Is Big Tech Too Powerful?

Google, Facebook, Amazon, and Apple are under fire for becoming so dominant. Is it time to break them up?

Christopher Weyant/Boston Globe/Cagle Cartoons

When you want to look something up online, chances are you use Google. Want to do some online shopping? You probably visit Amazon. Browsing social media or messaging your friends? It’s likely you’re on Facebook or one of the other platforms it owns, Instagram or WhatsApp.

For many people, this technology has made it easier than ever before to connect with friends and family, find information, or purchase just about anything with the click of a button. But now these tech companies are coming under fire from government officials for becoming so dominant.

In October, the Department of Justice (DOJ) filed a landmark lawsuit accusing Google of illegally maintaining a monopoly over internet searches (see “What’s a Monopoly?,” below). Two months later, the Federal Trade Commission (FTC), which enforces antitrust laws, and more than 40 states accused Facebook of becoming a social media monopoly. The FTC is also investigating whether Amazon has an illegal monopoly over online shopping, and the DOJ is looking into whether Apple possesses a monopoly on phone apps through its app store.

The tech giants have long denied any wrongdoing. And it will likely be years before the lawsuits and investigations are resolved. But legal experts say they signal a new era of increased backlash against the tech industry for having what many people see as too much influence over us. And they could eventually lead to the breakup of some of the biggest companies in the world, perhaps changing the internet—and our lives—forever.

“People might enjoy using the tech platforms,” says Hal Singer, a senior fellow at George Washington University’s Institute of Public Policy. “But they are also asking, ‘What kind of society do we want?’”

Amazon was founded by Jeff Bezos in 1995 in a garage in Bellevue, Washington, as an online bookstore. Google was created in 1998 in a garage in the suburbs of San Francisco by Larry Page and Sergey Brin, two Ph.D. students at Stanford University, as a revolutionary tool to sift through the countless websites online. And Facebook was conceived in 2004 in a dorm room at Harvard University by Mark Zuckerberg and other students as a way for classmates to connect with one another.

But from their modest beginnings, these companies have grown into some of the world’s most dominant businesses—multibillion-dollar corporations that now have their footprints in seemingly every facet of our lives (see “How Big Tech Took Over,” below).

When you want to look something up online, chances are you use Google. Want to do some online shopping? You probably visit Amazon. Browsing social media or messaging your friends? It’s likely you’re on Facebook or one of the other platforms it owns, Instagram or WhatsApp.

For many people, this technology has made life easier. We use it to stay connected with friends and family. It’s also been a useful tool for finding information. And it’s enabled people to buy just about anything with the click of a button. But now these tech companies are coming under fire from government officials for becoming so dominant.

In October, the Department of Justice (DOJ) filed a landmark lawsuit against Google. It accused the tech company of illegally maintaining a monopoly over internet searches. (see “What’s a Monopoly?,” below). Two months later, the Federal Trade Commission (FTC), which enforces antitrust laws, made a similar move. It and more than 40 states accused Facebook of becoming a social media monopoly. The FTC is also investigating whether Amazon has an illegal monopoly over online shopping. And the DOJ is looking into whether Apple has a monopoly on phone apps through its app store.

The tech giants have long denied any wrongdoing. And it will likely be years before the lawsuits and investigations are resolved. But legal experts say they signal a new era of increased backlash against the tech industry for having what many people see as too much influence over us. These cases could eventually lead to the breakup of some of the biggest companies in the world. If they do, that might change the internet and our lives forever.

“People might enjoy using the tech platforms,” says Hal Singer, a senior fellow at George Washington University’s Institute of Public Policy. “But they are also asking, ‘What kind of society do we want?’”

Amazon was founded by Jeff Bezos in 1995 in a garage in Bellevue, Washington. Back then, it was simply an online bookstore. Google was created in 1998 in a garage in the suburbs of San Francisco by Larry Page and Sergey Brin, two Ph.D. students at Stanford University. The tool allowed users to quickly search through the countless websites online. At the time, it was revolutionary. And Facebook was conceived in 2004 in a dorm room at Harvard University by Mark Zuckerberg and other students. They saw it as a way for classmates to connect with one another.

