09/17/2020

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House Subcommittee Says Big Tech Is Too Big



Report Suggests Splitting Supersized Companies


The House Judiciary Subcommittee on Antitrust spent 16 months investigating Apple (AAPL), Amazon (AMZN), Facebook (FB), and Google (GOOGL), and released a 450-page report indicating these big four are monopolizing the technology space.

After interviews, hearings, and analysis of over one million documents, a team of mostly Democrats produced the report along with their recommendations on what to do moving forward. Their main suggestions include splitting up the biggest businesses and making it harder for tech giants to absorb other, smaller companies.

A few Republicans raised concerns that the recommendations in the report go too far and could stifle innovation at these companies.

Instagram Acquisition Under Scrutiny


Within the report is an analysis of Facebook’s 2012 acquisition of Instagram. Publicly, Facebook portrayed Instagram as a fledgling app that needed support from a larger company. However, internal documents obtained by the subcommittee paint a different picture. They suggest Instagram’s growth projections just before the merger showed the company was quickly gaining traction and may not have needed Facebook’s help at all.

These findings suggest Facebook purchased Instagram to suppress competition. To substantiate their allegations, subcommittee members pointed to the “Cunningham memo,” an internal Facebook document from 2018 that highlighted how Facebook could avoid competing with Instagram. Notably, Tom Cunningham wrote the memo six years after Facebook acquired Instagram, so Facebook executives appear to have been concerned about competition even after the merger.

Antitrust observers have long wondered what the trajectory of Instagram might have looked like without its sale to Facebook. While it’s impossible to know now, this new report suggests lawmakers may scrutinize future acquisitions by Facebook, or even potentially force a breakup between Instagram and Facebook in the future.

Facebook’s relationship with instagram wasn’t the only one under scrutiny. The subcommittee’s report underlined concerns about Amazon’s relationship with third-party vendors, Apple’s alleged discrimination against third-party apps in its App Store, and Google’s monopoly on search and search advertising.

Finding Common Ground


It’s unclear whether or not the report’s analysis and suggestions will become law, especially as Republicans highlight what they see as “non-starters” in the recommendations. It’s possible, however, that coming legislation could reshape the tech landscape.

While Republicans take issue with some of the report’s findings, they also found common ground. “There actually is a lot that we agree on, including the lack of sufficient scrutiny on past activity by these companies,” said Rep. Jim Sensenbrenner of Wisconsin, suggesting more of that scrutiny may be to come.


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