentives Amazon to exploit its access to competing seller’s data and information. 

The report also claims that Amazon’s ability to acquire so much of its competition has not only led to fewer consumer choices but has also reinforced its stockpile of consumer data. 

“Amazon is first and foremost a data company, they just happen to use it to sell stuff,” a former employee told the subcommittee. 

The report accused Facebook of similar acquisition and data exploitation tactics. 

“The company used its data advantage to create superior market intelligence to identify nascent competitive threats and then acquire, copy, or kill these firms,” the report says.

“In the absence of competition, Facebook’s quality has deteriorated over time, resulting in worse privacy protections for its users and a dramatic rise in misinformation on its platform.”

One of Facebook’s largest and most prominent acquisitions occurred back in 2012 when the social media giant absorbed Instagram. Instagram is now so massive that Facebook’s biggest competition is, in many ways, itself. A former Instagram employee said that the head of the app wanted Instagram to grow as widely as possible, which was discouraged by Facebook CEO Mark Zuckerberg, who did not want the photo-sharing app to compete with his social networking platform.

“It was collusion, but within an internal monopoly,” the employee said. “If you own two social media utilities, they should not be allowed to shore each other up. It’s unclear to me why this should not be illegal. You can collude by acquiring a company.”

Self-Preferencing at Apple and Google 

When it came to Apple, much of the subcommittee’s findings had to do with the App Store. The report said that while the company’s ecosystem has “significant benefits” for both app developers and customers, the company still functions on an extreme and controlling bias. This control creates barriers for competition and allows Apple to discriminate against rivals so it can promote its own apps.

“Apple also uses its power to exploit app developers through misappropriation of competitively sensitive information and to charge app developers supra-competitive prices within the App Store,” the subcommittee said. 

When it comes to Google, the report says that small businesses, entrepreneurs and major corporations alike depend on the web giant for traffic and have no alternate search engine to adequately serve as a substitute. The report accuses Google of conducting an “an aggressive campaign to undermine vertical search providers, which Google viewed as a significant threat.”

“Google appears to be siphoning off traffic from the rest of the web, while entities seeking to reach users must pay Google steadily increasing sums for ads. Numerous market participants analogized Google to a gatekeeper that is extorting users for access to its critical distribution channel, even as its search page shows users less relevant results,” the report says. 

The report also says that Google uses anti-competitive contracts. For example after buying the Android operating system, Google used contractual restrictions so that Google’s monopoly could extend beyond desktop to mobile. Those contracts required Google apps to be pre-installed or given default status. 

Congressional Suggestions

As a result of these findings, the subcommittee said that there is a “pressing need for legislative action and reform.” The report then laid out extensive and detailed suggestions, which would lead to some of the most sweeping antitrust laws against these tech giants. Those reforms include addressing anti-competitive conduct in digital markets, strengthening merger and monopolization enforcement, and improving the sound administration of the antitrust laws.

The report listed out dozens of potential policies to that could be in this kind of legislation, including enacting nondiscrimination requirements that would prevent these companies from favoring their products and boosting them ahead of rivals; a presumptive prohibition against future mergers and acquisitions by the dominant platforms; reasserting the anti-monopoly goals of the antitrust laws and their centrality to ensuring a healthy and vibrant democracy; and restoring congressional oversight of antitrust laws and bringing federal antitrust agencies to their full strength.

These recommendations come from House Democrats and are not fully supported by Republicans. While many on the right oppose much of what the Democrats have put on the table when it comes to this, some see it as a starting point for negotiations.

Company Responses

The tech companies, for their part, are all on the defense when it comes to the report’s findings and suggestions. All four are advocating against any legislation that would limit their practices and maintaining that none of their behavior has been anti-competitive. Now, as far as what these companies are saying, well they all seem to be on the defense. 

“All large organizations attract the attention of regulators, and we welcome that scrutiny. But large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong,” Amazon said in a blog post. 

Facebook told CNBC that the company is an American success story with plenty of competition. 

“Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people. Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses,” the company added. 

Apple released a statement with similar messaging to that of Amazon and Facebook.

“We have always said that scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions reached in this staff report with respect to Apple,” the company said.

“We’ve built the App Store to be a safe and trusted place for users to discover and download apps and a supportive way for developers to create and sell apps globally.”

Google also put out a blog post addressing the report, saying that the suggestions laid in it are not best for the American people. 

