Zuckerberg comes out swinging in face of break-up tension

Via a leaked audio-recording of a Facebook townhall meeting with employees, Facebook CEO Mark Zuckerberg has taken a combative position in the face of increasing pressure.

Taking questions from Facebook employees, Zuckerberg has taken a much more forthright and confident stance than he generally does when in the shiny lights of the public domain. The leaked audio files, courtesy of the Verge, paint a picture of a man who is prepared to go to war to protect the gargantuan company he has built over the last decade.

“So, there might be a political movement where people are angry at the tech companies or are worried about concentration or worried about different issues and worried that they’re not being handled well,” Zuckerberg said.

“That doesn’t mean that, even if there’s anger and that you have someone like Elizabeth Warren who thinks that the right answer is to break up the companies … I mean, if she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge.”

Presidential hopeful Elizabeth Warren, the Democrat Senator representing Massachusetts, is looking like the biggest political opponent of Silicon Valley. And it is becoming increasingly clear Facebook is enemy number one.

But perhaps these comments indicate just why Washington and its political leadership is acting so aggressively towards the likes of Facebook, Google and Amazon. These are companies who no-longer fear the political establishment. They are arguably more influential, and as you can see from the comments above, they believe they have the upper-hand when it comes to legal arsenals.

As we have mentioned before, this is one of the reasons we suspect politicians are taking such a firm stance against Silicon Valley in 2019. Not only are the actions and business models of these firms’ easy pickings for PR points, Washington DC seemingly does not like it is not the most influential neighbourhood in North America anymore.

On the other side of the debate, Warren has not kept her opinions about Facebook to herself or even attempted to disguise that some of the tweets have been directed towards Zuckerberg.

“We have to fix a corrupt system that lets giant companies like Facebook engage in illegal anticompetitive practices, stomp on consumer privacy rights, and repeatedly fumble their responsibility to protect our democracy,” Warren said in one tweet.

“Zuckerberg himself said Facebook is ‘more like a government than a traditional company’. They’ve bulldozed competition, used our private information for profit, undermined our democracy, and tilted the playing field against everyone else,” she said in another.

“Facebook’s anti-competitive mergers mean they face no real pressure to tackle disinformation. They won’t even do the bare minimum to improve transparency. Tech giants shouldn’t be able to wield enough power to undermine our democracy,” a final one read.

Facebook seems to be the focal point of Warren’s anger, though this might be down to the leaked audio, as well as the concentration of power at Facebook. Zuckerberg himself has admitted that his voting power at the company has made him a target for the politically ambitious, though this is not the only company which is facing pressure.

All of the major players in the Big Tech fraternity are becoming targets and it the raising temperature might hit boiling point before too long. Some of these companies might be willing to accept fines simply because they don’t make that much of a dent in the spreadsheets, but it would not be a surprise to see some aggression coming back the other direction before too long.

Silicon Valley and Washington DC both have ambitions to be the most prominent voice in the ears of the US consumer, but only one can secure that mantle.

US general public in favour of breaking up Big Tech

The technology industry has caught the sharp-end of the stick from point-scoring politicians in recent months, however it does appear the aggressors are representative of the people.

It should not be considered unusual to see some of the rhetoric stepped-up a level with the Democratic Presidential Candidate heating-up, though that could only be the tip of the iceberg. Recent election campaigns have seemingly specialised in grand promises, see Brexit and 2016 Presential Election, and there is little evidence sanity will be restored to the political arena.

The technology industry is an easy target for these imposing statements, and this seems unlikely to change.

According to research from think tank Data for Progress, almost two-thirds of the US general public support the notion of breaking-up big tech. And worryingly for the residents of Silicon Valley, the boundaries of political divide seem to matter very little. It does appear everyone has it in for Big Tech.

Of those who identify as in support of the Democrat party, 29% and 34% either strongly or somewhat support the break-up of big tech to encourage more competition. For Republican supporters, the numbers are 29% and 31%, and for those who identify as independent, 32% and 34% support the move.

These questions are quite generalist, but there is support to tackle the growing influence of Silicon Valley and its powerful residents. One of the reasons for this might be the highly-publicised data scandals which has dominated headlines over the last 12-18 months. The frequency of these incidents does not paint a favourable light on the ability or attitude of Big Tech.

