Pixel Envy

Written by Nick Heer.

Assorted Thoughts on the Big Antitrust Report

I have now read the antitrust report about one-and-a-half times and I can confidently say that you, reader, are better served by the analysis of others. I do not think a long piece from me, a non-lawyer, trying to interpret its various nooks and crannies is helpful. So, what I can do is point you to a few smart people who wrote about it, and also add a few idle observations of my own.

I think Wednesday’s episode of Dithering offers a great high-level take. I was stunned by the million-plus documents Google produced which, as John Gruber and Ben Thompson point out, appears to be an attempt at overwhelming investigators instead of being helpful.

But I take issue with both hosts’ interpretation of the CEO’s questioning in July and the resulting lack of surprise in this report. They portray this as begging the question in the classic rhetorical sense of deriving a question from a presumed answer or position. What I saw were representatives testing a thesis: the CEOs they were questioning represent tech companies that have become very powerful, potentially through illegal means.

If you have a Dithering subscription and haven’t listened to Wednesday’s episode yet, it’s worth your while.

Kate Cox, Ars Technica:

Facebook outright “has monopoly power in the market for social networking,” the report concludes, and that power is “firmly entrenched and unlikely to be eroded by competitive pressure” from anyone at all due to “high entry barriers—including strong network effects, high switching costs, and Facebook’s significant data advantage—that discourage direct competition by other firms to offer new products and services.”

[…]

But regulators did not block Facebook’s blockbuster acquisitions of either Instagram or WhatsApp, and they didn’t stop 60 other Facebook acquisitions. This led to what one former employee described to the committee as collusion between the platforms, “but with an internal monopoly.” The employee added: “If you own two social media utilities, they should not be allowed to shore each other up. It’s unclear to me why this should not be illegal. You can collude by acquiring competitors and forbidding competition.”

The report attempts to distinguish between social media platforms and social networks. TikTok, it points out, is often cited as a knee-jerk counterpoint to the argument that it is hard to succeed against Facebook’s acquisition strategy. But, it says, TikTok is more like YouTube than Facebook or Instagram.

One thing that struck me as I read the report is how many acquisitions were involved in making all four companies as dominant as they have become. Acquisitions are a clear focus of the investigation; the last forty-odd pages of the report is simply a list of every significant acquisition made by Amazon, Apple, Facebook, and Google. Some of these companies would likely have disappeared and taken their technologies with them had they not been acquired, but others may have competed against tech giants or offered complementary products while remaining independent. It is impossible to know for sure. But acquisition-driven strategies have arguably created a market where it is increasingly difficult for anyone to even try. Success seems less determined by how well-used a product or service is, and more by which company will acquire it and for what price.

Cox:

Google’s position as the dominant search engine is well-cemented. But over the past 20 years, the company has shifted its behavior “to rank search results based on what is best for Google, rather than what is best for search users,” the report concludes, “be it preferencing its own vertical sites or allocating more space for ads.”

I am encouraged to see the report portray AMP as a technology hostile to competition and the web as a whole.

The report also raises concerns with all four companies about user privacy. Apple’s marketing focus on privacy was also questioned with regard to its ability to limit competition ostensibly on those grounds. I think the report was generally fair in its worry about the implications of having a few companies stewards by default of so much sensitive data. But though there are many recommendations in favour of limiting market dominance, I saw none for regulating the collection and use of private user data. Of course, this was a report about antitrust and anti-competitive practices; but, it seems like the committee only told half the story without recommending strong rules on user privacy.

Casey Newton, writing for his brand new newsletter Platformer:

On the other hand, even these recommendations aren’t likely to become law any time soon. America’s divided Congress has been defined by inaction this year; it is currently failing to provide basic economic relief to tens of millions of Americans during a historic pandemic. And we expect these lawmakers to pass a thoughtful collection of reforms and get the president to sign it?

In fairness, the committee has been clear that nothing will pass this year. For anything to pass at all, Democrats may have to take back the presidency and the Senate, and make it through what promises to be a chaotic and even dangerous transfer of power. Until and unless that happens, the status quo seems likely to endure.

This report is comprehensive. Returning to the Dithering episode, it is true that I found few surprises when I read it. Yet, it is worthwhile to compile all of these questionable practices into a single document. It drops like an anvil — both because of its volume and the impact of seeing these practices laid bare in such clarity. I hope it does more than gather dust. These companies are wildly powerful. Whether you believe that power should be cut down or simply be subject to greater responsibility and oversight, you will find sensible arguments in this report.

But I am not a lawyer.