Thanks to their massive reach and lucrative data collection practices, Google and Facebook have long dominated the tech industry. Still, they have now come under increasing fire from regulators worldwide as antitrust authorities have become increasingly aware of the market power they wield.
As their problem worsens, their consequences could be severe, and their impact on the economy and consumer choice could be far-reaching.
Let’s take a closer look at why their antitrust problem is rapidly escalating.
Overview of the current antitrust problem
The current antitrust problem facing Google and Facebook is that both companies have become increasingly powerful and dominant in the digital advertising market, leading to concerns over their ecosystem domination. As a result, there has been a significant increase in regulatory scrutiny of these companies in recent years.
Google is the dominant search engine and Facebook is the leading social network with over 2 billion monthly active users, which can track user behaviour across multiple platforms. This has enabled them to collect data on an unprecedented scale, giving them an advantage over other businesses who lack access to this data.
Furthermore, Google and Facebook have also increased their presence in other sectors beyond digital advertising such as online retail, cloud computing, online travel services, and artificial intelligence (AI) technologies. Their exponential growth allows them to achieve near monopolies on certain markets or services while competing with smaller players within those same markets. This enables them to exploit market power at scale and stifles competition from smaller rivals who cannot match their reach or capital base.
Finally, this current antitrust problem is compounded by issues related to privacy and disinformation campaigns emanating from within the systems operated by these companies which have caused additional protectionist measures by regulators seeking to protect consumers from potential harms caused by their activities.
Google’s Antitrust Issues
Google and Facebook have been facing antitrust issues for a while now, but recently, these issues have been getting much more serious. As Google and Facebook continue to hold immense power in the market, the regulatory agencies worldwide have stepped up their scrutiny of the two tech giants.
In this article, let’s explore why Google and Facebook’s antitrust problem is worsening.
EU’s $2.7 billion fine
The European Union has recently ramped up its antitrust efforts against tech giants, slapping companies such as Google and Apple with massive fines. In June 2017, the European Commission fined Google €2.42 billion ($2.7 billion) for favouring its comparison-shopping service over that of competitors in search results. The commission found this “illegal practice had been in effect since 2008”.
The commission argued that Google’s conduct reduced competition to the detriment of consumers and stifled innovation by hindering competitors’ ability to innovate and compete in the marketplace. It also found that Google used its market dominance to artificially inflate prices for advertisers by controlling access to pricing information about rival services, meaning smaller rivals could not compete on equal terms and new companies struggled to enter the market.
This has major implications not only for the European Commission, but could spark similar antitrust actions from other major countries across the globe including India, China, South Korea and Australia in attempts to curb unchecked commercial power held by large corporations such as Google, Facebook, Amazon and Apple (GAFA).
FTC’s investigation into Google’s ad practices
The Federal Trade Commission (FTC) investigated Google’s ad practices in 2013. This has since expanded to encompass a variety of allegations against the tech giant, including its dominance in online search and digital advertising.
The FTC began looking into potentially anti competitive behaviour in various areas, including how Google promotes its products, such as maps and flights, over competitors, collects user data; and whether or not it requires third-party sites to pay to be included in search results. In addition, other questions have been raised about possible discriminatory practices aimed at discouraging competition.
The FTC is investigating both the search giant’s past and current practices under antitrust laws, which prohibit anti-competitive behaviour that harms consumers by reducing competition, restricting market access or driving up prices. If the commission finds a violation of antitrust laws occurred it could take action against Google such as issuing fines and other remedies. The outcome of this investigation could have a significant impact on companies around the world who rely on Google for their advertising needs.
Google’s dominance in search
Google dominates global search engine traffic and market share, emphasising its unmatched capability to target customers and capture their data through its search engine. In the US alone, Google controls 76.5% of desktop-based search engine queries and 94% of mobile searches, signalling a legitimate antitrust concern for authorities.
