Washington is coming for America’s big tech companies
On Sunday Google CEO Sundar Pichai tweeted that his company “will drop everything else” to fix its hamburger symbol.
Google got the layers of its hamburger emoticon (those symbols you use in computer world) all wrong. It puts the cheese below the burger. A public outcry followed.
Now it may well be true that Google’s tech guys have no idea how to make a proper hamburger but still you’d think the CEO has more important stuff to worry about.
Google is currently being asked to clarify its role in Russia’s meddling in last year’s US presidential election. Facebook and Twitter have been summoned by the US Senate too.
And the government probes into tech companies are unlikely to be limited to the part they played in the spread of ‘fake news’.
Washington lawmakers are growing icier towards big tech companies like Google, Apple, Amazon and Facebook.
They see monopolies forming on the internet and they’re worried current legislation isn’t going to be effective to restrict the grip of big tech companies on society.
If the CEOs of these companies are going to “drop everything” for something, they’d better do it to address these antitrust issues.
What’s the issue?
If you take a look at the five largest US companies by market capitalisation, it’s not hard to spot the common denominator.
Apple, Alphabet (Google’s parent company), Microsoft, Facebook, and Amazon are all technology companies.
What’s more, these companies keep growing in size much more rapidly than you might expect from these big blue chips.
In the past 12 months their share prices have gone up by 40% on average. That’s highly irregular for companies at the top of the market.
The ‘Big Four’ – Amazon, Apple, Facebook and Google – in particular have long been seen as America’s sweethearts. As big US companies conquering the world through innovation, they were a billboard for the US economy.
But now, as their market dominance continues to grow, lawmakers in Washington are getting more nervous.
Both progressives and conservatives are increasingly worried that US antitrust legislation isn’t up to scratch.
They’re aware that the laws designed to restrict the big businesses of before may not be suited to deal with internet companies.
You can see where they’re coming from.
Amazon is involved in about half of all commercial transactions conducted online. Facebook is with 77% by far the biggest in mobile social network visits. And Google accounts for 81% of search engine traffic.
Why is this worrying? Well, because in the internet age their domination of everything taking place online makes these companies incredibly powerful.
“Google, Apple, and Amazon provide platforms that lots of other companies depend on for survival,” said Democratic Senator Elizabeth Warren last year.
“But Google, Apple, and Amazon also, in many cases, compete with those same small companies, so that the platform can become a tool to snuff out competition.”
All of the data these big tech companies accumulate makes them incredibly well placed to branch out and launch new products and services in other markets.
Earlier this year the European Commission gave Google a €2.4bn fine for abusing its power in the search engine market.
Google prioritised its own products over those of rivals in its search results, which probably helped the company to aggressively expand in other sectors.
The European Commission was already on a mission to limit the powers of big tech companies. Now their American colleagues may be following their example.
Why are lawmakers paying attention now?
If big tech is such a big issue, why are US lawmakers only paying attention now?
Well, that’s probably because the power and dominance of these companies has snowballed in recent years.
The fact that Amazon’s share price has doubled in the last 20 months is a testament of this rapid expansion.
The reason the US authorities haven’t acted before is also due to the fact that US antitrust legislation differs from its European equivalent.
Europe and the US look at different things when they assess ‘anti-competitive behaviour’. In Europe laws focus on fostering competition. US laws don’t necessarily block monopolies as long as they don’t harm consumers.
Amazon has created a lot of goodwill among its consumers by keeping prices low and offering free services. Google and Facebook have similarly enjoyed plenty of support from consumers.
As ‘consumer benefit’ is the main priority for US antitrust laws, this may have kept an antitrust bullseye off their backs. But for how much longer?
“People are at least open to the argument that concentration of power is a problem even if there’s no immediate cost paid by consumers,” the Financial Times quotes Republican Bill Kristol.
No doubt another reason is that Washington seems to be locking horns with these big tech companies on a regular basis.
Google and Facebook have lawyered up now that they’re asked to explain their role in the spread of ‘fake news’ in last year’s election.
Meanwhile Apple hasn’t been very eager to help the federal government whenever it asked assistance in unlocking the mobile phones of certain individuals.
Now that these tech companies end up more often in the government’s crosshairs, it must have become clear to Washington that they need to act if they don’t want to make them too powerful.
In any case, the attitudes in US politics towards its big tech companies are changing.
Both Democrats and Republicans are growing more concerned and getting more critical. This makes it highly likely that antitrust becomes a high-profile issue in next year’s mid-term elections and the 2020 presidential campaign.
Of course it may help that US lawmakers can simply follow the example of European lawmakers who have already been turning the screws on Google, Apple, Amazon, and Facebook.
Maybe the only thing that can stop these big tech companies from getting even more dominant is the US government and the EU going after them.