Google, Amazon, Apple and Facebook, the world’s leading Internet companies, are having a hard time. Companies’ stocks have tumbled since June, with $134 billion wiped off the value of the four companies on June 3 alone.
The reason for all this was a report that American authorities were preparing to review their business model.
The report is not unfounded. Josh Hawley, a Republican senator, has advocated tougher antitrust scrutiny of big tech companies since he became Missouri’s attorney-general. At attorney General Bill Barr’s confirmation hearing in January, Ms Hawley asked him to play his part in taking a fresh look at the companies.
Standing on the level of state and law, Hawley’s requirement has sufficient legitimacy and necessity.
Antitrust history in the United States
On July 2, 1890, congress passed the Protection of Trade and Commerce from Unlawful Restrictions and Monopolies Act, also known as the Sherman Anti-Trust Act. The law was designed to ban restrictive trade practices and monopolistic trade practices, which in layman’s terms “prevent consumers from being robbed”.
After the law was enacted, many individuals and companies were punished to varying degrees for non-monopolistic behavior.
In 1911, the U.S. Supreme Court’s final ruling established the Standard Oil monopoly, ordering it to divide the monopoly into 34 companies within six months
In 1911, the U.S. Antitrust Bureau sued tobacco companies for monopolizing the tobacco industry through predatory pricing and other methods, controlling 95 percent of the U.S. cigarette market. The company was found guilty and ordered to be broken up into 16 companies.
In 1969, the Antitrust Bureau accused IBM of monopolizing the computer market by bundling computer hardware and software.
In 1974, the U.S. Department of Justice again filed antitrust charges against ATT, ATT was divided into eight companies in 1984, and constantly subject to government supervision and control.
In May 1998, the FEDERAL government and 19 states and the District of Columbia accused Microsoft of monopoly. The charges against Microsoft include bundling its Explorer Web browser with its Windows 98 operating system, forcing PC makers such as IBM and Combie to install explorer by bundling it… All of these charges relate to unfair business practices by Microsoft.
In 1999, the United States saw its first antitrust lawsuit in the vitamin market.
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These are not the only similar cases in the history of ANTITRUST in the United States, and there is no space to list them all.
Back to the main companies of this article, the head of the Judiciary Subcommittee of the US House of Representatives confirmed to the media on June 4, 2019 that four technology companies, including Amazon and Google, will face an antitrust investigation by the US House of Representatives, and the company’s top executives will be asked to cooperate with the investigation to testify. America’s antitrust laws are jointly guarded by the Justice Department and the Federal Trade Commission (FTC), and the investigation will be split, with the DoJ investigating Google and Apple and the FTC in charge of Amazon and Facebook.
The pressure is not confined to America
Domestic pressure is enough for the tech giants to worry about, and threats from the rest of the world never stop.
In March 2018, Japan’s Fair Trade Commission raided Amazon’s Japanese branch headquarters in Tokyo. According to NHK and other media reports, the investigation began when Amazon Japan threatened to “stop cooperation without payment” on suspicion of illegally charging Japanese suppliers.
“We will investigate whether these ‘platforms’ are hindering technological innovation by Japanese companies,” Kazuyuki Sugimoto, chairman of the Fair Trade Commission, told the Mainichi Shimbun.
By “platform,” Sugimoto is referring to amazon, Apple, Google, Facebook and other Internet oligarchs. He said the investigation would look at whether the big companies “hoarded customer data, blocked latecomers from entering the market, or forced commercial partners to lower prices because of their dominant position in the industry.”
Unlike Japan, which has taken a relatively soft approach to antitrust — at least so far without major headlines — the European Union has shown no room for leniency.
According to statistics, in the years from 2004 to 2008, the European Union issued a total fine of 1.68 billion euros to Microsoft, and a single fine of 899 million euros set the highest record. A year later, Intel’s single fine of 1.06 billion euros set a new record.
In July 2018, the European Union fined Google 4.34 billion euros for using its dominance of the Android mobile operating system to promote its search engine and squeeze out potential competitors. Google initially protested, but quickly reversed itself a month later and said it would comply with the EU ruling, prompting speculation that it feared that defiance would lead to more severe penalties.
The break-up of Google and Facebook has a history
Elizabeth Warren, the Massachusetts senator and Democratic presidential primary candidate, has made it clear that if elected in 2020, she would break up big tech companies including Google and Facebook.
Ms Warren is speaking because the history of US antitrust is not unusual in breaking up industrial oligopolies into smaller companies.
Makan Delrahim, assistant attorney-general and antitrust chief at the US Department of Justice, raised antitrust issues during a trip to Israel for a conference in June. Delrahim referred to antitrust investigations launched decades ago by the US antitrust division into Regulated Oil and ATT.
In standard Oil’s heyday, consumers actually enjoyed lower prices, thanks to advanced production technology and similar technology giants like Google and Facebook.
As for ATT, Mr Delrahim sees its telephone network as a late example of “network effects”, but ATT’s refusal to let independent companies connect to its own long-distance lines actually hurts them. Like the tech giants of today, ATT argues that it offers lower prices, better products and services, and a lot of innovation.
The end result was the break-up of Standard Oil and ATT into a series of independent subsidiaries.
Mr. Delrahim said the antitrust division’s big antitrust victories against the big companies could provide lessons for investigating the tech giants now.
Google is ready for the challenge
In the face of multiple challenges at home and abroad, companies may not sit idle.
After years of fighting regulators, Google seems to have accumulated enough experience and strategy to handle the challenges ahead.
In previous debates with European regulators, at congressional hearings and in interviews with Google representatives, the responses of Google executives also reflected the broad lines of the company’s antitrust defense:
* Google sees itself as a set of free, accessible and very useful services that enable people around the world to learn information and connect with each other.
Unlike Facebook Inc., Google says its core products don’t try to get people to spend more time on them in exchange for questionable social value.
By indexing the Web and providing easy access to its information through Google’s search bar, the company argues that it provides an invaluable service to billions of people around the world – all for free.*
Meanwhile, Google has stepped up its lobbying in Washington, with Maurice Stucke, a former Justice Department lawyer who studied antitrust law at the University of Tennessee, revealing that the company has been funding academics to defend it.
In light of the latest investigation, Google said: “We’ve dealt with this issue in the past and we’ve gotten through it, and we can do it this time.”
In this anti – monopoly station, the final outcome, we can not predict, because there are many uncertainties in the process. One thing is certain, however, that the doJ and FTC’s actions will have a big impact on these Internet giants.