Congressional report blasts Google, Apple, Amazon, and Facebook as monopolistic ‘gatekeepers’ of the digital economy

The disintegration of these societies is apparently on the table.

According to a full report released yesterday by the Antitrust Subcommittee of the House Judiciary, Google, Apple, Amazon, and Facebook are in monopoly positions in their respective markets. The Congressional Report, prepared after more than a year of facts and evidence, recommends a variety of ways, including “structural separation” (sale), to restore competition and avoid such a concentration of power in the future.

The 400-page report describes each company’s alleged market abuse with specific examples. “When Amazon, Apple, Facebook, and Google took control of the largest distribution channels, they started to act as guards. A large number of companies in the US economy now depend on these guards to access users and markets.

Google was the first to issue a statement specifically addressing the corporate division idea: “Americans simply don’t want Congress to block Google products or damage the free services they use every day. Article 230 weakens consumers,” the technology, leadership, and economy of the United States – without any apparent advantage.

Facebook, Apple, Amazon, etc will also challenge the findings and recommendations of the House Report, which has no direct legal force. However, it will be very influential and perhaps illustrate the arguments and evidence that could arise in the apparent threat of US antitrust cases, at least against Google and possibly Facebook.

Google is a system of “interconnected monopolies”

The report notes that “Google has had solid and stable sales for nine years over the past decade, with a profit margin of over 20%, nearly three times the average for a US company.”  “Google is well-positioned to maintain its dominance, noting that” Alphabet has developed an extraordinarily strong competitive advantage around its business.

According to the report, Google has conducted effective monopoly studies based on size, data, and “gatekeeper” status to avoid competition or make favorable concessions to others dependent on the ecosystem. It also criticizes Google for “misuse” by third parties and prefers vertical content in search results.

The report undoubtedly uses examples from Yelp and TripAdvisor, and the report uses Google’s alleged attempt to remove third-party content from the SERP and take vertical content to the next level:

When the local OneBox is displayed on the page, links to the [company] website with highly relevant [results] on the page are moved to the lower organic search area. This deterioration places [the company] at a competitive disadvantage relative to Google’s local search results and endangers the health of our business, and this problem is compounded by the growth of the mobile environment, where links to [our ] website from small screens or first page of search results.

The claim was initially rejected by the FTC during Google’s original antitrust investigation about eight years ago. But the market has changed since then.

The report further states that “Google has also actively suppressed some competitors by imposing algorithmic fines.” According to Yelp, Google’s internal content is unlikely to survive Google’s downgrade policy.

Here are some additional Google results:

Google “diverts traffic from the rest of the Internet, while entities that try to reach users pay Google more and more.”

  • Google ‘has maintained a monopoly on global searches through a number of competing contracts’ and in particular application rules for Android OEMs.
  • Google’s vast “richness” of user data helps to strengthen market dominance and the provision of interconnected services

Facebook wanted to “capture, copy or kill” competitors

Facebook believes there is stiff competition from Twitter, Snapchat, Pinterest, and TikTok. However, the subcommittee’s report states unequivocally: “Facebook has monopolistic powers in the social networking market.” He adds that Facebook “has maintained an undisputed position in the social networking market for almost a decade.” Network effects, data benefits, and high switching costs discourage direct competition from other companies to offer new products and services.

Most of Facebook’s discussions in the report focus on its acquisition strategy and whether Instagram and WhatsApp were acquired to end competitive threats to the company. The report cites Facebook memos and internal documents that describe the company’s merger and acquisition strategy as an ‘acquisition’ and a tool to ‘neutralize competitive threats and maintain Facebook’s [dominant] position’.

“Facebook used the data to create better market intelligence to identify competitive threats and then obtain, copy or delete these activities,” the report said. It also provides examples of alleged “measures taken to misuse data, harm competitors, and protect Facebook from the competition.”

The report cites cases where competing Facebook / Instagram features (e.g. Snapchat Stories) were copied in an attempt to “destroy” them:

Evan Spiegel, the co-founder of Snapchat, received an offer from Zuckerberg to receive the $ 3 billion he did not want. Later, Facebook, which is part of Facebook, introduced the Stories feature, which was almost identical to regular Snapchat, also known as Stories. Less than a year after launch, Instagram Stories had more active users (200 million) per day than Snapchat Stories (161 million).

Referring to the example of Vine, among others, the report adds that Facebook also selectively refused access to its ‘social card’ to harm and neutralize suspicious competitors. In 2013, Facebook announced the short-lived video app Vine. “It reflects the main features of the Facebook news feed.” In response, Facebook Vine has stopped accessing the Facebook API. In this way, Facebook was able to disrupt the consumer experience on Vine and reduce the competitive threat of the platform. Twitter won Vine in 2016.

Finally, the Facebook report discusses the ‘monopoly power of online advertising in the social media market’, citing evidence from third parties that Facebook advertising is ‘inevitable’, ‘mandatory’ and ‘difficult’ to replace. for its size and capacity.

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