Back in July, a report stated that major U.S. tech firms like Apple, Google, Facebook, and Amazon were being investigated by the U.S. Department of Justice for possible antitrust violations. The truth of the matter is that these companies became so big that they dominate segments of the tech industry including search (Google), social media (Facebook) and retail (Amazon).
Reuters reports today that the U.S. House of Representatives has apparently started its own probe demanding that executives of top tech companies hand over financial and other company records. Also requested were internal emails about acquisitions and other topics dating back more than ten years from Apple CEO Tim Cook; Amazon CEO Jeff Bezos; Larry Page, the CEO of Google parent Alphabet; and Facebook CEO Mark Zuckerberg. Executives from all four firms testified before the House antitrust subcommittee in July. Today’s report indicates that the House is looking at Google’s 2006 acquisition of YouTube, its purchase of Android a year earlier, and other transactions that brought DoubleClick and AdMob to Google. Acquisitions made by Amazon are also under the microscope as are Facebook’s purchases of Instagram and WhatsApp.
Google was fined $5 billion last year by the European Commission for antitrust violations
Overseas, Apple is under investigation due to the 30% cut of App Store revenue that it takes for itself. The so-called “Apple Tax” has led consumers to pay higher prices for apps, according to the plaintiffs in a class-action suit filed against Apple in 2011. Because Apple does not allow iOS users to sideload apps from third-party app stores (like Google allows on Android), the plaintiffs claim that such behavior is anticompetitive and forces them to pay higher prices for apps and games. Last May, the U.S. Supreme Court ruled in a 5-4 decision that the suit can continue to trial because the majority consider Apple to be the distributor of apps and games to iOS users rather than an “intermediary” like Apple claimed. This is similar to the complaint made to the EU competition commission by music streamer Spotify. The commission has been reportedly investigating Apple.
Apple has responded by claiming that it is taking only a 15% cut on 680,000 of Spotify’s more than 100 million premium users. First, Apple notes that its cut on subscriptions paid through its in-app payment system (iAP) drops down from 30% to 15% after the first year. It also notes that after 2016, Spotify members were no longer allowed to upgrade from the free ad-supported service to a paid premium subscription through the App Store limiting the number of Spotify subscribers affected.
The House seeks information from each of the four firm’s top executives related to their company’s market share and top business rivals. The House also wants to know the tech firm’s largest customers for certain products. While this investigation seems to be more concerned with Google’s past acquisitions, the company was fined $5 billion last year by the European Commission for violating antitrust laws by forcing Android phone manufacturers to use Google Search and the Chrome Browser on their handsets. In addition, Google was found to have paid off manufacturers to install Google Search on their devices. In addition to the fine, Google was forced to put up a page on Android handsets that gave users the option of selecting a different browser and search engine instead of Chrome and Google, respectively.
Overall, it would look as though the House is more concerned with the size and market share domination of the four tech giants. Other monopolistic behavior might be investigated separately by the DOJ or other agencies.