The GiD Report#130 — It’s no accident that Big Tech are monopolies

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GlobaliD

8 min readOct 13, 2020

Welcome to The GiD Report, a weekly newsletter that covers GlobaliD team and partner news, market perspectives, and industry analysis. You can check out last week’s report here.

What we have for you this week:

Amazon, Apple, Facebook and Google are monopolies
Justice Department could charge Google this week
Microsoft allows app store users to choose their own payments
Americans have hated monopolies for centuries
How Facebook screwed up by trying to get TikTok banned
The fintech wave
Stuff happens

1. Guess what? Amazon, Apple, Facebook and Google are monopolies according to the House Judiciary Committee.

That much is outlined in their 450 page report, which you can check out here.

“No surprises here,” Greg Kidd tweeted. (Also not a surprise if you’ve been following this newsletter.)

He added:

“It’s the world we live in now. It didn’t happen by accident. We need to change the way antitrust and anticompetition law works so that it works for rather than against innovation, inclusion and neutrality.”

Which is more or less spiritually aligned with the intentions of the report. These are some of the changes tol antitrust law proposed — via Axios:

limiting companies’ ability to compete unfairly against third parties on their own platforms by either requiring online marketplaces to be independently run businesses or establishing rules for how such marketplaces can be organized;
blocking online platforms from giving themselves preferential treatment or playing favorites with other content providers;
requiring social networks to be interoperable so that people can communicate across platforms and carry their data over from one platform to another;
directing antitrust enforcers to assume that an acquisition by a dominant tech firm is anticompetitive unless proven otherwise; and
allowing news publishers to team up to negotiate against tech platforms looking to carry their content.

Of interest here, the 16 month investigation outlined specifically how Apple and Facebook achieved and continues to wield its monopoly power — via Axios:

Apple: The report says Apple exerts monopoly power over software distribution to more than half the mobile devices in the U.S. It accuses the company of exploiting rivals by levying commissions and fees and copying apps, and says Apple gives preference to its own apps and services.
Facebook: The social media network has monopoly power in the social networking space, the report finds, and takes a “copy, acquire, kill” approach to would-be rivals such as WhatsApp and Instagram, both of which it bought in the early 2010s.

First, we should just acknowledge that the conclusions of the report and various proposals are all an incredible validation of the work we’ve been doing here at GlobaliD the past few years. There will always be two ways to fix a systemic issue — from the top down and from the bottom up. Ideally, you have both happening in concert.

GlobaliD has been working on the bottom-up solution to the problem. Now the top-down approach is coming, and it’s great to see.

Ideally, regulations are timely but in practice, they are lagging indicators. Consumer preferences and demands are already changing.

(Anecdotal: My sister was telling me this morning that she doesn’t really use Instagram anymore or sees as much value in it for her personally. And isn’t that how these things usually go? Long before lawmakers jump through all the hoops in order to break up Facebook, the kids will have already found a new shiny toy.)

A bit of reality: This is really just the start of a potentially long and drawn out process. We’re talking about the titans of industry, and they won’t go down without a fight. (They’ve all already denied the findings of the report, denying that they are monopolies or violate antitrust law. Unsurprisingly, Big Tech thinks the competitive landscape is healthy.)

But if we do end up achieving the proposals of the report, it will be game changing — there’s no doubt about that.

This is politics, though, so you never know. That being said and given the way the current election buildup is panning out:

If Democrats take the White House and the Senate in November, they could use this report as a blueprint for longer-term legislative and enforcement changes to limit tech giants’ power.

Relevant:

2. This will be a long drawn out battle but there are already skirmishes abound. The Justice Department could charge Google as early as this week. (Top down)

That would amount to the biggest such action against a U.S. tech company in 20 years (since Microsoft).

It could mean forcing Google to sell off Chrome, reports Politico.

A bit of context: This particular action is coming from the Trump administration. The point? This is truly a bipartisan issue.