“Americans simply don’t want Congress to break Google’s products or harm the free services they use  every day,” Google wrote. “The goal of antitrust law is to protect consumers, not help commercial rivals.”

See what others are saying: (CNBC) (New York Times) (Washington Post)

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Department of Justice Files Antitrust Suit Against Google Alleging Unlawful Monopoly

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  • The Department of Justice is filing an antitrust lawsuit against Google, accusing it of illegally maintaining its monopoly by using its hefty ad revenue to engage in exclusionary contracts that block competition. 
  • An example of this would be Google’s arrangement with Apple to be the default browser on Safari. The Department thinks this agreement makes it impossible for competition to break through. 
  • Google has defended itself and says that it does make room for competition, but that consumers choose Google of their own volition. 
  • This is one of the largest antitrust suits against a major tech company in years and could be a long legal battle. Depending on the outcome, there could be major implications for other tech companies outside of Google. 

DOJ Files Suit Against Google

The Department of Justice announced Tuesday that it is filing an antitrust suit against Google, launching one of the largest cases of its kind against a tech company in decades. 

The suit will hurl multiple allegations against the tech giant, including claims that it maintains its monopoly via unlawful exclusionary and interlocking agreements and contracts that block the growth of competition. The Justice Department is claiming that the company spends billions of dollars in ad revenue to pay major phone and tech companies like Apple to make Google the default search engine on web browsers. 

The lawsuit also alleges that Google has arrangements to make sure its search application is preloaded and cannot be deleted on mobile Android devices, which the department says hurts and prevents competition. 

An action like this from the Justice Department has been highly anticipated for some time now. In the summer of 2019, Department officials announced a broad review of the practices of big companies, including Google. Their investigation into the company has lasted since and has included probes into several aspects of the Silicon Valley behemoth. 

“An antitrust response is necessary to benefit consumers,” Jeffrey A. Rosen, deputy Attorney General said in a briefing. “If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google.”

Google’s Dominance on the Internet 

The Attorneys General from eleven states will be joining the suit, and many more may decide to hop on as the legal battle continues. It could take years for this to play out and be resolved. Pending the results, it could also have major implications for other big tech companies. 

Google’s dominance across the internet is prominent. According to data from Vox, when it comes to searching, the company takes up 92% of the market, with its biggest competitor, Bing, owning just a small sliver of that space. When it comes to smartphone operating systems, it takes up 85% of the market. For web browsers, it takes up 66%. 

The Justice Department is not the only part of the government to recently take aim at Google. In the first week of October, a House subcommittee released a report accusing Google, as well as Facebook, Amazon and Apple, of holding and abusing monopoly power in their respective industries. That report mentioned anti-competitive contracts at Google. The House suggested that there was a “pressing need for legislative action and reform” when it comes to monopolies at major tech companies. 

Google’s Response

Google has repeatedly denied that it holds an unlawful monopoly. In a Tuesday statement, the company maintained that it allows for healthy competition and condemned the Justice Department’s choice to bring an antitrust suit forward.

“Today’s lawsuit by the Department of Justice is deeply flawed,” the statement said. “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”

This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”

When it came to specifics in the suit, Google claimed the Justice Department was relying on “dubious antitrust arguments.” The company compared the agreements it has with companies like Apple to a cereal brand paying a grocery store to stock its boxes at eye level.

When it comes to Apple specifically, Google claims that it is the default in Safari because Apple believes Google to be the best search engine. Google also said their agreement is not exclusive and that Bing and Yahoo are also featured in Safari.

“This isn’t the dial-up 1990s, when changing services was slow and difficult, and often required you to buy and install software with a CD-ROM,” Google argued. “Today, you can easily download your choice of apps or change your default settings in a matter of seconds—faster than you can walk to another aisle in the grocery store.”

“This lawsuit claims that Americans aren’t sophisticated enough to do this. But we know that’s not true.”

While it will take several years for this case to be resolved, many are analyzing what the potential outcomes may be. The Wall Street Journal said that if Google loses, there could be court-ordered changes to its practices, potentially to create openings for new rivals. However, the lawsuit will not immediately specify specific solutions. That step will come further down the road. 

If Google wins this, it could throw a wrench in the government’s growing plans to go after big tech companies. Other investigations could get complicated or foiled, and it could mean that this issue might have to move into Congress’ hands.  

