U.S. Antitrust Committee Likens Tech Companies Including Apple to 'Oil Barons and Railroad Tycoons'

[MacRumors]

Apple, Facebook, Google, and Amazon have been the subject of an ongoing antitrust investigation conducted by the U.S. House Judiciary Antitrust Subcommittee, which today said the tech companies "have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons."

As outlined by CNBC, the subcommittee has released a 450 page report [PDF] highlighting findings from multiple hearings (including one with of the CEOs from each company), interviews, and more than 1.3 million documents, with the report also including recommendations for new antitrust laws.

The recommendations are focused on promoting fair competition in digital markets, strengthening laws related to mergers and monopolization, and restoring vigorous oversight and enforcement of antitrust law.

The committee wants Congress to prohibit dominant platforms from entering adjacent lines of business, encourage antitrust agencies to view mergers by dominant platforms as anticompetitive by default, and prevent dominant platforms from preferencing their own services with a requirement that they offer equal terms for equal products and services.

The subcommittee says that dominant firms should also make their services compatible with competitors and allow users to transfer their data, that "problematic precedents" need to be overridden in antitrust case law, and that forced arbitration clauses and limits on class action lawsuits should be eliminated.

Although these four corporations differ in important ways, studying their business practices has revealed common problems. First, each platform now serves as a gatekeeper over a key channel of distribution. By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them. Second, each platform uses its gatekeeper position to maintain its market power. By controlling the infrastructure of the digital age, they have surveilled other businesses to identify potential rivals, and have ultimately bought out, copied, or cut off their competitive threats. And, finally, these firms have abused their role as intermediaries to further entrench and expand their dominance. Whether through self-preferencing, predatory pricing, or exclusionary conduct, the dominant platforms have exploited their power in order to become even more dominant.

As for Apple specifically, the subcommittee determined that Apple has a monopoly when it comes to the distribution of software apps on iOS devices and that its control over iOS "provides it with gatekeeper power over software distribution on iOS devices."

In contrast, Apple owns the iOS operating system as well as the only means to distribute software on iOS devices. Using its role as operating system provider, Apple prohibits alternatives to the App Store and charges fees and commissions for some categories of apps to reach customers. It responds to attempts to circumvent its fees with removal from the App Store. Because of this policy, developers have no other option than to play by Apple's rules to reach customers who won iOS devices.Owners of iOS devices have no alternative means to install apps on their phones.

The committee cited multiple interviews with App Store developers, including those that have been in major conflicts with Apple, such as the CEO of email app "HEY" and the General Counsel of Tile, along with public disputes with companies like Airbnb and ClassPass, who recently clashed with Apple over fees for digital events during the ongoing public health crisis.

Through interviews and document review, the committee reviewed Apple's 30 percent App Store fees, its control over the App Store, the dominant position of its own apps as default apps, App Store search rankings, blocking rival content like parental control apps, App Store guideline enforcement, Apple's decision not to allow other voice assistants to replace Siri as the default, and more, with the data outlined starting on page 329 of the report for those interested.

Much of what was shared was already known through prior reports and coverage of Apple's disputes with various companies, and the recommendation document provides broad recommendations for action rather than recommendations specific to Apple, but Apple could be impacted in a multitude of ways should the recommended antitrust laws be implemented.

Note: Due to the political or social nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: U.S. Antitrust Committee Likens Tech Companies Including Apple to 'Oil Barons and Railroad Tycoons'

 

[symphony]

lol I seriously doubt Apple will allow a third-party App Store.

And Apple has no obligation to open up their platform just, because developers have become greedy. This will cause more harm to the ecosystem than good.

 

[PJWilkin]

And they did not find Google had a monopoly on Ads

Utterly astounding

 

[iSRS]

Prepare for more expensive apps and services and less integrated phones, not just Apple.

 

[farewelwilliams]

Multiple app stores is going to ruin UX and developer experience. Mark my words.

