Thursday, October 08, 2020

LEFT & RIGHT UNITE

'Big Tech Must Be Broken Up': House Report on Silicon Valley Monopolies Bolsters Call for Far-Reaching Antitrust Measures

"The totality of the evidence produced during this investigation demonstrates the pressing need for legislative action and reform," states congressional report following a 16-month probe.

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House Democrats suggested breaking up Big Tech in a newly-released Judiciary Committee report published on October 6, 2020. (Photo: Peter Macdiarmid/Getty Images)

A 450-page House Judiciary Committee report on monopolistic tech company behavior recommends more stringent antitrust measures and breaking up Big Tech. (Photo: Peter Macdiarmid/Getty Images)

House Democrats on Tuesday released a major report calling on Congress to overhaul U.S. antitrust law and take action to curtail the power of tech titans Amazon, Apple, Facebook, and Google. 

The House Judiciary Subcommittee on Antitrust spent 16 months investigating Big Tech, resulting in a 450-page report (pdf) that found the four tech companies wield abusive monopoly power and suggesting that lawmakers take steps to break them up.

"A company like Amazon needs to be treated like Standard Oil and be split into many pieces."
—Vahid Razavi, Ethics In Tech

The report details a litany of anti-competitive practices that have become business as usual for "companies that once were scrappy, underdog startups that challenged the status quo" but which have now "become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons."

"Each platform now serves as a gatekeeper over a key channel of distribution," the investigation found. "By controlling access to markets, these giants can pick winners and losers throughout our economy."

According to the report, the "monopoly power" of the four tech giants has "diminished consumer choice, eroded innovation and entrepreneurship in the U.S. economy, weakened the vibrancy of the free and diverse press, and undermined Americans' privacy."

The committee found that the companies, whose operations span multiple industries, use their dominance in one area of their business to undercut the competition in other areas.

Google's Android operation system, for example, gives it and its parent company Alphabet "near-perfect intelligence" on competiting companies that develop apps for Android. This allows Google to easily create its own apps to unfairly undercut the competition. 

The committee concluded that Google fosters an "ecosystem of interlocking monopolies" perpetuated via two main anti-competitive practices. 

First, the company aggressively works to "undermine... vertical search providers"—search engines for particular topics, like Expedia for travel or Dreamstime for photo sharing—in order to "boost Google's own inferior vertical offerings, while imposing penalties" on competitors. 

Second, Google uses anti-competitive contracts, including ones that "required smartphone manufacturers to pre-install and give default status to Google's own apps."

The report found that Amazon—which accounts for nearly half of all U.S. e-commerce sales (that's more than seven times as much as second-place Walmart)—unfairly reaps data from its third-party sellers it then uses to boost its own business.

Amazon then uses this edge to favor its own brands over those of competitors, excludes competing products from its virtual shelves, and prioritizes its own products in online search results. 

The lawmakers accuse Apple of exercising monopoly power through its control of software downloaded to iPhones—which account for nearly half of all U.S. mobile phones in use. While iPhone users can only download apps from Apple's store, the report found that the company unfairly favors its own apps, while charging outside app developers "exorbitantly high" fees.

"Apple leverages its control of iOS and the App Store to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings," the report states. "Apple also uses its power to exploit app developers through misappropriation of competitively sensitive information and to charge app developers supra-competitive prices within the App Store."

The committe reported that Facebook enjoys monopoly power in both the online advertising and social networking markets, and that the company uses a "copy, acquire, kill" strategy to destroy competition.

For example, the investigators found that Facebook's 2012 acquisition of Instagram was a brazen attempt to "neutralize a nascent competitive threat" that was followed by an intentional effort to thwart the upstart's success so it couldn't compete with its new parent company.

"These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement."
—House Judiciary Antitrust  Subcommittee 

The report cites an Instagram whistleblower who testified before Congress that there was "brutal infighting" between Facebook and Instagram, and that CEO Mark Zuckerberg's efforts to slow Instagram's growth amounted to "collusion... within an internal monopoly." It also discusses the infamous 2018 Cunningham Memo, a blueprint for such internal monopolistic collusion. 

The committee concludes that Congress should update antitrust laws to make it more difficut for companies to obtain approval for mergers and acquisitions. It also calls for the abolition of mandatory arbitration clauses in tech companies' terms of service agreements that prevent users from suing either individually or through class-action lawsuits.

