- 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 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)
Apple Will Cut Its App Store Commission Fee in Half for Small App Makers
- In January, Apple will launch its Small Business Program, which cuts its 30% App Store commission fee in half for developers with less than $1 million in annual net sales on its platform.
- The move comes as Apple faces growing scrutiny from lawmakers and businesses slamming it for what they call anti-competitive practices in its App Store.
- While some view the change as Apple extending an olive branch to developers, larger companies that have criticized its App Store policies, like Spotify and Epic Games, called the program a “‘window dressing” and a calculated move to preserve its monopoly.
- According to the analytics firm Sensor Tower, the top 1% of app publishers generate 93% of the revenue across the App Store and Google’s Play Store.
Apple’s Small Business Program
Apple said Wednesday that it will cut its App Store commission fee in half for developers with less than $1 million in annual net sales on its platform.
The move is part of its new Small Business Program and will go into effect on Jan. 1.
Since Apple currently takes a 30% commission from the total price of paid apps and in-app purchases, this change cuts the fee down to 15% for small and new developers.
This is a pretty major move coming from Apple, and many are describing it as the company’s attempt at extending an olive branch to developers because lawmakers and businesses around the world are focusing intensely on its App Store business practices. Many have already faulted Apple for anti-competitive and unfair behavior.
Big Companies React
At first glance, it actually does seem a little surprising that Apple would do this. In its annual filing with the SEC last month, Apple said reducing its App Store commission rate could hurt its financial results since it’s a major revenue point for its business.
However, Apple will continue to charge top-grossing apps its 30% fee, so it’s very likely that the financial impact of this change could be minimal.
In fact, several experts note that apps are typically a sort of “winner-takes-most” kind of business. According to a 2019 estimate from the app analytics firm Sensor Tower, the top 1% of app publishers generate 93% of the revenue across the App Store and Google’s Play Store.
The news is definitely good for small businesses, especially those hurting amid the pandemic. It also opens doors for those looking to add more virtual offerings under their businesses.
Still, the big companies who have been critical of Apple won’t see it as helpful. Epic Games, for instance, which is still in legal battles with Apple, released a statement criticizing the move.
“This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally,” it said.
“By giving special 15 percent terms to select robber barons like Amazon, and now also to small indies, Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30 percent tax on most in-app purchases. But consumers will still pay inflated prices marked up by the Apple tax.”
Spotify, which has also challenged Apple’s App Store fees before, also commented on the matter.
“Apple’s anti-competitive behavior threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious,” it said.
“While we find their fees to be excessive and discriminatory, Apple’s tying of its own payment system to the App Store and the communications restrictions it uses to punish developers who choose not to use it, put apps like Spotify at a significant disadvantage to their own competing service. Ensuring that the market remains competitive is a critical task.”
“We hope that regulators will ignore Apple’s ‘window dressing’ and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all,” it concluded.
Conservatives Flock to Parler After Outrage Over Facebook and Twitter Policies
- Since the election, millions of people have been joining alternative social media platforms like Parler that have much more lax content regulations than traditional sites.
- Last week, Parler was the most downloaded app on both Android and Apple devices, and the company’s user base more than doubled from 4.5 million to 10 million.
- Rumble, a platform that bills itself as an alternative to YouTube, has also seen a massive bump in new users, a fact that the company’s CEO credited in large part to recent traffic from Parler.
- Numerous big-name conservative influencers have been pushing their followers to join these platforms, arguing that mainstream companies like Twitter and Facebook censor their content.
- Critics say that the alternative sites are allowing misinformation, conspiracies, and hateful content to flourish, effectively creating a dangerous echo chamber where people only hear what they want.
Parler Sees Huge Boom
Millions of conservative social media users have been flocking to alternative platforms in the weeks following the election amid allegations of censorship on traditional sites like Facebook and Twitter, which have been cracking down on election misinformation.
The most significant example is Parler, a social media company founded in 2018 that markets itself as a “free speech” and unbiased alternative to Twitter and Facebook. Unlike those platforms, Parler leaves most moderation decisions up to individual users.
