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Big tech blows a collective raspberry at the House’s antitrust report

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Big tech has responded to the mammoth antitrust report put out by the U.S. House Judiciary Committee yesterday with blanket denials there’s any monopolistic behaviour or competitive imbalances to see here.

Below is a quick run down of Amazon, Apple, Facebook and Google’s rebuttals.

Among the committee’s (many) recommendations are structural separations and prohibitions on certain dominant platforms from operating in adjacent lines of business; interoperability and data portability requirements; non-discrimination requirements and a ban on self-preferencing; and beefed up merger and monopolization enforcement, as well as better administration of antitrust laws.

Amazon

In a lengthy but punchy blog post the ecommerce giant brands the committee’s views on antitrust “fringe notions” and “regulatory spitballing” — lathering on dire predictions of doom for small business and hoards of inflated-price-enraged consumers should lawmakers deign to dabble in any “misguided interventions”.

Sample quote:

The flawed thinking would have the primary effect of forcing millions of independent retailers out of online stores, thereby depriving these small businesses of one of the fastest and most profitable ways available to reach customers. For consumers, the result would be less choice and higher prices. Far from enhancing competition, these uninformed notions would instead reduce it.

The substance of Amazon’s argument against the need for antitrust intervention is the top-line claim that retail is “thriving and extraordinarily competitive” — with the tech giant saying it accounts for a tiny fraction of global retail and isn’t even the largest US retailer by revenues (that’s Walmart). Among the grab-bag of competitors Amazon lists as evidence that it’s a mere retail minnow are Best Buy, Costco, Facebook, Kroger, Google Shopping, Home Depot, Shopify and Target. (It doesn’t mention Whole Foods because it already consumed that competitor.)

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The strategy here is to claim online and offline retail are just one giant market — because of course if lawmakers slice by online retail alone there’s no denying Amazon’s oversized punch.

Another chunk of rebuttal is against what it claims is “false narrative” that its own interests don’t align with “the thousands of small and medium-sized businesses thriving as sellers in our store”.

“The opposite is true: Amazon and sellers complement each other, and together we create a better customer experience than either could create alone,” it pouts, before going on to say SME sales account for around 60% of all physical products sold on its marketplace, and that it “typically” makes the same or more revenue on third-party sales — rubbishing the idea there could possibly be any conflict of interest at all from Amazon also selling own brand rival products on the same marketplace where only Amazon gets an overview of merchants’ data.

NB: European regulators aren’t so convinced about the lack of competitive risks on dual-sided platforms.  

Europe is now formally investigating Amazon’s use of merchant data

Apple

Asked for its response to the committee report, Apple sent us an on the record statement in which it writes that it “vehemently” disagrees with the conclusions reached — adding the beautiful kicker to the sentence “with respect to Apple”. Epic trolling Tim.

It also said it would be issuing a more “extensive refutation” of the accusations levelled at its business in the coming days.

Here’s the rest of its statement:

Our company does not have a dominant market share in any category where we do business. From its beginnings 12 years ago with just 500 apps, we’ve built the App Store to be a safe and trusted place for users to discover and download apps and a supportive way for developers to create and sell apps globally. Hosting close to two million apps today, the App Store has delivered on that promise and met the highest standards for privacy, security and quality. The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem. Last year in the United States alone, the App Store facilitated $138 billion in commerce with over 85% of that amount accruing solely to third-party developers. Apple’s commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces. Competition drives innovation, and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so.

In further background comments the gist of Apple’s argument boils down to ‘Don’t mess with a good thing’.

Aka billions of users across 175 countries can’t be wrong nor unhappy — nor can the tens of millions of developers making wares for its kit, given, for example, how many (1.8M) apps are now on the App Store. (Developers whose apps get excluded are unlikely to be so happy, of course.)

Apple doubles down on its right to profit from other businesses

It also defends the 30% commission it takes on app sales — aka the ‘Apple tax’ — pointing to a recent study by Analysis Group that the structure is “similar in magnitude to those of other app stores and digital content marketplaces” — and further noting that for in-app subscriptions the tax falls to 15% after the first year.