 

[Chrjy]

I always struggle with the monopoly argument and it might be because I misunderstand it but I see it quite simply:
Any company, let's take Apple (as it's appropriate!) started from nothing, just an idea. Steve Jobs and Steve Wozniak started the company from a garage in Cupertino and managed to grow it into one of the most successful companies ever. Starting a company is easy, creating a successful company is incredibly hard, especially to get to the size and turnover of Apple.

As soon as a company becomes successful, they get slammed and people try to bring them down. It seems to be the same with people who become famous, once they get to a certain stratosphere, people love to try and pull them down and I find that really sad. Why do we live in a world of such hate rather than celebrate successes.

If a company such as Apple is able to be successful without hurting others or selling others (Google, Facebook etc!) then shouldn't that be something to cheer about?

Again, I reiterate, it maybe my lack of understanding but I'm pretty simple!

 

[jz0309]

first the EU, now this ... concerning that bureaucrats are getting more and more involved in tech ...

 

[jonblatho]

A really important quote that was left out: “To address this underlying conflict of interest, Subcommittee staff recommends that Congress consider legislation that draws on two mainstay tools of the antimonopoly toolkit: structural separation and line of business restrictions. Structural separations prohibit a dominant intermediary from operating in markets that place the intermediary in competition with the firms dependent on its infrastructure. Line of business restrictions, meanwhile, generally limit the market in which a dominant firm can engage.”

Like I’ve said all along: Apple can be the referee or a player in the “game” that is the App Store, but it’s legally difficult if not untenable to be both. Break it up.

 

[GeoStructural]

lol I seriously doubt Apple will allow a third-party App Store.

And Apple has no obligation to open up their platform just, because developers have become greedy. This will cause more harm to the ecosystem than good.

They can be forced to. Apple is not above the law.

Like I’ve said all along: Apple can be the referee or a player in the “game” that is the App Store, but it’s legally difficult if not untenable to be both. Break it up.

You can cause a heart attack to some passionate people in this forum for saying that.

Some fail to understand that it doesn't matter if Apple originated the App Store or manufactured the device, if they want to be in the business they have to do it under commercial law and competitively fair. If they make little XYZ developer sign the developer agreement they cannot allow Amazon (specially giant Amazon) to under the same agreement and market segment pay smaller fees... And then if developer XYZ complains he/she is now greedy, or should just find another Store. No!

Apple here sets the rules, arbitrates, charges you fees, removes your work without consultation and only since a few weeks ago, only recently, they have laid out something equivalent to a formal procedure, before they would just send you an email in which they terminated your license and removed your work. THIS IS WRONG, it does't matter if Apple administrates the Store, they have to do it fairly and protect users and developers alike.

 

[I7guy]

They can be forced to. Apple is not above the law.

Also may amount to a hill of beans. Apple isn't above the law, but nobody is. And more than less when government tries to play Robin Hood, it's a lose/lose for all concerned.

Amazon has a monopoly on AWS. Should the government break that up also?

edit: read some of the pdf, it sounds likes, because entity A is investigating (Apple|Amazon|Google) maybe we should also.

 

[jayducharme]

first the EU, now this ... concerning that bureaucrats are getting more and more involved in tech ...

What's concerning is that their meddling appears to be without a full understanding of how it all operates. When you have a senator asking how Facebook makes money, that's a big problem. I don't see how any of the services they're citing is a monopoly. If you don't like Amazon, shop online at Walmart or Target. If you don't like Apple computers, get a PC or a Chromebook. If you don't like Google, use Duck Duck Go. If you don't like iPhones, get an Android (or even a Blackberry). There's plenty of choice currently out there.

 

[Cosmosent]

The new "visibility" on (possible) Adjacent Lines of Business is BIG !

 

[Appleman3546]

Apple is facing pressure on their app store from all directions and countries, hopefully Apple introduces an alternative soon before they are forced to comply with a much more radical alternative

 

[jonblatho]

Amazon has a monopoly on AWS. Should the government break that up also?

Last I checked AWS wasn’t a dominant market force for antitrust purposes. A (the?) leading cloud services provider, sure, but there’s strong competition in that market.

 

[ghanwani]

These things can take forever to play out and the result is usually what amounts to a slap on the wrist.

