Washington, Berlin Often you will not recognize a perfect storm until you are in the middle of it all. This is how the big American technology companies are likely to feel at the moment: the headwind comes from all directions. The antitrust investigation into “big tech” now announced by the US Department of Justice is only the last and probably most dangerous threat to its barely controlled market power.
The Federal Trade Commission (FTC) also imposed a $ 5 billion fine on Facebook for illegally distributing personal information to 87 million users in the Cambridge Analytica scandal. In the future, CEO Mark Zuckerberg must personally be responsible for the protection of privacy.
For better privacy, Facebook also needs to set up a new committee on the board. Chief adjudicator Colin Stretch spoke of a “fundamental change” in privacy, which will also affect product development.
Zuckerberg in duty
Previously, the US Congress had been in several hearings with the dominance of Facebook, Google and Co. dealt. And even US President Donald Trump regularly presses Twitter on the major Internet platforms, because he feels treated by them politically unfair.
So far, the Democrats in the US, whose presidential candidate Elizabeth Warren calls for the destruction of the tech companies, go the furthest. She supported a “legitimate antitrust investigation” by the Ministry of Justice tweeted the senator.
The Ministry of Justice wants to investigate, among other things, whether large tech companies hinder the competition. Company names were not mentioned in the announcement. But from the areas mentioned – web search, social media, online retail – it is clear that at least it should go to Google, Facebook and Amazon.
Google dominates the Internet search in the US, according to Statcounter statisticians, with a market share of almost 90 percent. Together with Facebook, the Group controls more than half of online advertising in the US. Amazon dominates the American online trade, according to the market researchers of Emarketer with a market share of 38 percent, the second largest provider comes just six percent.
It wants to address the concerns of consumers and entrepreneurs, said the Ministry of Justice. The question was how the platforms would have reached their market power and whether they had slowed down innovation and harmed consumers. The shares of the tech companies gave way slightly.
The approval of the fight against the overpowering tech giants from the USA came from the chairman of the German monopoly commission, Achim Wambach: “It is good that now also the American competition authorities pursue a possible abuse of market power by the tech companies.”
The authorities in Europe had “presented in recent years, such as in the EU Commission against Google or the procedure of the Federal Cartel Office against Facebook,” said Wambach, who is also president of the Leibniz Center for European Economic Research (ZEW) in Mannheim ,
Several working groups in the US and Europe, such as the German Commission on Competition Law 4.0, are currently working on how to adapt competition law in order to meet the challenges posed by new technologies.
How much the wind has turned in the US, is also shown by the fact that Trump's Republican and opposition Democrats pull together in a stronger control of the tech industry exceptionally together.
“Cartel officials must now be courageous and fearless to stop the monopolistic abuse of Big Tech,” tweeted Democratic Senator Richard Blumenthal. The authorities have acted “too long aloof and apathetic”, now is the time to curtail data misuse, anti-competitive tactics and market dominance.
Republican Senator Marsha Blackburn, a close ally of US President Trump, announced a series of hearings in the Senate Judiciary Committee. Republican Josh Hawley, a top technology critic in the Senate, commented on recent developments as “very big and important news”.
At the governmental level, the Ministry of Justice and the FTC are primarily responsible, with both houses sharing the power to enforce antitrust matters. The authorities have only started investigations, but these could result in official antitrust investigations and years of legal battle.
In the pliers the regulator
Antitrust measures are one of the most important instruments for limiting the dominance of a company. The last official trial was almost 20 years ago, at that time the focus was on Microsoft's expansion. At the same time, Facebook's cryptocurrency Libra is increasingly being criticized. Last week, Fed Chairman Jerome Powell said the central bank had “serious concerns” about “money laundering, consumer protection and financial stability.”
Concern is also growing in the US Congress. The House Judiciary Committee launched a comprehensive investigation into competition in the digital markets. For example, MEPs are scrutinizing whether WhatsApp's and Facebook's takeovers on Facebook were right or whether Amazon is discriminating against third-party content providers.
At a hearing with Tech representatives, Democrat David Cicilline talked about a “death zone” for competitors. “The Internet is becoming more focused, less open, hostile to innovation and entrepreneurial.”
Adam Cohen, Google's economic policy director, defended the industry. “We've helped lower prices and expand consumer and dealer choice in the US and around the world.”
However, the approach of the American government is not quite apolitical. The US Senate is investigating allegations that corporations such as Google and Twitter are censoring conservative votes online – an accusation that has not yet been substantiated, but plays a role in the election campaign. Trump himself sparked suspicion when he recently invited to a “social media summit” in the White House and promised to investigate the “protection of the freedom of expression of all Americans”.
The relationship of the US president to the Internet giants is complicated anyway. So the industry protested against xenophobic utterances Trump and his exit from the Paris Climate Agreement. Trump also gave Silicon Valley financial relief by cutting corporate taxes. And if the semiconductor industry suffers from the trade war, the industry supports Trump's goal of restraining China's aspirations in the tech market.
Also in connection with European plans for a digital tax Trump wants to protect the US companies. He therefore even allows the introduction of new punitive tariffs. However, when it comes to regulatory issues, Silicon Valley can not hope for support from the White House.
Trump recently proposed “slandering Google and Facebook” for antitrust reasons. For the moment, the big technology companies will have little left to do more than crank up their lobbying efforts.
More: The US authorities are taking the European view when it comes to regulating Facebook, Google, Apple and Amazon. The step is overdue, comments Handelsblatt author Torsten Riecke.
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