Endangered giants on their pedestal

Endangered giants on their pedestal

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Protection of personal data, control over the advertising market, online search or social networks, dominant position in online commerce or control of the market for smartphone applications... Grievances against the digital giants are at the root of many investigations, both on the American side and by the European Commission. The antitrust investigations launched in recent days against Google and Facebook are a reminder of the ultra-dominant position of the digital giants and raise the question of their possible dismantling.

In the online advertising market, Google and Facebook control nearly 60% of the U.S. market, estimated at $129 billion for 2019, and more than half of the global market, which is expected to rise to $333 billion, according to the research firm eMarketer. Globally, 92.4% of online queries went through the Google search engine in August. With Facebook, Instagram and WhatsApp, the Facebook group, for its part, has carved out a largely dominant position in the social networking market in many countries.

Similar hold on the smartphone market: Android (Google) and iOS (Apple) are the operating systems currently present on almost all devices, with the products of the two giants offered by default (web browsers, mapping) and total control over application stores (PlayStore or AppStore).

Is dismantling possible?

For these large groups, an antitrust investigation in the United States carries with it the theoretical risk of dismantling, as provided for in a US legislative arsenal that has been in existence since 1890.

There are resounding precedents: in 1911, the break-up of Standard Oil, John Rockefeller's empire, led to the creation of Chevron, Mobil, Exxon and Amoco.

But nothing similar so far in the computer or digital field. An investigation launched in 1969 against IBM was finally dropped thirteen years later, as the revolution in microcomputing put an end to the group's monopoly on computers. Microsoft was accused of dominance because of its Windows operating system, but a financial agreement with the US Department of Justice ended the case.

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Some U.S. politicians, such as Democrat and presidential candidate Elizabeth Warren, are calling for an outright dismantling of the tech giants. As are some American think tanks. For example, the Open Markets InstituteOne of its members, Matt Stoller, wrote on September 9 in the English daily newspaper The Guardian that "it takes" dismantle the digital mastodons or they will become our government and end up choosing what we see and know about the world. "

Other commentators, and the web giants themselves, advocate less radical solutions. Facebook founder Mark Zuckerberg, whose company has gone from scandal to controversy, has in recent months been a champion of tighter regulation in digital matters.

At the European level, the European Personal Data Protection Regulation (PDPR), which came into force in May 2018, is expected to provide a strong regulatory framework. And the pressure in Europe on the Gafa's is not about to abate any time soon, as Denmark's Margrethe Vestager, who made a name for herself by taking on the Silicon Valley giants - with no less than three fines for abuse of a dominant position against Google to her credit - remains Competition Commissioner in the new EU executive, whose composition was unveiled on Tuesday 10 September.

Legal fronts are multiplying

A new judicial front opened last Friday for Facebook: a coalition of American states, including New York, has launched a broad investigation into the management of its users' personal data and its commercial practices, particularly in terms of advertising. « This investigation focuses on Facebook's dominance in the (social networking) industry and the resulting potentially anti-competitive conduct. ", said Letitia James, Attorney General of New York State.

We will use any tools at our disposal to determine whether Facebook's actions may have endangered consumers' personal data, reduced the quality of choices available to them or increased the price of ads. ", the Democrat added.

Facebook was fined a record $5 billion at the end of July by the FTC, the US communications regulator, for failing to protect its users' personal data.

The Instagram and WhatsApp courier acquisitions are also under investigation by federal authorities, who are wondering whether they were made by Mark Zuckerberg's group to stifle competition. « Is that too much power for one company? Should these acquisitions be defeated? These are the main questions that states will be looking at "AFP's Michael Carrier, who teaches at Rutgers University, told AFP.

Facebook, the world's leading social network, has consistently rejected accusations of monopoly, arguing that consumers have a lot of choice about how to interact online.

This investigation promises to be the first in a series of state antitrust investigations against the Silicon Valley giants. « Attorneys General representing a broad coalition of states announced on Monday, September 9, an investigation to determine whether major technology groups have used anti-competitive practices to stifle competition, restrict access (to their platforms) and affect consumers. ", Ken Paxton, Texas Attorney General Ken Paxton, a Republican, said last Friday in a statement.

Google's turn?

Google confirmed on Friday that it is one of the target groups. It also said in an online statement that the Department of Justice had asked it to provide documents on past investigations as part of its wide-ranging investigation launched at the end of July into the tech giants and possible anti-competitive practices. The online search giant is regularly accused by its critics of imposing restrictive clauses in contracts with third party sites - online retailers or newspapers - thus preventing its competitors from placing their contextual advertising on these sites.

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Google's services help people in their daily lives, provide consumers with choice and support thousands of jobs and small businesses across the country. ", reacted Friday Jose Castaneda, a spokesman for the group. « We continue to work constructively with the regulators. "

It is unclear at the moment whether these investigations - the major federal investigation and those carried out by coalitions of states - will be coordinated. « The survey reflects the concern that large technology companies are causing beyond Congress and federal agencies. "says academic Michael Carrier. « Every day we see big scares about how these companies are controlling our lives online. "

And Apple...

Amazon and Apple could also find themselves in the States' crosshairs. Critics argue that Amazon has a dominant position in online commerce, while Apple would disadvantage its rivals who offer their services on the App Store.

In the view of the American and European authorities and justice, Apple has modified the search algorithm of the App Store so that its applications no longer trust the first positions constantly, as was the case until recently. As the New York Times Following a major investigation, adjustments were made this summer in July.

Alexandre Boero explains on the specialized site Clubic : " After dissecting the App Store's activity since 2016 (the year in which the company added its apps to its store), the NYT reported that the firm's apple apps appeared in the top positions of results for at least 700 search terms. For the term "podcast", typed in May 2018 from an iPhone on the App Store, the first 14 results were ads or applications stamped... Apple. That was the norm. In 2018, the App Store generated more than $50 billion in sales, two-thirds of which came from... research. The lure of profit is, it must be said, very tempting. "

U.S. Senator Elizabeth Warren, the favorite to become the Democratic candidate against Trump in 2020, advocates a dismantling of the technological giants. With Lina Khan, a lawyer barely thirty years old, who quickly became the muse of the antitrust movement of the big techs, the movement against the overpowering GAFA seems to be definitively launched. A supreme paradox, it is inspired by the actions carried out in the Old Continent, in Europe, to limit and tax the giants of technology. « They have too much power over our economy, our society and our democracy. . scande the senator in every one of her interventions.

According to most legal experts, the battle against the Silicon Valley giants is not going to be a picnic. It will be a tough one, and there will be no holds barred. The giants won't let themselves be knocked off their pedestals without a fire in their bellies.

With AFP

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