If the power of Big Tech is the problem, what is the answer?
In Washington, members of the House antitrust committee have been pondering three possible responses: throw more resources at enforcing existing antitrust rules: tighten up the laws to give the enforcers more teeth; or design entirely new regulatory frameworks with the most powerful digital gatekeepers in mind.
Their answer, in a 449-page broadside against Big Tech released last month, is: do all three!
In the rush to constrain the power of Amazon, Apple, Facebook and Google, politicians and regulators in Washington finally seem to be almost falling over each other to make up for last time. The House report is an attempt at a sweeping indictment of Big Tech’s business practices.
There is a clear risk of overkill. The huge popularity of their services and importance to a fast-growing digital economy aren’t mentioned. But, read in its entirety, the report draws out common themes that show how the companies have succeeded in entrenching themselves – including using their platform power to promote their other services, and making acquisitions to eliminate potential rivals or colonize new markets.
There is in our opinion certainly plenty of lost time to make up. It is nearly eight years since the Federal Trade Commission in the U.S. backed away from suing Google at last minute, ushering in an extended period of regulatory inaction. Next year, the internet search company will be nearly four times bigger in terms of revenue than it was then.
The House committee’s proposal looks like a legislative wishlist with little chance of seeing the light of day, at least in its entirety. The Republicans who are in the minority on the committee refused to back the report. Top of the list of recommendations is a drastic call for clear structural separation between the tech giant’s operations, as well as limitations on the number of different businesses they can be in. It is hard to see this industry-wide restructuring winning political backing, even if regulatory actions in future target the break-up of individual companies.
For now, Europe still looks set to take up the running against Big Tech. Unlike Washington, Brussels has already tried antitrust enforcement. Three cases against Google set the standard for trying to hold tech power to account. But the remedies that were meant to correct the perceived competition failures have so far only proved to be in our opinion of too little, too late.
Brussels is in our opinion also further ahead in thinking through the lessons from this and trying to further tighten its laws to reflect the new realities of digital monopolies.
The outlines of potential legislation are now starting to emerge, in the shape of a broad-ranging Digital Services Act.
The European prescription begins with forcing the big tech companies to share data collected through their platforms with smaller rivals, a more designed to break the cycle that locks in the leaders of the data economy. The law would also limit their ability to set a preference for their own services, for instance preventing Google from inserting its own maps or location listings above its general search results, and Amazon from favoring in-house products. And it would limit their ability to have their services pre-installed on consumer gadgets, something that squeezes out competitors.
Even these measures in our opinion, though, might not be enough. Brussels has also been pondering drastic new enforcement powers. These include the ability to force changes in dominant companies’ business practices without a full investigation or proof that the law has been broken- an idea that would provoke a storm of protest from across the Atlantic. The US in our opinion is still some way from trying to make legislative choices. But in its exploration of the way Big Tech operates, this last month report has in our opinion at least established a basis for future action.
The House report also gives regulators a clear green light in one specific area, calling on them to consider unwinding acquisitions that they cleared in the past, but which have turned out to hurt competition. The chances therefore of a belated battle over Facebook’s purchase of Instagram and WhatsApp, and Google’s takeover of digital ads firm DoubleClick, just went up.
In the meantime the US Department of Justice (DOJ) has accused Google suppressing competition in internet search in a lawsuit that marks the beginning of a landmark antitrust case against one of the world’s largest technology groups ever filed by DOJ.
The justice department finally called Google “a monopoly gatekeeper for the internet” and alleged that the company, owned by Alphabet, had used a “web of exclusionary” deals to stymie competitors in the search business.
“If we let Google continue its anti-competitive ways, we will lose the next wave of innovators and Americans may never get to benefit from the ‘next Google’”, said William Barr, US attorney-general. “The time has come to restore competition to this vital industry”.
The action, filed in federal court in Washington just two weeks before the presidential election, comes as in our opinion bipartisan scepticism of large technology companies has taken hold in the US capital. It is the most high-profile antitrust action taken by the US government since its battle with Microsoft in the 1990s.
Though the government has not specified what remedies it would seek, it signaled that a break-up of the company not been ruled out. “Nothing’s off the table,” said Ryan Shores, a DOJ official. The lawsuit requests “structural relief as needed” – a reference in our opinion to a possible break-up.
In a complaint that echoes the EU’s 2016 case against Google and its Android mobile operating system, the government claimed the search company used its contracts with device makers to block other search engines, while also paying to put its search service in front of users on many of the most widely used smartphones and browsers.
Some 60% of all search queries in the US are drawn to Google, thanks to that web of arrangements, according to the lawsuit. When combined with Google’s other distribution channels, such as its Chrome browser, the number rises to 80%, the lawsuit alleged.
The contract terms at the centre of the case include alleged provisions that prevent device makers that use Android from supporting rival versions of the open-source operating system on any other devices they make.
The DOJ also objected to Google’s requiring its search service be given a top position on all handsets that include its Play app store and other services.
The case takes aim at payments amounting to billions of dollars a year that Google pays to handset makers, mobile phone companies and browser makers to give its search service prominence. These include payments that have been estimated at 8 billion – 12 billion dollar a year alone to Apple, according to the lawsuit.
For now, hoping for antitrust and market rules to solve the harm done by the biggest technology companies to democracy is just that: a hope.