See what others are saying: (Vox) (Wall Street Journal) (CNN)

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Thousands of Amazon Workers Demand Paid Time Off To Vote

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  • Around 4,000 Amazon tech workers signed a petition Tuesday that calls for eight hours of paid time off to be made available for employees to use up until Election Day for voting-related activities, including voting, registering, and volunteering.
  • Amazon, which is the second-largest employer in the U.S., does not currently have a companywide policy that offers its over 1.3 million workers paid time off to vote.
  • By contrast, companies like Walmart, Facebook, Apple, Uber, Starbucks, and dozens of others offer some sort of paid allotted time for voting.
  • Amazon says employees can request time off to vote, but the number of hours and pay it will provide depends on local laws.
  • Critics note that while some states require employees to be excused and paid for a few hours if voting conflicts with work schedules, several battleground states, including Florida and Pennsylvania, do not.

Employees Back Petition

Thousands of Amazon tech workers backed a petition Tuesday urging the company to offer employees paid time off to vote on or before Election Day.

Amazon is the second-largest employer in the country, with over 1.3 million U.S. workers, including Whole Foods employees. However, it does not have a companywide policy in place that offers paid time off to participate in federal elections.

For comparison, Walmart, which is the nation’s largest employer, offers up to three paid hours for its employees to vote. Other companies like Facebook, Apple, Uber, Twitter, and Starbucks also provide allotted time for voting. Some companies, like Patagonia, are even closing their doors completely on Election Day, while stores like Best Buy are reducing hours.

Supporters of such policies point out that for many Americans, voting, especially during a pandemic, can mean hours-long lines and other unexpected delays.

Because of this, on Tuesday, more than 4,000 Amazon tech workers added their support to a petition that was created internally that morning by Amazon Employees for Climate Justice.

That group formed in 2018 to put pressure on the company to commit to reducing fossil fuel emissions, but has expanded its focus to speak out against poor working conditions and other issues.

The petition calls for eight hours of paid time off to be made available for employees to use up until Election Day for voting-related activities, including registering to vote and volunteering.

Amazon Responds

However, on the other side of the issue, Amazon spokeswoman Jaci Anderson said that the company has given employees information on how to register to vote and request time off.

“In all 47 states with in-person voting, employees that lack adequate time before or after their scheduled workday to vote, can request and be provided excused time off,” she explained. “The number of hours and pay provided to employees varies by state in line with local laws.”

It appears that for now, Amazon doesn’t want to make paid time off for voting a company-wide policy and instead will only comply with local laws.

That’s a big deal because, although many states require employees to be excused and paid for a few hours if voting conflicts with work schedules, several battleground states, including Florida and Pennsylvania, do not.

See what others are saying: (NBC News) (CNN) (The New York Times)

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Facebook Bans Holocaust Denial, Reversing Previous Policy

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  • Facebook announced Monday that it was expanding its hate speech policy to ban content that denies or distorts the Holocaust, a significant reversal from Mark Zuckerberg, who previously said he would leave the content up because it was not “intentional.”
  • In a blog post, the company cited the rise of antisemitism and lack of knowledge about the Holocaust among young people as the reasoning behind their decision.
  • While many applauded the move, they also argued that Facebook could have done this years ago and that the company was only taking action now because of pressure campaigns like Stop Hate for Profit.
  • Others also noted that the company made similar changes this week like banning QAnon and anti-vax ads, and argued Facebook was only reversing these policies to get good press ahead of the election.

Facebook Reverses Holocaust Denial Policy

Facebook will now ban all content that denies or distorts the Holocaust, the company announced Monday, reversing a years-long policy promoted by CEO Mark Zuckerberg.

Zuckerberg has long argued that his platform should not be an “arbiter of truth” and intervene in questions of free speech. In 2018, he told Recode that while he found Holocaust denial “deeply offensive,” as a Jewish person himself, he did not think Facebook should regulate it.

“At the end of the day, I don’t believe that our platform should take that down because I think there are things that different people get wrong,” he said. “I don’t think that they’re intentionally getting it wrong.” 

Now, Zuckerberg seems to have backtracked entirely, and in a Facebook post on Monday, he said the company would be expanding its hate speech policy to include Holocaust denial.

“We’ve long taken down posts that praise hate crimes or mass murder, including the Holocaust,” he wrote. “But with rising anti-Semitism, we’re expanding our policy to prohibit any content that denies or distorts the Holocaust as well.”