"The totality of the evidence produced during this investigation demonstrates the pressing need for legislative action and reform," the report states. "These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement."

While Amazon, Apple, Facebook, Google, and some Republican lawmakers have criticized the report, Democrats and digital rights advocates hailed its call for stronger antitrust protection and to break up Big Tech.

"Our investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation, and safeguards our democracy," House Judiciary Committee Chairman Rep. Jerrold Nadler (D-N.Y.) and Antitrust Subcommittee Chairman Rep. David Cicilline (D-R.I.) said in a joint statement.

"By reasserting the power of Congress, we now have a thoroughly researched and reasoned roadmap for the work ahead as we rein in anti-competitive behavior, help prevent monopolistic practices, and allow innovation to thrive again," said Rep. Pramila Jayapal (D-Wash.). "I'm looking forward to continuing this urgent work."

In a Tuesday blog post, the digital rights group Electronic Frontier Foundation said that "many of the report's recommendations echo calls EFF has also made, proof of just how obviously effective, needed, and common-sense they are," adding that it is "pleased to see the report go beyond U.S. antitrust law's narrow focus on consumer prices."

"Overall, the Judiciary Committee report is a strong, evidence-based prescription for fixing antitrust law to help address the problems of Big Tech," said EFF. "We hope the conversation continues, with good changes to the law and increased enforcement yet to come."

Vahid Razavi, a former Amazon Web Services manager and founder of the nonprofit advocacy group Ethics In Tech, applauded the report and said it was nice to hear more lawmakers concur with his long-held assertion that the biggest tech companies are monopolies. 

"Big Tech must be broken up," Razavi told Common Dreams. "A company like Amazon needs to be treated like Standard Oil and be split into many pieces. Amazon Web Services is a monopoly by itself. AWS competes with many of its customers and partners today."

"Every partner that I previously managed on behalf of AWS is now facing competing product offerings by Jeff Bezos and his team at AWS," he added of the Amazon CEO. 

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House Antitrust Report Proposes Takes a Swing Against Big Tech

Kayla Sargent
October 7th, 2020  

Congress has finally begun to take action against Big Tech’s reign of terror, this time, with a focus on antitrust. 

The House Subcommittee on Antitrust, Commercial and Administrative Law released its antitrust report late Tuesday, which discussed the rise to power of Facebook, Google, Apple and Amazon. The report recommended several solutions, chief among them is increasing competition and breaking up tech monopolies.

The report provided a summary of the lack of competition in online markets, beginning with Facebook. “In the absence of competition, Facebook’s quality has deteriorated over time, resulting in worse privacy protections for its users and a dramatic rise in misinformation on its platform,” the report stated.

Google, similarly, faced accusations of anticompetitive behavior. Subcommittee staff claimed that “Google maintained its monopoly over general search through a series of anticompetitive tactics. These included an aggressive campaign to undermine vertical search providers, which Google viewed as a significant threat.” 

The report also stated that Amazon achieved its status “in part, through acquiring its competitors, including Diapers.com and Zappos.” The subcommittee staff said that “the company’s control over, and reach across, its many business lines enables it to self-preference and disadvantage competitors in ways that undermine free and fair competition.” 

The report further argued that Apple “leverages its control of iOS and the App Store to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings.”

In order to correct this behavior, subcommittee staff, which prepared the report, recommended six different solutions:

  • First, it recommended “structural separation and line of business restrictions,” two tools that Congress has used to break up monopolies in the past, specifically “railroads and telecommunication services.”
  • The subcommittee further recommended “that Congress consider establishing nondiscrimination rules to ensure fair competition and to promote innovation online,” which would “require dominant platforms to offer equal terms for equal service and would apply to price as well as to terms of access.” 
  • Antitrust laws are somewhat pointless if there is no way to increase competition in the broader market, so subcommittee staff recommended “that Congress consider data interoperability and portability to encourage competition by lowering entry barriers for competitors and switching costs by consumers.”
  • To reduce Big Tech’s market power, the subcommittee staff recommended “that Congress consider shifting presumptions for future acquisitions by the dominant platforms.” Such a change would presume that any acquisition by a dominant platform would be anticompetitive unless demonstrated “necessary for serving the public interest” and that benefits of the merger could not be achieved through internal growth.
  • The report then requested “that the Subcommittee consider legislation to provide news publishers and broadcasters with a narrowly tailored and temporary safe harbor to collectively negotiate with dominant online platforms.”
  • The final recommendation requested that “Congress consider prohibiting the abuse of superior bargaining power, including through potentially targeting anticompetitive contracts, and introducing due process protections for individuals and businesses dependent on the dominant platforms.”

