By Maria-Diandra Opre
Your commercial awareness dose
Intense scrutiny of Big Tech’s practices has resulted in a series of an anti-trust lawsuit which will develop in 2021 and the following years. Some compare the rise of technological conglomerates to the oil monopolies of the 70s and the 80s. For years, tech companies were “untouchable”, with few attempts of the political actors to impose restraints and regulate. However, the last months of 2020 have witnessed an increase of antitrust and regulatory measures against technological giants.
Antitrust regulation of the digital platforms represents one of the few common grounds on which Democrats and Republicans adhere. At the moment, federal actors of the US have filed 3 federal lawsuits against Big Tech. One of the recurrent complaints is represented by the anti-competitive conduct of the search function and ad monopoly. Furthermore, there are accusations that Google and Facebook have tacitly agreed to not compete with each other.
In October 2020, a 400-page report commissioned by the USA’s Antitrust House Judiciary provided a comprehensive analysis of the practices of Amazon, Apple, Facebook, and Google. The main findings and proofs indicated that Big Tech abused their competences and engaged in unethical business practices, thus new layers of regulation must target them. One of the most significant stances presented in the report is that: “Google has monopoly power in the market for search, while Facebook has monopoly power in the social networking market”.
In December 2020, the Federal Trade Commission and a cluster of 40 states, filed a lawsuit and advocating for a breakup Facebook by reversing the acquisitions of Instagram and WhatsApp. So far, the break up of companies was viewed as an extreme measure and last resort, but now it seems that possibility comes closer to reality. Bernie Sanders asserts that “greed knows no bounds, and they’ve used their power to try and control too much of political and economic life all over the world… the only thing that will stop Facebook is to say ‘enough is enough’ and break it up”. At the other side of the spectrum, European regulators were very reluctant in requesting breakups of companies.
European courts have already imposed fines, amounting to 10 billion, in cases which targeted Google’s digital ad dominance, but this did not have a great impact on the technological giants’ practices. From a geopolitical stance, it is difficult for Europe to enact changes in the digital sphere. All of the giant tech companies are from the US, thus some may argue that due to the non-existence of European tech global actors that this approach would be like complaining about “sour grapes”. In the same vein, the European Commission has expressed the intention to enhance digital protectionism and politicize antitrust practices
On 14 December, EU has revealed the most ambitious legislative project so far in the digital arena: the Digital Markets Act. This document clearly establishes the differences between businesses and gatekeepers, by setting obligations for gatekeepers and guidelines on what they can and cannot do. Among other prohibitions, gatekeepers must not give preferential treatment to their products to the detriment of third parties’ products. Moreover, preventing consumers from linking up to businesses outside their platforms will be prohibited.
Even if the antitrust spotlight fell upon Google and Facebook, the circumstances of Apple and Amazon are projected to change in 2021. The Federal Trade Commission is probing antitrust concerns involving Amazon, as concerns are rising about the negative impact on small businesses. It is speculated that Amazon compiles non-public seller data, for example, the number of products ordered and the sellers’ revenues, implementing it further in its own retail algorithms which enables them to decide what products to launch next and the price level for each offer. Hence, third-party sellers are disadvantaged whereas the sales of Amazon products are surging.
Fortnite has filed a lawsuit against Apple, targeting the App Store and its payment procedures, which require a 30% commission. In December 2020, the founder of Cydia, the store platform which preceded the Appstore, filed a suit on the basis that Apple utilized anticompetitive means to destroy Cydia. These lawsuits have directed the attention of the EU and US to Apple’s conduct. Complementing the concerns raised by Fortnite, The House Judiciary Committee report indicated that “Apple’s monopoly power over app distribution on iPhones permits the App Store to generate supra-normal profits”. Moreover, Apple is suspected of breaching EU privacy law, as some speculate that iPhone users are tracked for advertising purposes.
The development of these antitrust and regulatory tendencies will become prominent in 2021, once with the onset of the existing lawsuits.
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