By GRACE WINFIELD
Big Oil. Big Pharma. Big Tobacco. America is no stranger to the perceived mistrust placed upon “big” industries.
There’s a new group of top-competitors that regulators and lawmakers have initiated a litigation war with: Big Tech.
Big Tech is comprised of the top-tech companies in the United States: Apple, Facebook, Amazon, Google and occasionally, Microsoft.
Regulators and lawmakers have launched antitrust investigations into whether the four technology companies have used their size and wealth to end competition and expand their dominance. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are leading the investigations into these companies. The FTC is focusing on Amazon and Facebook, while the DOJ is responsible for the Google and Apple probe.
There was never any question as to if there would be a litigation war, but when. For a while now, these companies have faced public scrutiny as their influence–and business–grows. Now, they’re target practice for regulators.
The antitrust arguments against the companies differ, just as their primary revenue sources vary. However, the major concern that still stands is whether too few companies possess too much power.
Facebook. How could one forget the Cambridge Analytica scandal and Mark Zuckerburg’s brilliant idea to monetize his user’s data? Recently, Facebook was hit with a $5 billion fine from the FTC after releasing over 400 million phone numbers of its users. It is the largest penalty ever levied against a tech company. As part of the settlement, the company agreed to improve and evaluate its user data policies.
Google makes the majority of its profit from its advertising network. In 2017, ads generated 86% of its revenues. Google is an advertising mastermind; it acquired Youtube, realizing its potential to generate ad revenue, while simultaneously tapping into a new market–video advertisement. However, Google has been accused of favoring its own services over other competitors, such as Yelp. Additionally, Google-owned Youtube was charged $170 million for collecting children’s personal data and violating their privacy.
Congress questioned whether Amazon abuses data collected from other sellers, as a result killing companies with unfair practices by favoring its own products over third-party sellers. Congress has also accused Amazon whether the company’s own products get “preferential promotion on its site” in terms of advertisement, according to the New York Times. According to TJI research, Amazon has more than 140 private labels. While in actuality, private labels represent fewer than one percent of Amazon’s total sales.
Apple is facing a class-action lawsuit for inflating prices in its App Store. With IOS, owners can only purchase or download apps through the App Store. Apple’s chief compliance officer Kyle Andeer discussed the company’s business ethics and competition at a judiciary committee hearing. “Our mission is to make the best products and services in the world in each of the markets where we compete — for us it’s never been about making the most, it’s always about making the best. We design our technology to be easy to use, and safe and secure for all our customers. We see our customers’ privacy as a fundamental human right, and we embed that value in everything we create.” Andeer went on to say that companies such as Lyft, Uber, Pinterest and Spotify have had success in the formation of their companies through the App Store. However, this isn’t Apple’s first probe. Just in 2018, the company was being investigated by the Justice Department and the Securities and Exchange Commission over potential securities violations related to its disclosure of the software updates that slowed older iPhones.
Big Tech, according to the bipartisan dispute, is just one big monopoly. The government wants to break up these companies and the resources they have rightfully acquired. Facebook would cut ties with Whatsapp and Instagram. Google would let go of Youtube. Why would they do this? To create future competition.
But what is the need for future competition if these companies are purely innovative and successful in what they do?
As these companies continue to prosper, the rest of corporate America continues to envy their power–I can’t help but admire their accelerated growth.
First, we must recognize that Big Tech isn’t one large, demonizing monopoly the current rhetoric leads us to believe. Big Tech is five companies all in different businesses. So often now these companies are lumped together as Big Tech, though the view that they are one is false. They purely work well together and recognize each other’s success in their own respective fields.
In a Bloomberg interview, Microsoft co-founder Bill Gates expressed his distaste in the idea of breaking up Big Tech. “If there’s a way the company is behaving that you want to get rid of, then you should just say, ‘OK, that’s a banned behavior,'” Gates said. “Splitting the company in two and having two people doing the bad thing–that doesn’t seem like a solution.”
The one thing all of the companies have in common is their collection, analysis and exploitation of data, whether it be from consumers, advertisers or wholesalers.
One proposal I agree with most is one that would loosen the companies’ control of user data. Former senior antitrust official at the Justice Department, A. Douglas Melamed, supports the idea that Big Tech companies should give smaller companies access to user data. Melamed served as a member of the Stigler Center study team that cited several data moves in a list of potential regulations and enforcement actions.
“Data is a real trump card these platforms have,” said Melamed. “You let competitors have access to their back rooms for a reasonable fee.” Essentially, if regulators want to give other companies a chance to compete with the tech giants, data ultimately can be accessed–at a price.
Breaking up large, thriving American companies is not the solution. Rest assured, neither is the continuation of fines. The democrats and republicans are cheering for the Big Tech break up, and consumers should be skeptical before they join in, too.