The news: Amazon, Apple, Google, and Facebook are facing unprecedented scrutiny in their own backyard. The US Department of Justice (DoJ) and the Federal Trade Commission (FTC) are preparing antitrust investigations into the companies, and plan to divvy up the work. As the news emerged, the firm’s share prices were hammered, a clear signal that Wall Street believes the Feds mean business.
Congress also plans to put the companies under the microscope. The Judiciary Committee of the House of Representatives said it's launching a wide-ranging investigation of the market power of the tech giants.
Playing politics: The obvious question is: why now? The European Union has been sounding the alarm about Big Tech’s outsized power for years—and imposing massive fines on Google in particular for anticompetitive behavior.
The most plausible answer is American politics. Some prominent Democrats, including senator and presidential candidate Elizabeth Warren, have been calling loudly for tech giants to be broken up to stop them harming consumers’ interests. With a presidential election on the horizon, the Republicans likely want to be seen as tough on Big Tech, too. There’s also a widespread suspicion of Silicon Valley’s liberal tendencies. President Donald Trump has a history of trading barbs with Jeff Bezos, Amazon’s boss, and regularly rails against what he sees as social media and search companies’ anti-conservative bias.
Tech’s rap sheet: Politics aside, there’s plenty for antitrust watchdogs to sink their teeth into. Amazon is accused of using data from its online platform to gain an unfair advantage over other sellers. Google’s manipulation of search results to favor its own businesses has already been punished by the EU. Apple’s fighting a private lawsuit which alleges its 30% take on apps sold in its apps store is an abuse of monopoly power. And Facebook dominates the digital ad market together with Google.
Foul play? Critics such as Warren have used sporting analogies to justify calls for breaking up the tech giants. “You can get to be the umpire in a baseball game, or you can have a team in the game, but you don’t get to be the umpire and have a team in the game,’ she tweeted earlier this year.
If any of the tech giants are found guilty of anticompetitive behavior, they’re likely to be hit with heavy fines and other sanctions. That may not be enough to satisfy people like Warren, but trying to force through a breakup of one or more of the companies will be tough to do because:
The Microsoft precedent: None of this may deter US regulators, who can draw on Microsoft’s experience in the 1990s for inspiration. The DoJ tried to split Microsoft up to stop it bundling its Internet Explorer web browser with its dominant Windows operating system. The effort failed, but the bruising court battles harmed the company’s reputation and curbed its anti-competitive instincts. History could be about to repeat itself in the internet era.