3. Microsoft’s app store now lets users choose their own payments systems. (Bottom up)

That’s part of 10 app store principles promoting “choice, fairness and innovation” the company just published:

Developers will have the freedom to choose whether to distribute their apps for Windows through our app store. We will not block competing app stores on Windows.
We will not block an app from Windows based on a developer’s business model or how it delivers content and services, including whether content is installed on a device or streamed from the cloud.
We will not block an app from Windows based on a developer’s choice of which payment system to use for processing purchases made in its app.
We will give developers timely access to information about the interoperability interfaces we use on Windows, as set forth in our Interoperability Principles.
Every developer will have access to our app store as long as it meets objective standards and requirements, including those for security, privacy, quality, content and digital safety.
Our app store will charge reasonable fees that reflect the competition we face from other app stores on Windows and will not force a developer to sell within its app anything it doesn’t want to sell.
Our app store will not prevent developers from communicating directly with their users through their apps for legitimate business purposes.
Our app store will hold our own apps to the same standards to which it holds competing apps.
Microsoft will not use any non-public information or data from its app store about a developer’s app to compete with it.
Our app store will be transparent about its rules and policies and opportunities for promotion and marketing, apply these consistently and objectively, provide notice of changes and make available a fair process to resolve disputes.

OK, sure, this is mostly a symbolic move (given Microsoft’s market share in the space) in order to get ahead of the news and to take some well-timed jabs at Microsoft’s rivals.

But it also gives you a sense of how companies in general are reacting to the new vibes of the times.

4. A bit of history. TL;DR — Americans have hated monopolies for centuries.

A great longread from Ben Thompson’s Stratetchery — which is essentially a historical take on the American view of monopolies (and in turn antitrust).

First, here’s Ben quoting William Letwin in Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act:

Hatred of monopoly is one of the oldest American political habits and like most profound traditions, it consisted of an essentially permanent idea expressed differently at different times. “Monopoly”, as the word was used in America, meant at first a special legal privilege granted by the state; later it came more often to mean exclusive control that a few persons achieved by their own efforts; but it always meant some sort of unjustified power, especially one that raised obstacles to equality of opportunity.

And boy does that hatred go way back. Here’s a quick teaser from Ben:

As Letwin notes, American distrust of monopolies had its roots in England and 1624’s Statute of Monopolies, which significantly constrained the ability of the King to grant exclusive privilege; colonial and state legislatures similarly passed laws restricting grants of exclusive power by governments, and while the Bill of Rights did not have an anti-monopoly provision (contra Thomas Jefferson’s wishes), one of the most divisive political questions for the first several decades of the United States was over the existence (or not) of a national bank, in large part because it was a government-granted monopoly.

Check out Ben’s full piece: Anti-monopoly vs. Antitrust

5. BONUS: How Facebook screwed up by trying to get TikTok banned

The NYTimes tech newsletter:

Instagram’s boss had a message this week for the White House and the world: It was counterproductive for the United States to try to ban TikTok, the popular video app from China.
It’s bad for U.S. tech companies and people in the United States, Adam Mosseri, the head of Instagram, told Axios, if other countries take similar steps against technology from beyond their borders — including Facebook and its Instagram app. (He and Mark Zuckerberg have said this before, too.) “It’s really going to be problematic if we end up banning TikTok and we set a precedent for more countries to ban more apps,” he said.
Mosseri has a point. What he didn’t say, though, was that Facebook has itself partly to blame. The company helped fan the fears about TikTok that Facebook is now worried will blow back on the company. This is bonkers.
Facebook complaining about a bad policy that Facebook helped initiate might seem like an eye-rolling joke, but it’s more than that. It’s the latest evidence that the company’s executives are incapable of foresight. Facebook not predicting how its own actions might cause harm later on is partly why we have sprawling conspiracies and autocrats harassing their own citizens.
They weren’t wrong. There are reasons to be worried about TikTok and other Chinese technology operating in the United States. But I don’t believe Facebook was bringing up these concerns out of principled commitment to American values. What Facebook was doing was pure short-term self-interest.

That sounds about right.

6. BONUS: The fintech wave: