By Ryan Tracy
WASHINGTON -- America's biggest technology companies have
leveraged their dominance to stamp out competition and stifle
innovation, according to a Democratic-led House panel, which said
Congress should consider forcing the tech giants to separate their
dominant online platforms from other business lines.
The report released Tuesday from Democratic staff of the House
Antitrust Subcommittee capped a 16-month inquiry into the market
power of Amazon.com Inc., Facebook Inc., Alphabet Inc.'s Google and
Republicans issued a separate response endorsing strong
antitrust enforcement targeting the companies but didn't endorse
many of the Democrats' policy prescriptions. It also accused the
companies of bias against conservative viewpoints.
No legislative changes are imminent, but the report's sweeping
conclusions boost the odds for new laws in the future and
publicizes evidence that will give momentum to the companies'
critics in both parties.
In one snippet, the report describes an alleged effort by
Facebook's leadership to prevent the company's Instagram app from
competing with the original Facebook platform.
"The question was how do we position Facebook and Instagram to
not compete with each other," the report quotes a former Facebook
employee as saying. "If you own two social media utilities, they
should not be allowed to shore each other up. It's unclear to me
why this should not be illegal."
A 2018 memo by Facebook executive Tom Cunningham on the possible
"end states" of Facebook's family of apps concluded that "it is
unclear whether Instagram and Facebook can coexist," the report
said, with Mr. Cunningham worried about a possible tipping point in
which one might come to dominate the other.
"Instagram and WhatsApp have reached new heights of success
because Facebook has invested billions in those businesses,"
Facebook said in a statement. "A strongly competitive landscape
existed at the time of both acquisitions and exists today."
The company is facing an antitrust investigation by the Federal
Trade Commission, which is preparing a potential lawsuit, The Wall
Street Journal has reported. Google is also expected to be the
subject of an antitrust lawsuit filed by the Justice Department
Amazon disputed the report's conclusions.
"All large organizations attract the attention of regulators,
and we welcome that scrutiny," it said in a blog post. "But large
companies are not dominant by definition, and the presumption that
success can only be the result of behavior is simply wrong."
Google said in a statement it disagrees with the findings, which
it said "feature outdated and inaccurate allegations from
"Americans simply don't want Congress to break Google's products
or harm the free services they use every day," the company
Apple disputed the report's findings. "We have always said that
scrutiny is reasonable and appropriate but we vehemently disagree
with the conclusions reached in this staff report with respect to
Apple," a company spokesman said in a statement. "Our company does
not have a dominant market share in any category where we do
The Democratic staff report says all four companies wield
monopoly power and criticizes U.S. antitrust enforcement agencies
as failing to curb their dominance.
"These firms have too much power, and that power must be reined
in and subject to appropriate oversight and enforcement," the
449-page report says. "Our economy and democracy are at stake."
The report outlines a series of responses Congress could adopt,
including legislation forcing at least some of the companies to
separate certain dominant online platforms from other business
lines, as well as changes to antitrust laws to reinvigorate a
perceived lack of strong enforcement.
"This report could end up being a turning point in antitrust and
tech," said Paul Gallant, an analyst for investment bank Cowen Inc.
"It creates momentum for legislation next year, and it also might
nudge regulators to bring cases even under existing law knowing
they've got congressional backup."
Republicans on the panel issued a 28-page response, detailing
what they say are abuses of power by social-media companies in
censoring online speech. "Big Tech is out to get conservatives,"
the report concluded, criticizing Democrats for ignoring the issue.
The tech companies say they don't make content moderation decisions
based on political bias.
The report concluded that Amazon has monopoly power over its
third-party sellers, bullies its retail partners and improperly
uses third-party data to inform its strategy for selling self-made
private-label products on its e-marketplace.
The panel's legislative proposals could cause Amazon to exit
that business and others, in what would be a significant blow. The
tech giant has developed more than 100,000 private-label products
and made significant investments in the areas of home devices, such
as its Echo speakers.
In April, the Journal reported that Amazon's private-label
employees had used individual third-party data to copy products for
its own line of goods. The subcommittee uncovered similar behavior
in its interviews with Amazon's employees.
The report lays out Google's dominance of the search industry,
where it commands default placement for 87% of desktop search
traffic and more than 99% of mobile traffic.
The subcommittee attributed that to Google's ability to make
billions of dollars in annual payments to companies like Apple and
Firefox to keep Google the first choice even on rival browsers.
Separately, the findings echoed longstanding complaints from
businesses that Google's shift to trolling the internet for facts
that it can place at the top of the search page has been a blow to
websites that would otherwise have received incoming traffic from
the search engine to answer such queries.
"With the flip of a switch," one website owner told the
subcommittee, "Google turned our original content into its own
Google has said previously that changes to search were designed
to get information to users faster. Alphabet produced 1,135,398
documents for House investigators, though the report noted that
"subcommittee staff did not view this volume as a proxy for
The report concluded that Apple exerts monopoly power as it
controls software distribution to more than half the mobile devices
in the U.S. and allows it to generate "supra-normal profits" from
its App Store and service business.
Apple has said in the past that its restrictions on mobile app
sales for its devices are necessary to control the quality of user
The subcommittee's findings cast a harsh appraisal of Apple's
control over the App Store, saying the iPhone company uses its
gatekeeper power in ways that harm third-party software developers
and favor its own apps on its devices. The report noted an article
by the Journal last year that said Apple's app routinely appeared
first in search results in its App Store ahead of rivals.
The report also casts doubt on Facebook's argument that its apps
could never be separated, a case it made in a summary of its legal
arguments reported by the Journal on Sunday. The report cites an
unnamed former Instagram employee who told the subcommittee that
Facebook and Instagram could potentially be pulled apart. "It's not
building a skyscraper; it's turning something on and off," the
Ahead of the report's release, the Consumer Technology
Association, an industry group, said in a statement the tech sector
is "the reason for America's global innovation leadership and
powers our economy" and warned against action targeting its most
successful companies. "To undercut our nation's 'crown jewel'
companies would take our competitiveness out at the knees."
Republicans on the House panel are split about the report's
policy recommendations. Some believe U.S. antitrust laws don't need
to be changed, while others support some of the Democrats'
recommendations. Rep. Ken Buck (R., Colo.) said antitrust laws need
updating, but "it's very important that we proceed with a scalpel
and not a chain saw."
--Rob Copeland, Tim Higgins, Dana Mattioli, John D. McKinnon and
Jeff Horwitz contributed to this article.
Write to Ryan Tracy at firstname.lastname@example.org
(END) Dow Jones Newswires
October 06, 2020 20:22 ET (00:22 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Historical Stock Chart
From Nov 2020 to Dec 2020
Historical Stock Chart
From Dec 2019 to Dec 2020