 

[PlayUltimate]

lol I seriously doubt Apple will allow a third-party App Store.

And Apple has no obligation to open up their platform just, because developers have become greedy. This will cause more harm to the ecosystem than good.

They will change the business model before they open it up. Apple created a marketplace when there was not one before. Despite the profits of the current App Store, I can see Apple shutting the whole thing down for developers before allowing anyone to have unfettered access to their hardware.

 

[I7guy]

Last I checked AWS wasn’t a dominant market force for antitrust purposes. A (the?) leading cloud services provider, sure, but there’s strong competition in that market.

Seems like AWS is the 50,000 lb gorilla in the room. There are other players/cloud providers, just like there are other App stores.

 

[PlayUltimate]

Last I checked AWS wasn’t a dominant market force for antitrust purposes. A (the?) leading cloud services provider, sure, but there’s strong competition in that market.

I suspect this is mostly political pandering; makes sense in an election year.

 

[Red Oak]

I find it amusing how people with no evident business experience try to tell Apple what to do

Any final recourse is at least 5 years out

Carry on

 

[jonblatho]

I suspect this is mostly political pandering; makes sense in an election year.

I mean, I guess, but antitrust isn’t exactly a politically “sexy” issue; it’s not something that’ll win or lose a race by any stretch because so few people give a ****. The only one of the major Democratic presidential candidates this cycle who even occasionally discussed it unprovoked, as far as I know, was Warren, and she discussed a lot of things unprovoked.

 

[DelayedGratificationGene]

Look it’s election time and these hacks are desperate to show they are doing something, anything. That’s all this is. It’s ridiculous nonsense.

 

[JM]

Government getting involved and making things worse? Say it isn't so!😱

Apple has competition: Android.

Why is it Apple's fault (or Android's) for not having a worthy competitor outside these two choices? Nobody is being FORCED to buy Apple (or Android). They're successful because they worked hard and intelligently and created something people want to become successful. Don't punish them now because people want want they're selling.

If Apple is broken up, then their products become garbage. So would Android I guess (lol).

They're not "railroad or oil tycoons", lol. Those and Bell where out there telling people and other businesses "no you can't actually build there. We own it. Sorry."

show me how Apple is telling anyone they can't build a competing platform.

Palm and Blackberry tried but they just werent good enough and people didn't choose them. Explain how that's Apple's fault?

 

[vipergts2207]

I always struggle with the monopoly argument and it might be because I misunderstand it but I see it quite simply:
Any company, let's take Apple (as it's appropriate!) started from nothing, just an idea. Steve Jobs and Steve Wozniak started the company from a garage in Cupertino and managed to grow it into one of the most successful companies ever. Starting a company is easy, creating a successful company is incredibly hard, especially to get to the size and turnover of Apple.

As soon as a company becomes successful, they get slammed and people try to bring them down. It seems to be the same with people who become famous, once they get to a certain stratosphere, people love to try and pull them down and I find that really sad. Why do we live in a world of such hate rather than celebrate successes.

If a company such as Apple is able to be successful without hurting others or selling others (Google, Facebook etc!) then shouldn't that be something to cheer about?

Again, I reiterate, it maybe my lack of understanding but I'm pretty simple!

The thing is, it can be argued that they're hurting others with their decision making because of their dominant position in the market. Apple and Google effectively have duopoly on the smartphone market. Apple's position on game streaming apps is an example of the ability to hurt others.

 

[Red Oak]

Where is it in the report how the App Store has been a godsend to both consumers and developers? Look at the fu**** metrics - downloads, unique users, rev generated, ease of WW distribution. All went off the charts with the App Store

Let’s all take a moment to remember how god damn awful software distribution was on Windows and carrier digital stores 10 years ago. It was a F**** shi* show

What a god dam crime this whole charade is

 

[symphony]

Well now that Apple’s OS’s share the same apps in mostly every platform, Apple competes with Windows, Linux, Android phones, Google, Samsung, etc. Not really a monopoly in that regard.

Apple ain’t going to budge, they’re just going to ruin the experience which will be the government and greedy developers fault