The regulatory scrutiny around the big technology firms is going to widen with the US Department of Justice announcing a probe to review the practices of “market-leading” online platforms. Technology giants such as Google, Facebook, Apple, and Amazon will likely be impacted by this broader review.
The Justice Department wants to know if the leading online players are “engaging in anti-competitive practices and depriving users of benefits”. The probe comes at a time when there are increasing calls around the world for regulating these companies.
What is being reviewed?
The Justice Department’s press release states that it will be reviewing “whether and how market-leading online platforms have achieved market power”. It will also check whether these players “are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers”.
The review will consider “widespread concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online”. The department will be seeking information from the public and “industry participants who have direct insight into competition in online platforms”.
While it does not name the big tech companies, the dominance of Google in search, Facebook in social media, and Amazon in online retail is unparalleled, and all three will likely face a review of their market practices.
But why are these firms being reviewed?
In the US, Google has close to 90 per cent market share in search. Amazon’s share in the online market space is around 37 per cent. In social media, Facebook remains dominant with its apps such as Instagram and WhatsApp having more than a billion users each.
In the past, Facebook has also been accused of stifling competition by either buying out rivals or by introducing features that are a direct copy of its biggest rivals.
Is it the first time that these companies are facing scrutiny?
The call for regulation is not new; indeed, there have been such demands across the world in the past.
Facebook was recently fined $5 billion by the US Federal Trade Commission (FTC) for violating and misusing user privacy. Democratic presidential hopeful Elizabeth Warren has called for big tech companies such as Facebook to be broken up. There is a worry that these companies are completely monopolising the online space and killing all competition.
The European Union (EU) has hit Google with three separate fines since 2017; all fines have been on account of antitrust and anti-competitive practices. In March 2019, it was a €1.5 billion fine for Google misusing its AdSense technology. In 2018, the fine was a record €4.3 billion for misusing its dominant position with Android, and in 2017, the number stood at €2.4 billion for dominating shopping search results with its own pages and stifling competition.
In India, Google was fined $21.1 million for search bias by the Competition Commission of India (CCI) last year. In June this year, Reuters reported that Google was again being investigated for misusing its Android dominance in India.