12 Accusations in the damning House report on Amazon, Apple, Facebook and Google
By Mike Isaac, Steve Lohr, Jack Nicas and Daisuke Wakabayashi
House lawmakers released a scathing report on four of the world’s largest tech companies, accusing them of abusing their market power. The report, which was released on Tuesday and concludes a 16-month investigation into Amazon, Apple, Facebook and Google, recommended breaking up the companies and passing the most sweeping changes to antitrust laws in decades.
Here is a summary of the accusations against each company in the report, which was endorsed only by Democratic lawmakers.
— The company uses its market power as both the largest online retailer and the leading e-commerce marketplace to its advantage and to hobble potential competitors. Amazon sets the rules for digital commerce. About 2.3 million third-party sellers do business on the Amazon marketplace worldwide, the report said, and 37% of them rely on Amazon as their sole source of income — essentially making them hostage to Amazon’s shifting tactics.
— Amazon harvests the sales and product data from its marketplace to spot hot-selling items, copy them and offer its own competing products, typically at lower prices. One former Amazon employee told the House investigators, “Amazon is first and foremost a data company, they just happen to use it to sell stuff.”
— In cloud computing, where Amazon Web Services is the market leader, the company has dealt unfairly with some open source developers, whose software is often freely shared. One open-source engineer said, “We develop all this work and then some large company comes and monetizes that.”
— Apple has a monopoly on the app marketplace on iPhones and iPads, enabling the company to take an excessive cut of app developers’ sales and “generate supra-normal profits.” Apple has charged a 30% commission on many app sales since it introduced the fee more than a decade ago, forcing many developers to raise prices for consumers or reduce investment in their apps.
— Apple has used its control over the App Store to punish rivals, including by ranking them lower in search results, restricting how they communicate with customers, and removing them outright from the store. Apple is the sole enforcer of sometimes opaque App Store rules, leaving developers few options to complain.
— Apple favors its own apps and services on its devices by preinstalling them and making them the default options for a variety of actions. For instance, when iPhone users click a link to a webpage, a song or an address, their devices will typically open Apple apps. Such an advantage, combined with the services’ deep integration into Apple’s software, makes it difficult for third-party apps and services to compete.
— Facebook’s monopoly power in social networking is “firmly entrenched,” and the company has snuffed out competitors through strategic acquisitions and copying products. Services like Onavo, a data analytics firm Facebook acquired, helped the company to spot “early bird warning” signals on would-be competitors rising quickly in the app store.
— The company has grown so overwhelmingly powerful that internal findings suggest its greatest competition exists within itself. Services like Instagram, which is owned by Facebook, grew so quickly that it threatened to overtake the popularity of Facebook. Mark Zuckerberg shifted his strategy quickly, in what one employee called “collusion, but within an internal monopoly.”
— Because of the absence of competition, user privacy has been eroded while misinformation and toxic content have proliferated across all of the company’s services, which are used regularly by more than 3 billion people.
— Google maintained its search monopoly by grabbing information from third parties without permission to improve search results. In other instances, it introduced changes in search to give a leg up to its own services and disadvantage competitors’ offerings.
— The committee found that the company goes to great lengths to keep Google search front and center for users. In the past, it has forced smartphone-makers to install Google search in order to use its Android software and have access to its Google Play app store. It pays Apple billions of dollars to be the default search engine on iPhones and it takes steps to prevent users from switching search providers on Chrome.
— Google has nine products with more than 1 billion users. That provides the company with a trove of data that can be used as “near-perfect market intelligence” and reinforces its dominance because Google can track what new products or services people are using in real time to closely monitor competitors.