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Editorial Notes

[Editorial Notes] Why are Big Tech companies facing antitrust issues?

After years of intense growth driven by an ever-growing share of the online ad market and big data, the giants of Silicon Valley, including Amazon, Apple, Facebook and Google, are facing an unprecedented challenge calls by lawmakers to curb their market monopoly power.
By IASToppers
December 24, 2019

Contents

  • Introduction
  • What are the main concerns with each major online platform?
  • What is the presumption for the antitrust case?
  • Conclusion

Why are Big Tech companies facing antitrust issues?

For IASToppers’ Editorial Simplified Archive, click here

Introduction

There are two sources of tension relating to the Amazon, Apple, Facebook and Google that have caused alarm across the United States, Europe and elsewhere:

Why-are-Big-Tech-companies-facing-antitrust-issues

  1. First, they may have engaged in an anti-competitive behaviour over many years thus undercutting smaller potential companies (rivals).
  2. Second, as a result of their growth, they now have a vast influence on politics, policy and personal reputations, making cost of data privacy breaches Thus, in July 2019, the United States Justice Department and the House Judiciary Committee separately announced major antitrust investigations into Google, Facebook, Amazon and Apple for thorough review of the market power held by them.

What are the main concerns with each platform?

Amazon: 

  • Given the disruptive effect of its online sales platform on traditional retail markets and smaller sellers, lawmakers for years have contemplated regulations to clamp down on Amazon’s alleged anti-competitive practices.

Amazon’s alleged anti-competitive practices.

  • For example, questions have often been raised on whether Amazon favours its self-branded products over those of third-party sellers, whether it forces other sellers to use its advertising services or fulfilment network, whether it changes rankings of product search displays or whether it uses data on other sellers to tweak its own offerings to its advantage.

Apple: 

  • In September 2019, U.S. investigators demanded documents from Apple to shed light on the company’s App Store policies, specifically regarding how Apple ranks search results on that platform, questions surrounding how Apple determines the share of revenue it takes from in-app purchases, and the exclusion of certain competing apps from the Store.
  • For example, after apple introduced its own services, certain parental-control apps have filed complaints about Apple’s alleged restriction of their apps.

Facebook: 

  • Regulators have focused their attention on acquisition of several companies by Facebook. For example, the U.S. Federal Trade Commission (FTC) enquired into whether Facebook defensively purchased certain companies to maintain its market position in the social networking ecosystem.
  • Specifically, questions have centred when Facebook’s brought a data analysis firm that in 2013, which then allegedly helped the Facebook see off potential competitors.
  • Investigators have also started looking into allegations that Facebook may have cut off certain third-party apps from its data.

Google: 

  • Google handles more than 90% of online searches across the world, so regulators have been closely observing its delivery of search results.
  • In recent years concern has grown over the fact that Google has increasingly been sending users to its own sites to answer their queries, including products such as Google Flights and Google Maps.
  • The European Union has already fined Google $5.1 billion in 2018.

In the U.S. the cases against the four tech firms will likely be centred on possible violations of the Sherman Antitrust Act and Clayton Antitrust Acts.

centred-on-possible-violations-of-the-Sherman-Antitrust-Act-and-Clayton-Antitrust-Acts. The above mentioned two laws have been foundational in the past century of US antitrust prosecutions.

Conclusion

In view of the rapid growth of electronic commerce and the rising importance of online trade in a large number of goods and services, there is need to develop a better understanding of the functioning of e-commerce and its implications for markets and competition.

Government, along with all the related stakeholders, should work towards eliminating practices having adverse effect on competition, promoting and sustaining competition, protecting the interests of consumers and ensure freedom of trade in the market.

 

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