While the report primarily warned of the harms of monopolies from a business and consumer protection standpoint, some, including Sen. Ted Cruz (R-TX), have other problems with Big Tech. At a hearing in September, Cruz asked a Google spokesperson, “If Google isn’t dominant, why does it have the power to demand of a media publisher it disagrees with that it take down the comments site and why does it expect immediate obedience?”


Conservatives are under attack. Contact your representative and demand that Big Tech be held to account to mirror the First Amendment while providing transparency, clarity on “hate speech” and equal footing for conservatives. If you have been censored, contact us at the Media Research Center contact form, and help us hold Big Tech accountable.

MRC TechWatch Reader,

Never before have a few companies had the ability to silence the entire conservative movement. Now, a handful of tech companies can censor both the people and the ideals of the right through a dangerous combination of computer programs and deliberate censorship.

This is why TechWatch, a program of the MRC exists—to defend conservative speech online and expose efforts by top tech companies and their employees to silence conservative voices with Orwellian speech controls. We are part of the only organization purely dedicated to this critical mission and we need your help to fuel this fight.

Donate today to help TechWatch continue its fight. $25 a month goes a long way in the fight for a free and fair media—which includes social media.

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- The MRC TechWatch Team 

Facebook's 'monopoly power' hurts user privacy, finds Congress

Well, yeah.

IMAGE: BOB AL-GREENE / MASHABLE

BY JACK MORSE1 DAY AGO

When it comes to protecting users' privacy and fighting the spread of misinformation, Facebook is getting worse.

So claims a 449-page congressional report released Tuesday, which pins Facebook's multitude of failings, at least in part, on a troubling lack of competition in the social networking space. Facebook, in other words, is a monopoly — and we're all suffering as a result.

The report is the result of a 15-month investigation into the anticompetitive practices of Facebook, Amazon, Google, and Apple, and is the work of the bipartisan House Subcommittee on Antitrust, Commercial and Administrative Law. It pulls no punches in condemning the tech and advertising giant that swallowed up potential competitors like Instagram and WhatsApp in its path.

Notably, the report finds that Facebook' long-held stance that it's not a monopoly because it has "a lot of competitors" is mostly BS.

"Facebook's position that it lacks monopoly power and competes in a dynamic market is not supported by the documents it produced to the Committee during the investigation," reads the House report. "Instead, Facebook's internal business metrics show that Facebook wields monopoly power."

That's right, the report concludes that even Facebook's own internal data shows the outward-facing line of social media competitors aplenty to be untrue.

"In the absence of competition," continues the report, "Facebook's quality has deteriorated over time, resulting in worse privacy protections for its users and a dramatic rise in misinformation on its platform."

We reached out to Facebook for comment on the report's findings — namely that Facebook's monopoly power contributes to worse privacy outcomes for users and an increase in dangerous misinformation (like that of the just partially banned group QAnon) — but received no immediate response.

That's OK, however, because the House committee doesn't need Facebook to weigh in on one of the report's key recommendations: "Structural separations and prohibitions of certain dominant platforms from operating in adjacent lines of business."

Essentially, break the companies up.

Other recommendations include preemptively blocking future mergers and acquisitions, making it easier for users to move their data from one platform to another, and safe harbor protections for media outlets.

The proposal guaranteed to turn the most heads, however, is the aforementioned separation. While that recommendation has received pushback from at least one Republican on the committee, it is likely to find broad support among the American public. A Consumer Reports survey, cited in the House report, found that 79 percent of Americans "think that mergers and acquisitions pursued by large platforms are unfair because they undermine competition and limit consumer choice."

SEE ALSO: Facebook admits it's awash in COVID-19 misinformation

It turns out that breaking up Big Tech might just be the one thing Americans can agree on — assuming misinformation spread via Facebook doesn't change their minds first.

Congress’ renewed attack on Big Tech may clear the field for decentralization
The Antitrust Subcommittee looks for new legal tools to rein in Apple, Amazon, Facebook and Google — a clear opening for tech tools built to decentralize.

