Disruptive TechAugust 20, 2019

Who’s Afraid of Big Bad Tech?

Amazon’s Fight Against Antitrust Allegations 

By BRANDON SAMS | Contributing Writer  

Nothing has captured retail and commerce quite like giant, multinational tech conglomerates Amazon, Google and Facebook.

They have shifted the foundation of how people consume entertainment, information and retail and with that comes accusations of monopoly.  

For years, journalist and bloggers have been questioning whether or not tech giants Google, Facebook and Amazon have become monopolies in their respective markets. Monopolies refer to companies and corporation which have complete control over an entire industry from the supply side to the service provider. Under this definition, these companies do not have “complete control” over an industry as Google and Facebook, on some metrics, are direct competitors and Amazon as a retail outlet has competition with eBay, on the e-commerce side, and traditional storefronts such as Walmart and Target 

However, on July 23 the United States Department of Justice announced a sweeping antitrust review of internet giants categorized as “market-leading online platforms” through the department’s Antitrust Division headed by Assistant Attorney Makan Delrahim. According to the agency, the antitrust review was prompted by consumers and business owners expressing discontent with their market share of “internet search, social media and online retailing,” respectively.  

Earlier this year on June 3, the House Judiciary Committee launched an investigation citing “anti-competitive” conduct by the companies for this bipartisan enquiry. Essentially, believing these large, multinational conglomerates to be gatekeepers to industries that many Americans have benefited from both socially and economically. The investigation lead to the Federal Trade Commission officially approving a fine of approximately $5 billion to be levied against Facebook for mishandling user data on July 12: signaling the largest FTC fine since the department’s formation in 1914.  

The United States was not the first nation to investigate Amazon’s business practices. Back in March the European Commission, a branch of the EU, fined Google $1.69 billion dollars for practices which lead to it occupying 70 percent of the online advertising market in the region over the course of a decade. Prior, in October 2018, Google was forced to separate Chrome and Android in the European region due to a previous antitrust fine levied against Android.  

Then in July 2019 the European Commission opened an investigation into Amazon to address their potential anti-competition practices and whether or not to levy fines and force breakups in the region in the same way they did with Google-controlled companies. Due to Amazon’s duality as a retailer and a marketplace for other retailers to sell their goods, the investigation is set up to explore whether they abused their dual role to short the smaller businesses using Amazon as a go-between for their consumers. 

Only time will tell the outcome of these investigations, but they lay the groundwork to set precedent for control of entire industries. For example, Amazon’s position as a disruptor in the retail industry has directly led to the Retail Apocalypse, while allowing the corporation to profit off the collapse of retailers while controlling the greater retail market through its marketplace program for small and independent sellers. In 2019, Amazon captured 47 percent of the e-commerce market. The only traditional retailer to make up more than 2 percent of the e-commerce sales share is Walmart with 4.6 percent of the market.  

While it may be hard to say for sure these corporations have monopolies in the market, the European model of addressing anti-competition practices and a largely disparate proportion of the market being occupied by these internet giants is the perfect way to enact structural changes without having to pass the high bar monopoly imposes. The pressure imposed by these regulatory powers in America and abroad may force these conglomerates from buying out competition or seizing markets. Likewise, the decrease in business from the billions in fines and break up of corporations, like Google’s subsidiaries, can cause a downsizing of the corporate office and consequently their corporate influence. 

Having the government take an interest in taking big corporations to task could be a positive for smaller businesses. Having the government’s fine-tuned microscope shining a spotlight on the behaviors of the industry: light is said to be the best disinfectant and the business sector is in dire need of some cleaning. 

Picture a corporate culture where dominating forces such as Amazon and Google are stripped of their influence and smaller businesses can thrive in a well-regulated environment like the past, before the Big Tech boom. The venture capitalists would be reengaged in the act of financing new businesses including emerging retailers and online shopping centers not beholden to the crushing power of Amazon. This has the potential to change everything for the business and retail industry and has the power to set a precedent to stop other, if not monopolizing, dominating corporate powers.