In this episode, Paul and Justin discuss The House Judiciary Committee’s Antitrust Subcommittee’s latest report on big tech. The Judiciary Committee Antitrust Subcommittee released a 455-page report stating that Google, Amazon, Facebook, and Apple currently are monopolies operating in the United States. They are valued at over $5 trillion and makeup over 30% of the S&P 100 stock market. The committee has made several recommendations to even the playing field for new companies to enter those respective markets.
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The information in this episode comes from Judiciary.house.gov, The New York Times, Fortune.com, CNBC, and Consumer Reports.
What exactly the House Judiciary Committee is?
According to their official website, the committee was established in 1813, and the House Committee is the second oldest standing committee in Congress. Today, the Committee is at the forefront of some of the most significant issues facing our nation, including protecting Constitutional freedoms and civil liberties, oversight of the U.S. Departments of Justice and Homeland Security, legal and regulatory reform, innovation, competition, and anti-trust laws, terrorism and crime, and immigration reform.
It sounds like they are an extremely important committee. They are in charge of the digital economy and ensuring that monopolies don’t overpower an industry, and their most recent report has revealed some interesting finds. This 455-page report has been a 16-month long investigation to investigate the market power and behavior of Google, Facebook, Amazon, and Apple.
According to a joint statement from Committee Chairman Jared Nadler and Antitrust Subcommittee Chairman David N. Cicilline (sis-il-ini) had this to say about the report, “As they exist today, Apple, Amazon, Google, and Facebook each possess significant market power over large swaths of our economy. In recent years, each company has expanded and exploited their power of the marketplace in anticompetitive ways.”
It’s hard to argue that point, those companies combined are worth over $5 trillion. That is more than a third of the S&P 100 index. So 4 companies make up over 30% of an entire stock market. They function as gatekeepers and control key channels of distribution on their respective platforms.
Right, Apple alone has been in the news in a vicious battle against Epic Games. You can actually listen to the recap on episode 12 of the digital galaxy podcast. The courts originally sided with Apple, stating that they had the right to regulate pricing and charge whatever they want to other developers. However, after this report, that may be changing. The report states that Apple leverages its controls of iOS and the app store to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings.
It certainly feels that way. When Apple removed Fortnite from their app store, they heavily pushed Pub G, which is pretty much a Fortnite twin. By banning Fortnite from the platform, Epic games has lost potentially millions of dollars from gamers.
According to an article on CNBC, Apple fired back with this response, “We have always said that scrutiny is reasonable and appropriate but we disagree with the conclusions reached in this staff report with respect to Apple, our company does not have a dominant market share in any category where we do business.”
What did the report say about Facebook?
The article says, “Facebook has monopoly power in the market for social networking. Internal communications among the company’s Chief Executive Officer, Mark Zuckerberg, and other senior executives indicate that Facebook acquired its competitive threats to maintain and expand its dominance.”
So Mark Zuckerberg provided his feedback on the report that Facebook is monopoly power. “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.”
One item we saw was that Google provides over 90% of search results across the entire internet. According to an article on Fortune.com, the CEO of DuckDuckGo, Gabriel Weinberg, states that “It’s impossible for small search engine competitors to compete with Google’s deep pockets and outbid it for valuable placements like Apple’s browser.”
It may seem daunting for any new company to try and compete with these four companies. Consumer Reports published these findings from their Survey called Platform Perceptions:
85% of Americans are concerned—either very concerned or somewhat concerned— about the amount of data online platforms store about them, and 81% are concerned that platforms are collecting and holding this data in order to build out more comprehensive consumer profiles.
58% are not confident that they are getting objective and unbiased search results when using an online platform to shop or search for information.
79% say Big Tech mergers and acquisitions unfairly undermine competition and consumer choice.
60% support more government regulation of online platforms and mandating interoperability features, to make it easier for users to switch from one platform to another without losing important data or connections.
With all this information brought to the committee, they’ve proposed a series of recommendations including structural separations at each of the four companies and broader changes to antitrust regulation and enforcement.
Some of the recommendations include:
Strengthening antitrust laws
Strengthening antitrust enforcement
Implement rules to prevent discrimination, favoritism, and self-preferencing
Along with many other recommendations.