By Ryan Tracy and John D. McKinnon
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 called
on Congress to force tech giants to separate popular 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
Apple Inc.
It says Facebook and Google have monopoly power, while Apple and
Amazon have "significant and durable market power," and criticizes
U.S. antitrust enforcement agencies as failing to curb their
dominance.
The 449-page report recommends Congress consider a series of
measures in response, including legislation forcing them 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.
The report carries no legal consequences on its own, but
lawmakers hope its conclusions will spur policy makers to
action.
"To put it simply, 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," the report says. "These firms have too much power, and
that power must be reined in and subject to appropriate oversight
and enforcement. Our economy and democracy are at stake."
Republicans on the House panel didn't sign on to the report and
have said in interviews in recent days that they share concerns
about the tech companies but disagree with some farther-reaching
Democratic policy recommendations.
"It's very important that we proceed with a scalpel and not a
chain saw, " said Rep. Ken Buck (R., Colo.), a member of the
subcommittee.
The companies are expected to vigorously challenge the report's
findings.
Ahead of the report's release, the Consumer Technology
Association, an industry group, published a statement saying 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."
The companies didn't immediately respond to requests for
comment.
The report wraps up a probe launched in June 2019. Lawmakers had
access to reams of internal corporate documents -- more than the
companies wanted to give but fewer than what the committee sought
-- and gathered evidence from more than 100 market
participants.
The probe intensified in July when lawmakers called out some
tech executives' personal emails during a contentious, five-hour
videoconference hearing.
The committee's conclusions weren't wholly surprising. Rep.
David Cicilline (D., R.I.), the antitrust panel's chairman, and
other lawmakers have long been skeptical of Big Tech. At a July
2019 hearing, Mr. Cicilline warned the internet was "growingly
hostile to innovation and entrepreneurship."
The bipartisan inquiry publicized new evidence that gives
momentum to the companies' critics in both parties. While passing
new legislation targeting competition in the tech sector remains an
uphill battle, it appears more likely now than a year ago.
"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."
The report gave a detailed account of the market power of the
four tech giants. It said Facebook has achieved an impregnable
competitive advantage in the market for social networks, thanks in
part to its acquisition strategy.
"Despite significant changes in the market...Facebook has held
an unassailable position in the social network market for nearly a
decade, demonstrating its monopoly power," the report said. It said
that internal documents including communications among senior
leaders over strategy and other matters "support the conclusion
that Facebook's monopoly power is insulated from competitive
threats."
Facebook Chief Executive Mark Zuckerberg and other executives
contend that the social-network marketplace is robust and highly
competitive.
The report found that Google enjoys durable monopoly power in
the market for general online search. "Google overwhelmingly
dominates the market for general online search," it said, pointing
to the company's strength in data, its size and "aggressive
business tactics that Google wielded at key moments to thwart
competition."
Google has said that it faces strong competition from other
search engines such as Microsoft Corp.'s Bing and DuckDuckGo.
The subcommittee's report criticized Amazon for a "lack of
candor" in its responses to congressional inquiries. The report
concluded that the e-commerce giant is the dominant digital
marketplace controlling about 65-70% of U.S. online market sales.
Amazon has said it should be viewed as part of the overall retail
market, where its share is much lower.
The report says Apple has "significant and durable" market power
in its mobile app store. Apple contends that its restrictions on
mobile app sales for its devices are necessary to control the
quality of user experience.
Write to Ryan Tracy at ryan.tracy@wsj.com and John D. McKinnon
at john.mckinnon@wsj.com
(END) Dow Jones Newswires
October 06, 2020 17:23 ET (21:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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