Cicilline’s Report: Tech Giants “Exploited Their Power of the Marketplace in Anticompetitive Ways"

Cicilline’s Report: Tech Giants “Exploited Their Power of the Marketplace in Anticompetitive Ways"

U.S. Congressman David Cicilline, Chair of the House Judiciary Committee's Subcommittee on Antitrust, issued a scathing report on the anticompetitive business models of America's four largest tech giants -- Apple, Facebook, Google, and Amazon.

“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," said Cicilline in his subcommittee's 450-page report.

Cicilline writes in the report, “Although these four corporations differ in important ways, studying their business practices has revealed common problems. First, each platform now serves as a gatekeeper over a key channel of distribution. By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them. Second, each platform uses its gatekeeper position to maintain its market power."

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The report comes after more than a year-long investigation and recommends in broad strokes dramatic regulatory action to limit the tech giants from continuing their monopolisitc behaviors.

In the highly critical report, Cicilline goes onto write, "By controlling the infrastructure of the digital age, they have surveilled other businesses to identify potential rivals, and have ultimately bought out, copied, or cut off their competitive threats. And, finally, these firms have abused their role as intermediaries to further entrench and expand their dominance. Whether through self-preferencing, predatory pricing, or exclusionary conduct, the dominant platforms have exploited their power in order to become even more dominant."

READ THE REPORT HERE

Recommendations include:

- Structural separations and prohibitions of certain dominant platforms from operating in adjacent lines of business;

- Nondiscrimination requirements, prohibiting dominant platforms from engaging in selfpreferencing, and requiring them to offer equal terms for equal products and services;

- Interoperability and data portability, requiring dominant platforms to make their services compatible with various networks and to make content and information easily portable between them;

- Presumptive prohibition against future mergers and acquisitions by the dominant platforms;

- Safe harbor for news publishers in order to safeguard a free and diverse press; and

- Prohibitions on abuses of superior bargaining power, proscribing dominant platforms from engaging in contracting practices that derive from their dominant market position, and requiring due process protections for individuals and businesses dependent on the dominant platforms.

The recommendations seem to be directly focused on splitting up Facebook by forcing the sale of Instagram and WhatsApp. And, forcing App to dramatically change its relationship and app developers, especially its forced pricing structure.

Cicilline in July hosted virtual hearings which included Amazon's Jeff Bezos and Facebook's Mark Zuckerberg.

 

Facebook and Google via YouTube Dominate Social Media

The report cites that according to Facebook’s internal market data, YouTube and Facebook’s family of products were by far the most popular social media sites by Monthly Active Persons (MAP) as of December 2019.

"The social network marketplace is highly concentrated. Facebook (1.8 billion users) and its family of products—WhatsApp (2.0 billion users), Instagram (1.4 billion users)— have significantly more users and time spent on its platform than its closest competitors, Snapchat (443 million users) or Twitter (582 million users).483 TikTok is growing quickly and is often referenced as evidence that the social media landscape is competitive.484 Although it meets the broad definition of social media as a social app for distributing and consuming video content, TikTok is not a social network," states the report.

 

Cicilline Came Under Fire for Donations Before Hearing Started

Cicilline came underfire fire for received thousands in contributions from five senior executives at Amazon just months prior, CNBC.com reported in August of 2019.

“Over a three-week period starting in late May, five senior executives from Amazon made individual contributions to Rep. David Cicilline, the Democrat from Rhode Island who’s leading the House antitrust investigation into major tech companies, public filings show,” reported CNBC. “Cicilline became the chairman of the House Judiciary Committee’s Antitrust, Commercial and Administrative Law Subcommittee in January, when Democrats regained control of the House.

Cicilline’s office told CNBC that on the day the subcommittee launched its antitrust investigation, that he put in place “a formal policy of refusing campaign contributions from companies and executives that may be subject to scrutiny.” The donations by Amazon executives were made before the antitrust probe announcement, and before the July hearing was scheduled.

According to CNBC, the executives who donated to Cicilline “include Amazon’s CEO of worldwide consumer Jeff Wilke, CFO Brian Olsavsky, general counsel David Zapolsky, SVP of worldwide operations Dave Clark, and SVP of North America consumer Doug Herrington. They all contributed the max $2,800 allowed, except for Olsavsky, who donated $1,500.”