Are the Big Four Tech Abusing Market Dominance? Industry Opinions Remain Divided

The recent antitrust hearing against the big tech CEOs and any resulting action has the potential to change the technology landscape. We share some key highlights and tech analysts’ perspective on the recent antitrust inquisition. 

This was a big week in the history of tech. On Wednesday, the CEOs of big tech companies virtually testified in front of the US House Judiciary’s antitrust committee. For over five hours, Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, Google’s Sundar Pichai, and Apple’s Tim Cook were grilled by the congressional subcommittee members about their business practices, acquisitions, anti-competitive behavior, and market dominance. Where Amazon was questioned about using third-party seller data for its business strategies, Google was charged for prioritizing its own products in search results. Additionally, Facebook was condemned for squashing competitors such as Instagram, and Apple was interrogated about their App Store.

Is Amazon’s Business Strategy Wrong?

Amazon was questioned about using third-party seller’s data to develop competing in-house products. The allegation is that such practices have impacted the sales of small businesses that retail via Amazon. To counter this, the retail giant shared that in-house products constitute only about 1% of its total sales.

Patrick Moorhead, Industry Analyst and President of Moor Insights & Strategy, shared a different perspective on the Amazon congressional hearing. In this blog post, he sharesOpens a new window , “The premise here is that it is “bad” that Amazon uses data it collects from branded sales to determine what store-branded products it sells. The fact is that Amazon does use data, but so does every big retailer. This has been a practice for a hundred years. So, if all retailers do it, have been doing it since the 1800s, is the issue that Amazon is doing it? It’s a real head-scratcher to me.”

Google’s Dominance in Web Search Business

Lawmakers accused Google of stealing content from ‘honest businesses’ such as Yelp Inc. to keep users on its own web page. Google allegedly stole reviews from Yelp and even threatened to delist it. Moreover, the company was also questioned for using its Android and adtech business to favor its own products. Pichai disagreed with the accusations and pointed out that Google is giving consumers what they want. Again, a perspective that leaves consumers and businesses alike divided. 

Apple App Store’s Exorbitant Fee 

The mobile giant too faced criticism over its App Store policies being anti-competitive. Companies like Spotify and Telegram have complained that Apple might be using its App Store to stifle competition by charging companies a 30% commission on in-app purchases and subscriptions. 

Tim Cook said, “I disagree strongly with that. The competition is for developers – they can write their apps for Android or Windows or Xbox or PlayStation. We have fierce competition at the developer side and the customer side, which is essentially so competitive I would describe it as a street fight.”

Pavel Durov, founder of Telegram, on his website sharesOpens a new window , “The problem is not to create a rival mobile Operating System (OS), but to get third-party developers to build apps for this new OS. There’s a vicious circle: devs don’t build apps if the OS doesn’t have enough users, and users don’t buy phones if there aren’t enough third-party apps for them. Even Microsoft, with its huge influence among developers, failed to have apps (such as Instagram) built for their Windows Phone, and Microsoft had to shut down their OS. So no matter how much you invest in building an alternative, the 2020 mobile OS market is closed to new entrants.”

Facebook’s Anti Competitive Behavior

Out of 216 questions, Facebook was scrutinized the most, with 67 questions. The social networking platform was grilled on its acquisition strategy to eliminate competitors, and its content moderation methodologies. The committee also shared concerning emails between Zuckerberg and former CFO, David Ebersman, that shed light on the fact that Facebook wanted to neutralize competition (Instagram and WhatsApp) to improve its services. 

Alec Stapp, Director of Technology Policy at the Progressive Policy Institute, saysOpens a new window , “Some Big Tech critics believe the companies create a “kill zone” around their businesses. The hypothesis is that the Big Five are so dominant in their respective markets, that no venture capitalists will fund startups to compete with them. Over time, as the tech giants grow and branch out into new markets, we should expect the startup ecosystem to shrivel up and die. This theory is contradicted by numerous prominent examples, including Shopify competing successfully with Amazon and TikTok with Facebook.”

Adding marketing perspective to the acquisition, Benn Thompson, founder of Stratechery addsOpens a new window , “The combination of Facebook and Instagram provides a one-stop-shop for advertisers who wish to reach any demographic, limiting the monetization potential of competing products like Snapchat and Twitter, and limiting investment in the consumer space broadly as Google and Facebook consume the majority of advertising dollars.”

What are your thoughts on the debate? How much is business and where do the line at unethical practices begin? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!