The baddest moves the biggest names in tech have pulled
The capitalist economy which runs most of the world today was built on the principles of individualism. The institution of private property was created, the exercise of free will was sanctioned, and healthy and perpetual competition in the marketplace was encouraged.
However, healthy competition has been strangled by gargantuan corporations who have steadily accumulated size and have leveraged that to gain strongholds over their respective industries. These few massive players have sought governmental backing via lobbying, have picked up and replicated any new ideas that enter the industry, have restricted access to technology through wide-ranging patents, have sought to eliminate any new threats by pricing at predatory rates and have incessantly grown larger and stronger by strategically acquiring companies through mergers.
This is so far offbeat from what a capitalist world was supposed to be, and yet is an inevitable result of how we implemented those very principles. And nowhere is this anomaly more glaring and alarming than in the tech industry, which deals in goods more intangible than tangible, and where the exchange of products cannot be impeded by physical barriers.
In this piece, we analyze the colossal Goliaths of the tech world and how their supremacy in the industry helps them get away with far more misdemeanors than they should.
Facebook, Google, Amazon and Qualcomm are all huge tech companies whose influence stretches across borders. Each of these has monopolized one or more subsets of the tech industry.
- Facebook, for instance, through its own social network and through its acquisition of WhatsApp and Instagram, has acquired an 80% share in the social media market.
- Google is by far the most intuitive choice for an online search engine and has a 90% share in the search engine market.
- Amazon is the most dominant force in the e-commerce industry and controls both sides of the coin by being a selling platform as well as a commercial seller in its own right.
- Qualcomm was indispensable in the development of wireless broadband technology and has patents on technology essential to the operation of mobile data. Because of these patents and the obligatory royalties attached to them, any company which makes a device compatible with mobile data networks must pay a royalty fee to Qualcomm. This is a huge part of Qualcomm’s present dominance in the modem chip market, where it holds a roughly 52% share.
Such dominance exhibited by these companies is hard to curtail for a number of reasons. Firstly, their resources help them home in on and strategically obliterate any new competitor that begins to blossom in their industry. This is carried out by acquiring it in a takeover, by blocking it on their own platform or by replicating the exact idea and mass-producing it in far greater quantities and at far lower prices. Secondly, they don’t shy away from using the institution of intellectual property rights to obtain a stranglehold on important technology through the registration of wide-ranging patents. Hence, any new manufacturer who produces the same category of products must pay them patent royalties at rates discerned by these companies.
Such unquestioned and impregnable dominance is the main token that helps them go further and further in a quest to satiate their ever-expanding desires. That’s precisely what we scrutinize here – blatant misuse of unchecked power.
How the rules were flouted and how governments riposted
There have been multitudes of leaks of personal information of Facebook users, most notably when 540 million users’ account data was left hanging on display on a publicly accessible cloud server owing to a gaffe by the company’s developers in April this year. Even though all such problems were immediately brought to task upon the alarm being raised, it brings to the fore the conundrum of how third-party apps which link your Facebook account with themselves use the data they accrue.
In 2010, the Electronic Frontier Foundation (EFF) identified personal information aggregation techniques called “connections” and “instant personalisation” on Facebook. It all starts with the little like button that can clear the way for the different pilot programmes or companies to gain access to an individual’s private information. Most Facebook users fail to understand how the mechanism works or how the effect of companies being able to access private data might be dangerous and thus, are no more than oblivious victims of Facebook’s policies.
Arguably the most sensational among the fusillade of negative headlines which Facebook has been bombarded with was the Cambridge Analytica scandal, where an analytics firm tied to Donald Trump’s 2016 presidential campaign illegally grasped personal data from unknowing Facebook users and used it in profiling the American electorate to make more incisive and targeted campaign advertisements. A historic achievement broke the media on July 24th, 2019 when the US government placed a humongous $5 billion fine against Facebook for repeated privacy violations. This came as a much awaited conclusion to a 16 months long probe into the matter after revelations of Facebook’s entanglement with Cambridge Analytica.
Google hogged all the wrong headlines in March this year when it attracted the ire of the European Union’s antitrust watchdog for malicious advertising practices. Google partners with several websites as an advertisement broker by helping the website generate money by running ads alongside the search boxes on the website page. These ads are run by AdSense for Search, a unit within Google.
The prosecuting claim was that this control of AdSense, and hence Google, to control which ads are featured on the websites and how, aided it to negatively target ads of Google’s market rivals, including wide-ranging aspects of how those ads are displayed – the size of the ads, the colors used or the fonts of the advertising text. An immediate punitive maneuver was hence necessary to eradicate this high-handed control and to give all players a level opportunity to effectively advertise their products.