More interesting research which builds this momentum comes from research firm Morning Consult.

Morning Consult research

As you can see from the graph above, the majority of respondents to the survey either support the continuation of the current scrutiny of the technology industry or would want to see it increased. Considering the current political position is uncomfortable for Big Tech, these numbers will not be soothing.

Interestingly enough, perhaps the biggest aggressor from the Democrat side of the political arena is gathering momentum in the battle for a nomination. Former Vice-President Joe Biden might have been the bookies favourite for the Democrat nomination for some time, though it appears Massachusetts Senator Elizabeth Warren is putting-up a very credible challenge.

Polling data from CNN suggests Warren is leading the race for the Democrat nomination, though this position could gather momentum as the process unfolds. As more potential nominees drop out of the race, votes will be dispersed amongst the remaining contenders; 20% have selected Warren as their next-best choice, with Biden only collecting 10% of the reshuffled votes.

It is way too early to make any predictions regarding the nominees or the outcome of the 2020 election, though there is another forecast worth bearing in mind. According to Real Clear Politics, a website which aggregates polling opinions from different news outlets in the US, if the election was to be held tomorrow, Warren would beat Trump, however Biden would lose comprehensively.

Again, this data has to be taken with a pinch of salt, there is a lot which can change over the next twelve months, but some will be sitting uncomfortably in Silicon Valley. Traditionally, the Democrat party has been much more politically aligned with the emerging technology segment, though Warren is one of the most aggressive critics.

Announcing her intention to compete for the keys to the White House in March, Warren has made the issue of Big Tech the focal point of her campaign. This is the big-ticket promise that we mentioned earlier in the article; Warren was one of the first to suggest the break-up of Big Tech and the reversal of acquisitions which look anti-competitive with the benefit of hindsight.

Since this point, the critical crowd has grown. The FTC is investigating Facebook for its acquisitions of WhatsApp and Instagram, as is the House Judiciary Committee. Google is at the centre of a      Department of Justice and House Judiciary Committee enquiry. The Apple App Store is facing an anti-competition probe, and Amazon’s eCommerce platform is under investigation as well.

Although all of these investigations are geared towards the activity of a single company, the outcome will set precedent which can be applied throughout the rest of the industry. If one loses, everyone in Silicon Valley is exposed to the same dangers.

Big Tech bosses might have expected the criticism and scrutiny would have continued, though these individuals might not have thought the general public would care so much.

50 US Attorney Generals sign-up to Google antitrust investigation

Usually, when you put 50 lawyers in a room together, it’s a bloodbath, but Google has seemingly done the impossible; united them all behind a single cause.

Led by Ken Paxton, the Attorney General representing the State of Texas, the coalition brings all except two State Attorney General’s on board, California and Alabama, as well as the legal minds representing Washington DC and Puerto Rico.

“Now, more than ever, information is power, and the most important source of information in Americans’ day-to-day lives is the internet,” said Paxton. “When most Americans think of the internet, they no doubt think of Google.

“There is nothing wrong with a business becoming the biggest game in town if it does so through free market competition, but we have seen evidence that Google’s business practices may have undermined consumer choice, stifled innovation, violated users’ privacy, and put Google in control of the flow and dissemination of online information. We intend to closely follow the facts we discover in this case and proceed as necessary.”

Paxton has pointed out in the statements that the Government and its agencies does not have an issue with a dominant market player (we don’t believe this however), but it must maintain this dominance by playing within the rules. This is where Paxton believes Google has become non-compliant with US law; it is stifling competition and the choice for consumers.

The difficulty the legal coalition will face in this investigation to start with is the reason behind Google’s market domination; it offers the best search service on the web. Some might disagree, but we believe it is the most effective and accurate internet search engine available. This will be one of the reasons behind the continued dominance, though there are of course others; these other factors will determine whether Google is abusing this position of dominance.

One area which might become of interest to the Attorney Generals is the roll of acquisitions in maintaining this leadership position. Of course, M&A is a perfectly valid means of growing a business, though should such transactions be deemed as a means for Google to kill off any competition which could potentially emerge, this would be a violation of antitrust laws.

