Amazon is the global leader in e-commerce and cloud-based computing, with the Amazon store and Amazon Web Services dominating their respective industries. The Jeff Bezos-led company has a publishing arm, a television studio and has started challenging Netflix in the streaming service domain. Amazon additionally produces consumer electronics like the Kindle, Amazon Echo, Fire tablets and Fire TV.
Microsoft is one of the two big names in console gaming, occupies a substantial share of the desktop software market through Windows and also has the second-largest cloud computing market share through Microsoft Azure.
Facebook is the dominant company when it comes to social networking, online media sharing through Instagram and YouTube. It is a significant presence in instant messaging, with WhatsApp becoming more popular day by day.
Apple and Google share the entire market for mobile operating systems between themselves. Google has 72% of the market through Android, Apple has the remaining 27%. Google bought Android in 2005 to get into the mobile OS business, and it has since beaten established competitors like BlackBerry and even Microsoft’s Windows Phone. Google is also the undisputed leader in online search engines.
Reading this might have made one realise just how prevalent these companies have become in our consumer lives without us catching on. Perhaps unfortunately, this is just the tip of the iceberg. The list goes on and on. How exactly have these companies succeeded in whichever market they venture into? According to a growing number of experts as well as some members of the US Congress, the path these industry giants took to reach this unparalleled success might well have been one of depravity.
* * * *
The word Big Tech is being thrown around a lot these days, and while most people are fairly familiar with the terminology by now, we’ll revisit it once more merely for the sake of starting this pivotal and extremely important story from the right place.
Big Tech refers to the five companies which dominate nearly every field of technology and share practically the entire market among themselves: Amazon, Apple, Facebook, Google, and Microsoft. Each of these companies has established themselves as the unrivalled leader in their respective industries, and each of them is also actively building towards a future where they have no serious challenge from any prospective or ambitious competitor. The problem with this vision isn’t the vision itself: monopolies are actually allowed under current US law. The part which is stirring up controversy and attracting unwanted attention is the method which these companies are using to achieve this vision. Are they really going too far to snuff out competition? Are they using their current dominance in their industry to ensure a future where there is no one left to dominate?
These are some of the questions which are being asked increasingly frequently, and arriving at the answers is easier said than done. A substantial portion of the solution depends on how antitrust laws are interpreted, and to what extent research - on markets, rivals and their products - can be deemed as part of normal tactics and not of anti-competitive ones.
* * * *
In 1998, Microsoft was sued by the US government for using anti-competitive practices to eradicate competition. The lawsuit stated that Microsoft was wrongly using its dominance in the market to create a monopoly and remove any threats to its position. It alleged that Microsoft had intentionally made it difficult to install and use rival software on Windows computers and laptops.
Antitrust laws ensure one company doesn’t control or take over the market and doesn’t inflate prices accordingly. Microsoft had bundled additional programs into Windows software which was a loss for rival companies, and this was the crux of the argument against Microsoft. For example, when it started to give its browser software - Internet Explorer - for free, its top competitor Netscape failed to sustain itself and collapsed.
While the lawsuit remained controversial with many saying there wasn’t any case against Microsoft at all, the presiding judge ruled that the antitrust charges were indeed true and that Microsoft had created a monopoly in the industry that threatened competition as well as innovation. The company was asked to break up into two entities, one with the operating software and the other constituting the software arm.
However, Microsoft appealed against the ruling and consequently, the appeals court overturned the original decision. The Department of Justice made an agreement with Microsoft which asked the company to share its computing interfaces with other companies in the industry instead of breaking up.
* * * *
The Big Tech companies (except Microsoft as of now) are facing exactly what Bill Gates’ company faced in 1998, except that there is much more data that can be used against them this time. It is worth noting, however, that the digital landscape has also changed at a rapid rate and it can be reasonably argued that current laws don’t monitor and regulate anti-competitive practices as they should be doing.
After investigating the Big Tech companies for 16 months, a report led by US House lawmakers concluded in October 2020 that all of them (excluding Microsoft) had used their dominance in their industry to remove competition. Amazon, Apple, Facebook and Google are all accused of controlling prices and distributing goods and services in a biased manner. The committee report claims that these companies reduce the business for third party competitors - like sellers on Amazon or app developers on Android and iOS - thus trying to end any serious competition to their own business. The report’s claims include but are not limited to the following:
Amazon uses seller data to understand which products sell better and which ones Amazon should itself start to produce and sell. 37% of sellers on Amazon rely on the company as their only source of income, binding them to Amazon and forcing them to put up with tactics like these which Amazon uses to promote its own products while reducing business for these sellers.
Apple (mis)uses its ownership of the App Store to obtain “completely sensitive information” about third-party apps. This helps them to understand which kind of services are in demand. Apple then integrates these into its own services.
Facebook used user data from its private networking app Onavo. The company then used this data to identify WhatsApp as a hugely popular alternative, and a competitor. Facebook consequently acquired WhatsApp in 2014.
Similarly, the report says that Google used search and Gmail statistics to understand what kind of web browsers are more popular. This gave them a significant advantage when they launched Google Chrome. Since then, Chrome has become the most popular browser option by quite some distance. Google allegedly increases the degree of this monopoly using information from third-party sites like Yelp to improve its search results. Chrome now sends its user data to Google, allowing Google to use browser data to understand the demand for other services better. This potentially allows them to dominate in whichever industry or domain they want.
* * * *
All four companies have completely rejected the findings of the committee. Amazon said that these “uninformed notions” could instead harm small businesses and sellers using the e-commerce company as a platform. Apple “vehemently” disagreed with the report. Facebook said that its mergers with Instagram and WhatsApp weren’t anti-competitive in any way. The company also added that its acquisition of WhatsApp was cleared by the government earlier and so it saw no reason for another investigation into the same matter.
The Democrats present in the Congress recommended reforming antitrust laws, substantial restructuring for these big companies and making it illegal for them to preferentially show their own products (like Google shows its products first in search results). However, a large number of Republicans refused to consider any of these reforms, especially those involving restructuring the companies and their business models; suggesting that Congress is divided over this controversial issue and that there might be several obstacles to overcome on the road to reforming the laws concerned.
The five Big Tech companies have created a world where it is practically impossible to live without being surrounded and even overwhelmed by their products and services. They have created near-perfect market intelligence such that there is no practical way for a competitor to even challenge them for a prolonged period. The concerned laws seem outdated in any case; several experts have stated that they do not appropriately address several areas due to the rapid advancement and change in the digital world. It remains to be seen whether this leads to a drastic change in policy which will curb these companies from taking over the market, or instead permit greater freedom business-wise; it is certain, however, that it will lead to a change in policy, for better or for worse.
Comments