In these last few months, many of us have leaned into technology to keep connected, and as the UK heads into another lock-down, this trend will continue to amplify the ‘big tech’ companies (Amazon, Apple, Alphabet (Google), Facebook, Microsoft) and their unassailable market monopolies.
The difficulty here revolves around the controversial business regulations and tactics that these big tech enterprises have deployed to protect and expand their monopolies, precipitating new antitrust suits surrounding their alleged anti-competitive behaviour.
What kind of antitrust behaviour are we talking about?
Big tech in particular is accused of anti-competitive practices because they are leveraging their platforms to block competition. This involves manipulating the platforms they already operate, to advantage their own products, or flat-out block their rivals from growing.
An example is Apple’s iOS app store, which is a platform for many companies to compete with Apple’s own music, game and lifestyle apps on its iOS devices. Apple has been attacked for beleaguering iOS app developers by forcing them to use only Apple’s store and payment system for their apps, while imposing a hefty commission on sales. This is why Epic Games filed suit against Apple in the United States back in October, because it boycotted Apple’s 30% commission charge on its popular app, Fortnite, leading to Apple suspending the game from its store. The Epic Games v. Apple trial is due to start next year.
Similarly, Microsoft has also engaged in the practice of advancing its own products through platforms that already dominate the market. Take Microsoft’s dominant Office productivity suite for example - It’s Teams product, which has been leveraged during the pandemic for business communication, was automatically tied to Microsoft’s Office suite, meaning that millions were forced to download Teams, whether they wanted to or not. This has prompted Slack, a rival US software company, to file a lawsuit.
Slack has strategically filed this suit through the European Union, which may give the case greater influence, given that the EU’s jurisdiction covers multiple countries. Nevertheless, Microsoft Teams gained around 30 million users during the March to April lock down, signalling that big tech is raking in the profits of pandemic-induced trends. The boldness of smaller rivals to file litigation against big tech constitutes a battle of the former to restrain the big strides of the latter.
The U.S. Government v. Google
Generally speaking, an antitrust claim needs to prove a “violation”, showing “harm to competition”. Recently, it appears that the US government reckons big tech is meeting this threshold. In October, the US Department of Justice (DoJ) launched an antitrust suit against Google, accusing it of monopolising the search engine market, by pre-loading Google onto android phones, and creating exclusive contracts through which Google targets other devices (offering manufacturers a slice of ad revenue money in order to get them to make Google the default search engine on their devices).
The trial date has not been set for this case either. Journalists have opined that the case could “take years” to settle, but this intervention by the U.S. government ends a decades-long hiatus where it had previously side-stepped judicial battles over antitrust. But this time, Google is alleged to have leveraged their existing dominance in the phone market, and large cash stash, to erroneously rule the market. Plaintiffs lawyer Jonathan Cuneo is also planning to incorporate the DoJ’s lawsuit into a combined class action suit with other parties, to strengthen the case.
How successful will these suits be?
Looking at precedent, the last US DoJ suit against Microsoft in 1998 led to a modest settlement, which has since expired. However, the European Union celebrated in 2018 when it succeeded in fining Google €4.34 billion for anti-competitive practices. Governments are therefore entertaining sizeable antitrust cases, but the results are mixed, and will continue to be so.
These lengthy cases and inconsistent results urge a great reform of antitrust laws here in the UK, and around the world. Regulation of the technology industry is always thought to be much slower than the industry’s rate of growth, but only modernised statutes and coordinated treaties will expedite antitrust regulation. For example, the UK Competition & Markets Authority investigated Facebook’s acquisition of Giphy citing consumer data privacy concerns, but the acquisition has still gone ahead. The regulatory environment for tech also needs urgent reform for other reasons, like the huge pressing issue of whether to regulate online disinformation and hate speech.
Solutions - is there a way forward?
Many agree that it would be a “historical anomaly if tech was not robustly regulated” like other industries, but the question is how, and defining what counts as anti-competitive practice. In other words, how do governments regulate anti-competitive practices in an industry that is border-less and evolving rapidly?
Regulation at the moment is “mostly ‘ex post’, meaning after-the-fact antitrust suits, as opposed to ‘ex ante’ rules “that would constrain big tech companies upfront”. The European Union is currently planning to electrify tech regulation with its ‘Digital Services Act’ - this would target the “gatekeeper" prerogative that tech companies currently enjoy, to block competition in app stores, search engines and marketplaces. Notwithstanding the problem of defining what companies would fall under this “gatekeeper” regulation, the legislation should be a positive step forward.
More audacious proposals emerge from the United States House Antitrust Committee, which concluded in October that Amazon, Facebook, Apple and Google should be broken up, and put under separate management; a popular idea within politically progressive circles. Another proposal is to presume any acquisition by a dominant company to be “harmful” unless proven otherwise. Both of these are bold ideas for regulating US-based tech companies and would inevitably spike contentious competition litigation, if enacted.
Conclusion
The antitrust offensive brewing against big tech runs parallel to the more consequential effort to make national institutions, and supranational bodies like the EU, update antitrust legislation to make anti-competitive practices easier to pin down, and regulate. As big tech moves into developing nations’ markets, this task is more urgent. The Western world needs to unify to update antitrust laws quickly or face another decade of uncoordinated antitrust cases that yield mixed results.
Comments