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Hill Report: Social Media/Tech Giants Degrade Democracy, Undermine Free Press

The Democrat-led House Antitrust Subcommittee has released its report on competition in online markets and it is a damning portrait. It concludes that social media giants have leveraged their gatekeeper power to "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."

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The staff report found that Facebook and Google monopolize their respective online spaces, while Apple and Amazon have "durable market power," and that Congress must step in to legislate.

In fact, it said, Facebook has tipped the market power scale to such an extent that it competes more vigorously among its own products, Instagram, WhatsApp and Messenger, than with their "actual competitors."

The report, which was released Tuesday (Oct. 6), is the product of an investigation launched in June 2019 of Facebook, Google, Amazon and Apple as well as of antitrust laws, competition policies and current enforcement and whether they are sufficient to handle the market power and anticompetitive conduct in digital markets.

It also follows the seventh and final hearing related to the investigation last week in the subcommittee, and while the report is from committee staff and "does not necessarily reflect [the views] of the Committee on the Judiciary or any of its members, some of the findings were telegraphed in the hearing by Democratic members who were clearly on the same page (actually pages, some 449 of them) as the committee signaled it was wrapping up the report.

The investigation found that all four companies are gatekeepers over Key distribution channels, abuse that power by "charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them."

The report also concluded the companies protect that power by controlling infrastructure and surveilling other businesses to identify potential rivals so they could buy them out or cut them out of copy, then solidified their market power via predatory pricing and exclusionary conduct. 

"[W]e firmly believe that the totality of the evidence produced during this investigation demonstrates the pressing need for legislative action and reform," the report said. "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."