This article is written by Bikramjit Chatterji a student of Amity Law School, Kolkata pursuing a Diploma in Law Firm Practice. This article has been edited by Ojuswi (Associate, Lawsikho).
This article has been published by Sneha Mahawar.
Table of Contents
Introduction
Big Tech Companies in the USA have been hit with a series of antitrust lawsuits by the U.S. Federal Government and they say that these big tech companies are operating in monopolies and abusing the power that they have. This is especially scary, considering all the data that they have of almost every person in the world because many people from across the world use their platforms on a daily basis. So abusing or misusing that power is not a huge problem for many of these big technology companies which many of these companies are doing. From selling user data to companies to selling user data to political parties, these companies have done it all. Considering the kind of power that they have in their hands, it is easy to say that they can misappropriate it and misuse it as and when they want. So considering all this power that these companies have, we need stronger regulations and better control on these companies, to keep checks on them so as to make sure that they don’t misuse their power all the time. Sure they are running into lawsuits even now, but that is only after someone finds out what they have done but that doesn’t mean that they are not getting away with a lot of the stuff that they are doing. The reason behind writing this article is to make everyone understand what these big tech companies are doing in the USA and what actions are being taken against them.
What are antitrust lawsuits
Several countries have laws in order to level the playing field for companies to operate their business and protect the consumers in it. The goal of these laws is to protect consumers from a single company gaining too much power and creating a monopoly. This law also prevents the big companies from gaining too much power over their competitors so as to not eliminate them from the competition. Basically, these antitrust laws prevent a company from playing dirty and putting all the profits in their pocket. Antitrust laws are often referred to as competition laws developed by the U.S government to protect consumers from predatory business practices. This is to ensure fair competition in the open market economy. But these laws have evolved with time and with the ever-changing market so as to protect companies from becoming monopolies. Antitrust laws are applied to a wide range of business activities, mostly questionable in nature, like bid-rigging, price-fixing and monopolies. However, if these laws didn’t exist, they would create a lot of havoc because competition in the market would cease to exist and consumers would be forced to pay exorbitantly high prices or would have access to a limited supply of products and services.
What are big tech companies
Big Tech, who are also known as the Tech Giants or the Big Four or the Big Five are the kind of names which are given to the present four or five of the largest, most dominant and most prestigious companies in the Information Technology space in the United States of America. The Big Five consists of Google, Amazon, Apple, Meta or as it was previously called Facebook and finally Microsoft taking the fifth place. These tech giants are the goliaths in their playing fields, almost unbeatable in them with no competitor even in sight. These players are in the space of e-commerce, online advertising, consumer electronics, cloud computing, computer software, media streaming, artificial intelligence, smart home, self-driving cars and social networking. Not only this, but they also have the most valuable companies globally, each with a maximum market capitalization of around $1 trillion to $3 trillion. On top of this, they are considered one of the most prestigious employers in the world. These big tech companies are offering services to millions of people which is why they can sway user behaviour and also control user data as and how they want. Concerns related to monopolistic practices have led to a lot of antitrust investigations being held by the Department of Justice and the Federal Trade Commission in the United States and the European Commission. Many have questioned the impact these companies have on privacy, market power, free speech, censorship, national security and law enforcement. However many people are predicting that maybe it is not possible to live in a digital ecosystem without using the services of these big 5 tech giants.
Market dominance
These big tech companies have replaced several energy giants such as ExxonMobil, BP, Gazprom, PetroChina, Chevron and Shell from the first decade of the 21st century from the top of the NASDAQ stock index. They have also left behind some of the traditional big media companies such as Disney, Warner Bros, Discovery, and Comcast. In 2017, five of the biggest IT companies in the USA had a combined net worth of $3.3 trillion and they alone made up around 40% of the total value of NASDAQ 100. But the reason that these companies have still remained popular among the common masses is that they provide most of their services to the general public for free, making them highly appealing to the general public.
Introduction about the companies
Though these companies are pretty well known to the general public and there is no need to say anything more about them, here is a short introduction to these companies:
Google is the leader among search engines, online video streaming websites, email service websites, web browsing, online navigation-based mapping, mobile operating systems and cloud storage as well as several other services that they provide. Google Cloud is in third place in online storage facilities, also called cloud storage after two other giants: Amazon and Microsoft. Both Google and Meta hold a kind of duopoly on the market of digital advertising and Google’s advertising services make up 82% of their revenue and profits.
Amazon
By the year 2017, Amazon was the dominant player in the e-commerce business, holding 40.4% market share. Their cloud computing division held 32% market share and their live streaming platform, Twitch, held around 75.6% market share. Their game-changing AI technologies such as Amazon Alexa and Amazon Echo also made market leaders in the area of artificial intelligence-based personal digital assistants and smart speakers where Amazon Echo comes into play. They hold about 69% market share in this field with Google’s Google Nest taking another share of 25% and other players sharing the bread crumbs.
Apple
Apple is known in the smartphone market for selling high-margin smartphones and other electronic devices sharing a kind of duopoly with Google in the field of mobile operating systems. Apple has around 27% share of the market and Google has around 72% market share.
Meta (previously known as Facebook)
Meta Platforms, as it is known now and as it was formerly called as Facebook up until October 2021 when the name was changed. This company is a social networking giant and I am sure that everyone reading this article has an account on this social networking account or has had one at some point in time. They have been the most popular social media platform for the past decade and they are now the owners of Instagram, another social networking platform and WhatsApp, an online messaging platform. Meta had also acquired Oculus in 2014, leading to their entry into the virtual reality market as well.
