On Tuesday, a House subcommittee put out a massive report that places Big Tech in the crosshairs of major antitrust reforms.
The four firms at the center of the report — Apple, Google, Facebook and Amazon — have been in hot water with Congress for some time. But while the tone of the recent conversation is punitive towards those firms, it also seems to envision a broader shift to new rules that would stop tech from this level of centralization again.
Obviously, that’s a lofty ambition, and sweeping political ideals don’t make it into market practice without extensive compromise. Nonetheless, the proposed rule changes would not only clearcut huge chunks of these firms’ claims to the tech market, but also seem to leave the field open for blockchain technologies that make concentration of power impossible not only illegal, but technologically impossible.
The report, entitled “Investigation of Competition in Digital Markets,” comes from the staff of the Democratic majority of the House Antitrust Subcommittee of the Judiciary Committee. It’s a 449-page account of America falling out of love with Big Tech.
The core criticisms are already familiar: Apple, Google, Facebook and Amazon use their roles as vital gatekeepers to bully competitors and muscle into new markets on the basis of ill-gotten leverage. In its own words:
Dominant platforms have used their integration to tie products and services in ways that can lock in users and insulate the platform from competition. Google, for example, required that smartphone manufacturers seeking to use Android also preinstall and give default status to certain Google apps enabling Google to maintain its search monopoly and crowd out opportunities for third party developers.
Apple and Google are both in legal battles with Epic Games, the firm behind Fortnite, over their 30% commission on transactions via their platforms, which Epic Games tried to circumvent by using its own currency. Apple and Google blocked Fortnite from its respective app stores immediately.
The Epic Games battle and the 30% commission — far higher than internet payment processors generally charge, is just a recent entry in a long rap sheet of bullying behavior. And while everyone seems to acknowledge that these firms now provide critical infrastructure in the modern world, the report calls upon the era that gave birth to the trust-busting movement to point to comparable abuse of power:
Companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.
The report would not be as long as it is if the solution it put forward was as simple as applying existing law and trusting existing authorities. The dominance of the four firms in question is part of a longer-term buildup of judicial precedent and regulatory hesitance that predates the internet era, but becomes especially obvious when dealing with internet business models:
It is unclear whether the antitrust agencies are presently equipped to block anticompetitive mergers in digital markets. The record of the Federal Trade Commission and the Justice Department in this area shows significant missteps and repeat enforcement failures.
The report proposes updating cornerstone antitrust legislation like the Sherman Act, lowering the threshold for market dominance. It would seek to counter any future acquisitions. Citing hundreds of mergers and acquisitions since 2000 of which antitrust authorities blocked zero, the authors of the report would label any future acquisition by a “dominant platform”illegal unless proven otherwise:
Subcommittee staff recommends that Congress consider shifting presumptions for future acquisitions by the dominant platforms. Under this change, any acquisition by a dominant platform would be presumed anticompetitive unless the merging parties could show that the transaction was necessary for serving the public interest and that similar benefits could not be achieved through internal growth and expansion.
The authors also argue that in recent decades, a series of critical court decisions have dulled the original weapons for prosecuting antitrust violations. Legislators, they say, must override those precedents to proceed.
Meaning for crypto?
Cointelegraph Magazine earlier noted that blockchain-based social media stands to benefit from any crackdown on Facebook. But it goes deeper than that.
The Netflix documentary “The Social Dilemma” is steadily shocking more and more Americans with how much of their personal information they’ve surrendered to monetization by third-party platforms. But that’s only the start of it. The Committee’s report philosophically looks at digital platforms as critical infrastructure:
Each platform uses its gatekeeper position to maintain its market power. By controlling the infrastructure of the digital age, they have surveilled other businesses to identify potential rivals, and have ultimately bought out, copied, or cut off their competitive threats.
Framing internet technology as infrastructure is growing more and more common in the halls of Congress. The report actually calls upon antitrust measures that once broke up railroad and telecommunications giants as an example. But, frankly, the state of American telecoms and railroads is disgraceful.
But the quest to make internet mediaries more neutral and publicly accessible, to remove them from the control of powerful third parties capable of using their accumulated information to their own ends, seems like a pretty clear use case for a switch to apps and sites that are by their nature decentralized. In other words, the kind of infrastructure the blockchain community has spent the last decade building.
This post first appeared here: https://cointelegraph.com/news/congress-renewed-attack-on-big-tech-may-clear-the-field-for-decentralization