Big Tech in Hot Water

Big Tech in Hot Water

John Quinlan, Contributor

There is a growing consensus of support for reigning in the power of Big Tech companies. Members of congress, agencies like the Federal Trade Commission (FTC), and private companies have all tried targeting Big Tech in antitrust investigations, but have been effectively unsuccessful thus far.

The FTC’s original complaint against Facebook was dismissed by a federal judge in June, but was given a second chance to amend the filing. The FTC argues that Facebook holds an illegal monopoly over social media. In the case filing, it is mentioned how Facebook maintains its monopolistic possession by using aggressive tactics to conquer its competition, following CEO Mark Zuckerberg’s strategy, expressed in 2008: “It is better to buy than compete.”

Facebook vehemently defends its status in the market, claiming that there is plenty of other competition in social media. The company took to Twitter, calling the FTC’s case “meritless” and acting as a victim in the conflict, “The FTC’s claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final.”

The FTC argues that, because of Facebook’s acquisition of Instagram, the social media giant boasts monthly user-ship that no other social media company can compare with. The next largest “personal social networking service” is Snapchat, which has tens of millions of fewer users than Facebook or Instagram.

Facebook continues to mention Tik Tok as a viable competitor, but the FTC does not believe the app falls into the category of “personal social networking service.” The Commission compares the Chinese app to Youtube, a “content broadcasting and consumption service,” which would not compete in the same market as Facebook or Instagram.

The complaint also argues that Facebook’s monopolistic power gives them an unfair advantage in the selling of advertising. Facebook collects data on its users activities and sells it to companies looking to utilize behavioral advertising. In 2020, Facebook generated profits of over $29 billion on $85 billion of revenue.

Apple is also under legal fire for monopolistic practices. This month, Fortnite creator Epic Games won an antitrust lawsuit against the tech giant for its tight grip on the App store. Previously, Apple collected a 30 percent fee for most digital app purchases, but a U.S. district judge ruled that Apple must allow developers to lead customers to alternatives to its payment processing service. While the judge did not go as far as to say the company functioned as a monopoly, it ruled its behavior as anticompetitive and restored some power to smaller app developers.

Apple CEO Tim Cook has defended how the company treats app developers, “We do not retaliate or bully people. It is strongly against our company culture.”

Companies like Spotify and Match Group have joined Epic in its fight against anti competitive practices of Big Tech and formed the “Coalition for App Fairness” In a statement following the case rulings, Spotify chief legal officer Horacio Guiterrez emphasized the importance of this legal win, “This and other developments around the world show that there is strong need and momentum for legislation to address these and many other unfair practices, which are designed to hurt competition and consumers. This task has never been more urgent.”

Match Group spokeswoman also stressed the need for a renewal of antitrust laws, “Apple and Google’s monopolistic practices will only end when we bring our laws into the digital age.”

While some progress has been made, ambiguity and an out of date antitrust legal system leave Big Tech in power. Sam Weinstein, an associate professor at Benjamin N. Cardozo School of Law and a former attorney in the antitrust division of the Justice Department, “Case law is just stacked in favor of the defendants. It’s especially difficult in the tech area because tech companies are able to argue that competition is just a click away.”

Members of Congress are compelled to make changes to the current antitrust legislation. Minnesota Senator Amy Klobuchar, who also is the chair of the Senate Judiciary antitrust panel, argues why the legislation needs to be updated, “You see time and time again, our laws are not as sophisticated as the companies violating their spirit. These circumstances cry out for change.”

Missouri Senator Josh Hawley is optimistic about Congress’ plans to update antitrust legislation, “I’m excited that Members on both sides of the aisle in the House share a common vision of revitalized antitrust law, and I look forward to joining their efforts as we look forward to the fall. Faithful antitrust enforcement is the lifeblood of a healthy free-market economy.”

Big Tech’s meteoric rise in the last decade has brought upon unprecedented competition issues, but a growing number of groups are looking to fight back and rein in their power.