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Monopolistic practices

The times are changing, especially when US lawmakers bring antitrust charges against Google which they accuse of monopolistic practices.

Of course Google denies all the allegations and Alphabet’s, Google’s parent company, share price barely moved when the news of the historic lawsuit broke, but it does suggest that lawmakers and public sentiment appear to be turning against Silicon Valley.

Supporters of the legal action are hoping that at the end of what will be a long and protracted legal process, we will see a radically different company and industry.

Google, Facebook and Amazon are already facing investigations at State level regarding alleged “monopolistic behaviour”, while the Federal Trade Commission is currently investigating Amazon and Facebook to determine if they are abusing their massive market power.

The charges against Google describe the company as a “monopoly gatekeeper for the internet”, which uses “pernicious” anti-competitive tactics to extend its power. When a single company has 80% of the “search” market and advertising revenues, then there is certainly the danger that it will crowd out competitors, undermine innovation and prevent the development of the “next Google”.

Many years ago Google attacked Microsoft accusing it of being a technological bully that ruthlessly abused its dominance of the personal computer software market to choke off competition – what goes around, comes around!

What is particularly interesting about this, and other, legal actions are that they highlight a changing perception of the tech industry - no longer great innovators that purport to ‘do no evil’ but rather large corporate superpowers.

This push back against the tech sector comes after the Cambridge Analytica scandal highlighted the power of Facebook and for many the site of Amazon’s chief executive, Jeff Bezos, growing richer by the day while the rest of the economy goes to ‘hell in a hand cart’ raises serious issues over the power and wealth of these companies.

The change in the regulatory and political attitudes clearly emerged earlier this year when the bosses of Alphabet, Amazon, Apple and Facebook appeared before a congressional hearing and, for many watching the proceedings, simply demonstrated good old-fashioned commercial ruthlessness.

This action by the US justice department could have a much wider-ranging impact and lead to investigations into other parts of their businesses going forward.

While the European commission has already conducted three investigations into Google and the UK and Australia are re-drawing the regulatory map, it’s going to be the DoJ’s anti-trust case that could prove the big game changer.

Neil Tyler

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