This is where the probes will find it very difficult to fight against Google and the other giants of Silicon Valley; can anything be done against potentially anti-competitive acquisitions? In the Google case, some might suggest it shouldn’t have been allowed to acquire both Android and YouTube to supplement its PC search advertising business. This suggestion is of course made with hindsight, though there will be some who will attempt to do something about it.

Elizabeth Warren, the Democrat Senator for Massachusetts and potential opponent for President Trump in the 2020 Elections, has already promised to break-up the tech giants. FTC Chairman Joe Simons is another who has the divestment ambition, though he has stated it would have to be done sooner rather than later, as Big Tech is manoeuvring assets and operations in an attempt to make any divestments almost impossible.

What this investigation does offer is another layer of scrutiny placed on the internet giants. This investigation might well be directed at Google, but any precedent which is set could be applied to the other residents of Silicon Valley.

When you actually stand back and look at the investigations which are on-going, the US Government is creating a swiss cheese model of legal nightmares for the internet giants. The more layers which are applied, the less likely Big Tech can squeeze through the legal loopholes and come out unscathed on the other end. The likes of Google will have the finest legal minds on the payroll, but the legal assaults are coming quickly, and from all angles.

Aside from this investigation, Google has also recently confirmed it is at the centre of a Department of Justice probe and is also facing the House Judiciary Committee’s examination into big tech antitrust. And then it will have to consider the potential implications of other enquiries.

Facebook is being investigated by the FTC for its acquisitions of WhatsApp and Instagram, as is the House Judiciary Committee. New York Attorney General Letitia James is asking whether the social media giant has damaged the consumers lives through its operations. Finally, the House Financial Services Committee as well as the Senate Banking Committee is investigating the Facebook push into cryptocurrency.

At Amazon, the FTC is investigating how the eCommerce giant competes against and aids third-party sellers on its platform, while at Apple, the House Judiciary Committee probe is attempting to understand whether the commission it takes from developers through the App Store is anti-competitive.

Each of these investigations will create precedent which can be applied to others in the Silicon Valley fraternity. It also gives any failed attempts to limit the potential of Big Tech another opportunity. There are plenty of irons in the fire and Silicon Valley will do well to avoid a branding altogether.

With the sheer volume, breadth and depth of investigations scrutinising the business models of the internet giants, it is starting to become impossible to believe the regulatory status quo will be maintained. The sun might be setting on the Wild West Web.

To date, Silicon Valley has enjoyed what should be considered a very light-touch regulatory environment. For us, there are two reasons for this.

Firstly, regulators and legislators simply could not keep up with the progress being made by the technology industry, or perhaps did not foresee the influence these giants might be able to wield. Whether it is a shortage of bodies, skilled workers being snapped up by private industry or simply too many different segments to regulate, the progress of technology leapt ahead of the rules which were supposed to govern it. The internet giants have been profiting greatly off this regulatory and legislative void.

Secondly, you have to wonder whether regulators and legislators actually wanted to put the reigns on the digital economy and the power houses normalising it in the eyes of the consumer. These companies are driving economic growth and creating jobs. The US is at the forefront of an industry which will dominate the world for decades to come; why would the Government want to stifle the industry which is keeping the US economy at the head of the international community.

With both of these explanations, perhaps it has gotten to a point where excess is being realised. The technology industry has become too powerful and it needs to be reigned in. Some might argue that Silicon Valley has more influence than Washington, which will make some in Government feel very uneasy.

Google confirms it is in the DoJ crosshairs

The technology industry is facing regulatory and legislative assaults from all angles, and Google has confirmed it is attempting to help the Department of Justice with its own investigation.

It should perhaps be considered second-nature for Google to be dealing with some sort of investigation. It has been the subject of dozens of probes over the last few years, though there are some weighty ones on the horizon.

“We have answered many questions on these issues over many years, in the United States as well as overseas, across many aspects of our business, so this is not new for us,” said Kent Walker, SVP of Global Affairs at Google.

“The DOJ has asked us to provide information about these past investigations, and we expect state attorneys general will ask similar questions. We have always worked constructively with regulators and we will continue to do so.”

In July, the Department of Justice announced an antitrust investigation, though the subjects were not explicitly named. The probe will focus on how online platforms achieve market dominance and whether they are stifling competition and therefore innovation.

