The Four Horsemen Ride Again, But For How Long?

Big Tech is bruised but not beaten with regulations still just a theoretical wish list of recommendations...

Somewhere in between the chaos of a pandemic, there’s been something of a reckoning for big tech. It’s not exactly been a quiet slap on the wrist either with the CEOs of Google, Apple, Facebook and Amazon all hauled in front of the House Antitrust Subcommittee to address increasingly concerning antitrust allegations earlier this year.

What made this particular hearing such a landmark event was the fact that this is the first time we’ve seen GAFA (Google, Apple, Facebook, and most telling of all, Amazon) summoned to appear together. It’s become commonplace (and fairly predictable) to see Facebook and Google put through the ringer, but up until now, Amazon, and to an extent, Apple, have avoided the kind of scrutiny that Mark Zuckerberg and Sundar Pichai have endured. 

Well, there’s nowhere left to hide anymore. These guys are very public property and now that congress has rendered its verdict, the result of a 16-month investigation into GAFA’s practices, what comes next is arguably more important than the findings themselves. At the centre of the mammoth 450-page ‘blockbuster’ report is something we have all known for a long time: Big tech has too much power and should be broken up. In case you’re wondering, yes I am rolling my eyes right now. 

I’ll concede that at least each platform has been called out for specific misdemeanours rather than just facing vague accusations of ‘anticompetitive behavior’ without context. In Google’s case it’s their overwhelming dominance of Search and preference for its own products, Facebook’s monopoly power has effectively killed off all competition in the social networking space, a similar ruling to Apple, whose own monopoly over iPhone app distribution has allowed them to generate large profits as a result. And as for Amazon? They have a pattern of exploitative behavior towards sellers on its platform, ‘enabled by its market dominance’. 

Big tech, naturally, disputes this and for all the talk of regulation and change, there’s still a long way to go before they are answerable to anyone beyond their shareholders. That being said, such a public trial by the media does bring this issue to light in a way we haven’t seen before. 

Still, there’s a sense that the balance of power is starting, very slowly, to tip. Things won’t turn overnight, but by rounding up and ‘charging’ GAFA as one unit guilty of various anti competitive wrongdoings, things are getting more serious. What we’re yet to determine is whether our acknowledgement that these platforms provide a dangerous disadvantage to the market is enough to stop us all using and advertising on them. The jury’s still out on that one. 

A Power Grab In The Pandemic 

The irony is not lost on me that a day after this hearing to determine whether these tech companies were too big, they did in fact get bigger, reporting higher Q2 earnings. Alphabet (Google’s parent company) was the only marginal loser, with declining revenue of 2% due to a drop in search ads, but considering the catastrophe that had been predicted, I’m guessing they won’t be too cut up about it.  

Facebook’s revenue rose to $18.7 billion - despite July’s advertising boycott, Amazon doubled its profits, raking in $5.2 billion - up from $2.6 billion last year and Apple reported earnings of $11.25 billion, even with all of their stores closed during lockdown. This comes amid forecasts from the Organization for Economic Co-operation and Development (OECD) that global economic activity will likely fall 6% in 2020, whilst a measure of unemployment will climb to 9.2%, from 5.4% in 2019. The gulf between big tech and everyone else is only getting wider, which is why we’re seeing things shift up a gear in trying to put some healthy boundaries in place.

Look, no-one can deny the essential services these guys provide in the context of the world today. Smartphones, social media, the connected world - it’s all a byproduct of our own digital evolution. Even before the pandemic essentially gave the big four unparalleled access to our lives, they had already positioned themselves as indispensable, utilities of the modern world. 

That being said, users are no longer ignorant of what it means to interact on these platforms anymore either; they know there is a trade off. They want to use Amazon to shop, Facebook to socialize and Google to search, but that doesn’t mean they aren’t questioning the serious harm being done thanks to the huge amount of power these companies currently wield. 

It’s already a tired argument in many ways. The execs behind GAFA aren’t ready to accept that user values are changing, so they can offer little in the way of action, instead hiding behind acknowledging some wrongdoing and promising to do better. That may have been enough to ensure continued user compliance in the past, but given what we’re facing today, they can’t just pay lip service to change, they have to adjust. 

Now that the House Antitrust Subcommittee has released its conclusions on what should happen (a new standard for antitrust violations, restricting the advantage dominant players may have in adjacent lines of business and tighter regulation for acquisitions for starters) vs what’s likely to materialize in the short term, the stage is set for what will be an almighty battle between big tech and their would-be regulators. It won’t be a clean flight. Nor will it be quick. Consider what’s actually needed to ensure compliance on everything from safeguarding user data, to corporate responsibility for information put out in the public domain - it’s a huge task. 

Competition Is Always Good, Start Thinking That Way 

Antitrust isn’t new, but the intensity of pursuing big tech in both a public and private domain has gained a lot of traction in recent years. It may be a case of too little too late. The question should be asked: how were these platforms able to consolidate their power to a point where they were able to evade the consequences for so long? How were they able to dictate terms and completely reshape the landscape to suit their needs? 

The very nature of healthy competition has all but been obliterated in the wake of big tech. Somewhere along the line we forgot to support the local players, allowing these guys to get stronger, richer and more powerful than we could imagine. If we add Microsoft into the mix, these five companies now make up 20% of the stock market’s total worth; a 70-year first for one single industry according to The New York Times. Apple’s valuation topped $2 trillion last quarter, just to give you some idea of their mammoth size. 

The oligopoly CEOs may have presented a humble front when facing down lawmakers in July, talking about how they are trying to do their best whilst serving the wider public need, but let’s get one thing straight; what it comes down to is a lot of twisted facts and unfair competition, which I believe was supported by the "boss of the boss” of that same antitrust committee. That being said there are chinks in the armour starting to appear, which shows that they can’t remain unchallenged forever. This is particularly true when it comes to the changes being made to the digital advertising industry right now. 

The Partnership for Responsible Addressable Media are looking to push back on privacy regulations and changes to the way browsers prevent ad targeting and tracking. Apple and Google are the two attracting most of the heat; the former because of its impending IDFA obliteration and the latter because of its plans to phase out support for the third party cookie… with little in the way of a viable replacement. This group essentially wants to get the likes of Apple, Google and Mozilla all on the same page, discussing approaches that will work on a universal level. Not exactly an easy task, but essential for safeguarding the future of our industry. 

I’m all for change, regulation and compliance; it’s needed for us to create a system that benefits many and not just the few. Make no mistake, these platforms talk a good talk when it comes to making changes to protect the user, but they are also serving themselves at the same time; creating restrictions, limiting the marketplace and forcing the smaller players into compliance. All in all, there’s a lot to play for and the stakes are only getting higher. For now, these guys live to fight another day, bruised but not beaten, but I’m looking forward to round 2, how about you? 

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