But from their modest beginnings, these companies have grown into some of the world’s most dominant businesses. They’re now multibillion-dollar corporations. And they seem to have their footprints in almost every part of our lives. (see “How Big Tech Took Over,” below).

Shutting Out Competitors?

The DOJ’s case against Google focuses on its search engine and related advertisement business. Nearly 90 percent of all searches on the internet worldwide go through Google, according to the lawsuit. And the DOJ alleges that Google has abused its dominance in internet search to “shut out competitors” such as Microsoft Bing and Yahoo Search.

The agency accuses Google of protecting its monopoly by making it the default search engine on Android, its mobile operating system, and by striking deals with other tech companies, like Apple. Google pays Apple billions of dollars a year to also make it the default search engine on iPhones, iPads, and Mac computers, so when users do an internet search, it automatically goes through Google, unless they change their settings.

“Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet,” the lawsuit says. “That Google is long gone. The Google of today is a monopoly gatekeeper for the internet.”

However, Google argues that its search engine is dominant only because people prefer it and that other search engines are just a click away.

The DOJ’s case against Google focuses on its search engine and related advertisement business. Nearly 90 percent of all searches on the internet worldwide go through Google, according to the lawsuit. And the DOJ alleges that Google has abused its dominance in internet search to “shut out competitors” such as Microsoft Bing and Yahoo Search.

The agency accuses Google of protecting its monopoly by making it the default search engine on Android, its mobile operating system. They also point to the deals that Google has struck with other tech companies, like Apple. Google pays Apple billions of dollars a year to also make it the default search engine on iPhones, iPads, and Mac computers. When users of Apple devices do an internet search, it automatically goes through Google, unless they change their settings.

“Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet,” the lawsuit says. “That Google is long gone. The Google of today is a monopoly gatekeeper for the internet.”

But Google argues that its search engine is dominant only because people prefer it. The company says that other search engines are just a click away.

BIG TECH By the Numbers

2,540,000,000,000

NUMBER of Google searches per year—more than 80,000 a second.

Source: Internet Live Stats

NUMBER of Google searches per year—more than 80,000 a second.

Source: Internet Live Stats

38%

PERCENTAGE of all online sales in the U.S. that go to Amazon. Walmart is in second place, with about 6 percent.

Source: eMarketer (End-of-Year Forecast as of July)

PERCENTAGE of all online sales in the U.S. that go to Amazon. Walmart is in second place, with about 6 percent.

Source: eMarketer (End-of-Year Forecast as of July)

5.5 billion

TOTAL NUMBER of Facebook, Instagram, and WhatsApp users worldwide.


Source: The Verge

TOTAL NUMBER of Facebook, Instagram, and WhatsApp users worldwide.


Source: The Verge

“People use Google because they choose to—not because they’re forced to or because they can’t find alternatives,” Kent Walker, Google’s chief legal officer, said in a statement.

The Justice Department’s case isn’t the only legal trouble facing Google. In December, more than 30 states filed a lawsuit against the company, accusing it of downplaying websites where users review services, like Yelp and TripAdvisor, in its search results in order to promote its own reviews or services and illegally shut out competition. That same month, ten states accused Google of abusing its dominance in online ads.

As for the case against Facebook, federal and state officials say the company’s purchases, especially of Instagram for $1 billion in 2012 and WhatsApp for $19 billion two years later, eliminated competition that could have one day challenged the company’s dominance. Since those deals, Instagram and WhatsApp have skyrocketed in popularity, giving Facebook control over three of the world’s most popular social media and messaging apps.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” said Attorney General Letitia James of New York, who led the multistate investigation into the company.

However, Facebook argues that the FTC had already reviewed those purchases, and the platforms have become so successful only because Facebook helped them grow.

