- 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.
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.
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)
Google Is Banning “Sugar Dating” Apps as Part of New Sexual Content Restrictions
The change essentially targets apps like Elite Millionaire Singles, SeekingArrangements, Spoil, and tons of other sugar dating platforms.
Sugar Dating Crackdown
Google has announced a series of policy changes to its Android Play Store that include a ban on sugar dating apps starting September 1.
The company’s Play Store policies already prohibit apps that promote “services that may be interpreted as providing sexual acts in exchange for compensation.”
Now, it has updated its wording to specifically include “compensated dating or sexual arrangements where one participant is expected or implied to provide money, gifts or financial support to another participant (‘sugar dating’).”
The change essentially targets apps like Elite Millionaire Singles, SeekingArrangements, Spoil, and tons of other sugar dating platforms currently available for download.
What Prompted the Change?
The company didn’t explain why it’s going after sugar dating apps, but some reports have noted that the move comes amid crackdowns of online sex work following the introduction of the FOSTA-SESTA legislation in 2018, which was meant to curb sex trafficking.
That’s because FOSTA-SESTA created an exception to Section 230 that means website publishers can be held liable if third parties are found to be promoting prostitution, including consensual sex work, on their platforms.
It’s worth noting that just because the apps will no longer be available on the Play Store doesn’t mean the sugar dating platforms themselves are going anywhere. Sugar daters will still be able to access them through their web browsers, or they can just sideload their apps from other places.
Still, the change is likely going to make the use of these sites a little less convenient.
See what others are saying: (The Verge)(Engadget)(Tech Times)
Organizers of a Wednesday walkout say they “will not return to silence” and “will not be placated by the same processes that led us to this point.”
After a week of growing criticism against its workplace culture, the CEO of Activision Blizzard has finally apologized for how the company first responded to allegations of sexual harassment and assault in its offices.
“Our initial responses to the issues we face together, and to your concerns, were, quite frankly, tone deaf,” CEO Bobby Kotick said Tuesday in a letter to employees. “It is imperative that we acknowledge all perspectives and experiences and respect the feelings of those who have been mistreated in any way. I am sorry that we did not provide the right empathy and understanding.”
In its initial response, Activision Blizzard denounced the disturbing allegations brought forth in a lawsuit by the California Department of Fair Employment and Housing (DFEH) as “irresponsible.” The company added that it came from “unaccountable State bureaucrats that are driving many of the State’s best businesses out of California.”
But many current and former employees soon disputed that claim. In fact, at the time, more than 2,500 had signed their name to an open letter condemning the company for its response, which they described as “abhorrent and insulting” to survivors.
In his letter, Kotick promised employees that Blizzard will take “swift action to be the compassionate, caring company you came to work for.”
As part of a series of new policies, he said the company will now offer additional employee support and listening sessions, as well as potential personnel changes to leadership.
“Anyone found to have impeded the integrity of our processes for evaluating claims and imposing appropriate consequences will be terminated,” he added.
Kotick also said Blizzard will add “compliance resources” to ensure that leadership is adhering to diverse hiring directives.
Lastly, he promised that the company will remove “inappropriate” in-game content. In a similar statement on Tuesday, Blizzard’s World of Warcraft team said it’s actively working to remove “references that are not appropriate for our world,” though it didn’t specify what those references were.
It now appears that many of the references being removed are of the game’s former Senior Creative Director, Alex Afrasiabi, who is cited in the lawsuit as someone who hit on and made unwanted advances at female employees. Moreover, the suit also directly accuses him of groping one woman.
“Afrasiabi was so known to engage in harassment of females that his suite” during company events “was nicknamed the “[Cosby] Suite” after alleged rapist Bill [Cosby],” the suit claims.
Organizers of a company-wide employee walkout, which was announced Tuesday and occurred Wednesday, still argue that Kotick’s latest message doesn’t address their larger concerns.
Among those are “the end of forced arbitration for all employees,” “worker participation in oversight of hiring and promotion policies,” “the need for greater pay transparency to ensure equality,” and “employee selection of a third party to audit HR and other company processes.”
“We will not return to silence; we will not be placated by the same processes that led us to this point.”
Ahead of the walkout, Blizzard reportedly encouraged its own employees to attend, saying those workers would face no repercussions and “can have paid time off” during the demonstration, according to The Verge.
Frito-Lay Workers End Nearly Three-Week Strike After Securing Higher Wages and a Guaranteed Day Off
Employees also negotiated an end to “suicide shifts,” which are two 12-hour shifts that are only eight hours apart.
Hundreds of Frito-Lay workers in Kansas have put an end to their nearly three-week strike over alleged mandatory overtime assignments that resulted in extremely long work weeks and so-called “suicide shifts.”
The term “suicide shift” refers to working two 12-hour shifts with only eight hours of rest in between. That can be especially hard on employees who claim to have worked up to 84 hours in a single week. For context, that’s 12 hours a day without a single day off.
One of the reasons workers have found themselves taking on more hours and days at plants is because consumer snacking has increased during the pandemic — so much so that Frito Lay’s recent net growth has exceeded every single one of its targets. That’s why at one point, the striking workers asked consumers to boycott Frito-Lay products in a show of solidarity.
The strikes began July 5 and concluded on July 23 following an agreement reached by union leaders and PepsiCo., Frito-Lay’s parent company. Under that deal, all employees will see a 4% wage increase over the next two years. They’ll also be guaranteed at least one day off a week, and the company will no longer schedule workers with only eight hours off between shifts.
Following the agreement, Anthony Shelton, the president of the union representing the workers, said that they’ve “shown the world that union working people can stand up against the largest food companies in the world and claim victory for themselves, their families and their communities.”
“We believe our approach to resolving this strike demonstrates how we listen to our employees, and when concerns are raised, they are taken seriously and addressed,” Frito-Lay said in a statement. “Looking ahead, we look forward to continuing to build on what we have accomplished together based on mutual trust and respect.”
The Long, Bitter Road to an Agreement
When the workers went on strike, they lobbed several very disturbing accusations against Frito-Lay.
In fact, the workers were pushed so hard that according to one employee who wrote in the Topeka Capital-Journal, “When a co-worker collapsed and died, you had us move the body and put in another co-worker to keep the line going.”
While Frito-Lay dismissed this account as “entirely false,” other employees continued to protest conditions in the plants. Many even argued the 90-degree temperatures they had to stand in to protest outside were preferable to the 100-degree-plus temperatures and smokey conditions in the factories.
During the strikes, PepsiCo. actively disputed that its employees are overworked, describing their claims as “grossly exaggerated” and saying, “Our records indicate 19 employees worked 84 hours in a given work week in 2021, with 16 of those as a result of employees volunteering for overtime and only 3 being required to work.”
It also said an initial concession more than met the striking employees’ terms, but the union backing those workers disagreed, and further negotiations were held until the final deal was reached.