Google has faced several lawsuits over critical issues like privacy and intellectual property. Among all this, one lawsuit that gained the greatest amount of popularity is the one versus the United States over Google’s violation of privacy policies. At the end of the investigation, Google faced a $22.5 million civil penalty. Besides this, Google has lost a total of $9.3 billion to the EU as a result of the EU’s antitrust probes spanning over a decade. The main aim of the probes was to investigate the company’s Android phone softwares and searches related to shopping. Very recently, on March 20th, 2019, Google was fined a mindblowing $1.7 billion for its illegal actions as an ad broker for various websites.
Amazon, as we saw, has a two-fronted approach to the e-commerce market. It is both a platform for third-party companies to sell their products online, and a commercial seller in its own right that could theoretically compete with the very companies it provides a launching pad to. It’s this very duality of its operations that has sparked a European Union investigation into the company this July.
When contracting with third-party sellers and giving them licenses to sell on the platform, Amazon makes them sign a use-of-data clause stating that their participation in Amazon is contingent on them allowing Amazon access to their sales data – including information like the name of the merchant, the details of their products and tabs of all transactions they have successfully completed. The basis of the EU’s concerns are whether the accrual and use of such data stifles competition on the platform to such an extent that it’s impossible for an up-and-coming business to compete with it on level terms.
Amazon has also faced a lot of heat over claims of violation of government-set standards of working environment. Severe violation of Union Laws and questionable warehouse conditions in the US and the UK have been answered with strict action from the governments in the last two decades. In 2001, below standard conditions of the Garson Gate UK Facility was received with a threatened protest from Billy Bragg. This protest later resurfaced in 2008 to fight for the same cause.
Various BBC undercover reports validate all the claims made by the protesters. Apart from these, concerns about Amazon drivers making much less than the minimum wage in various countries sparked protests in Spain which eventually resulted in a Workers’ strike in 2018. It was supposed to last through the much awaited Amazon Prime Day, across the world. However, workers in several countries faced obstacles including anti-strike laws (in Poland) and the fear of harsher working conditions imposed by the company in case the campaign failed.
A much awaited action was taken on September 5th of 2018 when Senator Bernie Sanders and Representative Ro Khanna introduced the BEZOS (Stop Bad Employers by Zeroing Out Subsidies) Act in order to deal with companies like Uber, Amazon, McDonald’s and so on. Sanders worked hard to ensure that all the employees receive a minimum wage. This bore fruit on October 2nd when Amazon finally raised its minimum wage to $15 per hour.
Perhaps the most malicious of the Big Tech family is Qualcomm, a company vaulted into an unassailable supreme position in its market thanks to how instrumental it was in birthing the market in the first place. Baseband processors are the modem chips which enable any mobile device to connect to a cellular data network. Qualcomm owns essential patents in this field of technology that are indispensable in embedding the feature into mobile phones.
The company operates under a “no license – no chips” business policy, under which it sells its modem chips to phone makers like Apple and Samsung only if they agree to astronomically high royalty payments. It has also enticed buyers with the option of exclusivity contracts, wherein it would lower the patent charges mentioned above if the buyer agreed to exclusively use Qualcomm chips in their phones.
On July 18th, 2019, Qualcomm faced a staggering $272 million fine. This comes in conclusion to a four year long investigation that shed light on the fact that the company sold 3G modem chips at predatory prices between 2009 and 2011 in order to drive its competitor, Icera, out of the market just as Icera was emerging as possible competition. Besides this, Qualcomm has faced the consequences of anti-competitive pricing in the hands of regulators in South Korea, China and Taiwan in the form of huge fines in recent years.
Such violations by tech-giants have sparked protests from people and organisations over the years, eventually culminating in government intervention in recent times. Although many claim that government regulations is absolutely necessary to keep a check on such companies, recent history shows that government regulators have almost always failed. The administration costs often fall heavily on the smaller firms and thus, the private sector giants end up benefiting from the policies meant to keep them in check.
However, without any form of regulation, these unspoken crimes committed by corporate giants will get out of hand and eventually just become the norm. This should necessarily be prevented because, as Elizabeth Warren once stated, these companies “have too much power over our economy, our society, our democracy.”
The abundantly misused and abused maxim has never rung truer – “With great power comes great responsibility.” And if you can’t see that humongous responsibility in the glare of the power, prestige and control bestowed upon you, you need to be stripped of every ounce of that power. If Big Tech must be broken up for the thriving market to open up again, for the customer to wield their rightful power of choice again and for all those with any authority to be answerable to the people they serve again, then by all means, we should seize that hatchet and bring the house down.