After a 16-month investigation into the digital economy, the House Judiciary Committee’s Antitrust Subcommittee has released a report proposing a series of antitrust reforms to the “big four” tech companies: Google, Amazon, Apple and Facebook. The suggested reforms in The Investigation of Competition in the Digital Marketplace: Majority Staff Report and Recommendations could put the brakes on the multi-industry dominance of the big four.
Why Does The Antitrust Subcommittee Want To Break Up Big Tech?
Broadly speaking, the Antitrust Subcommittee thinks the big four tech companies are too powerful. More specifically, the committee believes the “monopoly power” each of the big four has in their respective industries, and that acquisitions like Whats App by Facebook and YouTube by Google, creates a dominance that limits competition and fair pricing. According to Marcy Gordon, reporting for the AP, the report states that “Each platform now serves as a gatekeeper over a key channel of distribution, by controlling access to markets, these giants can pick winners and losers throughout our economy.”
The Antitrust Subcommittee report on the big four tech companies hedges somewhat on the monopoly control of Apple and Amazon, instead saying the two companies have “significant and durable market power” over the U.S. online retail market and mobile operating systems and app stores, respectively. However, the report clearly states the belief that “Google holds a monopoly in search and that Facebook has monopoly power in social networking,” arguing that the anti-competitive tactics and data advantages of Google and Facebook lead the companies to either “acquire, copy or kill” competitors.
What Are The Proposed Reforms Suggested To Break Up Big Tech?
A press release from the Antitrust Subcommittee outlines the main goals of the report, which include:
- Structural separations to prohibit platforms from operating in lines of business that depend on or interoperate with the platform;
- Prohibiting platforms from engaging in self-preferencing;
- Requiring platforms to make services compatible with competing networks to allow for interoperability and data portability;
- Mandating that platforms provide due process before taking action against market participants;
- Establishing a standard to proscribe strategic acquisitions that reduce competition.
The Investigation of Competition in the Digital Marketplace: Majority Staff Report and Recommendations also suggests strengthening antitrust laws to better meet the challenges of the digital economy, and offering better transparency into antitrust agencies.
How Likely Is It That The Antitrust Subcommittee Will Take Action To Break Up Big Tech?
It’s clear from the suggested reforms that “structural separations” means breaking up the companies in some way, including divesting assets like YouTube and Whats App and banning or severely restricting future acquisitions. The AP notes that, though it’s unlikely a break up of this scale will happen anytime soon, there is growing frustration with regard to the big four tech companies. “Forcing the companies to break up would be a radical step for Congress to take with a powerful industry. For decades, the tech giants have enjoyed light-touch regulation and star status in Washington, but have faced growing scrutiny and criticism over issues of competition, consumer privacy, hate speech and their effects on democracy and the political climate.”
Google, Amazon, Apple and Facebook have powerful lobbies and will no doubt fight any attempts to cede their control or interfere with their businesses. Google responded to the report by saying, “Americans simply don’t want Congress to break Google’s products or harm the free services they use every day,” the company said in a statement. “The goal of antitrust law is to protect consumers, not help commercial rivals. Many of the proposals bandied about ... would cause real harm to consumers, America’s technology leadership and the U.S. economy — all for no clear gain.”
What happens on November 3rd could also affect how the reforms are implemented, with Democrats and Republicans at odds about the best course of action when it comes to the big four. Although the initial report was bipartisan, Republicans issued another, follow-up report, A Third Way to Take on Big Tech, that suggests more targeted enforcement of antitrust violations.
How Should Digital Marketers Respond To The Report?
Step back and watch the show, because for now there isn’t anything to be done. However, the reforms, should they happen, could create interesting changes for marketers, both good and bad. If big tech breaks up, and media buying is spread over a variety of fractured platforms, brands will need to learn more, hire more and strategize differently, an exhausting undertaking that could cause bumps in the roll out of campaigns that now operate on autopilot. The good news is, the additional competition that might emerge from a hamstrung big four could cause media prices to go down, offering less expensive entry points and opportunities for brands.
In the meanwhile, digital marketers should continue with well-strategized multichannel campaigns, which are less susceptible to reforms that might impact one platform more than another, and offer a range of opportunities for brand awareness, customer acquisition and revenue generation.
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About the AuthorMore Content by Sarah Cavill