Small Tech Firms Fear Retaliation If They Assist Antitrust Probes: Lawmaker

‘If you look at the size of some of the large platforms, their ability to exclude people from the platform can result in closing the business,’ said U.S. Rep. David Cicilline (D-RI), chairman of the House Judiciary Committee’s Antitrust Subcommittee. ‘That’s sort of the most dangerous consequence of this kind of concentration -- the ability to exclude rivals, put them out of business, diminish innovation, diminish entrepreneurship, diminish choices for consumers.’

Small technology firms fear retaliation from the likes of Facebook and Google if they participate in federal antitrust probes of the tech giants, because they rely on them for access to customers, according to a top U.S. lawmaker.

Small digital companies say that relationship “makes them concerned about raising their voice, raising concerns about the monopoly power of these platforms,” U.S. Rep. David Cicilline (D-RI), chairman of the House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law, said yesterday, Reuters reported.

“If you look at the size of some of the large platforms, their ability to exclude people from the platform can result in closing the business,” Cicilline said. “That’s sort of the most dangerous consequence of this kind of concentration -- the ability to exclude rivals, put them out of business, diminish innovation, diminish entrepreneurship, diminish choices for consumers.”

The Subcommittee on Antitrust this month announced it will conduct a bipartisan investigation into competition in the online marketplace.

“The purpose of this investigation is to document whether dominant market participants are exercising their market power in anti-competitive ways and to assess whether our existing laws and current enforcement levels are adequate to address these problems,” Cicilline said during a keynote address at the American Antitrust Institute’s 20th Annual Policy Conference in Washington, D.C., yesterday. “Over the coming months, we will conduct a top-to-bottom review of online markets through a series of hearings, information requests and a series of discussions with key stakeholders and policy experts.”

Cicilline said he has contacted most of the major technology platforms, and hopes they participate in the probe in a “meaningful way,” Bloomberg reported.

Google and Facebook did not immediately respond to CRN’s requests for comment.

Cicilline told reporters that “you would be amazed” at how many companies have come forward with concerns about the potentially unfair way that big tech companies compete, according to the Bloomberg report.

Meanwhile, the U.S. Department of Justice and Federal Trade Commission could also be moving toward antitrust probes of the largest tech companies. Apple and Google are reportedly under the jurisdiction of the DOJ, while the FTC has claimed oversight of Amazon.com and Facebook.

Congress has retreated from its once-active role in conducting oversight of antitrust laws and competition among American businesses over the past few decades, “allowing the laws to become more technical, less effective and altogether less democratic in the hands of the courts,” Cicilline said.

“During this same period, consolidation throughout the economy has wiped out competition and hollowed out the middle class, resulting in less choice, higher prices, worse quality and record levels of inequality,” he said. “In the technology sector, Google controls 90 percent of the market for search engines, and Facebook accounts for over 70 percent of social networking sites.”

A small number of dominant, unregulated platforms have extraordinary power over commerce, communication and information online, Cicilline told conference attendees.

“Since 2007, Google has acquired several of its competitors in digital advertising, resulting in significant concentration and a complete lack of transparency in this market,” he said. “And since 2011, another dominant online platform, Facebook, has acquired two of its most significant rivals -- Instagram and WhatsApp -- in an effort to corner the market for social media services and advertising on these services.”

Google has made 270 acquisitions, and Facebook has made 92, and none were blocked by federal enforcers, Cicilline said, citing a recent analysis by Tim Wu, a professor of law, science and technology at New York’s Columbia School of Law.

“The sheer dominance of some of these platforms has resulted in worse products and significantly less choice, leaving people without a competitive alternative to services that are increasingly essential to navigating 21st-century life,” Cicilline said. “As these firms have squashed the competition, they have imposed new terms of services that further exploit user data and leave everyday people powerless to escape the platforms’ elaborate surveillance machines.”

“There have been numerous reports of digital platforms engaging in potentially anti-competitive conduct -- such as favoring their own products or discriminating against rivals -- that has gone unchallenged by antitrust enforcers in the United States,” Cicilline said.

Cicilline said he also plans to re-introduce legislation to end the “scourge” of no-poach and non-compete clauses, noting a U.S. Department of Treasury report that almost 30 million working Americans at all levels of employment are covered by non-compete clauses.

“Less than half of non-compete agreements involve work subject to trade secrets,” he said. “There is also no shortage of examples of employers colluding at the expense of workers through no-poach agreements -- a criminal violation of the antitrust laws.”