Tag: antitrust

Antitrust Law Should Be Used to Break Up Big Tech Monopolies

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President Donald Trump, via his Twitter account, recently prompted a public discussion about the possibility of using antitrust law against major technology companies, due in part to a growing body of evidence that bias is being perpetrated against conservative individuals and entities by such companies.

The primary rationale of antitrust enforcement is the protection of the American consumer and free market economy from unprincipled business behavior by monopolistic enterprises.

Never before in the nation’s history have companies, such as Google, Facebook, and Amazon, among others, possessed the size, wealth, dominance, control, and sheer power that the tech giants do.

With more than 70 percent of the PC search market and almost 85 percent of the mobile device market, Google currently has a virtual stranglehold on the gateway to digital information. And Google’s video social media platform, YouTube, controls almost 80 percent of the video market.

Facebook has about 2 billion users worldwide, and when the company’s additional acquisitions of Instagram and WhatsApp are factored in, 95 percent of young people regularly log on to Facebook platforms.

When it comes to Amazon, by the year’s end the company will have swallowed up almost 50 percent of the U.S. e-commerce business, and additionally lays claim to 80 percent of the e-book market. Amazon is also the largest provider of hosted cloud services, and the odds are strong that an online sales firm that competes with the company would likely be using Amazon servers for its own website.

Research on Google searches has produced data, which indicate that bias against conservative news outlets, blogs, and websites exists, and additionally indicate that ideologically right-of-center content has actually been removed from YouTube.

Despite Google’s denial of bias, PJMedia recently conducted a count of search results relating to President Trump and found that 96 percent of the most visible news articles that arose were generated from liberal outlets.

The Daily Caller reported that Google’s fact check feature engages almost exclusively in the targeting of right-of-center sites.

Facebook has exhibited bias in its trending topics, as well as in its removal of conservative content, and Amazon has manipulated book reviews to favor leftist writers.

Despite promises to the contrary, Facebook continues to censor ideas based on conservative content and has recently been caught doing so. A New York Post article by Salena Zito, which noted that supporters of President Trump were unaffected by the conviction and plea deal of two prominent Trump-associated individuals, Zito’s article was labeled as “spam.”

Facebook even took down an article titled “The School Shootings That Weren’t,” posted by NPR, that showed the number of school shootings, which were claimed to have taken place during the 2015–2016 school year, was highly inflated.

The president is correct in suggesting that the use of antitrust law against tech companies may be a necessary step that the government needs to take in order to awaken the tech giants to the duty that they have, to exercise greater responsibility in their approach to users and content. If they do not, consequences may result as seen with other companies, which were divided into smaller less monopolistic concerns.

In a previous antitrust filing, AT&T was split up into eight much smaller companies, and Standard Oil was divided into 34 firms. Each of these companies possessed the ability to almost totally dominate their respective market. The original AT&T accounted for 93 percent of all telephone calls made in the U.S., and Standard Oil sold 87 percent of U.S. refined oil.

An antitrust case that began in the early years of former President Bill Clinton’s administration was ultimately settled by the Department of Justice. Microsoft had been accused of abusing monopoly power on personal computers, in its handling of operating system and web browser sales, by bundling its Internet Explorer browser with its Windows operating system.

Microsoft’s actions are strikingly similar to a recent Google business practice. To insure its dominance of the mobile market, Google forced carriers and manufactures that used its Android operating system to make Google Search the default search engine and include a number of Google apps as well.

In 2008 the Bush Justice Department threatened to bring an antitrust action against Google, due to a proposed partnership with Yahoo for the sale of advertising. At the time, Google had a 70 percent share of the market, and Yahoo, with 20 percent, was the second largest search engine.

Due to the monopolistic realities of these giant tech companies, startups that might compete with the giants may end up being smothered. For example, an entrepreneurial startup company with products that compete with Google offerings has to be concerned that Google will give its own product a higher ranking and may even hide the new company’s competing products.

