A Democratic congressional staff report recommends changes to antitrust laws and enforcement that could result in major changes for Big Tech companies, such as spinning off or separating parts of their businesses or making it harder to buy smaller companies, CNBC informed.
The staff found, after a 16-month investigation into competitive practices at Apple, Amazon, Facebook and Google, that the four businesses enjoy monopoly power that needs to be reined in by Congress and enforcers.
In a nearly 450-page report, the Democratic majority staff laid out their takeaways from hearings, interviews and the 1.3 million documents they scoured throughout the investigation.
Republicans have voiced objections to some of the bolder proposals in the report, such as imposing structural separations. Rep. Ken Buck, R-Colo., a key ally of the subcommittee majority who has been in favor of antitrust reform, has prepared his own response to the report outlining areas of “common ground” and “non-starters,” according to a draft version obtained by CNBC.
Following the majority report’s release, Judiciary Committee ranking member Rep. Jim Jordan, R-Ohio, put out his own response about allegations of platforms’ bias against conservatives, which the companies have repeatedly denied. Four other Republicans signed onto the report, including Buck and former Judiciary ranking member Doug Collins of Georgia, and subcommittee members Reps. Matt Gaetz and Greg Steube of Florida.
Buck stressed in his own response, however, that he is supportive of the investigation and its findings and continues to push for bipartisan antitrust reform.
Subcommittee ranking member Rep. Jim Sensenbrenner, R-Wis., said in a statement that while he does not approve of sweeping changes to the antitrust laws, “There actually is a lot that we agree on, including the lack of sufficient scrutiny on past activity by these companies.”
He expressed support for greater funding of antitrust enforcers but said he was skeptical of the Glass-Steagall type of approach, presumptive bans on merger activity and mandates for data interoperability, fearing it would stifle innovation.
The Democratic report found that the four tech companies enjoy monopoly power in their respective domains.
Facebook enjoys monopoly power in the online advertising and social networking markets, according to the report.
One surprising finding in the course of the investigation had to do with Facebook’s acquisition of Instagram, according to a counsel for the antitrust subcommittee who spoke with reporters Tuesday. According to the counsel, documents outlining Instagram’s projected growth just before its $1 billion acquisition by Facebook in 2012 painted the picture of a fast-growing company, rather than a weak competitor that might have floundered without Facebook’s help.
While there is no way to reverse engineer what would have happened to Instagram were it to remain independent, the question of whether Facebook bought Instagram to squander a growing competitor has been a recurring one for many antitrust observers.
Recommendations by the Democratic majority staff would address the concern that dominant companies may be able to engage in “killer acquisitions” of competitors by shifting the burden onto those companies to prove their deals won’t harm competition.
The report also discusses what it calls the “Cunningham memo,” a document produced in 2018 by a senior Facebook data scientist named Tom Cunningham that was first reported by The Information in 2019. According to the report, it was prepared for senior executives including Facebook CEO Mark Zuckerberg.
In an interview with the subcommittee staff, a former senior employee at Instagram who sat in on meetings as the memo was being prepared said the document was meant to answer how the company could “position Facebook and Instagram to not compete with each other,” according to the report. The former employee told the staff in an interview cited with Friday’s date that then-Instagram chief Kevin Systrom “wanted Instagram to grow naturally and as widely as possible. But Mark was clearly saying ‘do not compete with us.’ … It was collusion, but within an internal monopoly.”
CNBC previously reported that new information on the Facebook-Instagram deal from a whistleblower had prompted the report’s first delay, according to a source.
“Facebook is an American success story. We compete with a wide variety of services with millions, even billions, of people using them,” a Facebook spokesperson said in a statement. “Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people. Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses. A strongly competitive landscape existed at the time of both acquisitions and exists today. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time.”