Aside from this probe, momentum is gathering to attack Silicon Valley. New York Attorney General Letitia James is looking into antitrust violations at Facebook, which could set some pretty damaging precedent. The House Judiciary Committee’s antitrust subcommittee is also conducting its own investigation, and soon enough Texas might be entering the fray.

Texas Attorney General Ken Paxton has asked the press to gather on the steps of the United States Supreme Court Building in Washington DC later on today to be briefed on yet another antitrust investigation. Details are thin here for the moment, however it is another headache for Silicon Valley to consider.

The next couple of weeks will offer much more colour to the investigations, however it is becoming increasingly obvious the technology industry is going to be very different in a few years’ time. It does appear the days of the Wild West Web are coming to a close.

Multiple US states open Facebook antitrust investigation

An investigation has commenced in the US into possible abuses of Facebook’s market dominance regarding data, advertising and consumer choice.

The leader of the investigation is New York Attorney General Letitia James, but she has got her contemporaries from Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee, and the District of Columbia to muck in too. They all, apparently, are uneasy about the effect Facebook’s dominant market position has on all kinds of competition.

“Even the largest social media platform in the world must follow the law and respect consumers,” said James. “I am proud to be leading a bipartisan coalition of attorneys general in investigating whether Facebook has stifled competition and put users at risk. We will use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising.”

Yet to be announced by James, but widely reported nonetheless, is a parallel and similar investigation by the same AGs into Google. Of particular interest in both cases seems to be the digital advertising market, which is dominated in the US by the companies in question, as you can see from the chart below from eMarketer.

emarketer us digital ad spend

Since digital now accounts for the majority of ad spending it’s legitimate to be concerned about such a large market being dominated by so few players. Having said that it’s also reasonable to note that Google and Facebook have reached this position by competing in the open market and to the victor go the spoils. But however you achieve a dominant market position, once you do different rules apply to you and there’s plenty of precedent for such companies facing significant sanctions.

30 Attorney Generals on verge of announcing Google probe – sources

Sources familiar with the matter have suggested an antitrust probe involving more than 30 State Attorney Generals could be launched as soon as next Monday.

Although the specifics of the investigation are yet to make it into the public domain, the threat is looming large for Google. Three separate sources have suggested Google is in the crosshairs, according to the Washington Post, another incremental step in the US as lawmakers look to dilute the power and influence of one of Silicon Valley’s poster boys.

Comments are difficult to come by, though lawyers are seemingly ready to down weapons and reach across the political divide to address a growing debate. Bickering politicians can usually be relied on to be lethargic and ineffective, though it seems Silicon Valley is antagonising Washington enough to force friendships in an increasingly hostile and partisan political climate.

That said, it would surprise few if the investigation is officially launched next week, as there have been various public offices stating their disapproval over the power and influence Google wields.

The crux of the issue is a simple one; should a company like Google be able to access such vast amounts of information. If data is the new oil, Silicon Valley is OPEC. Combining this potential gold mine with the already bulging bank accounts could create a worrying position.

One question which remains is how responsibly companies like Google are exerting this power. Are the internet giants fuelling campaigns of defensive acquisition, swallowing up potential competitors to prevent a dilution of market share? Are initiatives being implemented to prevent growth of these rivals and kill an idea before it can even consider scaling? These are areas which could be deemed monopolistic, an abuse of a dominant position, a big no-no in today’s world.

The monopolistic accusations are just a single element of the mix though. Conservative voices have suggested the left-leaning internet giants are demonstrating bias, offering prominence to some political commentary and hiding certain opinions.

“If big tech companies are not living up to their commitments and representations regarding being open to all political viewpoints and free of bias and restrictions on the basis of policy preference, then they should be held accountable for their false, misleading and deceptive trade practices,” said Texas First Assistant Attorney General Jeff Mateer.

Mateer and the Texas Attorney General office believe Google has been restricting the advertisement of some Republican political events, while Facebook has been censoring pro-Trump articles and Twitter limited the visibility of Republican politicians. These are unproven claims right now, but they demonstrate the ‘us’ and ‘them’ mentality which is a common theme though the relationship between Silicon Valley and Washington.

For the politicians, the perceived preference of the internet giants on political matters is another reason power and influence should be diluted. An antitrust investigation, gathering 30 Attorney Generals behind the same cause, could be one way to tackle the problem.

