Tech Giants In Legal Trouble Over Competition

Tech Giants In Legal Trouble Over Competition

CEOs of tech giants Facebook, Google, Apple, and Amazon were summoned over allegations of unfair practices for obliterating competition in the market.

Crux of the Matter

Recent Case
CEOs of Apple, Google, Facebook and Amazon recently appeared before the congressional committee of the US for a “high profile anti-trust” hearing. The Democrat congressional committee accused the tech giants of wielding “their power in destructive, harmful ways in order to expand”, and accused them of abusing power to suppress competition or buying it entirely.

On the other hand, the Republicans accused these tech giants of “suppressing” conservative views on their platforms.

Amazon CEO Jeff Bezos appeared before Congress for the first time. In the hearing, he was accused of conflict of interest as Amazon “both hosts sellers and competes against them by offering similar products”. The company was also accused of using third-party seller data to enhance Amazon’s own versions of those products.

While Bezos stated that his employees are not allowed to use third-party sales data, he admitted that the policy “might have been violated”.

Facebook CEO Mark Zuckerberg was questioned over the takeover of Instagram and other “competitors”. The Judiciary committee accessed his internal mails sent before the acquisition of Instagram in 2012 and found that Zuckerberg had claimed in one email that Instagram could be “very disruptive” to his company. The committee accused him of neutralizing Instagram by buying it in 2012, which the committee considered a threat. In his reply, Zuckerberg “respectfully” denied the claims of pressurizing competition.

Apple CEO Tim Cook received a complaint about Apple’s App Store. Besides facing criticism over the fee of 15-30% levied on developers, the company also faced accusations of “cutting off” the app developers. Besides the US Congress, Apple also received an anti-trust complaint from Europe, filed by Telegram and Spotify. The complaint was filed over concerns on the 30% fee levied on these apps, Apple’s censorship, and its violation of user privacy.

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Google was accused of “stealing content” from small firms like Yelp, and was also accused of thwarting companies from its ‘search’ which might divert traffic from its own.
Google CEO Sundar Pichai claimed that the firm prioritized user experience.

Antitrust Laws
Antitrust laws are defined as laws to protect consumers and small businesses from unfair practices of large businesses, with an aim to prevent unfair monopoly in the market. There are some key differences in antitrust laws applied in Europe and the US.

  • The European Commission (EC) penalizes companies with fines, while the US applies criminal law, and imposes both financial and custodial penalties against offenders.
  • Comparatively, more centralized control of mergers does occur in the European Union (EU) by the EC than the US.
  • Differing stance on cartels (collusion of firms to divide the market).
    The EU treats cartels as financial offence, while the US laws treat it as “property crime”.
  • The EC also has power to block or review mergers, while the Federal agencies in the US require permission from the Courts to do so.
  • Ian Madrigal is an activist and was in news in 2018 for dressing up as the Monopoly Man and sitting behind Sundar Pichai during his testimony before the US Congress. It was a metaphor for the corporate consolidation by wealthy technology monopolies by literally turning up as Mr Monopoly.
  • The Social Network is a 2010 American biographical drama film and portrays the founding of social networking website Facebook and the resulting lawsuits. It was named one of the best films of the year by 78 critics, and named the best by 22 critics, the most of any film that year.
  • PageRank is an algorithm used by Google Search to rank web pages in their search engine results. PageRank was named after Larry Page, one of the founders of Google.