Big Tech's moment of reckoning has finally arrived.
After years of expansion and disruption, while seeming to escape regulatory scrutiny relatively unscathed in the United States, the world's most powerful tech companies are suddenly staring down the barrel of a bipartisan gun that could severely curtail their growth, subject them to invasive probes, saddle them with new regulations and potentially force them to break up.
In recent days, antitrust investigators at the Federal Trade Commission and the Department of Justice have set their sights on four of the largest players in Silicon Valley: Google, Amazon, Facebook and Apple. The two U.S. agencies have reportedly decided to divide and conquer, with the Justice Department taking the lead on investigating Google, while the FTC is set to examine the practices of Amazon.
Facebook, which came to an agreement with the FTC in 2011, has been rumored to be close to a new deal with the agency that would subject it to billions in fines and new regulatory oversight around privacy. Apple would fall under the purview of the Justice Department, which has a history with the Cupertino, Calif. company. The Justice Department found in 2014 that Apple engaged in a conspiracy with five publishers to increase the price of ebooks, ultimately costing the company $450 million.
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"This is more of a warning to the companies that they’re being carefully scrutinized and they need to be careful not to play fast and loose given their dominant positions in the digital marketplace," Gene Kimmelman, a former senior antitrust official at the Justice Department who is now president of the consumer group Public Knowledge, told The New York Times.
From left: Apple CEO Tim Cook, Amazon CEO Jeff Bezos, Google CEO Sundar Pichai and Facebook CEO Mark Zuckerberg. Big Tech is facing a regulatory reckoning.
The antitrust scrutiny comes as lawmakers on both sides of the aisle have vowed to curtail the power of Big Tech, which critics say has stifled competition and innovation while allowing the spread of misinformation and hate speech. A number of Democrats running for the 2020 presidential nomination have called for greater regulation of Silicon Valley but Sen. Elizabeth Warren, D-Mass. has put forth the most aggressive proposal to break up several tech giants on antitrust grounds.
The House Judiciary Committee on Monday announced a bipartisan investigation that will use the power of subpoenas and public testimony to focus on three key areas: documenting competition problems in digital markets; examining whether dominant firms are engaging in anti-competitive conduct; and assessing whether existing antitrust laws, competition policies and current enforcement levels are adequate to addresses the issues.
"Unwarranted, concentrated economic power in the hands of a few is dangerous to democracy – especially when digital platforms control content. The era of self-regulation is over," House Speaker Nancy Pelosi, D-Calif., said in a statement on Twitter, adding that the probe is "long overdue."
Shares of Facebook and Alphabet, which owns Google, both tumbled on Monday, pulling the Nasdaq Composite Index into correction territory.
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"Technology has become a crucial part of Americans' everyday lives," said Antitrust Subcommittee Ranking Member Jim Sensenbrenner, R-WI, in a statement. "As the world becomes more dependent on a digital marketplace, we must discuss how the regulatory framework is built to ensure fairness and competition."
The tech industry poured $77.9 million into lobbying U.S. lawmakers in 2018, compared with $16.4 million a decade earlier, The Wall Street Journal reports. Both Google and Amazon have also funded more than 30 nonprofit groups, including think tanks on the left and the right, that have a voice in the public debate over antitrust, according to the Journal.
However, all of that money may not be enough to stave off regulators and investigators.
People familiar with the investigations told Reuters that neither the Justice Department nor the FTC has contacted Google or Amazon about any probes, and that company executives are unaware of what issues regulators are reviewing.
The world's largest online retailer, Amazon, has faced heat for the power it wields over third-party sellers on its platform -- in part from the sale of its private label products. The Seattle-based tech giant has also been criticized for damaging traditional retailers, although government regulators did allow its purchase of Whole Foods to proceed in 2017. Amazon has pointed out in the past that Walmart, its biggest American competitor, saw its online sales grow 40 percent last year and that 90 percent of all retail sales in the U.S. still happen in bricks-and-mortar stores.
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Apple is being examined by the European Union thanks to a complaint from streaming music company Spotify that Apple has abused its power over app downloads. Although Apple has frequently touted the privacy of its hardware and taken subtle shots at Facebook, a new report suggests that a range of different iPhone apps are sending out users' information to third parties. The Tim Cook-led company recently announced that it was killing iTunes. Cook pushed back on antitrust arguments, telling CBS News on Tuesday that his company is "not a monopoly."
In April, Facebook said it expects to be fined up to $5 billion by the FTC, which has been probing the social network's role in sharing the data of 87 million of its users with the data-mining firm Cambridge Analytica. The Menlo Park, Calif. company, which also owns WhatsApp and Instagram, has been slammed by critics over the proliferation of fake news on its platform. However, Zuckerberg announced this year that Facebook would pivot to focus more on privacy and encrypted communication, and the company has dramatically increased its investments in AI and hired thousands of workers focused on health and safety.
“We’re still waiting on long overdue FTC action on Facebook’s violated consent decree,” Sarah Miller, co-chair of Freedom From Facebook, a group which has called for the social network to be broken up, said in a statement to Fox News via email. “Facebook’s violation of the consent decree already gives the FTC grounds to break up Facebook’s monopoly, and they should. But, a potential bigger-picture antitrust investigation is also long overdue."
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The FTC previously settled an investigation into Google in 2013 with a reprimand, but the Sundar Pichai-led firm has been fined multiple times by European regulators in recent years for anticompetitive practices. According to ad research firm eMarketer, Google is expected to capture 37 percent of the $129 billion spent on online ads in the U.S. in 2019, compared to 22 percent for Facebook and 10 percent for Amazon.
"After four decades of weak antitrust enforcement and judicial hostility to antitrust cases, it is vital for Congress to step in to determine whether existing laws are adequate to tackle abusive conduct platform gatekeepers or if we need new legislation," said Antitrust Subcommittee Chairman David Cicilline, D-RI, in a statement.
Still, not everyone agrees that Silicon Valley's biggest tech companies should be broken up.
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“The Justice Department’s investigation of Google will come to the same conclusion as the FTC’s did in 2013 -- that there is no antitrust case,” said Carl Szabo, VP of NetChoice, an e-commerce trade association, in a statement to Fox News. "It’s illogical that the DOJ is investigating competitors in the same market for monopoly behavior. Amazon, Apple, and Google all compete with each other in a vibrant and competitive marketplace."
Google, Facebook and Amazon did not comment on the record for this story. Fox News also reached out to Apple.
https://www.foxnews.com/tech/google-facebook-amazon-apple-bipartisan-onslaught
2019-06-04 16:57:53Z
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