Connect with us

Business

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

Published

on

  • 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)

Business

“Cyberpunk 2077” Developer Agrees To Settle Lawsuit for $1.85M

Published

on

If approved, CD Projekt Red would pay just a small fraction of the $316 million it reportedly spent developing the game.


CDPR Agrees To Settle

Game developer CD Projekt Red (CDPR) has agreed to settle a class-action lawsuit related to its buggy launch of “Cyberpunk 2077” for $1.85 million, The Verge reported Thursday.

The lawsuit itself is actually a conglomeration of four different suits brought by shareholders who alleged that they were misled about the company’s financial performance. Since the game’s release, CD Projekt Red’s share price has fallen 54%.

The settlement must now be approved in court, but overall, it appears to be a small amount compared to the game’s $316 million budget. In fact, the game reportedly made $563 million in sales and only spent around $2.2 million on a refund campaign, though the developer’s overall refund cost for 2020 could have been as much as $51 million.

“Perhaps the plaintiffs didn’t have much of a case?” The Verge writer Sean Hollister speculated on why “it sounds like the lead plaintiffs and their lawyers negotiated for a fairly tiny sum here in exchange for ‘relinquish[ing] any and all claims against the Company and members of its Management Board.’”

“As expressly stated in the Term Sheet, execution of the Term Sheet does not imply admission of any responsibility on the part of the Company or any of the other defendants named in the case,” the negotiated settlement reads.

“Cyberpunk’s” Botched Launch

“Cyberpunk” was first announced in 2012, and for years, it was the subject of widespread fan anticipation. Seven years later, a release date of April 16, 2020, was given; however, that date was pushed back several times much to the ire of fans, some of whom even sent CDPR staff death threats.

The game was ultimately released amid fan pressure on Dec. 10, 2020, but it was so riddled with glitches that Sony infamously pulled “Cyberpunk” from its Playstation Store a week later, offering full refunds to all players who had purchased a digital copy. In June this year, “Cyberpunk” finally made its way back onto the Playstation Store following multiple patches and hotfixes from CDPR.

Despite “Cyberpunk” surpassing a massive 8 million pre-orders before launch, Bloomberg reported last week that “Where analysts had originally expected Cyberpunk sales of 30 million units in the year after the game’s release, they now expect 17.3 million copies to have been sold in that time.”

In October, CDPR delayed planned next-gen updates for both “Cyberpunk” and “The Witcher 3” until the first and second quarters of 2022, respectively.

“Apologies for the extended wait, but we want to make it right,” the developer said.

See what others are saying: (The Verge) (Engadget) (Video Games Chronicle)

Continue Reading

Business

E.U. Court Rules That All Member Nations Must Recognize Same-Sex Parents

Published

on

The decision comes after a child named Sara was left without a country to call home because she had two mothers.


The Child With No Citizenship

The European Court of Justice, the European Union’s highest court, ruled Tuesday that all 27 of its member states must recognize same-sex parents and their children as a family.

The ruling stems from a case involving two women and their newborn daughter, whose status as a family originally varied between member nations. As a result, the couple’s daughter was left without citizenship in any country.

The two women, Bulgarian citizen Kalina Ivanova and Gibraltar-born British citizen Jane Jones, found themselves unable to take their newborn child Sara out of Spain after she was born in the country. Because Spain recognizes same-sex marriage, both Ivanova and Jones were registered as the girl’s legal mothers on her Spanish birth certificate.

However, under Spanish law, Sara was unable to gain citizenship in the country since neither of her parents were Spanish citizens. On top of that, she was denied British citizenship because Jones “was born in Gibraltar of British descent, and under the British Nationality Act (1981), [Jones] cannot transfer citizenship to her daughter,” the LGBTQ+ advocacy group ILGA-Europe said in a press release.

That left the couple with one other option: register Sara as a Bulgarian citizen. Still, the Bulgarian government refused to issue Sara a legally-recognized birth certificate, arguing that she is ineligible to have two mothers. Officially, Bulgaria does not recognize either same-sex marriages or same-sex registered partnerships. 

“Currently, the child has no personal documents and cannot leave Spain, the country of the family’s habitual residence,” lLGA-Europe said. “The lack of documents restrict Sara’s access to education, healthcare, and social security in Spain.”

EU Ruling

In its Tuesday decision, the European Court of Justice ruled that children in the EU have a legal right to freely move between countries given that such a right is afforded to all EU citizens. Because of this, all countries are now required to uniformly recognize the child’s parents, even if they are of the same sex. 

“That refusal could make it more difficult for a Bulgarian identity document to be issued and, therefore, hinder the child’s exercise of the right of free movement and thus full enjoyment of her rights as a Union citizen,” the court said

Despite some member states like Bulgaria not legally recognizing same-sex couples, the court stressed that its ruling “does not undermine the national identity or pose a threat to the public policy” of those nations.

