Tech companies face US scrutiny as elections approach
News emerged last week that the US was opening investigations into whether major tech companies engaged in anticompetitive practices. The Federal Trade Commission is apparently looking into Amazon and Facebook, while the Department of Justice is probing the behavior of Apple and Alphabet, the parent company of Google. This was momentous news, and the implications will impact business and users beyond the US.
After the news broke, the combined value of the four companies dropped by more than $130 billion. Their stock prices eventually rebounded, but the shock on Wall Street indicated that no one really knows what to expect from these investigations. Some of the probes may lead to nothing and others may result in hefty fines for the companies. The most drastic outcome would be that the government would force one or more of these companies to “break up,” meaning split into multiple companies to prevent a monopoly of a market or industry. No one knows what will happen until the lengthy investigation and adjudication process plays out.
In this case, the US is considering enforcing the law and regulating tech giants. However, the US is not the only government that could address these issues, even though they are American firms. The EU has a history of similar investigations and action. For more than 15 years beginning in the early 1990s, Microsoft faced various investigations by the EU for potential antitrust violations and anticompetitive practices. Eventually, Microsoft was forced to make changes, though its main business practices remained intact. Google has also faced investigations and fines from the EU. But the EU has never seriously altered the behavior of the tech giants.
While only the EU and the US can realistically bring antitrust-type cases against such powerful companies, the effects of such action can have global significance. In this global economy, if these companies are altered or changed in a way that users notice, it will impact every user, not just Americans. These might be American companies, but they are truly global businesses.
However, the latest investigations are in America and they have been enabled by the fact that, almost alone among the democracies of the world, the US has very long election cycles. Without the year-and-a-half-long election cycle that the country is facing, there would be no political will in the government to go after these powerful companies. Campaigns are already in full swing for elections in November 2020. Because of the competitiveness of the races and because there is a general populist rise against big business — and especially big tech business — the government is now investigating these companies despite the power they are trying to exert to prevent such a move.
The New York Times reported just last week that, in 2018, these four tech companies spent a total of $55 million lobbying the US government for favorable treatment. In the US, “lobbyist” is the term used for a person whose job it is to ask legislators, the White House or regulators to either take certain actions or refrain from certain actions. Lobbyists act on behalf of a single client or an organized interest group. At the beginning of this year, there were 238 people in Washington registered as lobbyists for just these four tech firms. That means there were that many people going to meetings around the capital, giving campaign donations to politicians and arguing for favors for these four companies.
Lobbyists have great influence on the actions of government. However, nothing influences the government more than the will of voters. The voters in the US know these tech giants have amassed great power and may be abusing that power to prevent competition and harm consumers. Americans love success stories, like those represented by these companies. The founders of these firms are all household names. But Americans also despise cheating, and they want consequences if these businesses are cheating to hurt their competition, raise prices or profit from user data in illegal ways.
Without the year-and-a-half-long election cycle, there would be no political will to go after these powerful companies.
Ellen R. Wald
If the country and the politicians were not already in a frenzy about the upcoming election, the tech lobbyists probably would have prevented these investigations. A year ago, there seemed to be no motivation in Washington to investigate them. A year ago, politicians were happy to take campaign donations from the lobbyists and protect the tech firms.
But, today, the politicians must give speeches to voters and answer questions from reporters. Election day is only 17 months away. That is the day the politicians will be held accountable by the people. With that in mind, the politicians are allowing these investigations to proceed.
It is important that the tech companies receive fair treatment. They must not be adjudged to be in violation of the law without a fair investigation, a hearing and due process. But the mere news of these investigations is a sign that, when the people have their say, even the powerful can be held accountable for their wrongdoings.
- Ellen R. Wald, Ph.D. is a historian and author of “Saudi, Inc.” She is the president of Transversal Consulting and also teaches Middle East history and policy at Jacksonville University. Twitter: @EnergzdEconomy