“The government now wants a do-over,” Jennifer Newstead, Facebook’s top lawyer, said in a statement, “sending a chilling warning to American business that no sale is ever final.”

The investigation into Amazon concerns online shopping. Critics of Amazon say it has put many smaller retailers out of business and made it nearly impossible for companies not to sell their products on Amazon’s marketplace. Apple is also under investigation for its app store, which enables the company to take a cut of app developers’ sales and promote its own apps and services.

“People use Google because they choose to—not because they’re forced to or because they can’t find alternatives,” Kent Walker, Google’s chief legal officer, said in a statement.

The Justice Department’s case isn’t the only legal trouble facing Google. In December, more than 30 states filed a lawsuit against the company. The lawsuit accuses it of downplaying websites where users review services, like Yelp and TripAdvisor, in its search results. The lawsuit says Google does this to promote its own reviews or services and illegally shut out competition. That same month, ten states accused Google of abusing its dominance in online ads. 

As for the case against Facebook, federal and state officials say the company has made purchases to eliminate competition. They add that those competitors could have one day challenged the company’s dominance. Facebook’s purchases of Instagram and WhatsApp have especially come into question. Facebook bought Instagram for $1 billion in 2012 and WhatsApp for $19 billion two years later. Since those deals, Instagram and WhatsApp have skyrocketed in popularity. That’s given Facebook control over three of the world’s most popular social media and messaging apps.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” said Attorney General Letitia James of New York, who led the multistate investigation into the company.

But Facebook argues that the FTC had already reviewed those purchases. The company adds that the platforms have become so successful only because it has helped them grow.

“The government now wants a do-over,” Jennifer Newstead, Facebook’s top lawyer, said in a statement, “sending a chilling warning to American business that no sale is ever final.”

The investigation into Amazon concerns online shopping. Critics of Amazon say it has put many smaller retailers out of business. They argue that it’s practically impossible for companies not to sell their products on Amazon’s marketplace. Apple is also under investigation for its app marketplace on iPhones and iPads. The platform enables the company to take a cut of app developers’ sales and promote its own apps and services.

What’s a Monopoly?

A monopoly happens when one company controls all—or nearly all—of the market for a given product or service. The thinking is that monopolies hurt consumers because they eliminate competition—thus allowing one company to charge whatever it wants while having less incentive to maintain the quality of the services or goods it provides.

In 1890, Congress passed the Sherman Antitrust Act, giving the federal government the authority to break up monopolies. Illegal monopolies were rampant at the time. Companies in the oil, railroad, and steel industries had merged into huge trusts so they could secretly maintain the same prices, or raise prices together, without fear of competition—what’s known as “price fixing.”

Monopolies are illegal in the U.S. only if they deliberately stifle competition to get or keep their monopoly status. Now the question is whether the five big tech giants have done that to maintain their dominance.

A monopoly happens when one company controls all—or nearly all—of the market for a given product or service. The thinking is that monopolies hurt consumers because they eliminate competition—thus allowing one company to charge whatever it wants while having less incentive to maintain the quality of the services or goods it provides.

In 1890, Congress passed the Sherman Antitrust Act, giving the federal government the authority to break up monopolies. Illegal monopolies were rampant at the time. Companies in the oil, railroad, and steel industries had merged into huge trusts so they could secretly maintain the same prices, or raise prices together, without fear of competition—what’s known as “price fixing.”

Monopolies are illegal in the U.S. only if they deliberately stifle competition to get or keep their monopoly status. Now the question is whether the five big tech giants have done that to maintain their dominance.

A New Era for Big Tech?

But even if the government proves its case—which experts say will be
difficult—it might be too little too late. Some experts say these companies have such a foothold on the market that it’s questionable whether people will switch away from them even if more competition comes along.