That’s because while Bulgaria doesn’t have to issue its own birth certificate for Sara, it does have to recognize the Spanish birth certificate and issue its own identity card or passport for Sara.

“We are thrilled about the decision and cannot wait to get Sara her documentation and finally be able to see our families after more than two years,” Sara’s parents said according to the ILGA-Europe release. “It is important for us to be a family, not only in Spain but in any country in Europe and finally it might happen. This is a long-awaited step ahead for us but also a huge step for all LGBT families in Bulgaria and Europe.”

See what others are saying: (The Hill) (Insider) (Politico)

Continue Reading

Business

GoFundMe Campaign Raises $8,700 for Waitress Who Was Fired After Not Sharing $4,400 Tip With Co-Workers

Published

on

The waitress said this was the only time management had ever tried to force her to pool a tip in her three-and-a-half years working at the restaurant.


Waitress Gets Fired After Receiving Massive Tip

An Arkansas waitress has received over $8,700 in donations online after she was fired from her job for refusing to split her half of a $4,400 dollar tip with the rest of the restaurant’s crew.

That waitress, Ryan Brandt, told local Nexstar outlet KNWA last week that she and another server received the tip after waiting on a group of more than 40 people at the Oven & Tap restaurant in Bentonville.

“It was an incredible thing to do and to see her reaction was awesome, to see what that meant to her, the impact that it’s had on her life already,” Grant Wise, who was part of the party Brandt served, told the outlet.

According to KNWA, Wise called the restaurant before his large party arrived and asked about its tipping policy since they intentionally planned to donate $100 each as part of a way to thank restaurant workers. At the time of his call, Wise said he was told the money would go directly to his party’s servers. 

“We knew servers were really hit hard through COVID, and it was something that we had come up with to help give back,” Wise told KFSM.

The outcome, however, was much different. After receiving the tip, Brandt and the other server were allegedly told by a manager that they needed to pool the tip with the rest of the workers on duty. Brandt told KNWA she had never once been asked to pool her tips in her three-and-a-half years at the restaurant prior to this.

Complying meant Brant would take home just 20% of her half of the tip.

At some point before leaving, Brandt informed Wise that her tip would be pooled with the rest of the staff. Wise, who had intended the money to only go to his servers, then asked management to return his tip, which he gave to Brandt directly outside the restaurant. The following day, Brandt said she was fired over the phone.

“It was devastating,” Brandt told local outlets. “I borrowed a significant amount for student loans. Most of them were turned off because of the pandemic but they’re turning back on in January and that’s a harsh reality.”

Oven & Tap did not speak on Brandt’s firing in its initial statement. Instead, it only said, “After dining, this large group of guests requested that their gratuity be given to two particular servers. We fully honored their request. Out of respect for our highly valued team members, we do not discuss the details surrounding the termination of an employee.”

In a follow-up statement, Oven & Tap owners Mollie Mullis and Luke Wetzel said, “The server who was terminated several days after the group dined with us was not let go because she chose to keep the tip money.”

“We recognize and regret that a recent incident in our restaurant could have been handled differently by reminding our team how we would be splitting any tips prior to the event, however, our policy has always been to participate in a tip pool/share with the staff. Tip sharing is a common restaurant industry practice that we follow to ensure all of our team members are adequately compensated for their hard work.”

Oven & Tap has still not specifically commented on why it fired Brandt, but Brandt told KNWA she believes it’s because she violated company policy by telling Wise that his party’s tip was going to be pooled. 

Online Fundraising Campaigns for Brandt

After learning of Brandt’s firing, Wise created a GoFundMe, which ultimately raised $8,732 for Brandt.

“[Brandt] is, from what I can tell, a very kind woman that was working two jobs to get by through the pandemic,” he said in his initial post. “She has incredible aspirations to grow her own business and I can tell has a servants-heart.”

Wise provided an update Tuesday saying that instead of closing the GoFundMe, he will keep the campaign open to raise additional money to “pay it forward” to a future group of restaurant staff who will wait on his party.

In January, we are going to host another $100 Dinner Club and I have invited [Brandt] to be our ‘Guest of Honor’!” he said. “Any dollar amount raised over the $8,732 that has already been raised and is being paid out to [Brandt] will be given directly to the staff of the restaurant we decide to eat at.”

“We will be working to ensure through this that all staff in the restaurant are tipped so everyone feels blessed by our dinner.”

As of Tuesday morning, the GoFundMe page has raised over $9,100.

See what others are saying: (KNWA) (Insider) (KFSM)

Continue Reading