While it does have guidelines barring criminal activity, terrorism, child pornography, copyright violations, and fraud, the regulation of that content is done by volunteers called “community jurors,” not the platform itself.
The site, which is financially backed by a number of prominent conservative donors, has largely attracted a base of Trump supporters and right-wing users, and in the weeks since the election, the number of users has grown exponentially.
In fact, according to data from Google and other analytics firms, Parler was the most-downloaded app on both Android and Apple devices for the majority of last week, prompting the platform’s user base to more than double from 4.5 million to 10 million in that same time.
Conservative Voices Encourage Migration
Notably, Parler’s chief operating officer and co-founder Jeffrey Wernick claimed that this growth was not to due to “any one person or group, but rather to Parler’s efforts to earn our community’s trust, both by protecting their privacy, and being transparent about the way in which their content is handled on our platform.”
However, at the same time, others pointed to the fact that a number of major conservative influencers have recently encouraged their followers to switch over the platform, including the Fox Business host Maria Bartiromo, who lashed out at Twitter after the company flagged an article she posted claiming Democrats were trying to steal the election.
“This is the same group who abused power in 2016,” she tweeted two days after the election. “I will be leaving soon and going to Parler. Please open an account on @parler right away.”
Conservative radio host Mark Levin also echoed that sentiment, and encouraged his 2.7 million Twitter followers to do the same.
“Hurry and follow me at Parler,” he tweeted. “I may not stay at Facebook or Twitter if they continue censoring me. And one day I’ll have left their platforms. Parler is a wonderful alternative and is growing, and we need you there ASAP. It believes in truly open speech.”
Rumble Sees Uptick in Users
Notably, the mass exodus to Parler has not just helped the platform itself grow, but other similar platforms as well.
For example, the video-sharing site Rumble, which bills itself as an alternative to YouTube, has also seen a major spike in new users, which the company’s Chief Executive Chris Pavlovski directly attributed to traffic from Parler.
“I can confirm for the 1st time ever, Parler is sending Rumble more referral traffic than Facebook/Twitter combined,” he tweeted. “Dependency on them is now a thing of the past Next up, Rumble will dethrone YouTube.”
Pavlovski also told The Washington Post that his company has seen a big uptick in users since Election Day and that he expects the company will end the month with 80 million unique users, which is up from 60 million in October and 40 million this summer.
Rumble has been around since 2013, much longer than Parler, but the fact that its base is expected to double from what it was this summer is still incredibly significant. Part of that big increase is also due to the fact that, like Parler, major conservative influencers have been encouraging their followers to go to Rumble.
Rep. Devin Nunes (R-Ca.), a major ally of President Donald Trump, has recently been pushing his supporters to use the site. Major creators have also said they will bring their content to the platform, including Charlie Kirk, the founder of conservative youth organization Turning Point USA, as well as conservative commentator and Parler investor Dan Bongino.
Also like Parler, Rumble has very lax moderation rules. While its terms of service prohibit videos that show the assembly of weapons as well as other obscene content like pornography, nudity, or child exploitation, the platform has taken a very hands-off approach when it comes to misinformation and false claims, even regarding the election and the coronavirus.
“We don’t get involved in scientific opinions; we don’t have the expertise to do that and we don’t want to do that,” Pavlovski told The Post.
Criticisms and Concerns
However, to that point, experts who study online misinformation have said that false claims that have been removed off other platforms are popping up on Parler. The same is true for some users that have been banned by other platforms, like far-right talk-show host and conspiracy theorist Alex Jones, as well as the far-right militia group The Proud Boys, among others.
Many experts say the fact that this kind of content is thriving on Parler is cause for alarm.
“What we’ve seen in the past with some of these other fringe or alternative social media sites is, if there’s no rules and if it’s really siloed, then what happens is it gets more and more extreme,” Shannon McGregor, a professor who studies social media at the University of North Carolina, Chapel Hill, told NPR.
McGregor also specifically pointed to Gab, another alternative social network that has become well-known for hosting anti-Semitic and white nationalist content.
