Regulators in the United States and Europe are launching new investigations and legal actions aimed at curbing market power, facing a fresh wave of antitrust scrutiny that is aimed at large technology companies. The moves reflect an escalation in the broader fight between governments and the Internet’s titans of tech over for whom the Web should work Big Tech or government and how.
A landmark antitrust lawsuit by the Department of Justice (DOJ) against Apple has alleged that the company is illegally monopolising the smartphone market. The suit, months after years of investigation, claims Apple abused control over the iOS operating system and App Store to kill competition and preserve its place as the preeminent player in mobile devices.
Attorney General Merrick Garland announcing the lawsuit said that ‘Apple’s anticompetitive practises have inflated prices for consumers, limited choice, and suppressed innovation in the smartphone market.’ “This action is intended to reinstate competition and prevent Apple from continuing to leverage its market power against consumers, developers and the competition.”
The DOJ’s complaint zeroes in on a trio of Apple issues restrictions on app distribution, mistreatment of third party developers, and what makes Apple control over hardware features. It’s a lawsuit seeking structural remedies that could compel Apple to radically alter its business model by allowing alternative app stores for iOS devices.
The lawsuit came as a bald faced denial of these principles, Apple vehemently denied the allegations, saying that the lawsuit ‘threatens the principles that have made the iPhone the gold standard for privacy and security.’ But the company vowed to fight ‘vigorously’ to determine ‘the truth’ in a battle that could reshape the tech industry.
At the same time, European Commission launched formal antitrust investigations of Google for digital advertising, and Amazon for its use of seller data. The probes come as the EU looks to put in place the Digital Markets Act (DMA) a wide-reaching new law aimed at bringing the power of tech platforms in line.
The investigation into Google zeroes in on the company’s market position in the area of online advertising technology, where it has shown signs of favouring its own ad tech offerings over competition. The probe will ‘examine whether Google made it harder for rivals for online advertising services to operate in the ad tech stack,’ European Competition Commissioner Margrethe Vestager said.
The EU investigation is into allegations that Amazon used non-public data from independent sellers on its platform in favour of its own retail business. If proven, this practise would violate EU competition rules and would give Amazon an unfair advantage over third party merchants.
Both Google and Amazon said they would cooperate fully with the investigations and defend their business practises. If the companies breach EU antitrust rules, they could be hit with fines of up to 10 percent of their global annual revenue.
Consumer advocacy groups and smaller tech companies have hailed the renewed antitrust push against Big Tech for decades, arguing in favour of cracking up the tech industry in order to stop it from strangling innovation and limiting consumer choice. Yet industry groups say however, that overly aggressive regulation could also stymie technological progress and hurt U.S. companies in the face of global competition.
That is happening at a time when tech giants are facing other challenges such as content moderation, data privacy and the footprint of artificial intelligence in the world. Combined, these challenges have prompted countries around the world to make calls for widespread tech regulation reform.
As pressure mounts, some tech companies have started their own voluntary changes to their business practises. For instance, last year Google introduced plans for Android users in Europe to have more choice over their default search engine and Apple recently relaxed App Store policies.
But critics say these self imposed changes are not going far enough to address the competition issues. The various investigations and lawsuits now are likely to have far reaching implications for the tech industry and digital markets around the world.
These antitrust actions could restructure the business models of the world’s largest tech companies, or break apart some of the world’s most valuable corporations. In addition, they raise urgent questions about the proper tradeoff between reinforcing innovation and promoting competition in an increasingly dynamic digital economy.
These complex issues are one reason why the tech industry is at a crossroads as governments around the world try to work through them. But the legal battles, policy debates and possible restructurings of some of the most powerful companies of the digital age will be played out in the coming months and years.