Is Big Tech prioritising power over innovation

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A moment’s gaze at people’s digital lifestyle reveals how their online experience has become a function of roughly a dozen applications that are powered by a few large firms. Most people decide what to buy on Amazon app; connect with friends and family on Facebook; post pictures on Instagram and text contacts on WhatsApp; and search the web via Google. Apple users do most of this within iOS’ walled-garden ecosystem that rations apps only from its App Store. Taken together, these tech giants have a combined market value of $5 trillion and wield power over almost every single smartphone user’s digital life.

In their early days, these apps and interfaces helped consumers transition into a digital life. But over the past decade, they’ve grown more powerful and influential. Take the case of Facebook when it bought Instagram for $1 billion in 2012. The acquisition was seen by some analysts as Facebook’s way of keeping competition at bay.

A few years later, the social networking platform went shopping and bought WhatsApp for $19 billion. Instagram and WhatsApp acquisitions have made Facebook stronger and more powerful. Now, the social network and its family of apps has 1.88 billion daily active users on average for March 2021, an 8% jump from the same period last year. The company is also making inroads into the world of ecommerce with its Marketplace interface.

Also read: Facebook and its family of apps as one big digital bazaar

Jeff Bezos started Amazon to sell books. Now, the company sells almost everything under the sun. The ecommerce giant is now the second largest over-the-top (OTT) content provider, after Netflix, in a $101 billion market that is estimated to grow by 13% annually, according to market research firm Mordor Intelligence.

Streaming and advertising

The company’s Prime Video platform alone had a 70% year on year jump this year, according to CEO Jeff Bezos’ statement to investors. And the online retailer continues to add new subscribers, customers and content. Most recently, it struck a $8.5 billion deal with Hollywood’s MGM studios that will bring a library of film titles under its fold.

Alphabet-owned Google has grown beyond its search business in the last two decades. But its problem arises from its ads business. The Daily Mail had sued the company in April alleging that the search giant controls tools used to sell ad inventory, space on publishers' pages where ads can be placed, and exchange to decide where ads will be placed. Google was also called out for its proposal to remove third-party cookies from its Chrome browser.

Last week, Google made a commitment to U.K.’s competition regulator that it will re-look into the proposal after advertisers complained that the cookies were used to personalise and target ads. Google says its privacy sandbox will remove trackers in cookies that digital advertisers currently use.

Also read: Google follows Apple, restricts apps from tracking users

In a somewhat similar position, Apple too, is in the crosshairs with advertisers for tightening privacy features on its devices and exerting more control over the devices it sells. In its recent iOS update, the iPhone maker gave its users control over what data they will allow apps to collect. As a result Facebook made changes to its ad tools as the iOS 14.5 prohibits apps from collecting certain data. The Cupertino-based company, in a separate move, introduced a new paid ad app slot for developers to promote their apps on the app store.

App Store vs game developers

Apple’s App Store is also under the scanner for taking commission on in-app purchases. Fortnite game maker Epic Games took Apple to court after the iPhone maker removed the company’s app from its App Store citing policy violations. U.S. Federal Judge Yvonne Gonzalez Rogers heard the high-profile case and is expected to pass her judgement in a few weeks. Epic wants Apple to open up the iPhone to competing app stores and bar it from requiring developers to use its in-app payment system.

Antitrust regulators in the U.S., E.U., U.K. and Australia have come heavily against the monopolistic power of Big Tech companies. While the E.U., U.K, and Australia have completed several investigations into these companies’ practices, and have reached settlements in certain cases, there has been only a single large move in the U.S.

Antitrust actions

Last July, the U.S. House Judiciary Committee’s antitrust subcommittee grilled the CEOs of Apple, Amazon, Facebook and Google. During the antitrust hearing, lawmakers brought up Facebook’s Instagram acquisition, Apple’s App Store dominance, Google’s advertising practices and Amazon’s treatment of small sellers. In October, the panel released a scathing 449-page report that suggested expansive changes to the country’s antitrust law.

On Friday, the antitrust subcommittee culminated a 16-month-long investigation into the four large technology companies and put forward proposals for a sweeping legislative package to curb their dominant market position.

“Right now, unregulated tech monopolies have too much power over our economy,” David Cicilline, Antitrust Subcommittee Chairman, said. “They are in a unique position to pick winners and losers, destroy small businesses, raise prices on consumers, and put folks out of work.”

Along with Cicilline, a bipartisan group of lawmakers introduced four bills aimed at curbing the powers of Big Tech firms. One of the bills could potentially lead to their break up, another could end the practice of one dominant platform gobling up its competitive threat. The bills introduced will all be referred to the House Judiciary Committee.

Buck, a Ranking Member and co-sponsor of the bill that prevents dominant platforms from buying their competitive threat, said the four tech firms have “prioritised power over innovation” and “maintained monopoly power in the online marketplace” by using anticompetitive behaviours to stifle competition.

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Printable version | Aug 3, 2021 11:46:14 PM |

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