Big Tech faces U.S. Antitrust Authorities


The Story:

Apple, Amazon, Facebook and Google are facing the antitrust authorities in the U.S. regarding alleged anti-competitive behaviour by the tech giants. It is no news that these tech giants have enormous power and influence in their industries. Congressman David Cicilline claimed that the companies have "wielded their power in destructive, harmful ways in order to expand".

Apple was criticised for providing extremely unfair agreements to App developers, which would allow the company to alter the agreement in its favour when it pleases. Apple was also criticised for giving preferential treatment to certain businesses, which lowers competition within its App Store. Further, the iPhone maker has been accused of ‘squeezing out’ competition by developing its own Apple Apps, forcing other developers out of the App Store market.

This appeared to be the case with iBooks, where Apple forced publishing houses to provide their books through the App, limiting their ability to create their own App. The company is no stranger to creating ‘cartels’ in its iBooks store, as the United States of America v. Apple Inc. 2012 case has proved. The case ended with Apple agreeing to pay $450 million for its anticompetitive agreements with publishing houses, where they agreed to set uniformly-higher prices, eliminating price competition.

Amazon was accused of abusing its powers against the third-party sellers on the platform. Facebook was criticised for acquiring Instagram, hence creating a form of monopoly in the social media market. Google was accused of stealing content from smaller firms while threatening to be eliminated from Google searches if the smaller firms attempt to retaliate.

Legal Implications:

If the tech giants will be found guilty of anti-competitive behaviour and/or of de-facto holding a monopoly, the companies will have to pay very expensive fines. This should act as a deterrent for future abusive behaviours. Further, critics are calling for the tech giants to be ‘broken up’ into smaller firms, effectively creating a market where competition is restored. One must wonder whether the newly broken-up firms would deter from colluding, and whether the solution will stand the test of time and not produce any more tech giants.

Commercial Implications:

Antitrust Law (U.S. term) or Competition Law exists to maintain a positive competition within the different markets. Competition has been identified by the capitalistic theories as a positive factor, which drives improvements in innovation, efficiency and quality while lowering prices. As consumers, if companies engage in anti-competitive behaviours such as fixing prices or squeezing out the competition, we stand as the ones who lose. The large companies will be able to abuse their dominant position in the market, therefore imposing the prices and conditions they prefer freely upon the consumers. Competition would enable consumers to have stronger bargaining power, the absence of such ultimately hurts the average citizen.

Questions for Individual Thinking:

  1. Should the Tech Giants be broken-up into smaller firms?

  2. Is the use of the power by Tech Giants against the ideals of capitalism, or is it a product of it?

  3. What can the consumer do to fight the possible anti-competitive behaviour of large businesses?

Malcolm Zoppi

Born in Switzerland, grew up in the Bahamas, studying in England, completed an Erasmus year in Denmark, and now living in Spain.

Malcolm prides himself on his internationality and ability to analyse current affairs from different perspectives.

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