Amazon, Apple, Google and Facebook have all abused their market power according to a damning Congressional report that recommended forcing large technology companies to restructure their businesses entirely.
A 449-page report released on Tuesday by the Democrat-controlled House of Representatives antitrust subcommittee amounts to a justification and a road map for what would be the biggest assault on corporate power in the technology industry since the 1990s.
The report said: “By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them.”
The report suggests ending these practices by rewriting US antitrust law, for example by forcing companies to restructure so they cannot use their dominance in one area to harm rivals in another. Business lines should be split apart and kept under separate management, if not sold off.
And it calls for regulators to presume any proposed acquisition by a dominant company to be anti-competitive unless proved not to be.
While Republicans are not supporting these recommendations, Democratic officials expect that to be seriously considered by Joe Biden should he win November’s presidential election. A new Congress could also take them up in whole or in part.
Republicans on the subcommittee supported some of the report’s less contentious proposals to bulk up antitrust enforcement but declined to sign on to the report as a whole.
Democratic staff on the committee spent 16 months compiling their findings, interviewing 250 people and poring over 1.3m documents in the process.
They conclude that each of the four largest tech companies had choked off competition unfairly in different ways.
It said Facebook had “maintained its monopoly through a series of anti-competitive business practices”, including buying up potential rivals and writing its policies to the advantage of its own services while choking others.
It found that after the company’s 2012 acquisition of Instagram, the combined company then became so big that it ended up competing largely with itself rather than with others in the market.
And it revealed an internal research paper, dubbed the Cunningham Memo, advising Mark Zuckerberg, chief executive, in October 2018 how the company could continue to grow both Facebook and Instagram without one reaching a “tipping point” at which it would take all the users of the other. One senior Instagram executive described the approach as “collusion, but within an internal monopoly”.
The report went on to accuse Google of using some of its services to promote others. For example, the company demanded that smartphone makers using Google’s Android operating software should install its Chrome web browser as standard. Chrome in turn uses Google as its default search engine.
Supporters of large technology companies often say that aggressive tactics to defeat the competition have improved services for users rather than made them worse.
But the report outlines how Google manipulated its search engine to highlight its own products such as its shopping service when those services would not have normally have ranked highly on Google search.
It quotes one company employee saying of its shopping service: “We’d probably have to provide a lot of special treatment to this content in order to have it be crawled, indexed, and rank well.”
The Trump administration’s justice department is already finalising an antitrust lawsuit against Google in concert with several state attorneys-general.
Some of the findings of the subcommittee’s investigation were trailed at a public hearing earlier this year when the chief executives of Facebook, Google, Amazon and Apple sat for an all-day grilling.
On Amazon, the report finds that sellers using Amazon’s marketplace felt unable to protest about the company’s fees and policies because they were so reliant on its services, and it alleged the company routinely uses third-party seller data to help improve and sell its own products.
Amazon has promised not to use this data for competitive reasons, but one former employee is quoted as saying: “It’s a candy shop, everyone can have access to anything they want. There’s a rule, but there’s nobody enforcing or spot-checking. They just say, don’t help yourself to the data . . . it was ‘wink wink,’ don’t access.”
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On Apple, developers told the subcommittee that the iPhone maker uses its dominant App Store to benefit its own applications and hinder those made by rival companies.
In a statement, David Cicilline, the head of the subcommittee, and Jerrold Nadler, the Democratic chairman of the House judiciary committee, said the evidence “demonstrates the pressing need for legislative action and reform”.
“These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement. Our economy and democracy are at stake.”
Additional reporting by Kadhim Shubber in Washington