Even before the recent boom on Parler, critics have argued that the platform was a haven for posts that spread far-right extremism, anti-Semitism, and conspiracy theories. Now, many are worried that the rise of these alternative platforms will just create an echo chamber of people sharing that kind of content without any kind of fact-checking or warning system.
“When people see news they don’t like, they split off to start their own to confirm their bias. this splintering is dangerous — and it’s only beginning,” reporter J.D. Durkin explained on Twitter.
“I think it’s great there are more platforms in the media space than ever before — good people are earning paychecks doing what they love. what’s dangerous are the echo chambers created as a result and the toxicity against anything telling you what you don’t want to hear.”
While that is certainly an alarming possibility, especially when paired with the historical nature of these sites to slip into extremism, the big question that remains is will these platforms ever get big enough to really rival Facebook, Twitter, and YouTube?
While Parler now has 10 million users, that is still a fraction of Twitter’s 187 million daily users and Facebook’s nearly 2 billion.
Meanwhile, even the leading conservative voices that have encouraged people to switch over to Parler are still using Twitter and Facebook, including Bartiromo and Bongino, and many experts are skeptical that the conservatives with the biggest audiences will actually leave larger social media apps, even though they are telling their audiences too.
“All these people have accounts on Twitter because that’s where journalists are and that’s where the press is,” McGregor explained. “If they actually left Twitter, they would be less newsworthy.”
See what others are saying: (The Washington Post) (NPR) (Forbes)
Spotify to Buy Podcast Hosting Company Megaphone for $235 Million
- After purchasing exclusive shows, a podcast player, podcast creation software, and more, Spotify is planning to purchase the podcast hosting company Megaphone for $235 million.
- This new acquisition will help Spotify put ads in more podcasts by expanding the use of its system that makes real-time decisions about which ads a specific listener should hear based on their data, as well as the goals of the various ad deals Spotify is currently running.
- A survey Spotify recently sent to users has also sparked speculation that the streaming service is considering launching a separate subscription service for podcasts.
What Spotify’s Megaphone Deal Really Means
Spotify is looking to acquire the podcast hosting company Megaphone for $235 million, another major deal may help solidify its dominance in the podcasting world.
For the last few years, the streaming service has been working aggressively to snag both podcasting networks and popular programs.
Now, it’s going even further with this new acquisition that will help it put ads in more podcasts.
Megaphone is a company that offers technology for podcast publishers and advertisers seeking targeted slots on podcasts, and according to The Verge, the multimillion-dollar deal wouldn’t affect Spotify’s own podcasts since it already hosted its shows on Megaphone.
Instead, it means Megaphone hosted podcasts– from publishers like ESPN, the Wall Street Journal, and others– will have access to Spotify’s proprietary ad insertion technology, called Streaming Ad Insertion.
That system makes real-time decisions about which ads a specific listener should hear based on their data, as well as the goals of the various ad deals Spotify is currently running.
This purchase is major for Spotify because it means the company now owns a fully rounded-out podcasting ecosystem, including a network of exclusive shows, a podcast player, podcast creation software, a hosting company, and its own ad sales team.
Rumors of Potential Spotify Podcast Subscription Service
As such a strong force in the podcasting world, it not too surprising that earlier this week, reports surfaced suggesting Spotify might be considering launching a separate paid subscription service just for podcasts.
Right now, you can listen to podcasts on Spotify for free with ads, or without ads if you’re one of the 150 million people who pay for its music streaming membership.
Still, it’s worth noting that this change isn’t official. In fact, reports only surfaced after the company sent out a new survey to some users, including Variety’s Andrew Wallenstein.
Competitors Eye Big Podcast Purchases
Spotify isn’t the only company with its eyes on podcasts.
This week, several outlets reported that Apple and Sony are reportedly eyeing a $300-$400 million acquisition of the podcast network Wondery.
There are at least two other companies that have joined them for negotiations. They haven’t been identified and nothing has been finalized, but it has been confirmed that Spotify is not one of the bidders.
If this deal happens, it would be one of the priciest agreements in the industry.