“I’ve struggled with the tension between standing for free expression and the harm caused by minimizing or denying the horror of the Holocaust,” Zuckerberg continued.

“My own thinking has evolved as I’ve seen data showing an increase in anti-Semitic violence, as have our wider policies on hate speech.” 

Rise in Antisemitic Violence and Holocaust Ignorance

The claim that antisemitism and anti-Semitic violence is rising is one that has been backed up by numerous recent reports. In May, the Anti-Defamation League (ADL) reported that 2019 saw the highest level of antisemitic incidents since the organization first started tracking in 1979.

This general trend has been supported by other organizations, including the Federal Bureau of Investigation, which reported that in 2018 that the number of anti-Jewish hate crimes had increased by nearly 40% from 2014.

However, that rise also goes beyond the U.S., which is something Facebook noted in the official blogpost announcing the policy change. In addition to “the well-documented rise in anti-Semitism globally,” the platform also said its decision was supported by “the alarming level of ignorance about the Holocaust, especially among young people.”

The company specifically noted a recent study that found that almost one in four U.S. adults aged 18-39 “said they believed the Holocaust was a myth, that it had been exaggerated or they weren’t sure.”

The study, which went viral last month following its publication, also found generally shocking levels of ignorance that Gen Z and Millenial Americans had about the Holocaust.

Among other things, that study reported that nationally, 63% of respondents did not know 6 million Jews were murdered during the Holocaust, and one in every eight said they had not even heard about it before.

Perhaps most relevant to Facebook’s new policy, the study also found that nearly half of people said had seen Holocaust denial or distortion in posts on social media or elsewhere online. 

Facebook Accused of Fostering Antisemitism

As is the case with other forms of hate speech and conspiracies, Facebook has long been accused of letting antisemitism flourish by allowing Holocaust denial on the platform.

In July, the ADL published an extensive report on the issue titled “Facebook Has a Holocaust Denial Problem.” Among other things, that report found that both public and private Holocaust denial groups that the platform shared anti-Semitic content that violated Facebook’s existing and long-held community guidelines.

The same month that report was published, the ADL also launched the Stop Hate for Profit campaign, which involved an ad boycott of Facebook from over 1,000 major companies as well as a separate campaign where celebrities froze their Instagram and/or Facebook accounts for one day. 

While some said those efforts fell short, a number of people applauded Facebook’s Monday announcement and called the move a win for the campaign.

“Good news—another win for #StopHateForProfit: Facebook should have banned Holocaust denial long ago, but better late than never,” actor Sacha Baron Cohen, who has been a vocal critic of Facebook, tweeted.

Many others also hit on the point that this decision from Facebook was a good step, but it should have been done long ago. In a statement, ADL CEO Jonathan Greenblatt commended the move, but noted that the ADL had been encouraging the platform to take this step for almost 10 years.

Greenblatt also implied that despite how Facebook may have presented the decision in their remarks, the company was not taking the action out of goodwill for the Jewish community, but rather because of external pressure from Stop Hate for Profit and other campaigns.

“As Facebook finally decides to take a stance against Holocaust denial and distortion, they claim it is because of their work with the Jewish community over the past year,” he said. “We question this claim because if they had wanted to support the Jewish community, this change could have been implemented at any point in the last nine years.”

Questions Over Timing

Other’s also had similar questions about the timing of the decision, noting that in the last two weeks alone, Facebook has made some major reversals, including saying it will temporarily stop all political ads after the election and announcing it will ban QAnon. On Tuesday morning, the company also announced it will start banning anti-vax ads.

As a result, many argued that, despite years of pressure, Facebook is only choosing to crack down on these issues now to get good press and appear as though they are addressing deep-rooted issues ahead of Election Day.

While plenty of people have still said these new changes are better late than never, others claim they were too little too late, pointing out that Facebook had four years to address these issues, but waited until the election was already well underway.

Facebook has been criticized both for its oversized role in allowing the spread of misinformation on the platform in the lead-up to the 2016 election and for not doing enough to address those issues in preparation for the 2020 election.

Also on Monday, a new study published by the German Marshall Fund Digital reported that engagement with misleading websites on Facebook has more than tripled since the 2016 election, despite all the so-called achievements Facebook has touted in this area, and all the millions of dollars it poured into these efforts.

See what others are saying: (The New York Times) (TIME) (The Guardian)

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