Google, Amazon, Facebook y Apple “have become a type of monopolies that we last saw in the age of the oil barons and railroad tycoons. “This is one of the compelling conclusions of the report of almost 450 pages that was presented in the Congress of the United States.
The report of Subcommittee on Antitrust, Commercial and Administrative Laws, signed by the Democratic majority, took 16 months to prepare, the reading of more than 1.2 million documents and 7 hearings with hundreds of competitors and clients of those corporations who explained the effects of the trade policies of these giants.
CEOs of the firms investigated (including Jeff Bezos, Amazon, the richest man in the world) were summoned to give explanations with little results. “For nearly six hours we pressed for answers about their business practices, including evidence of the extent to which they have exploited, consolidated, and expanded their power over digital markets in ways anti-competitive and abusive. His responses were frequently evasive and indolent and generated new questions about whether believe they are beyond the scope of democratic oversight“.
It was not an easy task for the researchers to reverse engineer a business model often hidden within algorithms that work like black boxes and whose mechanism is not always possible to reconstruct.
The conclusion indicates that these big tech companies violate competition laws affecting “diversity and freedom of the press, innovation and privacy”. This is the largest case since this type of regulation was applied to Microsoft in 1990. For many specialists, it was precisely the sanctions against this company that opened the space where Amazon, Google or Facebook innovated.
Rules of the game
According to the report, “although these firms produced clear Benefits for society, the dominance of Amazon, Apple, Facebook and Google have had a price. These firms in general they control the market at the same time that they compete in it, a position that allows them to write some rules of the game for others while they play with others or carry out their own private quasi-regulation that cannot be controlled by anyone except themselves“.
The suggested solution is to divide these companies into different units so that they are not simultaneously referees and players from multiple commercial niches at the same time.
They also ask to be increase the power to enforce antitrust regulations by the state. Democratic presidential candidate Joe Biden declared himself willing to consider breaking up these companies, although his vice-presidential candidate Kamala Harris, senator from California, has a long connection (including campaign donations) from these companies and is considered by some the Silicon Valley candidate.
The sector Republican subcommittee refused to sign the report and he drew up his own version called “A third way to face big technology”. The representatives say they agree with part of the diagnosis, but prefer a selective application of antitrust laws.
What is GAFA specifically accused of?
According to the report, “Although the four corporations differ significantly, a study of their business practices revealed common problems. First, each of these platforms functions as a gatekeeper (gatekeeper) of a key distribution channel. By controlling access to markets these giants choose the winners and losers of our economy. Not only do they wield tremendous power, they also abuse it charging exorbitant commissions, imposing oppressive contractual conditions and extracting valuable data from people and the businesses that trust them. Second, each platform uses its position as a gatekeeper to maintain its market power. ”
Later he says: “The result is less innovation, fewer choices for consumers, and a weakened democracy“.
The extensive report then looks at the particularities of each of the companies. With respect to Facebook the frequent purchases of startup what could result in future competition. The paradigmatic example was the purchase of Instagram, a network that was seen as a threat if it continued to grow.
With this policy, says the report, “competition within its own family of products is greater than competition from any other company.”
It should be remembered that Facebook has four of the five most used applications on cell phones in the world: Whatsapp, Instagram, Messenger, in addition to Facebook itself. The amount of data accumulated through the different networks and services makes it impossible for any competitor to enter the same market sector. And even if he finds a free space to grow, he runs serious risks of being bought or imitated by the social network.
The report points out that Google monopolizes the search market and the advertising associated with them. As in the case of Facebook, the amount of data it has and that allows it to fine-tune its service constitutes an insurmountable barrier to entry for any competitor, as well as its presence by “default“on devices and browsers.
Due to its monopoly control in the search service, it was able to increase the amount of advertising between the results it offers and its own content, “blurring the difference between paid advertising and organic results.” In this way the company you can manage the flow of traffic according to your particular interests and charge companies for giving them at least part of it.
In the same vein goes the use of Android, an operating system that device manufacturers must install as received. The alternative of competing with your own system seems technologically and commercially unfeasible.
With these practices you can grow your other services. For example, Google Maps, which already has 80 percent of the map navigation market. A leaked internal document explained the operation of “Android Lockbox“, proprietary software used to monitor the use of third-party applications and detect potential competitors early.
In the case of Amazon, the statements of “partners” who sell on that platform that already accounts for about 50 percent of online sales in the United States.
To reach that market share Amazon was acquiring its direct competitors but also those that were in adjacent markets, adding more customer data and isolating themselves from the competition.
In this way, the platform achieved “a monopoly power on small and medium businesses that lack viable alternatives to Amazon to reach their consumers online. ”
The 2.3 million “partners” who offer products on the platform are considered “internal competitors” in company documents. Some denounced the threats who suffer to accept more advantageous conditions for the corporation. That control allowed “prioritize your interests and disadvantage your competitors in ways that undermine free and fair competition“.
The conflict of interest It is obvious in the report and is being empowered thanks to the recommendations of the virtual assistant Alexa and all the associated internet of things paraphernalia. And if someone dared to challenge Amazon, they would also have to avoid the corporation’s cloud service, Web Services, to ensure that sensitive information is not used to harm them.
It is the oldest of these companies and its business model has been mutating over the years. Apple has its main weapon in the iOS mobile operating system that allows you to control the access of any software to about one hundred million cell phones.
Those who resist their commissions (which reach 30 percent), as happened recently with Fortnite, They can suffer locks very dangerous for your business.
The report highlights that “Apple also uses its power to exploit app developers by misappropriating sensitive information to compete and charge app developers higher prices than is necessary to be competitive within the Macri the Treasury took on debt in dollars to finance current expenses in pesos“.
One of the many markets affected by the commercial behavior of these companies is journalistic with palpable effects even for democracy.
These companies can offer more efficient advertising at a lower price, since they use content produced by users through searches, postings on networks or from other platforms without paying anything for them.
In this way, they assure in the report, “Google and Facebook have an exaggerated influence on the distribution and monetization of online news sources reliable, undermining the quality and availability of high-quality journalistic sources. “
This research is not the only one that analyzes the behavior of the Internet giants. In recent times several of them They paid millionaire fines for violations of laws and regulations. The highest figure, $ 5 billion, paid it Facebook for the Cambridge Analytica case.
The four corporations are an inexhaustible source of news for public complaints and leaks that show that technological leadership is not an obstacle to carry forward old unfair and abusive business practices. Further, with difficulties to continue growing at the same rate history that they were used to, they try to expand into others more dynamic niches like financial or the audiovisual.
The sectors that see this progress with concern and do not want to suffer like the mass media, surely ask for more regulations for these corporations that tend to wipe out the competition creating a kill zone, as the report calls it. In recent months, moreover, the pandemic allowed them to accelerate their growth again.
The United States Congress faces against four companies whose combined stock market price is $ 5 trillion, which represent a third of the combined value of the top 100 Standard & Poors companies.
If your economic and lobbying power are monstrous, its power to manage the flow of information that circulates is even greater. With that report and if measures are taken, it may be one of the last opportunities to subject GAFA to the basic rules of competition and democracy.