Lastly it invokes privacy, pointing out that by reviewing apps and curating its users access to third party software it can offer protection from surveillance, as well as keep things clean by rejecting objectionable, harmful, unsafe, and illegal content. (Albeit, even the Apple gods can’t always do that.)

Facebook

In a brief on the record statement — presumably while it prepares the next chapters of its neverending ‘hard questions‘ series of lobbyist ‘literature’ — the social media giant sought to paint its business success as American as apple pie or, er, the freely unfettered market.

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Here’s what it told us in full, with remarks attributed to a faceless “Facebook spokesperson”:

Facebook is an American success story. We compete with a wide variety of services with millions, even billions, of people using them. Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people. Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses. A strongly competitive landscape existed at the time of both acquisitions and exists today. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time.

So, in sum, there’s absolutely nothing to see here but successful! business! as! usual! is Facebook’s wafer-thin claim. Sure, it bought and assimilated rival social media businesses that could have gained enough market share to challenge its dominance of the category but that’s also just totally great business! Moreover, Facebook buying those really successful rivals just made them even more great and successful! But not so great and successful that there isn’t also “strong” competition in the space Facebook has dominated for 15+ years through its sheer force of business success.

Of course Facebook’s statement makes no mention of Onavo: A VPN app it acquired and used to spy on rival app usage to figure out which apps it should be buying or, er, crushing via cloning their innovations — but that’s a whole other story Facebook isn’t at all keen to talk about for some reason. Ditto the whole paying teenagers to spy on them thing.

Facebook’s use of Onavo spyware faces questions in EU antitrust probe — report

In any case, the social media behemoth concludes, it’s the regulators who really screwed up here because they didn’t stop it buying Instagram and WhatsApp when they could have done. So ya! boo! sucks! it’s too late suckers! (we paraphrase).

Google

We also reached out to Google for a response to the antitrust report. The adtech giant had a statement ready to go — which kicks off by emphasising how much value its “free” products pump into the economy (not to mention all the “billions” it throws at R&D), before going on to chide policymakers for making “outdated and inaccurate allegations”.

The statement also features what’s become a go-to tech giant talking point as antitrust has risen up the political agenda in recent years — which is the claim that breaking up Internet giants wouldn’t actually fix anything.

Rather, Google warns (taking a similar tack to Amazon), of economic ruin awaiting the US economy — even from a ‘lesser’ intervention of tinkering with the sacred protections enshrined in Section 230 — and geopolitical doom for America’s tech leadership (taking a similar tack to Facebook). Or, in other words, cut Google and American bleeds. But also, no we’re not a monopoly, hell no! We’re just a verrrry fleet-o-foot operator in a “highly competitive industry”. So, er, which is it?

Interestingly, Google is the only tech giant to include some soft soap for lawmakers in this first response to the antitrust committee report — writing that it “support[s] Congress focusing on areas where clearer laws would help consumers”. (Translation: Stick with the small stuff and leave the important moneymaking business stuff to big tech.)

Here it invokes interoperability (because what technology solutionist doesn’t love a technology ‘solution’ to a monopoly problem); as well as claimed support for passing “comprehensive federal privacy legislation”. (Because a weaker federal framework is the only way to unpick state-level privacy laws with teeth like CCPA).

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Here’s Google’s statement in full:

Google’s free products like Search, Maps and Gmail help millions of Americans and we’ve invested billions of dollars in research and development to build and improve them. We compete fairly in a fast-moving and highly competitive industry. We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services.

Americans simply don’t want Congress to break Google’s products or harm the free services they use every day. The goal of antitrust law is to protect consumers, not help commercial rivals. Many of the proposals bandied about in today’s reports — whether breaking up companies or undercutting Section 230 — would cause real harm to consumers, America’s technology leadership and the U.S. economy — all for no clear gain.

We support Congress focusing on areas where clearer laws would help consumers, a few of which are mentioned in today’s reports: Google has long championed the importance of data portability and open mobile platforms; we are arguing a case before the Supreme Court tomorrow for the important principle of software interoperability; and we have urged Congress to pass comprehensive federal privacy legislation. We look forward to engaging with Congress on these and other issues moving forward.

TechCrunch’s Taylor Hatmaker contributed to this report 

Steps from the House’s antitrust report are too little, too late when it comes to big tech

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