The Democratic Subcommittee on the U.S. House Judiciary today shared its recommendations to change antitrust laws and prevent anti-competitive practices by big companies like Apple, Alphabet, Amazon, and Facebook. This follows a 16-month investigation into these companies to reform the laws in the digital age.
First reported by CNBC, the nearly 450-page document shared by House Democrats reveals their takeaways based on hearings, interviews, and 1.3 million documents analyzed during this period. The committee recommends major changes in antitrust law as they believe giant technology companies are taking advantage of their “monopoly power” to prevent competition.
One of the main proposals is the requirement of structural separations of large companies, which would force these tech companies to be broken into different smaller companies. This would also prevent dominant platforms from entering adjacent business lines.
Subcommittee Chairman David Cicilline mentioned a “Glass-Steagall for the Internet” in a reference to the law that separated commercial operations from investment banking in the 1930s. In other words, this could force Apple to separate its App Store operations into another company or Google to separate its YouTube operations.
Democrats suggest that dominant platforms shouldn’t be allowed to prioritize their own services in order to offer equal conditions to competitors. Another proposal is to require all tech companies to offer ways for users to easily transfer all data from one platform to another, allowing consumers to switch between products or services whenever they want.
The report argues that Apple has been taking advantage of how apps are distributed on iOS devices to reduce competition with its services. It also criticizes Amazon for its online store operations, Facebook for controlling online advertisements, and Google for dominating online search results.
However, Republicans disagreed with some of the proposals made by Democrats, such as the imposition of structural separations.
Apple has responded to the Democratic Subcommittee on the U.S. House Judiciary recommendations:
We have always said that scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions reached in this staff report with respect to Apple. Our company does not have a dominant market share in any category where we do business. From its beginnings 12 years ago with just 500 apps, we’ve built the App Store to be a safe and trusted place for users to discover and download apps and a supportive way for developers to create and sell apps globally. Hosting close to two million apps today, the App Store has delivered on that promise and met the highest standards for privacy, security and quality. The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem. Last year in the United States alone, the App Store facilitated $138 billion in commerce with over 85% of that amount accruing solely to third-party developers. Apple’s commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces. Competition drives innovation, and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so.
Apple is expected to provide a more extensive response to today’s report in the coming days. The company highlights that the App Store has allowed developers to reach users all over the world with its apps, which now has about 1.8 million apps available.
A survey by Analysis Group revealed that the App Store generated in 2019 $519 billion in revenue globally, of which $138 billion was just from the U.S. Apple has also argued that it has specific APIs to protect users’ privacy, as nearly 150,000 apps were rejected in the App Store review process last year for violating privacy rules.
Apple has been facing multiple antitrust investigations around the world, mostly because the company doesn’t allow apps to be installed on iPhones and iPads from outside the App Store. In Europe, the Draft European Union legislation is considering prohibiting Apple and other companies from selling devices with their own pre-installed service apps.
Apple CEO Tim Cook testified in August at an antitrust hearing of the U.S. Judiciary Committee, which also heard CEOs from Amazon, Google, and Facebook.
You can read the full report from House Democrats here.
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