Big tech is getting ready to take on the House of Representatives.
The House Democrats on Tuesday dropped a 449-page report following a year-long antitrust investigation, laying out what they view as the monopoly power wielded by Apple, Amazon, Google, and Facebook.
“Companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons,” members of the subcommittee wrote in the report.
The report made a series of broad recommendations for leveling the competitive playing field, including new laws to prevent tech companies from using their platforms to boost their products ahead of competitors’, banning mergers, and breaking up companies to prevent conflicts of interest.
The tech companies aren’t taking this lying down.
Amazon’s response was by far the longest, as the company posted a 1,400 word blog post in response to the report on Tuesday.
“Large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong. And yet, despite overwhelming evidence to the contrary, those fallacies are at the core of regulatory spit-balling on antitrust,” Amazon writes.
Amazon delved into various areas of the report in its blog, but in particular it took issue with the subcommittee’s conclusion that it is an anti-competitive conflict of interest for Amazon to both operate its marketplace and sell items on there which compete with third-party sellers.
It claims that in 1999 it tried operating two sites — one for itself and one for third-party sellers — but it was confusing for consumers.
“[The subcommittee’s] ill-conceived ideas would revive, via regulation, the failed two-store model that Amazon tried two decades ago; the model that both small sellers and customers rejected,” the company wrote in its blogpost.
“They would segregate sellers into separate, less visible stores, make it harder for customers to compare prices of products and, ultimately, reduce competition—all leading to higher prices and less selection,” Amazon concluded.
Facebook called itself “an American success story.”
Facebook pushed back against up on the subcommittee’s assertion that Facebook hurts competition by muscling in and acquiring smaller rival start-ups before they can become a serious threat, pointing to its 2012 and 2014 acquisitions of Instagram and WhatsApp.
“Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people. Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses,” a Facebook spokesman told CNBC.
“A strongly competitive landscape existed at the time of both acquisitions and exists today. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time.”
Apple said a tax it imposes on developers is “firmly in the mainstream.”
“We have always said that scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions reached in this staff report with respect to Apple,” a company spokesperson told CNBC. “Our company does not have a dominant market share in any category where we do business.”
In a statement to Bloomberg, the company addressed particular concerns from the report over the 30% commission it imposes on developers for in-app purchases. The fee has resulted in a fierce battle with major developers including Spotify and “Fortnite” maker Epic Games.
“Apple’s commission rates are firmly in the mainstream of those charged by other app stores,” Apple said.
Apple’s only other real competitor in terms of app stores is Google’s Play Store, which comes pre-installed on Android phones.
While it is true the Play Store also imposes up to a 30% tax on in-app purchases, Android phones allow users to download apps from places other than the Play Store. Apple devices such as iPhones and iPads are only allowed to download apps from the official Apple App Store, meaning it is a much more closed ecosystem.
Google said the House’s recommendations would harm consumers
“We compete fairly in a fast-moving and highly competitive industry. We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services,” Google said in a blog post on Tuesday.
“Americans simply don’t want Congress to break Google’s products or harm the free services they use every day. The goal of antitrust law is to protect consumers, not help commercial rivals. Many of the proposals bandied about in today’s reports — whether breaking up companies or undercutting Section 230 — would cause real harm to consumers, America’s technology leadership and the US economy — all for no clear gain.”
Section 230 is a part of the 1996 US Communications Decency Act, which gives broad powers to internet companies to moderate their own platforms as well as protecting them from liability from user-generated content that breaks the law. The House’s recommendations make no mention of Section 230, and it isn’t clear why Google mentioned it.
“We support Congress focusing on areas where clearer laws would help consumers, a few of which are mentioned in today’s reports: Google has long championed the importance of data portability and open mobile platforms; we are arguing a case before the Supreme Court tomorrow for the important principle of software interoperability; and we have urged Congress to pass comprehensive federal privacy legislation. We look forward to engaging with Congress on these and other issues moving forward,” Google said.