The US has taken a leaf out of the EU’s book, and is now preparing to investigate anticompetitive and anticonsumer practices among the Big Tech firms – namely, Amazon, Apple, Google, and Facebook. The initial focus is on social media, online search, and e-commerce, and while the DoJ hasn’t gone so far as naming its targets, these four have all but been confirmed by behind the scenes chatter.
For the IoT, you will note that the two current leading smart home platforms are represented, both of which have dominant market positions in online retail and online search. Apple does have a smart home offering, but even Facebook sells the Portal, a device for video-chatting in the home that could easily be adapted to offer some sort of smart home functionality.
Both Amazon and Google could easily fall foul of anticompetitive investigations in the smart home, with Amazon’s retail promotions and Google’s online marketing guidance likely to draw the ire of the investigators. A separate but related concern is that of data and privacy, where Amazon, Google, and Facebook are all likely to be accused of spying on consumers via their online platforms and in-home equipment.
To this end, Facebook has just been hit with a $5bn fine from the FTC, as a punishment for privacy violations. However, because the firm has been warning about the fine for some time, bracing investors for the impact, its share price actually went up after the announcement, because it was less than the market had anticipated. The sum is around a month of revenue for Facebook, and it made $22bn in profits last year, for some context, while Equifax’s negligence earned it a $275mn fine and Google was hit with a $1.7bn fine by the EU for its abuse of its dominant AdSense business.
Sure, Facebook now has to file compliance reports with the FTC, potentially for the next two decades, although it was already apparently under a consent decree from some 2011 violations, which don’t seem to have worked. If the narrative in Washington shifts, realizing that the FTC’s largest fine was a drop in the bucket and nowhere near enough to act as a disincentive, then perhaps the DoJ’s punishments are going to be much more barbed.
Regime change could be enough big factor. The Democratic nominees seem to largely favor breaking up these web giants – splitting Amazon and AWS, Facebook and WhatsApp or Instagram, and Google into its component parts. For the smart home, losing the access to the data derived from the web business would be a blow, but the Echo and Nest ecosystems would likely retain their leading positions in the wake of a break up – but without the close tie-ins with all the personal data that Amazon and Google can use to personalize and refine their services. Similarly, AWS and Google Cloud becoming separate from their parents would mean that those platforms could continue on independently.
But the legal basis for breaking them up would require some sort of proof that consumers are being harmed by these giants, and in US law, this has chiefly centered around price increases. In the smart home, Google and Amazon sell some of the cheapest offerings, and also do not charge for the ecosystem element – that is, there is no fee for controlling your lights via the platform.
Consequently, to challenge the concern that these platforms are overreaching might require some new precedents to be set, which could change the course of US legal procedures. Because of this, there will be reluctance to rock the boat, but for Democrat challengers, such actions could provide an easy PR win – although there are many on the Republican side that parrot the narrative that their viewpoints are being censored by the web giants, yet whom don’t realize that these private companies are not bound by the country’s free speech laws.
These potential cases could be how government figures and lawyers earn a name for themselves, and with such profitable companies, throwing out huge dollar-amounts as punishments is a sure-fire way to get headlines. As Tariff Man faces the Democrats at the 2020 polls, ratcheting up the pressure on the Big Tech crowd might provide a way to garner votes among the electorate.
But the Big Tech crowd have ready access to lawyers that will argue their case. US Treasury Secretary Steven Mnuchin declared “if you look at Amazon, although there are certain benefits to it, they’ve destroyed the retail industry across the United States so there’s no question they’ve limited competition,” in an interview on CNBC.
Amazon’s response was that it accounts for only 4% of US retail sales, and just 1% globally. Its spokesperson said “the vast majority of retail sales — 90 per cent — still occur in brick-and-mortar stores according to the US Census Bureau.” Facebook, meanwhile, has gone rather quiet about its plans to implement a global currency called Libra, after failing spectacularly to read the room when it announced the plan.