By Nandita Bose, Diane Bartz
Source: www.reuters.com, October 2020
(Reuters) – A U.S. House of Representatives panel looking into abuses of market power by four big technology companies found they used “killer acquisitions” to smite rivals, charged exorbitant fees and forced small businesses into “oppressive” contracts in the name of profit.
The antitrust subcommittee of the Judiciary Committee recommended that Alphabet Inc’s GOOGL.O Google, Apple Inc AAPL.O, Amazon.com AMZN.O and Facebook FB.O – with a combined market value of over $5 trillion – should not both control and compete in related businesses.
The panel’s report broadly recommended structural separations but stopped short of saying a specific company should be broken up.
The scathing 449-page report – the result of the first such congressional review of the tech industry – suggested expansive changes to antitrust law and described dozens of instances where the companies misused their power.
“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,” the report said.
In anticipation of the report, Amazon warned in a blog post Tuesday against “fringe notions of antitrust” and market interventions that “would kill off independent retailers and punish consumers by forcing small businesses out of popular online stores, raising prices and reducing consumer choice.”
Google said in a statement that it competes “fairly in a fast-moving and highly competitive industry. We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services.”
Facebook said, “We compete with a wide variety of services with millions, even billions, of people using them. Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people.”
Apple said, “Scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions.” The company also defended its commission rates and said it would issue a more extensive response in the coming days.
After more than a year of investigation involving 1.3 million documents and more than 300 interviews, the committee led by Democratic Congressman David Cicilline found companies were running marketplaces where they also competed, enabling “them to write one set of rules for others, while they play by another.”
Coming just weeks before the Nov. 3 presidential election, the report became an opportunity for Republicans and Democrats to boost their credibility in the fight against market domination by big tech companies.
That said, Congress is unlikely to act on the findings this year. Since the report reflects the views of the Democratic majority in the House, it signals that if Joe Biden wins the White House, the pressure on the companies could well continue.
Also, the report is likely to inform existing antitrust probes against the companies by the Federal Trade Commission and state attorneys general.