Spotlight on trust in 2021
Big questions will be asked about tech’s big four over the coming year. David Court rounds up the arguments.
We learntmany lessons in 2020; one of the biggest was just how important technology has become to our lives.
The vast majority of us rely totally on services provided by the technology industry to earn a living and stay in touch with loved ones.
Is it right that we place so much trust in just a handful of companies?
This is what makes the several antitrust cases happening around the world so important.
The US has recently announced antitrust lawsuits against both Google and Facebook, the EU is investigating Amazon (and the US is looking at it closely too), and Apple and Google have civil antitrust lawsuits from Fortnite game developer, Epic Games.
How will these lawsuits pan out? It’s impossible to say. Will they rule in favour of the status quo and allow the current handful of companies to dominate technology for the foreseeable future? That’s whatwill be argued.
For now, let’s do a little experiment to gauge what the current state of competition is like. See if you can say ‘‘no’’ to any of these questions.
Do you own an Apple or Android smartphone?
Do you use Facebook, Instagram or WhatsApp?
Do you use Google as your search engine?
Have you ever used YouTube or visited a newswebsite that doesn’t have a paywall?
Have you ever bought something off Amazon?
OK, the last one might not mean much here in New Zealand. But it’s only amatter of time before Jeff Bezos brings his online shopping giant here. And then we’ll all be addicted, like the rest of the world.
All these antitrust cases share a common truth: technology is a very winner-takes-all industry. And I don’t know if that’s a good thing or not.
What I do know is that a lot of this will be decided for us, mostly in US courtrooms, next year. Below is a roundup of the antitrust allegations tech’s Big Four face.
In my opinion, this is open-andshut antitrust. Why? Because in 2012, Facebook chief executive Mark Zuckerberg sent a series of emails that detailed his plan to buy competitors that, in his own words ‘‘could be very disruptive to [Facebook]’’.
Referring to fledgling photosharing social networks Instagram and Path, Zuckerberg remarked: ‘‘The businesses are nascent but the networks are established, the brands are already meaningful and if they grow to a large scale they could be very disruptive to us.
‘‘These entrepreneurs don’t want to sell (largely inspired [by] our success), but at a high enough price – like $500, or $1 [billion] – they’d have to consider it.
‘‘Given that we think our own valuation is fairly aggressive and that we’re vulnerable inmobile, I’m curious if we should consider going after one or two of them.’’
The next morning, Zuckerberg
sent a follow-up email clarifying ‘‘I didn’t mean to imply thatwe’d be buying them to prevent them from competing with us in any way.’’ Looks dodgy, doesn’t it? Now add another alleged email from 2008, included as evidence in the US antitrust lawsuit, inwhich Zuckerberg stated: ‘‘It is better to buy than compete.’’
Facebook went on to buy Instagram inApril 2012 for US$1b.
After the Instagram acquisition, court documents show that Facebook sawmobilemessaging as its problem area.
A 2012 email from Zuckerberg claimed that apps were ‘‘using messages as a springboard to build more generalmobile social networks’’.
In October 2012, a Facebook business growth director internally predicted that messenger apps ‘‘might be the biggest threat we’ve ever faced as a company’’.
Facebook acquiredWhatsApp in February 2014 for $US19b.
In December, the Federal Trade Commission (FTC) sought a permanent injunction that would require Facebook to sell Instagram and WhatsApp. Zuckerberg expects the process to ‘‘take years to play out’’.
The upcoming case against Google is an interesting one. Conventional wisdom suggests that internet users are not Google’s customers. They’re actually the product.
We, the user, are what Google sells to its clients (the advertisers), thus muddying the waters regarding the question ofwho is damaged by Google’s dominance.
The US Justice Department’s new antitrust lawsuit against Google doesn’t seem to care, though, arguing that advertisers and internet users are harmed by Google’s alleged monopoly.
It stated in its complaint that ‘‘countless advertisers must pay a toll to Google’s search advertising and general search text advertising monopolies’’.
‘‘Consumers are forced to accept Google’s policies, privacy practices, and use of personal data; and new companieswith innovative business models cannot emerge from Google’s long shadow.’’
Googlewill likely continue to argue that its services are free, and no-one is forced to use them.
In October, the US Department of Justice filed an antitrust lawsuit against Google. It will likely take years to resolve.
Amazon
The US and EU are looking at Amazon’s treatment of third-party sellers.
The EU is looking at how Amazon’s use of non-public marketplace seller data allows it to avoid the normal risks of retail competition and to leverage its dominance in themarket.
A recent investigation, led by EU antitrust chief Margrethe Vestager, found Amazon used ‘‘granular, real-time data’’ from third-party listings to inform its decision about potential new Amazon-label products to launch, how much stock to buy, which suppliers to use and how to price the products.
That’s not all. Vestager also launched a second antitrust investigation against Amazon, focusing on how it uses its ‘‘buy box’’ selling position to generate sales. The investigation will look at whether Amazon ‘‘might artificially favour its own retail offers and offers of marketplace sellers that use Amazon’s logistics and delivery services’’.
The US is further behind on its case. In November last year, after a 16-month probe, the USHouse Judiciary antitrust subcommittee made the claim that Amazon has monopoly power over third-party sellers, stating ‘‘Amazon’s pattern of exploiting sellers, enabled by its market dominance, raises serious competition concerns’’.
Amazon is expected to argue that its shopping platform only represents 1 per cent of the global market and less than 4 per cent of the USmarket, and therefore it cannot have a monopoly.
Apple (... and Google again)
Apple’s antitrust case centres on its battle with Fortnite publisher Epic Games.
This all began when it released an update to its iOS and Android app allowing players to purchase ‘‘V-Bucks’’ via Epic Games directly instead of going through the App Store or Android’s Google Play Store – where Apple and Google each collect a 30 per cent transaction fee.
Apple and Google, predictably, removed Fortnite from the App Store and Google Play Store.
Epic claims Apple has become a ‘‘behemoth seeking to control markets, block competition and stifle innovation’’.
Its suit against Google is more poetic, accusing the search engine giant of abandoning its roots. ‘‘In 1998, Google was founded as an exciting young company with a unique motto: ‘Don’t Be Evil.’
‘‘Twenty-two years later, Google has relegated its motto to nearly an afterthought, and is using its size to do evil upon competitors, innovators, customers, and users in a slew of markets it has grown to monopolise.’’
An Epic vs Apple trial date has been set forMay. Adate for Epic vs Google is still TBC, though next year is probable.
Internet users are not Google’s customers. They’re actually the product.