House slams monopolistic tech giants for abusing their power

This week, a regulatory process that began in June of last year finally reached its conclusion: the House Subcommittee on Antitrust released a report on the monopolistic practices of four globe-spanning digital platforms: Facebook, Google, Amazon, and Apple. The investigation involved the collection of more than 1.2 million documents, including internal emails sent by company executives, as well as seven congressional hearings looking at the impact the digital giants have had on privacy, innovation, and the media. Some of these hearings amounted to little more than crass grandstanding by legislators who seemed to barely understand the technology behind these companies. Others sparked some tough questions: the final hearing put the chief executives of all four companies in the hot seat as members of Congress pelted them with examples of blatantly anti-competitive behavior. All of that and more appears in the final report, which is 450 pages long.

The bottom line, the report states, is that by controlling access to certain technology 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 tech giants also use their monopolistic positions to entrench their market power, it says. “By controlling the infrastructure of the digital age, they have surveilled other businesses to identify potential rivals, and have ultimately bought out, copied, or cut off their competitive threats”. In the end, the report states, “companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons”.

The report recommends that antitrust laws be strengthened, along with a number of other new rules, including that acquisitions by large players should be assumed to be anti-competitive until proven otherwise. In addition to talking about technology, the subcommittee also devoted a section of the report to the impact that Google and Facebook’s advertising duopoly has had on the news business. “News publishers raised concerns about the significant and growing asymmetry of power between dominant online platforms and news publishers”, the report says. Nicholas Thompson, editor-in-chief of Wired, told Congress publishers are “like sharecroppers on Facebook’s massive industrial farm.” This outsized influence over the distribution and monetization of trustworthy sources of news, the report says, “undermines the availability of high-quality sources of journalism.” The committee recommended that publishers be allowed to collude in their negotiations with the tech platforms, something Rep. David Cicilline has been trying for some time to enshrine in legislation.

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The report has been described as bipartisan, but while it may have started out that way, it ended with only Democratic signatures on the document, and not one but two alternative documents issued by dissenting Republican members of Congress. According to a report in the New York Times, “over the past few days, support for the recommendations has split largely along party lines“, according to five people familiar with the talks. Rep. Jim Jordan of Ohio, the top Republican on the committee, asked his colleagues not to endorse the report, the Times said, and released his own response in which he said the House report didn’t address his party’s allegations of  bias against conservatives. Rep. Ken Buck of Colorado has written his own report titled “The Third Way” that says the Democratic suggestions went too far, and that he prefers “the scalpel of antitrust, rather than the chainsaw of regulation”.

Not surprisingly, the tech giants responded negatively to the report. Amazon decried what it called “flawed thinking” driven by “fringe ideas” about antitrust, while Apple said that it “vehemently disagrees with the conclusions” of the report. Facebook denied that its acquisitions of Instagram and WhatsApp—two deals that the committee focused on in the report—were anti-competitive, saying acquisitions are “one way we innovate new technologies to deliver more value”. And Google said in a blog post that the report features “outdated and inaccurate allegations from commercial rivals”. Many of the proposals in the report, it said, “would cause real harm to consumers and the US economy, for no clear gain”. Variations of these protests will no doubt appear when the Department of Justice files an expected lawsuit against Google and the Federal Trade Commission proceeds with its existing antitrust investigation into Facebook.

Here’s more on the tech giants and antitrust:

• Overdone: Shira Ovide of the New York Times writes she was struck that the committee “saw almost everything that the big tech companies do as evidence of illegal anti-competitive activity. It felt overdone. And there was little recognition of what the U.S. economy and people have gained from the success of these tech giants”. For example, she says, the committee criticized Google for not allowing other companies to collect mapping data from users’ Android phones. That may seem anti-competitive, Ovide says, “but also, Google’s action helped secure people’s digital privacy. Wouldn’t it be bad if every creepy app had access to our location when we roamed around the world”?
• Place your bets: Former Microsoft chief executive Steve Ballmer says he is willing to bet the tech giants won’t be split up. “I’ll bet money that they will not be broken up”, Ballmer told CNBC. “I also don’t think the case of Apple is the same as Google is the same as Amazon”, he added. “In a sense putting them all together makes good theater but it doesn’t necessarily mean good policy”. Microsoft was the subject of a landmark antitrust lawsuit and settlement in the late 1990s. Ballmer said he didn’t think a breakup would help with most of the criticisms of the four tech platforms. 
• Push a string: Technology analyst Ben Thompson writes in his newsletter Stratechery that “so much modern antitrust action against tech companies is like pushing on a string: the reason these companies have power is because so many customers choose to use them, and it is both difficult and probably unwise to try and regulate the individual choices of billions of users”. Thompson says he is sympathetic to the issue of how much power these companies have, but says that “constraining that power needs new laws that start with Internet assumptions, and anti-monopoly advocates would do well to focus on solutions that, instead of retracting privileges, extend them”.
• Discussion: CJR recently used its Galley discussion platform to host a series of interviews and roundtables about the tech giants and antitrust, with a group of experts that included Zephyr Teachout, an associate professor of law at Fordham University and a former Democratic candidate for governor of New York. She said going into the most recent hearing, she felt “like a teenager on Christmas, ready to be pleased and ready to be horribly disappointed”, but came away thinking that the committee posed some tough questions. Sandeep Vaheesan, legal director at the Open Markets Institute, said the hearing was an important reassertion of Congress’s power to regulate markets. “It felt like a throwback to an earlier time when Congress took its oversight function and matters of market governance seriously”, he said.

