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  • Originally published on
  • Wednesday, Mar. 13, 2019
UK Government Study Casts Big Tech Companies As Monopolies

Facebook, Google, Amazon and Apple are once again being cast as monopolies that have become too powerful for society's good, a recurring theme that's increasing the pressure to rein them in.

A 150-page report commissioned by the British government depicts big digital companies in search, social media, advertising and e-commerce as threats to competition, innovation and personal privacy. Meanwhile, the music streaming service Spotify filed an antitrust complaint in Europe against Apple, accusing it of stifling competition through its control over the iPhone's operating system and app store.

Wednesday's dual attacks provide more fodder in a loudening worldwide debate about whether stricter rules need to be drawn up to handcuff or even break up leading tech companies as they try to extend their tentacles into new market.

"What you're seeing is a broad recognition that there is a problem," said Matt Stoller, a fellow at Open Markets, an institution that studies corporate monopolies and advocates for more competitive markets.

In the U.S., Democratic presidential candidate Elizabeth Warren last week proposed breaking up the biggest U.S. tech companies, slamming them for having too much market and political power.

That high-profile missive further emboldened long-time critics such as U.S. Labor Secretary Robert Reich, now a professor of public policy at the University of California, Berkeley. He likens Facebook, Google and Amazon to "robber barons" that built vast business empires on innovations in the late 19th century, an era that became known as the Gilded Era.

"We're now in a second Gilded Age, ushered in by semiconductors, software and the internet, which has spawned a handful of (high-tech) behemoths and a new set of barons," Reich recently wrote in The Guardian, a British newspaper.

The British government's new report was led by Harvard University professor Jason Furman, who was a chief economic adviser to former U.S. President Barack Obama. The report found that global tech giants don't face enough competition and said that existing rules are outdated and need to be strengthened.

"The digital sector has created substantial benefits but these have come at the cost of increasing dominance of a few companies, which is limiting competition and consumer choice and innovation," Furman said. "Some say this is inevitable or even desirable. I think the U.K. can do better."

As for Spotify, the streaming service's beef with Apple centers on a 30 percent tax that digital services have to pay to use Apple's "in-app" payment system, making Spotify subscriptions more expensive than Apple Music. That same commission system recently prompted Netflix to stop accepting new subscription sign-ups through its iPhone app, as Apple prepares to unveil its own rival service.

Apple didn't respond to requests for comments on Spotify or the British report, nor did Google, Facebook or Amazon.

Britain's House of Lords recently called for a new digital regulatory authority to provide overall oversight.

"There is now a shared aspiration, which is the power of the tech platforms being reduced," said Blair Levin, a policy adviser to New Street Research and a former chief of staff to a Federal Communications Commission chairman.

European Union authorities also have faced down big tech companies. EU competition commissioner Margrethe Vestager has slapped whopping fines on Google and ordered Apple to pay back billions in back taxes. EU, German and Austrian authorities are looking separately into Amazon's marketplace platform over complaints of unfair practices.

Although the U.S. government has yet to take similar action, the Federal Trade Commission recently created a task force focused on anti-competitive behavior in the industry.

Britain's financial secretary, Philip Hammond, said the country's government would respond later this year to the report's recommendations, which must be approved by Britain's Parliament to take effect.

Recommendations include setting up a new "digital markets unit" tasked with giving people more control over their data by using open standards. That would let people move or share their personal information if they switch to a new digital service.

The report's authors said making it easier to switch would result in new digital services while creating new business opportunities to manage the data.

The report also recommended:

— Getting big companies to share key data with startups, while safeguarding personal information. The report said data sharing can help foster innovation and new business ideas. The panel cited as an example Uber's release of data to help improve infrastructure and planning decisions.
— Drawing up a code of conduct to lay out acceptable behavior for tech companies in their relationships with users. The report said clarifying unfair conduct would allow disputes to be resolved more easily.
— Rewriting rules so authorities can better stop digital mergers likely to "damage future competition, innovation and consumer choice." This should include letting Britain's competition regulator take into account the scale and likelihood of any harm in merger cases as well as requiring digital companies with "strategic market status" to inform the authority of all intended acquisitions.

Hammond said he asked Britain's competition authority to act on another recommendation: carrying out a study of the country's digital ad market, which is dominated by Facebook and Google. According to the report, publishers complain that because the digital advertising supply chain is opaque, it's hard for them to get a fair return on ads that go with their content.

Liedtke reported from San Francisco. AP Technology Writer Rachel Lehman contributed from San Francisco.

Category: News

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