Tech Giants Face Antitrust Crackdowns

Competition policy is a legal framework governments worldwide have enacted to regulate markets and monopolies. It was first conceived by the US in the 19th century. Today, business models and antitrust behaviour by big tech companies have been rising alongside competition policies.

Over the past few years, market watchdogs in the EU, China and the US have initiated lawsuits against such antitrust tech giants as Google, Apple, Nvidia, Microsoft, Alibaba and Meta for antitrust behaviour.

Global Antitrust Laws Regulating the Digital Economy

The US Congress enacted the first antitrust law, the Sherman Act, in 1890 as a charter of economic liberty to preserve free competition as a key principle of trade. In 1914, the US passed two additional legislations: the Clayton Act and the Federal Trade Commission Act. Today, these three Acts have been revised and form the US’s three core federal antitrust laws.

Equally, the EU has strict laws protecting free competition and prohibiting certain practices, and companies that violate these rules are liable to pay 10% of their annual worldwide turnover. A bulk of competition laws in the EU are derived from Articles 101 through 109 of the Treaty on Functioning of the EU (TFEU) and a series of directives and regulations. In addition, the EU passed a landmark piece of legislation in 2018, the General Data Protection Regulation (GDPR), which aims to protect consumer data and privacy. As recently as last year, the bloc passed the Digital Markets Act to regulate antitrust tech giants in the thriving digital economy.

China has also taken bold steps to curb unfair competition from tech giants, such as Alibaba and Tencent. In 2020, Chinese lawmakers issued Anti-Monopoly Guidelines 48 hours before Alibaba’s FinTech subsidiary, Ant Group, went public in a much-anticipated IPO. The guidelines were followed with a more comprehensive law on personal data protection, The Personal Information Protection Law (PIPL), which now forms part of China’s e-commerce law.

The law provides that when e-commerce businesses offer search results for a service or good, they must also give the consumer an option to see results that do not target their identifiable traits from consumer data held by such businesses. Another key legislation in China is the cyber security law, Data Security Law of the People of China (DSL), which is similar to the EU’s GDPRR.

Antitrust Cases Against Tech Giants in Europe

Competition watchdogs worldwide have recently intensified antitrust crackdowns on tech giants, with companies like Google and Apple bearing the brunt of it. The UK’s Competition and Markets Authority (CMA) and the US Federal Trade Commission (FTC) are leading this crackdown.

Over the past couple of years, CMA has been investigating Google and Apple’s practices pertaining to cloud gaming and mobile browser markets. The investigation concluded that the two companies operate a duopoly that gives them a stranglehold on these markets.

The inquiring group found that the playing ground is not fair for consumers and businesses in the UK when it comes to mobile browsers. Apple’s rules restrict competitors from delivering new innovative features that could benefit consumers. CMA also found that a revenue-sharing agreement between Apple and Google significantly reduces their financial incentive to compete in mobile browsers on iOS.

In its pursuit to rein in antitrust tech giants for accountability, the EU secured victories against the two companies. On one hand, Apple stands to pay a 13 billion euro fine tax bill after losing its appeal. On the other hand, Google was slapped with a 2.4 billion euro fine for market abuse.

Cases Against Antitrust Tech Giants in the US 

A US federal court issued a landmark ruling against Google’s search engine business in August 2024, finding that the company acted illegally to maintain a monopoly. This ruling paved the way for other federal cases challenging the power of tech giants in the digital market.

In September 2024, the FTC and 17 states took Amazon to court, alleging it is taking steps to protect a monopoly by squeezing sellers on its vast online marketplace and favouring its own services. According to the FTC, these practices harm consumers and result in artificially higher prices because Amazon prevents those selling goods on its platform from offering the same products on other sites. The US District Court for the Western District of Washington has set the trial for October 2026.

Earlier last year, the US Department of Justice (DoJ) sued Apple, accusing it of using a monopoly in the smartphone market to stifle competition and inflate consumer prices. DoJ joined 15 states and the District of Columbia in its lawsuit against Apple after two years of investigation.

In addition to the antitrust ruling against Google, the DoJ and eight states filed a separate suit against Google in January 2023. The plaintiffs in the online advertising case filled in the US District Court for the Eastern District of Virginia argued that Google acquired competitors through anti-competition mergers and bullied advertisers and publishers into using the company’s ad technology.

Meta also faced court in a case filed by the FTC in 2020, where it was accused of creating a monopoly in the social media space by buying WhatsApp and Instagram. The competition watchdog claimed the mergers deprived consumers of alternative social media platforms. However, in 2021, Judge James Boasberg of the US District Court of the District of Columbia dismissed the case, finding that the FTC did not adequately define the market that it accused Meta of monopolising.

Conclusion

Through the antitrust cases discussed above, competition regulatory authorities in the UK and the US have sent a powerful message to tech giants in Silicon Valley. Although tech regulations are new territory for lawmakers worldwide, court victories by competition watchdogs against antitrust tech giants offer relief to consumers and businesses seeking alternative options and free competition.

However, there is a great deal of uncertainty regarding governmental policies and their impact on global business operations. While it is undisputed that there is a need to regulate tech giants, the risk lies in the failure of regulatory frameworks in the West to become an adequate global standard for other countries. Therefore, these governments must enhance cooperation across national competition agencies to address concerns that are increasingly transnational in nature.

Source: New York Times

References:

Reuters

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Business Standard

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