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Breakingviews - Big Tech broadside is bonanza for D.C. lobbyists

The U.S. Capitol dome is pictured ahead of a vote on the additional funding for the coronavirus stimulus economic relief plan, amid the coronavirus disease (COVID-19) outbreak in Washington, U.S., April 21, 2020. REUTERS/Tom Brenner

NEW YORK (Reuters Breakingviews) - A panel of Washington lawmakers is not pulling any punches with its critique of Big Tech. Their 450-page report, released on Tuesday, accuses Amazon.com, Apple, Facebook, and Alphabet unit Google of abusing market power. Possible remedies include breaking up businesses and banning new acquisitions. Any actual reforms will surely be heavily diluted, but lobbyists for the technology giants now know where to counterattack.

The four collectively boast a market value of over $5 trillion. After 16 months and over 1 million documents, the congressional subcommittee argues they have simply gotten too big and too dominant in major digital markets, allowing them to make excessive profit, squeeze out rivals, or both.

The report attempts to show how each dominates different areas. Jeff Bezos’ Amazon, for example is singled out for its stranglehold on e-commerce, where the panel found its U.S. market share was around 50% overall and up to 80% in some categories like books. One option, according to the lawmakers, could be prohibiting a company that operates a powerful online store from selling its own goods. That’s a target for Amazon’s team on K Street.

Apple, meanwhile, is singled out for demanding a 30% cut from developers, like Spotify Technology or “Fortnite” owner Epic Games, for instance, that sell in its app store, and refusing them access to customer data. An antitrust crackdown would endanger the company’s services revenue, its fastest-growing area.

Google reigns supreme in online search with a nearly 90% market share. That prevents any competitor – including fellow behemoth Microsoft’s Bing search engine – from getting anywhere near the same results. For its part, Facebook is cited in the report for multiple offenses including buying up smaller threats like Instagram or WhatsApp to maintain its lead in social media. The lawmakers suggest forcing Mark Zuckerberg’s company to make it easy for users to move data to rival social networks, a serious threat to its market position.

The report was led by Democrats, but Republicans have their own reasons to go after Big Tech, and the Justice Department is preparing an antitrust lawsuit against Google, according to media reports. The European Union has taken a more aggressive stance on tech giants and competition for years. An antitrust reckoning in the United States is arguably overdue. Now the companies have a guide to a worst-case outcome.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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