Oct 7, 2020 - Technology

House Democrats tackle Big Tech "monopolies"

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Illustration: Eniola Odetunde/Axios

The House Judiciary Committee says Amazon, Apple, Facebook and Google are monopolies — but its new plan to rein in their power won't change anything overnight. Instead, Democratic lawmakers propose to rewrite American antitrust law in order to restructure the U.S.'s most successful and powerful industry over time.

The big picture: The report is a long pass down the field of the tech industry's unfolding conflicts. It could be game-changing — but it also might never get completed.

Driving the news: The report, which runs more than 450 pages, proposes broad updates to antitrust law, including:

  • limiting companies' ability to compete unfairly against third parties on their own platforms by either requiring online marketplaces to be independently run businesses or establishing rules for how such marketplaces can be organized;
  • blocking online platforms from giving themselves preferential treatment or playing favorites with other content providers;
  • requiring social networks to be interoperable so that people can communicate across platforms and carry their data over from one platform to another;
  • directing antitrust enforcers to assume that an acquisition by a dominant tech firm is anticompetitive unless proven otherwise; and
  • allowing news publishers to team up to negotiate against tech platforms looking to carry their content.

Committee investigators spent 16 months reviewing mountains of emails, memos and other evidence to reach these conclusions about the companies:

  • Amazon: The internet retail giant achieved its dominant position in part through acquiring competitors; has a monopoly over and mistreats third-party sellers; and has created a conflict of interest through its double role as an operator of its marketplace and also a seller there.
  • Apple: The report says Apple exerts monopoly power over software distribution to more than half the mobile devices in the U.S. It accuses the company of exploiting rivals by levying commissions and fees and copying apps, and says Apple gives preference to its own apps and services.
  • Facebook: The social media network has monopoly power in the social networking space, the report finds, and takes a "copy, acquire, kill" approach to would-be rivals such as WhatsApp and Instagram, both of which it bought in the early 2010s.
  • Google: The search engine has a monopoly in the general online search and search advertising markets, according to the report, maintaining its position through anticompetitive tactics such as undermining vertical search providers and acquiring rivals.

What they're saying: "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," write the authors of the report.

The other side: The companies all deny that they hold monopoly positions or that their practices and acquisitions violate antitrust law, and argue that the tech industry remains healthily competitive.

Why it matters: Responsibility for enforcing antitrust law lies with prosecutors at Justice and the states and with federal agencies, not with Congress. But if Democrats take the White House and the Senate in November, they could use this report as a blueprint for longer-term legislative and enforcement changes to limit tech giants' power.

Republicans on the committee offered two rival reports, focusing more on complaints of conservative bias on the part of social media platforms than on antitrust concerns, which their business-friendly party has a long tradition of discounting.

Our thought bubble: "Breaking up big tech" has been a longtime rallying cry among tech critics. Although the report offers potential rationales for unwinding acquisitions like Facebook's purchases of Instagram and WhatsApp, such outcomes remain unlikely — and would ultimately have to come from a court.

Yes, but: Many of tech's sharpest critics are enthusiastic about the report anyway. That's partly because they agree with so much of it. But it's also because they see it as a road map toward a healthier, less centralized industry.

What's next: Later this week or next week, the Justice Department is expected to file its long-gestating lawsuit against Google — kicking off tech's first major antitrust fight in two decades.

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