fbpx

Antitrust Probes and Lawsuits

Precision Agriculture
March 10, 2020
Self-Sovereign Identity
March 10, 2020

Antitrust Probes and Lawsuits

A law book with a gavel - Antitrust law

Key Insight

Antitrust laws exist to ensure and promote fair competition between companies, in part to protect consumers. Regulators in many countries are planning to take action to limit the reach and powers of the world’s largest, most dominant technology companies.

Why It Matters

Facebook, Apple, Amazon, and Google have all faced pressure from lawmakers and federal agencies over their expanding power and their control of data.

Examples

In general, antitrust authorities are concerned with six key areas: big tech companies’ ability to control data; the power they have to impose terms on competitors; the fact that they are both participants in and owners of their platforms; their potential use of algorithms to thwart competition; their habit of infringing on small competitors’ patents; and their merger and acquisition activity, which has helped them to consolidate power.

The U.S. Department of Justice’s Antitrust Division began hiring more staff in January 2020 to support their probes into big tech companies. The Federal Trade Commission is examining Amazon’s retail and cloud businesses and Facebook’s acquisitions. Numerous state attorneys general are investigating Google and Facebook. Meanwhile, the House of Representatives Judiciary Committee is investigating Apple, Amazon, Facebook, and Google.

There is some debate in the U.S. regarding the Sherman Act, which was originally written to regulate and break apart the enterprises of railroad and oil tycoons, who had built America’s biggest monopolies. What U.S. courts have yet to decide is whether big tech companies are indeed monopolies, which would trigger the Act’s application. So far, the big tech companies have argued that there is plenty of competition—if people or organizations don’t want to use Facebook, there are plenty of other social media companies to choose from.

Except at this point, the services these tech firms provide aren’t quite so simple or interchangeable: companies like Yelp, Spotify, Airbnb, and Tinder use Facebook and Twitter for authentication. Facebook is launching a cryptocurrency platform that can be used within Facebook’s ecosystem. Google and Facebook effectively control the entire market for digital advertising, and Amazon is the undisputed leader in e-commerce in most markets. (Exceptions include Alibaba and Baidu in China.)

In the European Union, the argument against big tech has been gaining more traction. In 2017, the E.U. fined Google a record-breaking $2.7 billion for what adjudicators said was illegally nudging users to its comparison shopping site rather than to off-platform retail sites.

In September 2018, the E.U.’s Competition Commissioner Margrethe Vestager began an investigation into how Amazon uses customer data. This year she and her division will review the E.U.’s antitrust parameters and could change how member governments anti-competitiveness—a new law could be on the books by mid-year.

What’s Next

The problem with existing antitrust laws is that they don’t always mesh with our ever-evolving business landscape. For example, Amazon recently acquired Zappos, Diapers.com, and Whole Foods. Together, all three give the company a much larger retail footprint, but individually, each acquisition doesn’t amount to unfair competition. (It’s not the same as Walmart, a retailer that sells related items—home goods, clothing, gardening supplies and foodstuffs—buying grocery stores Publix and Safeway.)

Several new tech antitrust policies will take effect in 2020 in an attempt to modernize our approach to antitrust for the digital era.

The Impact

Breaking apart big tech companies could prove difficult. For example, as Amazon continues to build digital payments, logistics, and package delivery infrastructure, it could indirectly crush other retailers who use other, inferior platforms. But that still wouldn’t be illegal. At the moment, we don’t have any laws against being really, really smart.

Watchlist

Big tech companies (especially Amazon, Apple, Facebook, and Google), Congress, Federal Trade Commission, E.U. Competition Commissioner Margrethe Vestager, U.S. Department of Justice Antitrust Division.