The CNBC video provides a succinct summary of why and how antitrust laws were enacted by the U. S. Congress to promote fair competition and to protect consumers from predatory monopolistic business practices. The main antitrust laws are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914 – all of which were enacted before the Internet was introduced.
Since then, the evolution of telecommunication technology moved from land line phones to smartphones with incredible ability to connect people locally and globally especially via social media. However, the technological firms providing these services have grown astronomically and consequently, begs the question if these Big Tech companies are providing fair prices/best quality to consumers or stifling innovation with their growing market power? Here are the most recent updates about antitrust lawsuits against the key Big Tech companies:
- January 11th, 2022: Allyn from NPR summarized that the “Federal Trade Commission’s antitrust lawsuit against Facebook can proceed … [as there were] enough proof to argue that Facebook’s acquisition strategy – particularly its takeover of Instagram and WhatsApp – [that] allegedly gobbles up competitors in order to maintain an illegal monopoly.”
- January 21st, 2022: Hatmaker from TechCrunch noted that Texas state lawsuit “alleges that Google illegally maintained a monopoly in online advertising… [and] that the company made a deal with Facebook o maintain its online ad dominance by crushing an emerging ad buying process called “header bidding”.
- January 27th, 2022: Morrison from Vox stated that “…on January 18 [Microsoft] would make the largest acquisition in its history, buying up Activision Blizzard, one of the biggest video game publishers in the world. … [with] the $69 billion deal…, Microsoft will become the third-largest gaming company in the world by revenue… [and can potentially] monopolize an increasingly consolidated gaming market and exclude rivals…”
- January 28th, 2022: Takahashi from VentureBeat informed that “a total of 35 U.S. states joined in an antitrust lawsuit to back up Epic Games’ lawsuit against Apple over alleged monopolistic practices …[that] harmed mobile app developers as well as users as it monopolized mobile app distribution and in-app payment solutions for iPhones.”
- March 15th, 2022: Chitkara from Protocol reported that “the class-action lawsuit alleges that Amazon still pressures sellers to maintain price parity on its platform…[and] under a “fair pricing” provision, Amazon monitors the prices of items on other marketplaces and punishes sellers if they don’t give Amazon the best terms…[further] as punishment, Amazon has the ability to hide the one-click-buy button, delete seller listings, limit shipping availability and even boot the seller from the platform entirely…[while] Amazon charges third-party sellers a higher fee than some of its competitors.”
Questions:
- Based on the CNBC video content, share TWO takeaways you have about the relevance of the 3 antitrust laws to the current business practices in the technological environment.
- Select and thoroughly read two of the five news articles listed above. Then, identify and explain which of the following is current being breached by the chosen Big Tech company:
- Increase in monopoly power?
- Mergers – horizontal or vertical or conglomerate or some combination of each?
- Price fixing?
- Price discrimination?
- Tying contracts?
- Read the section under “The Role of Government”.
Should the U.S. government regulate more, less, or take no antitrust action against the Big Tech firms? Do explain using TWO monopoly concepts from the article. - Self-reflection: As a consumer of the products or services provided by these Big Tech companies, are YOU helping fellow consumers with fair business practices or supporting Big Tech firms grow in market power? Do explain.
Sources| NPR: Judge Allows Federal Trade Commission’s Latest Suit Against Facebook to Move Forward; YouTube: Google, Facebook, Amazon, and the future of Antitrust Laws, One Minute Economics: Antitrust Laws (Competition Laws) explained in one minute; NPR: Judge allows Federal Trade Commission’s latest suit against Facebook to move forward; TechCrunch: Google asks a judge to dismiss Texas antitrust lawsuit about its ad business; Vox: Microsoft avoided the latest round of Big Tech antitrust scrutiny. Then it bought a company for $69 billion; VentureBeat: U.S. states and Justice Department pile in on Epic’s side in Apply lawsuit; Protocol: Amazon may face antitrust court battle over fair pricing; The Policy Circle: Antitrust: Balancing competition and innovation, Photo by dole777 on Unsplash