Sep 24, 2019

Rivals aim to document Facebook, Google strong-arming

Sarah Grillo / Axios

Smaller competitors to Google and Facebook that for years kept their legal grievances about the companies silent are beginning to speak up, as regulators crank up probes into anti-competitive behavior by the two Silicon Valley giants.

Why it matters: Many smaller tech companies once hesitated to call foul on Facebook and Google's dominance, fearful that doing so would make them look weak or unable to compete. Now that regulators are reaching out for information, more smaller rivals are stepping up.

Driving the news: Facebook competitors, including Snapchat, are gathering intelligence for Federal Trade Commission officials about ways the tech giant may have exploited its dominance to punish Snapchat, the Wall Street Journal reports.

  • Snapchat's legal team has reportedly kept a set of documents dubbed "Project Voldemort" for years with evidence of the allegation.
  • According to the report, Snapchat executives have suspected that Instagram was "preventing Snap content from trending on its app."
  • While some Google competitors, with Yelp in the lead, have long charged the search giant with monopolistic behavior, the current wave of antitrust investigations means those complaints may get a thorough examination.

Be smart: A similar scenario broke out earlier this year with YouTube when the Justice Department was considering an antitrust investigation into Big Tech companies.

  • Bloomberg reported that YouTube competitors AppNexus and Vevo were beginning to speak out publicly against the video giant's anti-competitive practices.
  • The report details several examples in which YouTube stifled competitors who were looking to compete against it in video advertising sales.

The big picture: The news comes a day ahead of a critical Senate Judiciary Committee hearing in Washington that will examine the market dominance of companies like Google, Facebook, Amazon and Apple.

  • Lawmakers on Capitol Hill have been holding a series of hearings into potential anti-competitive practices of the companies, alongside federal probes into the companies' dominance.

What to expect: Look for tech giants to point to the successes of smaller upstarts as proof that their dominance isn't absolute.

  • During a House Judiciary Committee hearing on the same topic this summer, for example, Facebook's head of global policy development cited TikTok as an example of an app that was growing rapidly and threatening its own business model.

Meanwhile, per the New York Times, the House Judiciary Committee has requested information from more than 80 companies about how they may have been harmed by Facebook, Google, Apple, or Amazon.

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Why it matters: The app could certainly pose a real threat to Snapchat, as it will be made available and likely marketed to all of Instagram's 1 billion+ users around the world.

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Snap CEO talks rivals, anti-trust, going public

Snap CEO Evan Spiegel at TechCrunch Disrupt 2019 in San Francisco. Photo: Steve Jennings/Getty Images for TechCrunch

Despite Snap's well-known rivalry with Facebook, CEO Evan Spiegel did not give a resounding "yes" when asked on Friday at the TechCrunch Disrupt conference if breaking up Facebook would benefit society.

"I think the thing that everyone’s concerned about is that they’ve seen that competition has been what’s motivated Facebook to make changes over time. Those have really motivated Facebook to dramatically change their product offering in order to compete."
— Evan Spiegel
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Zuckerberg talks Warren's "existential" breakup threat in leaked audio

Photo: Samuel Corum/Getty Images

Facebook CEO Mark Zuckerberg candidly addressed a number of questions about his company, such as the threat of a government breakup of Big Tech companies from 2020 candidate Elizabeth Warren, during an open meeting with employees, per leaked audio obtained by the Verge.

"You have someone like Elizabeth Warren who thinks that the right answer is to break up the companies ... if she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge. And does that still suck for us? Yeah.
Go deeperArrowOct 1, 2019