Investigation of Competition in Digital Markets report released (and a personal story never told)

The important report is here.

It’s a very important and interesting reading.

A mini-synthesis of the findings in the 400 pages long report can be found in this twitter thread.

As many readers know, I have devoted a significant part of my public life to promote competition in the digital space (“dimensione immateriale”), have proposed comprehensive bills while I was in the parliament and wrote a book “Capitalismo Immateriale” (in english it’d be “Virtual Capitalism”, 5 stars rating in italy and a good number of reprints) explaining in great detail the business models and practices that this report has found applied by these big four.

These are few highlights:

In June 2019, the Committee on the Judiciary initiated a bipartisan investigation into the state of competition online, spearheaded by the Subcommittee on Antitrust, Commercial and Administrative Law. As part of a top-to-bottom review of the market, the Subcommittee examined the dominance of Amazon, Apple, Facebook, and Google, and their business practices to determine how their power affects our economy and our democracy. Additionally, the Subcommittee performed a review of existing antitrust laws, competition policies, and current enforcement levels to assess whether they are adequate to address market power and anticompetitive conduct in digital markets

To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons. Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price. These firms typically run the marketplace while also competing in it—a position that enables them to write one set of rules for others, while they play by another,or to engage in a form of their own private quasiregulation that is unaccountable to anyone but themselves. The effects of this significant and durable market power are costly. The Subcommittee’s series of hearings produced significant evidence that these firms wield their dominance in ways that erode entrepreneurship, degrade Americans’privacy online, and undermine the vibrancy of the free and diverse press. The result is less innovation, fewer choices for consumers, and a weakened democracy.

Nearly a centuryago, Supreme Court Justice Louis Brandeis wrote: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.”Those words speak to us with great urgency today. Although we do not expect that all of our Members will agree on every finding and recommendation identified in this Report, we firmly believe that the totality of the evidence produced during this investigation demonstrates the pressing need for legislative action and reform.

These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement. Our economy and democracy are at stake.As a charter of economic liberty, the antitrust laws are the backbone of open and fair markets.

When confronted by powerful monopolies over the past century—be it the railroad tycoons and oil barons or Ma Bell and Microsoft—Congress has acted to ensure that no dominant firm captures and holds undue control over our economy or our democracy. We face similar challenges today.

Congress—not the courts, agencies, or private companies—enacted the antitrust laws, and Congress must lead the path forward to modernize them for the economy of today, as well as tomorrow. Our laws must be updated to ensure that our economy remains vibrant and open in the digital age.

Congress must also ensure that the antitrust agencies aggressively and fairly enforce the law. Over the course of the investigation, the Subcommittee uncovered evidence that the antitrust agencies failed, at key occasions, to stop monopolists from rolling up their competitors and failed to protect the American people from abuses of monopoly power. Forceful agency action is critical.

Lastly, Congress must revive its tradition of robust oversight overthe antitrust laws and increased market concentration in our economy. In prior Congresses, the Subcommittee routinely examined these concerns in accordance with its constitutional mandate to conduct oversight and perform its legislative duties. As a 1950 report from the then-named Subcommittee on the Study of Monopoly Power described its mandate: “It is the province of this subcommittee to investigate factors which tend to eliminate competition, strengthen monopolies, injure small business, or promote undue  concentration of economic power; to ascertain the facts, and to make recommendations based on those findings.”

Now let me add a personal touch.

I started analyzing and understanding patterns echoing abusive behaviors when I had to close a startup I funded and founded more than a decade ago.

The dominant phone player at the time was european, the popular video format for small-screen handset was .3GP, UMTS was rolling out, smartphones where just born (but growing *fast*), the WII console was a hit and there were plenty of video sites.

My startup, based in the UK, developed a system that allowed a user to bookmark a video – any video, on any site – for later watching on any device the user owned (hiding all technical complexities such as format transcoding, synchronizing, etc.), allowing her to manage her playlists, share with a limited number of friends with a legal friendly “lending” mode, etc.

The smartphone app allowed for synchronization of the contents for offline viewing (there was not enough bandwidth for streaming and it was costly; there was no coverage in subways, trains or airplanes): when you arrived home/office, the app would recognize the wifi and start synchronizing all the videos to your device.

We even had a client for the WII so you could watch your playlists on TV (and on play stations as well).

We published the app on the store and downloads were ramping up very satisfactorily, and just by word of mouth.

There was a clear need of a service that allowed users to aggregate videos from one of the many possible sources(*) and watch them on any device, anywhere, online/offline.

(*) there was life beyond youtube, at the time.

Then our app was taken down from the store. And that happened time and again with motivations that seemed futile to me.

The app was clearly legit.

One day my CTO received a call which basically said that it was pointless for us to insist with publishing the app because they were supporting Youtube and didn’t want a competing app.

We discussed with the lawyers and for a while  we unsuccessfully  tried to get a written statement of what we’ve been told, to possibly start a legal action; Later, absent any proof of the facts above, I had no choice but to shut down the company.

I told my story to some friends and learned other similar stories; in one case I was told they were asked some million euros in order to let the app in the store.

I have no proofs, so I have been very careful to avoid references to a specific company.

But that’s the kind of power that gatekeepers have and the reason why we need ex ante regulation to protect device neutrality. And the report recognizes it. (page 378)

this is a video of my system of the time.. (11 years ago)

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