Another area which is unclear is the extent of such a probe. Google has been named as the party of interest in this report, though it would surprise few if the likes of Amazon, Twitter or Microsoft were dragged into the fray also; Silicon Valley is increasingly becoming Enemy Number One in Washington.

FTC Chair kicks off race to tackle big tech before it’s too late

A race seems to be heating up in the US. On one side, government officials are looking to tackle the influence of big tech, and on the other, Silicon Valley is trying to make it as difficult as possible.

Speaking to the Financial Times, Chairman of the FTC Joseph Simons has stated he believes efforts from Facebook CEO Mark Zuckerberg to more intrinsically integrate the different platforms could seriously complicate his own investigation. Back in July, it was unveiled the FTC was conducting a probe to understand whether competition has been negatively impacted by the social media giant.

However, Facebook has gone on the offensive and Simons is clearly not thrilled about it.

“If they’re maintaining separate business structures and infrastructure, it’s much easier to have a divestiture in that circumstance than in where they’re completely enmeshed, and all the eggs are scrambled,” said Simons.

This is the issue which the FTC is facing; Facebook is more closely integrating the separate brands. From a commercial perspective, this will allow the social media giant to cross-pollinate the platforms, potentially increasing revenues and enhancing the data-analytics machine, though it will also make divestments much more difficult to enforce.

Looking across the big names in Silicon Valley, this is a common business practice. The commercial benefits are of course very obvious, but it could be viewed as a defensive strategy in preparation for any snooping from government agencies.

At Google, with the benefit of hindsight, some regulators and politicians might have wanted to have block the acquisitions of Android, YouTube or artificial intelligence firm DeepMind. These acquisitions have led Google to become one of the most influential companies on the planet, though it does appear regulators at the time did not have the vision to understand the long-term impact. Now the services are so deeply embedded and inter-twined it is perhaps unfeasible to consider divestments.

Amazon is another company some of these politicians would love to tackle, but how do you go about breaking-up such a complex business, where the moving parts are becoming increasingly reliant on each-other?

Going back almost two decades, this is not the first-time regulators have attempted to tackle an overly influential player. Thanks to dominance in the PC arena, Microsoft was deemed to be negatively influencing competition when it came to software and applications. Despite Microsoft being forced to settle the case with the Department of Justice in 2001, the concessions stopped far short of a company break-up.

As part of the settlement, Microsoft agreed to make it easier competitors to get their software more closely integrated with the Windows OS, by breaking the company into two separate units, one to produce the operating system, and one to produce other software components. This was a tough pill for Microsoft to swallow, but it was a favourable outcome for the internet giant.

One view on this outcome is that Microsoft managed to structure its business in such a way it became almost impossible to split-up. If the technology giants of today can learn some lessons from Microsoft, they might well be able to circumnavigate any aggression from the US government.

Although the FTC is stealing the headlines here, it is not the only party looking to tackle the influence of Silicon Valley.

The House Judiciary Committee’s subcommittee that deals with antitrust has already summoned Apple, Amazon, Facebook and Google to testify. This investigation is also looking at the potential negative impact these monstrously large companies are having on competition. A couple of weeks later, the Department of Justice also opened its own probe.

Of course, there are also posturing politicians who are aiming to plug for PR points by slamming Silicon Valley. This is a very popular strategy, with the likes of Virginia Senator Mark Warner and Presidential hopeful Elizabeth Warren taking a firm stance. President Trump has rarely been a friend of Silicon Valley either.

Another interest element to consider are the lawyers. Reports have emerged this morning to suggest as many as 20 State Attorney Generals will also be launching their own investigation. The threat of legal action could be very worrying for Silicon Valley, with a number of the lawyers already suggesting they do not like the way the digital economy is evolving, with the concentration of power one of the biggest problems.

The US has generally tolerated monopolies or an unreasonable concentration of power in economic verticals to a point, generally until infrastructure has been sorted, though the pain threshold might be getting to close. This has been seen with a break-up of Standard Oil’s monopoly, as well as splitting the Bell System, a corporation which was a monopoly in some regions for more than a century, into the Baby Bells across North America in the 1980s.

The internet giants will never publicly state they are participating in strategies which in-effect act as a hindrance to government agencies, but it must be a pleasant by-product. First and foremost, the internet giants will want to integrate different products and services for commercial reasons, operational efficiencies or increased revenues for example, however one eye will be cast on these investigations.