On Tuesday, a House subcommittee put out a massive report that places Big Tech in the crosshairs of major antitrust reforms.

The four firms at the center of the report — Apple, Google, Facebook and Amazon — have been in hot water with Congress for some time. But while the tone of the recent conversation is punitive towards those firms, it also seems to envision a broader shift to new rules that would stop tech from this level of centralization again.

Obviously, that’s a lofty ambition, and sweeping political ideals don’t make it into market practice without extensive compromise. 

Nonetheless, the proposed rule changes would not only clearcut huge chunks of these firms’ claims to the tech market, but also seem to leave the field open for blockchain technologies that make concentration of power impossible not only illegal, but technologically impossible.


Violations named

The report, entitled “Investigation of Competition in Digital Markets,” comes from the staff of the Democratic majority of the House Antitrust Subcommittee of the Judiciary Committee. It’s a 449-page account of America falling out of love with Big Tech.

The core criticisms are already familiar: Apple, Google, Facebook and Amazon use their roles as vital gatekeepers to bully competitors and muscle into new markets on the basis of ill-gotten leverage. In its own words:

Dominant platforms have used their integration to tie products and services in ways that can lock in users and insulate the platform from competition. Google, for example, required that smartphone manufacturers seeking to use Android also preinstall and give default status to certain Google apps enabling Google to maintain its search monopoly and crowd out opportunities for third party developers.

Apple and Google are both in legal battles with Epic Games, the firm behind Fortnite, over their 30% commission on transactions via their platforms, which Epic Games tried to circumvent by using its own currency. Apple and Google blocked Fortnite from its respective app stores immediately.

The Epic Games battle and the 30% commission — far higher than internet payment processors generally charge, is just a recent entry in a long rap sheet of bullying behavior. And while everyone seems to acknowledge that these firms now provide critical infrastructure in the modern world, the report calls upon the era that gave birth to the trust-busting movement to point to comparable abuse of power:
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 and railroad tycoons.

Solutions proposed

The report would not be as long as it is if the solution it put forward was as simple as applying existing law and trusting existing authorities. The dominance of the four firms in question is part of a longer-term buildup of judicial precedent and regulatory hesitance that predates the internet era, but becomes especially obvious when dealing with internet business models:
It is unclear whether the antitrust agencies are presently equipped to block anticompetitive mergers in digital markets. The record of the Federal Trade Commission and the Justice Department in this area shows significant missteps and repeat enforcement failures.

The report proposes updating cornerstone antitrust legislation like the Sherman Act, lowering the threshold for market dominance. It would seek to counter any future acquisitions. Citing hundreds of mergers and acquisitions since 2000 of which antitrust authorities blocked zero, the authors of the report would label any future acquisition by a “dominant platform”illegal unless proven otherwise:

Subcommittee staff recommends that Congress consider shifting presumptions for future acquisitions by the dominant platforms. Under this change, any acquisition by a dominant platform would be presumed anticompetitive unless the merging parties could show that the transaction was necessary for serving the public interest and that similar benefits could not be achieved through internal growth and expansion.

The authors also argue that in recent decades, a series of critical court decisions have dulled the original weapons for prosecuting antitrust violations. Legislators, they say, must override those precedents to proceed.

Meaning for crypto?

Cointelegraph Magazine earlier noted that blockchain-based social media stands to benefit from any crackdown on Facebook. But it goes deeper than that.

The Netflix documentary “The Social Dilemma” is steadily shocking more and more Americans with how much of their personal information they’ve surrendered to monetization by third-party platforms. But that’s only the start of it. The Committee’s report philosophically looks at digital platforms as critical infrastructure:
Each platform uses its gatekeeper position to maintain its market power. 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.

Framing internet technology as infrastructure is growing more and more common in the halls of Congress. The report actually calls upon antitrust measures that once broke up railroad and telecommunications giants as an example. But, frankly, the state of American telecoms and railroads is disgraceful.

But the quest to make internet mediaries more neutral and publicly accessible, to remove them from the control of powerful third parties capable of using their accumulated information to their own ends, seems like a pretty clear use case for a switch to apps and sites that are by their nature decentralized. In other words, the kind of infrastructure the blockchain community has spent the last decade building.


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