This poses a danger to the overall consumer market, because consumers lose the ability to become aware of and/or purchase any innovative products that startup companies might have to offer.

Both Google and Facebook maintain that their companies should not be the subject of antitrust scrutiny, because their product is said to be provided to their users free of charge. However, participants who are obtaining the services for free are not the actual customers of the companies. The real paying customers, in both search and social media, are the advertisers and publishers that pay for the ability to broaden their own pool of consumers.

The argument can be made that the big tech companies, via paid search advertising and paid social media advertising, have morphed into monopolies, and these monopolies have effectively stifled competition and innovation, while having a deleterious effect on the free market economy.

Back to the Future for the AT&T-Time Warner Merger

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U.S. District Judge Richard Leon recently greenlighted the $85 billion AT&T-Time Warner merger, while failing to impose any conditions or restrictions upon the massive media consolidation.

The merger, about which reports have circulated since late 2016, was publicly opposed by President Donald Trump as well as by the Department of Justice, which in the fall of 2017 went to court to stop the transaction.

After a six-week trial, Judge Leon ruled that the merger could move ahead, belittling the government’s legal arguments.

In an unusual expression for a jurist, Leon, who also presided over the Comcast-NBC-U mega-merger in 2011, went so far as to urge the government not to appeal the decision.

Antitrust law exists to prevent monopolies that could potentially stifle competition and harm consumers. When the same company owns the means of media production as well as the means of distribution of media content, antitrust issues arise.

This is not the first time that media companies have been met with legal challenges over simultaneous ownership of content and the means by which the content is delivered. In the 1940s, Hollywood studios produced motion pictures while owning the theaters in which the very films were being displayed.

In a 1948 decision, United States v. Paramount Pictures, Inc., the Supreme Court ruled that Hollywood studios would be required to sell off movie theater holdings.

The landmark decision essentially ended the studio system of the “Golden Age” of movies, while fundamentally altering the way in which Hollywood movies were produced, distributed, and exhibited. It also fostered the idea that “vertical integration” should be restrained by courts and, based on antitrust principles, barriers should be put in place between corporate ownership of both distribution and content.

With regard to the AT&T-Time Warner merger, the Trump administration had argued that the resulting conglomerate would create the same vertical integration-dual ownership issue that the old Hollywood studio system faced, and as a negative consequence consumers would end up paying more for their television viewing.

This was the same position with regard to the proposed merger that then-candidate Trump held during the 2016 presidential campaign.

In addition to potential risk to consumers’ pocketbooks, the entertainment business will be significantly affected by the AT&T-Time Warner combination. Allowing the merger to proceed in its present fashion will have profound ramifications for the manner in which entertainment companies compete with one other.

Owners of news, movie, and/or entertainment cable television channels, who wish to be well placed on the AT&T-Time Warner system, will be beholden to a company that has control over the delivery system while simultaneously owning competing channels.

Producers of content that competes with that of AT&T-Time Warner may need to have the content distributed via the merged company’s delivery system.

It is certainly within the realm of possibility that the merged company would advertently or even inadvertently favor channels and content which the enterprise owns.

The court’s decision in approving the merger may also embolden other Hollywood studios to pair up with telecommunications companies in order to effectively deal with the cash-rich tech companies that have invaded the entertainment space of late, e.g., Apple, Amazon, Google, and Netflix.

One relevant case in point is that of Comcast, which has jumped into the bidding for 21st Century Fox’s assets that Disney had already been in the process of negotiating to purchase.

Consumers generally have very few options when it comes to cable, satellite, and broadband services. AT&T provides broadband and television via a cable media delivery service, U-verse. It also owns a major satellite television provider, DirecTV.

By acquiring Time Warner, the company obtains a major movie and television studio, which includes the DC Comics’ franchises, Batman, Superman, and Wonder Woman, along with television programming on TBS, TNT, CNN, and HBO.

By owning content and delivery, the newly merged company has the same kind of vertical integration that the Court broke up years ago, when it forced movie studios to divest in the Paramount case.