Regardless, the lawsuits come at a time of growing backlash against Big Tech from lawmakers in Congress. In October, a bi-partisan subcommittee in the House of Representatives released a report after a 16-month investigation of the tech giants. In it, the lawmakers argue that all four companies—Google, Facebook, Amazon, and Apple—have become “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons” (see “Busted Trusts,” below).

But politicians are split on what to do about it. Many Democrats say these businesses should be broken up so they don’t have so much power. But while many Republicans favor tighter regulations, many oppose breaking the companies up, arguing that doing so won’t help consumers. After all, some say, most of these services are already free to use.

Experts says that it will be difficult for the government to prove its case. Still, even if the government does so, it might be too little too late. Some experts say these companies already have a strong foothold in the market. As a result, people might not switch away from them even if more competition comes along.

Regardless, the lawsuits come at a time of growing backlash against Big Tech from both Democrats and Republicans in Congress. In October, a bipartisan subcommittee in the House of Representatives released a report after a 16-month investigation of the tech giants. In it, the lawmakers take aim at Google, Facebook, Amazon, and Apple. They argue that all four companies have become “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.” (see “Busted Trusts,” below)

But politicians are split on what to do about it. Many Democrats have called for these businesses to be broken up, so they don’t have so much power. But while many Republicans favor tighter regulations, many oppose breaking the companies up. They argue that doing so won’t help consumers. After all, some say, most of these services are already free to use.

Is Big Tech like the oil barons and railroad tycoons of the past?

However, critics of these tech giants say the harm is in the enormous amounts of user data that these companies collect, which they then use to sell tens of billions of dollars’ worth of advertisements on their platforms.

Others say the biggest harm may be to young entrepreneurs, who hope to one day form their own tech companies—as well as the consumers who might miss out on the next big technological invention.

“If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation,” says Justice Department spokesperson Marc Raimondi about the case against Google. “If that happens, Americans may never get to see the next Google.”

But critics of these tech giants say the harm is in the large amounts of user data that these companies collect. The data is used to sell tens of billions of dollars’ worth of advertisements on their platforms.

Others say the biggest harm may be to young entrepreneurs who hope to one day form their own tech companies. They also note that consumers might miss out on the next big technological invention.

“If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation,” says Justice Department spokesperson Marc Raimondi about the case against Google. “If that happens, Americans may never get to see the next Google.”

With reporting by David Streitfeld, Cecilia Kang, and Mike Isaac of The New York Times.

With reporting by David Streitfeld, Cecilia Kang, and Mike Isaac of The New York Times.

How Big Tech Took Over

Chances are you use a lot of products owned by Google, Facebook, Amazon, and Apple. Here’s just some of what each owns.

Game piece illustration by Christopher Short

Google search: World’s most popular search engine

Gmail: World’s most used email provider

YouTube: Video streaming site that’s the most visited website in the world

Google Classroom: Online teaching tool with more than 100 million users worldwide

Google Chrome: Most used web browser in the U.S.

Chromebooks: Tablets often used by schools

Google search: World’s most popular search engine

Gmail: World’s most used email provider

YouTube: Video streaming site that’s the most visited website in the world

Google Classroom: Online teaching tool with more than 100 million users worldwide

Google Chrome: Most used web browser in the U.S.

Chromebooks: Tablets often used by schools

Game piece illustration by Christopher Short

Facebook: World’s most popular social media site

Instagram: Social media platform and the fourth-most downloaded mobile app of the decade

WhatsApp: Messaging app with over 2 billion users worldwide

Oculus: Virtual reality headset brand

Facebook: World’s most popular social media site

Instagram: Social media platform and the fourth-most downloaded mobile app of the decade

WhatsApp: Messaging app with over 2 billion users worldwide

Oculus: Virtual reality headset brand

Game piece illustration by Christopher Short

Amazon.com: Most popular online marketplace in the U.S.

Whole Foods: Supermarket with 500 stores in North America

Twitch: Live streaming service with 15 million daily active users

Zappos: Online shoe and clothing retailer

Amazon Web Services: Top cloud service provider in the world