It does appear there is an arms race emerging. Government agencies and ambitious politicians are collecting ammunition for an assault on Silicon Valley, and the internet giants are shoring up defences to ensure a continuation of the status quo. This is a battle for power, and its one the US Government could very feasibly lose.

FTC warns of break-up of big tech

The technology industry has often been a political punching bag over the last 18-24 months, and now the Federal Trade Commission (FTC) is adding to the misery.

In an interview with Bloomberg, FTC Chairman Joe Simons has suggested his agency would be prepared to break-up big tech, undoing previous acquisitions, should it prove to be the best means to prevent anti-competitive activities. This would be a monumental task, though it seems the tides of favour have turned against Silicon Valley.

This is not the first time the internet giants have faced criticism, and it won’t be the last, but what is worth noting is the industry has not endeared itself to friendly comments from political offices around the world. Recent events and scandals, as well as the exploitation of grey areas in the law, have hindered the relationship between Silicon Valley and ambitious politicians.

In this instance, the FTC is currently undertaking an investigation to understand the impact the internet giants are having on competition and the creation of new businesses. Let’s not forget, supporting the little man and small businesses is a key component of the political armoury, and with a Presidential Election around the corner, PR plugs will be popping up all over the place.

Looking at one of those plugs, Democrat candidate-hopeful Elizabeth Warren has already made this promise. Back in March, Warren launched her own Presidential ambitions with the promise to hold the internet giants accountable to the rules. Not only does this mean adding bills to the legislative chalkboard, but potentially breaking up those companies which are deemed ‘monopolistic’.

This has of course been an issue for years in Europe. The European Commission has stopped short of pushing for a break-up, though Google constantly seems to be in the antitrust spotlight for one reason or another. Whether it is default applications through Android or preferential treatment for shopping algorithms, it is under investigation. The latest investigation has seen job recruiters moaning over anti-competitive activities for job sites.

What is also worth noting is that the US has a habit of diluting the concentration of power in certain segments throughout its history. The US Government seems to be tolerant of monopolies while the industry is being normalised and infrastructure is being deployed, before opening-up the segment.

During the early 1910s, Standard Oil was being attacked as a monopoly, though this was only after it has finished establishing the rail network to efficiently transport products throughout the US. In the 1980s, the Bell System was broken-up into the regional ‘Baby Bells’ to increase competition throughout the US telco market.

The internet could be said to have reached this point also. A concentration of power might have been accepted as a necessary evil to ensure economy of scale, to accelerate the development and normalisation of the internet economy, though it might have reached the tipping point.

That said, despite the intentions of US politicians, this might be a task which is much more difficult to complete. It has been suggested Facebook has been restructuring its business and processes to make it more difficult to break-up. It also allegedly backed out of the acquisition of video-focused social network Houseparty for fears it would raise an antitrust red-flag and prompt deeper investigations.

You have to wonder whether the other internet giants are making the same efforts. For example, IBM’s Watson, its AI flagship, has been integrated throughout its entire portfolio, DeepMind has been equally entwined throughout Google, while the Amazon video business is heavily linked to the eCommerce platform. These companies could argue the removal of certain aspect would be overly damaging to the prospects of the business and also a bureaucratic nightmare to untangle.

The more deeply embedded some of these acquisitions are throughout all elements of the business, the more difficult it becomes to separate them. It creates a position where the internet giants can fight back against any new regulation, as these politicians would not want to harm the overarching global leadership position. Evening competition is one thing but sacrificing a global leadership position in the technology industry defending the consumer would be unthinkable.

This is where you have to take these claims from the FTC and ambitious politicians with a pinch-of-salt. These might be very intelligent people, but they will have other jobs aside from breaking-up big tech. The internet giants will have incredibly intelligent people who will have the sole-task of making it impossible to achieve these aims.

DoJ launches anti-competition investigation into leading online platforms

The US Department of Justice announced on Tuesday it is investigating if leading online platforms have undertaken anti-competition, anti-innovation, and other consumer harming practices.

Though the DoJ does not name the companies it will focus the investigation on, when it specifies “concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online”, it would be fair to assume the targets are Google, Facebook, Twitter, Amazon, and when it comes to digital content distribution, Apple.

