Breaking Up Big Tech: Why are U.S. antitrust laws changing towards global big tech companies?

Article by Bunmi Adaramola

In order to ensure an equal playing field for businesses operating within a specific industry, many countries adopt a range of laws to protect consumers and regulate companies to ensure competition and fairness. These laws are commonly referred to as ‘Competition Laws’ or in the U.S, as Antitrust Laws. It is important to have adequate competition mechanisms in place for businesses that operate in various sectors in order to prevent monopolies from rising or companies gaining too much power over the market competitors. The rise of global Big Tech companies (such as Facebook, Apple, Google, Amazon) in the U.S within the technology sector appears to have been met with little enthusiasm from regulators and enforcers of U.S antitrust rules. With these companies holding the highest market share capitalisation (according to Business Insider), not only within the technology sector but in the other industries they maintain a dominant presence in, the concern from U.S. antitrust regulators appears somewhat justified. Against this backdrop, this article discusses the various probes and investigations embarked on by U.S. State and Federal investigation authorities into Big Tech. Discussions surrounding the dominance of such Big Tech companies and the concerns as to whether these companies wield too much power with little oversight or regulation would be made. 

The reality is that Big Tech in the 21st century has significantly affected the way billions across the world live their lives, by impacting and transforming the U.S. economy. With technology becoming a significant aspect across various industries and sectors, concerns about the availability of many alternatives within the technology sphere are continually raised.  Elizabeth Warren, a Democratic candidate for the next U.S. elections, put forward the plan to ‘break up Silicon Valley’ as part of her political agenda. This comes under the belief that the corporate power held by big techs such as Facebook, Google, Amazon and Apple were too much such that it could result in consumer harm and anti-competitive practices. Further to this, a series of U.S antitrust probes by various organisations and departments began from July 2019. Ultimately, commentators have described the new era of changing antitrust rules as a significant period which could ‘change big tech and corporate America forever’.  

Investigation and Probes into Big tech by Federal and State Authorities

Facebook: After being caught up in a scandal earlier this year, (the Cambridge Analytica Scandal) where Facebook mishandled the privacy of its users, the Federal Trade Commission (FTC) handed the company a $5bn fine. Further to this, the FTC has continued to probe into Facebook, particularly of the concern that Facebook is allegedly abusing its market dominance by cutting off consumer access to data from smaller rivals. This is evident where other social media networking platforms (WhatsApp, Instagram) have been bought out by Facebook and have the highest percentage of usage compared with other social media platforms. This very act appears to have attempted to eliminate other rivals and competitors within the industry, with Facebook assuming an implied monopoly within the social media setting. The competition issue here lies in the question being asked by investigators as to whether if there was more competition in the social networking services platform, could consumers have a choice to use these other platforms that extracted less data? The overall concern with Facebook from antitrust investigations, especially as at 2019, goes back to the assumption that Facebook is a monopolist, who have gotten ‘too big’ and have violated the Sherman Antitrust Act by engaging in the anti-competitive practice.  

Google: Google has had its share of antitrust probes after the company was said to have allegedly been manipulating its search algorithm to favour big advertisers and punish competitors. Resulting from this, and the general need for antitrust enforcers to probe into the challenges caused by big tech, Google has faced series of investigations not only from the Department of Justice but also from U.S. states such as New York, Texas and District of Columbia.

Amazon: As at August 2019, the FTC launched an investigation into Amazon in order to ‘broaden the scrutiny’ of the company to cover areas beyond antitrust issues, including the cloud-computing business. Amazon is perhaps the largest online retail store globally, having the highest market capitalisation in comparison to other companies who operate in the retail sector.
This probe into Amazon also comes after news of the company allegedly ‘undercutting third-party merchants by using their sales data to market their own initiative private-label products’.

Are these Investigations Justifiable?

The concern for many is that investigators have decided that the big tech companies are simply ‘too big’ for their own good and have proceeded to go about breaking up Silicon Valley. In this case, it may appear that there might not be a real antitrust threat on the part of big tech, and investigators are operating purely out of the assumption that these companies wield an overbearing corporate power in the sectors they are dominant in. The result of such move into antitrust probes, according to many big tech specialists, is that such investigators are only embarking on a fishing expedition, one which would most likely go on for many years without any conclusion, as well as some serious financial cost to the government. Why? It is most likely difficult, nearly impossible, for policymakers to use antitrust laws to limit the powers of big tech.

The services offered by many big tech companies are cost-efficient and virtually free for consumer use, which allows users to greatly benefit from such service. For instance, social media networking platforms owned under Facebook are free for the most part, with Facebook helping from the ‘Marketplace’ feature on the platform, and with the ‘promotions’ feature for business pages on Instagram. This allows consumers to take advantage of the benefits offered within the innovative online advertisement climate offered by big tech companies. Due to this low cost or free nature of services, and the benefit derived by consumers, it becomes hard for investigators to prove the anti-competitive nature of big tech.

Taking these factors into consideration, it is more likely that the dominance of big tech platforms in many sectors is purely due to economies of scale as opposed to these companies engaging in anti-competitive practices.