House Judiciary Committee report on tech and antitrust is out!

Thread with some of my initial reactions as I go through it...

First highly misleading claim:

"a decade into the future, 30% of world GDP may lie with [Amazon, Apple, Facebook, and Google] and just a handful of others."

Source is a McKinsey report, which says 30% is literally all B2B and B2C commerce globally.

Not "a handful of others"!!

It's so ironic to me that of the 100 acquisitions Facebook has made, the Instagram acquisition is the one most commonly criticized while also being the only one that was extensively investigated & cleared by regulators in the US & abroad at the time.

Lots of hindsight bias here!

The report cites 1 poll showing that Americans are concerned with how much data Big Tech has & that they want more government regulation.

But this is at odds with the bulk of polls showing Americans approve of & trust tech companies more than other institutions (like Congress!).

A wild claim with no citation:

"Although Amazon is frequently described as controlling about 40% of U.S. online retail sales, this market share is likely understated, and estimates of about 50% or higher are more credible."

i.e., everyone says 40%, but we don't like that

This paragraph highlights an unavoidable tension. The report admits that Apple's closed ecosystem has produced significant benefits to app developers and consumers.

But the flip side of that closed ecosystem is that some players feel excluded (or can't do what they want).

To learn more about this dynamic, read this excellent piece from @elidourado on tech platforms and vertical integration: https://medium.com/cgo-benchmark/blame-and-vertical-integration-1fc5ef1af18

The big recommendations for digital markets include structural separations (breakups!).

I wrote about why separating platform owners from platform competitors makes no sense: https://www.agglomerations.tech/a-glass-steagall-for-the-internet-makes-no-sense-2/

And "safe harbor for news publishers" means an antitrust exemption. Not good!

It's not all bad!

Here are some genuinely good ideas:

Increase budgets for FTC and antitrust division of DOJ, which have steadily fallen over the last decade.

Use the FTC to collect more data & conduct merger retrospectives so we know what's going on and can update policies.

The report draws the wrong lesson from the Air Transport Association lobbying the Civil Aeronautics Board to not approve new airlines in the 1950s

It shows how regulators can become captured by industry!

The solution, in that case, was airline deregulation, not more regulation.

The report points out that Google has been trying to use Google Calendar to boost its free videoconferencing service (Google Meet).

It looks like this move has caused Zoom to *checks notes* reach all time highs in the stock market and shatter user growth records

Privacy is the ultimate "damned if you do, damned if you don't" issue in tech.

In two *consecutive* paragraphs, the report claims that there is a race to the bottom on privacy that excludes privacy-centric business models AND Apple's focus on privacy has anticompetitive effects.

The report includes 15 pages on the decline of the news industry in the age of the internet (much discussion of Google and Facebook, none of Craigslist).

Might the fact that publishers compete with digital platforms for ad $ affect news coverage of tech? https://www.techdirt.com/articles/20191024/13182743257/google-facebook-didnt-kill-newspapers-internet-did.shtml

"market participants told the Subcommittee that Google’s preferential treatment of its own verticals, as well as its direct listing of information in the 'OneBox' that appears at the top of Google search results, has the net effect of diverting traffic from competing verticals"

"In 2019, JP Morgan estimated that, though priced at $119, a Prime subscription is valued at about $860, up 10% from its estimated value in 2018."

lmao this line is supposed to show why Amazon is behaving anti-competitively but instead it just sounds like an ad for Prime.

"Amazon depresses wages when it enters a local labor market."

No, no, no. This is just Simpson's paradox.

I wrote a whole thread explaining this a while back: https://twitter.com/AlecStapp/status/1042504199572021248

"Several market participants expressed concerns to Subcommittee staff that Amazon uses its high and steady profits from AWS to subsidize these other lines of business, including its retail operation."

This myth just won't die.

Look at the financial statements, they're public!

Lol this chart on page 92 is already wildly out of date.

TikTok is now at 1 billion monthly active users.

It achieved that milestone faster than any other social media app ever.

This is potentially the most mind-blowing thing so far:

The report spends 82 pages on Amazon and the competitive landscape in ecommerce.

No mention of Shopify, a $126 billion ecommerce company that powers more than one million online businesses.

In Q2 2020, GMV grew 119% YoY!!

I know it's a long document and all, but the sloppiness is really quite astounding.

Errors like Apple claiming has "100 million iPhone users worldwide" should be caught by anyone who has a passing familiarity with the tech industry.

Dozens of examples like this in the report.

"It was collusion, but within an internal monopoly."

This is very much not a thing!

"Internal collusion" is also known as "operating a business."

I internally collude with my coworkers all the time. Hard to get projects done otherwise!