Other notable stories:

• BuzzFeed News has pulled a political correspondent from the White House press pool, citing concerns that the area has become a coronavirus hot zone after Donald Trump and many of his top aides, including press secretary Kayleigh McEnany, tested positive for the virus. BuzzFeed spokesman Matt Mittenthal confirmed to the New York Times that the company had withdrawn correspondent Kadia Goba from her Wednesday shift out of concern for her safety. Politico White House reporter Meridith McGraw volunteered to take Goba’s spot in the press pool, and BuzzFeed said it was awaiting further guidance from the White House Correspondents Association.
• California Sunday Magazine is shutting down, according to a report from Women’s Wear Daily and tweets from union members, after billionaire investor Laurene Powell Jobs pulled her support from the magazine and its affiliate Pop-Up Magazine, which produced events based on magazine articles. Until May, the magazine was distributed quarterly in weekend editions of The Los Angeles Times and the San Francisco Chronicle. It then went online only, but now that is closing as well. Emerson Collective, a foundation started by Jobs, acquired California Sunday and Pop-Up Magazine in 2018. Pop-Up will continue, but without backing from Emerson, WWD reported.
• Links to articles published by RT, a publication formerly known as Russia Today and described by American intelligence as the Kremlin’s “principal international propaganda outlet”, appeared routinely on a number of right-wing news sites, according to a report in the Wall Street Journal, but weren’t properly identified as being from the Russian-backed news site. They were placed on the sites by a company called Mixi Media, which launched in 2018 as a network of right-leaning publishers that included the National Review, The Daily Caller and Newsmax, as well as RT and another Russian state-backed outlet, Sputnik. Members of the network agreed to cross-post headlines from other news outlets in the network on their pages.
• Google is close to a deal to pay French publishers for their news, the company said Wednesday, according to Reuters. News of the deal comes ahead of an expected ruling by a French appeals court on the news licensing provisions of newly revamped EU copyright rules, which allows publishers to demand a fee from online platforms for showing news snippets. Last week, Google announced it would pay $1 billion to publishers globally over the next three years for their news, starting with German and Brazilian media groups, as part of a new product called News Showcase. But the company is still fighting with Australia’s government over similar proposed legislation.
• Microsoft’s vice-president of strategic initiatives announced a number of plans it said are designed to preserve and protect journalism and local newsrooms, including a community-based pilot program it says will “look at ways to provide journalists and newsrooms new tools, technology and capacity, and expand reach for local news outlets.” The announcement also includes a pro-bono program to provide legal support to journalists and smaller newsrooms, and an expansion of a program designed to help protect journalists from cyber-attacks.
• A fake news site called the Globe Independent was filled with news stories that were plagiarized from NBC News, the Washington Post, and other outlets but it gained a large audience on Facebook thanks to dozens of ads it purchased, according to a report by BuzzFeed News. Despite promises to stop manipulation of its platform, the unknown actors behind the fake site violated Facebook’s policies against fake accounts, and may have evaded its rules about political ads as well, BuzzFeed says. The behavior went unnoticed until BuzzFeed alerted Facebook.
• Fox News announced that the cable news channel is launching its own publishing imprint, Fox News Books, through News Corp.’s HarperCollins. The network said it has signed a three-book deal with the publisher, with the first book, written by Fox & Friends Weekend host Pete Hegseth, set for release in November. That book, Modern Warriors: Real Stories From Real Heroes, will be followed by a book written by Fox News @ Night anchor Shannon Bream in spring 2021 about women of the Bible.

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