Microsoft
Microsoft has been and is still dominating the desktop operating market with their product: Microsoft Windows and their office productivity software called Microsoft Office. Microsoft is the second biggest in the cloud computing industry with their product Microsoft Azure right after Amazon and is also one of the most prominent players in the video game industry with their product Microsoft Xbox. Microsoft is also a dominant player in the enterprise software business with their product Microsoft 365 which is also available to normal consumers and business collaboration software like Microsoft Teams.
Antitrust legislation and investigations
In the United States of America, there has been antitrust scrutiny and there have been investigations of members of the Big Tech companies which began in the late 1990s and early 2000s, with one of the first and major antitrust lawsuits being against a member of the Big Tech in 2001 when the U.S. Government accused Microsoft of illegally maintaining its monopoly position in the personal computer (PC) market primarily through the legal and technical restrictions that they imposed on other PC manufacturers, mostly OEM’s. It also barred users from being able to uninstall Internet Explorer and use other programs such as Java and Netscape. During that trial, the district court ruled that Microsoft’s actions constituted unlawful monopolization under Section 2 of the Sherman Antitrust Act of 1890 and the US Court of Appeals confirmed most of the judgements made by the District Court. But on 6th September 2001, the Department of Justice announced that they were no longer looking to break up Microsoft and would instead impose a smaller antitrust penalty on them. In this settlement, Microsoft agreed to share its application programming interfaces with other third-party companies and would also appoint a panel of three people who would always have full access to Microsoft’s systems, records and other source codes for five years in order to showcase compliance. On the 1st of November, 2002, Judge Kollar-Kotelly released a judgment accepting most of the proposed DOJ settlements and on the 30th June, 2004, the U.S. appeals court approved the settlement that Microsoft made with the Department of Justice in a unanimous vote.
But this wasn’t the end of antitrust legislation and investigations against the Big Tech companies and there were similar lawsuits in the late 2010s and early 2020s. This is when they again came under the radar of the Department of Justice and the United States Federal Trade Commission. This included requests related to providing information about prior acquisitions and potentially anti-competitive practices being practised. Some of the Democratic candidates running at that time proposed breaking up the Big Tech companies and regulating them as utilities.
Facebook’s antitrust lawsuit
According to the US Government, Meta or previously known as Facebook is becoming a social media monopoly. Concerns related to that led to an antitrust lawsuit in December 2020 when the Federal Trade Commission (FTC) and 46 other states decided to jointly sue Facebook, accusing the company of buying up all its competitors, mostly WhatsApp and Instagram to eliminate competition in the social media industry. This antitrust lawsuit by the FTC was mostly based on these two major accusations. But surprisingly, the lawsuit didn’t go far because 6 months into the lawsuit, the federal judge assigned to the case threw the case out saying that FTC had not given enough evidence to support this claim and the agency was given 30 days more to present their case. However, the agency never provided any more data which led to the case coming to a closing.
Google’s antitrust lawsuit
US Antitrust officials decide to file a case against Google for the second time related to a monopoly lawsuit over the company’s digital advertising business because Google is suspected of abusing its dominance. It is believed that Google is the most powerful advertising technology company on the planet with amazing financial results. Alphabet which is the parent company of Google outperformed at the end of 2021 with amazing revenues where they boosted their revenue to 32% which is up to $75 billion and also saw a nice bump in its share price as compared to its other competitor: Meta. Coming back to the lawsuit, in the lawsuit there were allegations against Google for misappropriating user data and lying about how they use user data. The lawsuit also said that their advertising fees were much higher than the competitors, roughly around 19% to 22% more. The lawsuit also said that Google forced publishers to adopt both its ad server and its ad exchanges in the early part of 2018. This could lead to Google getting way too much data about the businesses and leading to them manipulating the playing field as and when they want. There were also allegations of Google having a backroom deal with Facebook over application advertisement inventory which means that they have a deal with Google where they get an upper hand when it comes to showing advertisements in mobile applications which are not owned by Facebook themselves. However, these advantages are not provided to the other players in the market.
Conclusion
The journey of Big Tech Companies hasn’t been easy in the USA. They have hit several roadblocks along the way and even though they are the biggest company in the USA currently, they have had their fair share of anti-trust lawsuits. Giants like Google, Microsoft and Facebook had to be dragged to court due to anti-trust lawsuits due to which their reputation got hampered and they lost money on the capital market as well. From getting accused of monopolizing the market, to buying all the competitors to charging extra in case of advertisement fees, they have faced it all. But still, the question we often beg to ask is, can we live without these technology companies? The answer is no, without them our daily lives will come to a halt as we do not know a life without social media, e-commerce websites, search engines and operating systems. So the answer to this problem is that these technology companies need to be regulated and it needs to be made sure that these companies respect user data, don’t misuse them and don’t monopolize the market to eliminate many worthy competitors.
References
- https://www.forbes.com/sites/jonathanponciano/2022/05/12/the-worlds-largest-technology-companies-in-2022-apple-still-dominates-as-brutal-market-selloff-wipes-trillions-in-market-value/?sh=1629d66e3448
- https://www.investopedia.com/terms/a/antitrust.asp
- https://www.techtarget.com/whatis/definition/Big-Tech
- https://www.fondapol.org/en/study/big-tech-dominance-2-a-barrier-to-technological-innovation/#:~:text=The%20big%20tech%20companies’%20dominant,maintained%20in%20the%20market%20economy
- https://www.seegerweiss.com/antitrust/
- https://www.timesnownews.com/business-economy/companies/google-antitrust-case-monopolist-tech-giant-facing-explosive-allegations-article-91845679
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:
Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.