“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Makan Delrahim, the Assistant Attorney General of the Department’s Antitrust Division. “The Department’s antitrust review will explore these important issues.”

The DoJ is seeking “information from the public, including industry participants who have direct insight into competition in online”. If found guilty, and this may including offences other than anti-competition, according to The Wall Street Journal sources, “the Department will proceed appropriately to seek redress.”

This is the latest of a series of actions taken by the US legislature and administrative authorities to rein in the power of the online platforms. In March the House Antitrust Subcommittee launched a probe into online market competition.

“The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today. Market power in digital markets presents a whole new set of dangers,” House Representative David N. Cicilline, Chairman of the Antitrust Subcommittee said at the time.

More recently companies including Google, Facebook, Amazon have been subjected to House Judiciary Committee enquiry into their practices related to market competition, amid reports that these companies have gained shares in their key markets. Facebook is on the eve of a settlement with the Federal Trade Commission that could run as high as $5 billion following the investigation of its privacy breach.

The most common measure used by the leading online companies to fend off competition is to buy the competition out. The most high-profile cases include Facebook’s acquisition of WhatsApp and Instagram, Google’s acquisition of Waze, Amazon’s acquisition of Twitch, and Apple’s acquisition of Shazam. In some cases, for example the acrimony between Spotify and Apple, some restrictive policy changes may be applied to limit the growth of a competition, especially if the competition relies on the platform. Tim Cook, CEO of Apple, however denied the company is a monopoly in a CBS interview in June, claiming Apple is not in a dominant position in any market.

The power wielded by the online platforms has not escaped the attention of the politicians, especially the presidential candidates. President Trump has repeatedly lambasted the alleged bias against conservatives by the social media giants, while Elizabeth Warren, one of the front-runner Democrat candidates, famously called for the breakup of the big internet companies. However the applicability of such proposed breakups is debatable. The most high-profile attempt to break up a company in recent history was the one targeted at Microsoft, the decision rescinded on appeal. Even if a breakup does happen, its long-term effectively may also be questioned. The last memorable breakup of a monopoly in the last 40 years was the geographical split of AT&T’s regional operations into seven Baby Bells. Four of them were later acquired by the current AT&T.

Europe takes another chunk out of Qualcomm profits

The European Commission has announced it will once again fine Qualcomm for market abuse, with the investigation this time focusing on 3G baseband chipsets.

It seems time does not heal all wounds as this investigation focused on market abuse between 2009 and 2011, and a concept known as ‘predatory pricing’. In short, Qualcomm used its dominant market position to sell products to strategically important customers, below cost price, to effectively kill off any competition before it had a chance to gain momentum.

“Baseband chipsets are key components so mobile devices can connect to the Internet,” said Margrethe Vestager, the Commissioner in charge of competition policy. “Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor.

“Qualcomm’s strategic behaviour prevented competition and innovation in this market and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies. Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million.”

Although the European Commission affords the opportunity for companies to use market advantages to seek profits, but when it becomes anti-competitive the bureaucrats draw a line. This is what has happened in this instance.

At the time, Qualcomm controlled roughly 60% market share of the UMTS baseband chipset segment, three times as great as the nearest competitor, though this position was used to kill competition before it had a chance to emerge. Using its relationships with Huawei and ZTE, Qualcomm sold products at low enough prices no-one could compete.

This is the challenge with segments which have such high-barriers to entry, key customer accounts are critically important, such are the investments which need to be made in R&D. Qualcomm effectively created a loss leader of these products to stem the critical flow of funds into any competition which could develop from the smallest glimmer of hope. In this case, the firm in question was Icera, which was eventually acquired by Nvidia.

The fine in this case represents 1.27% of Qualcomm’s turnover in 2018 and will hopefully deter companies from engaging in anticompetitive activity in the future.

For Vestager, this is another parting shot as she wraps up her tenure in the competition policy office, a position she has held since 2014.

The Commissioner has built a reputation of taking on big tech who make a habit of practising in anti-competitive activities. Qualcomm has been a frequent combatant of Vestager, though she has got plenty of experience dealing with the likes of Google and Amazon also, the latter of which is the subject of the latest probe.

Assuming the tech giants will be happy to see the back of her would be very reasonable, though it remains to be seen who will replace the feisty and combative Vestager.