House Subcommittee Wants To Break Up Big Tech Companies

(PoliticalLookout.com)- A House panel has suggested that the United States should implement antitrust reforms that would curb the power of tech giants such as Amazon and Google’s parent company Alphabet Inc.

The recommendations came from the antitrust subcommittee of the House of Representatives, which just concluded an investigation that took 16 months to complete. The committee issued a report that was 449 pages in length, and that Republicans have largely denounced.

If Congress were to approve the plan as the subcommittee proposed, it could lead to the eventual breakup of these large technology companies.

The report is focused on four of the largest tech companies in the U.S. — Amazon, Facebook, Apple and Google. The subcommittee described these companies as “gatekeepers of the digital economy” that use the control they have to limit other companies.

The report says these companies have abused the power they have to identify threats from potential competitors and snuff them out. This ultimately leads to consumers having fewer choices and innovation not being as great as it could be.

The Democratic leaders of the subcommittee wrote:

“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. These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement. Our economy and democracy are at stake.”

One of the biggest suggestions to come out of the investigation — or at least the one that would have the greatest effect — is banning tech companies from owning different lines of businesses. If this suggestion is adopted by Congress, then it will in essence force many of these companies to break up.

The report reads:

“Their ability both to use their dominance in one market as negotiating leverage in another, and to subsidize entry to capture unrelated markets, have the effect of spreading concentration from one market into others, threatening greater and greater portions of the digital economy.”

The way the report suggests to correct this is to prohibit one dominant platform from competing with other firms that depend on the dominant platform. This would be similar to the Bank Holding Company Act of 1956, which essentially bars large banks from acquiring non-banking businesses such as real estate firms and insurance companies.

Further, the big tech companies would see their possible markets in which they could engage limited, just as large TV networks can’t enter into syndication or production markets.

Not surprisingly, officials for the tech companies being targeted by the report are not happy. In a blog post, Amazon wrote:

“These ill-conceived ideas demonstrate a misunderstanding of the size and shape of the retail industry. Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, retail has ample space for many winners.”

For its part, Facebook defended the company’s past acquisitions of Instagram and WhatsApp. A spokesperson said:

“Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at that time.”