Google’s dominance in search goes far beyond the large number of users it draws and the complexity of its algorithms that power its organic results. This is evidenced by numerous lawsuits attempting to tackle Google’s strategic policy favouring its products over others’ services – a controversy particularly relevant to verticals such as travel and shopping services. For example, firms competing with Google in these verticals complained about the advantage Google gives to its services by pushing them up in the rankings which caused direct harm to the competitors’ businesses.
In addition, since 2012 Google has also become increasingly dominant in online ads thanks to its powerful network of AdSense websites and affiliate advertising programs; between 2016-2018 alone, its digital advertising share increased from 40% to 60%. This has naturally resulted in much higher prices for firms looking to advertise online relative to what they would have paid before Google entered this space. To complicate matters further, these alleged monopolistic practices have become discouraged due to imperfect enforcement; authorities simply have too many gaps in understanding how an algorithmic enterprise like Google may utilise anti-competitive methods when ranking users or charging advertisers.
Overall, Google’s dominance on Organic Search and Digital Advertising makes it susceptible for antitrust regulators concerned about maintaining healthy competition for decades ahead.
Facebook’s Antitrust Issues
In recent years, Google and Facebook have come under intense scrutiny over their alleged monopolistic practices. Both tech companies have been accused of abusing their market power to force out their competitors.
Unfortunately, as the antitrust investigations pursue a resolution, the problem is only getting worse for Google and Facebook.
In this article, we’ll examine how Facebook’s antitrust issues have been evolving.
FTC’s investigation into Facebook’s data collection practices
In 2019, the Federal Trade Commission (FTC) launched an investigation into Facebook’s data collection practices, examining the tech giant’s large-scale accumulation of user data as a potential violation of antitrust laws. In addition, the FTC is interested in whether Facebook’s practice of collecting information on users and other websites without consent constitutes unfair competition.
This is not the first time Facebook has been scrutinised for its data practices; the FTC fined the company $5 billion in 2019 after violating privacy laws. However, this investigation focuses less on the violation of privacy itself, and more on its impact on competition.
The examination began with staff from both parties discussing possible remedies for any violations should they be identified. But with few details available about what either side is looking for in an agreement, it remains unclear how far this investigation will go. Meanwhile, both sides have invested billions in building their platforms and technology — such as Facebook’s Calibra — potentially paving the way for future efforts to dominate the online market by controlling access to certain user data or services.
At stake here is whether or not Facebook broke antitrust laws by leveraging its vast trove of user data to gain an unfair competitive edge over other players in the tech industry. This decision could seriously affect how businesses operate globally in digital markets.
Facebook’s dominance in social media
Facebook’s popularity has helped to cement its dominant position in the social media market. It is estimated that Facebook’s market share of social media advertising expenditure across world markets accounts for around 70 percent in most countries, according to an analysis published by The Drum in 2019. With a user base of 2.6 billion people, the company’s power and influence is hard to overstate.
Despite its widespread reach, the evidence suggests that Facebook’s platform remains largely unchecked by government regulators and competition watchdogs, despite growing concern about its potential for market dominance and abuse of user data. Criticism over the way Facebook operates has increased significantly over recent years. In 2018, the company was subject to criticism from antitrust regulators and industry watchdogs owing to concerns about how it collects data and uses targeted advertising as a tool of influence.
Just this year, the European Commission (EC) launched an antitrust investigation into Facebook’s behaviour concerning its impact on competition in online advertising services – including potential self-preferencing practices – and other elements related to its activities on third party websites. Additionally, parallel investigations have opened into Google’s practices within various EU Member States that address similar issues concerning their disclosures of how they use user data when delivering digital services/products or advertising services.
The mounting concerns over Facebook’s dominance in social media echo wider trends in tech culture surrounding references within Apple and other companies who markets raised similar debates previously – but with potentially greater implications for user privacy this time around due to societal changes driven by the pandemic. In response, governments are calling for closer examination into business models that could lead potentially anti-competitive outcomes ensuring trust is built into our global digital economy through rigorous enforcement of existing laws regarding business models proven detrimental not only from an economic standpoint but all consumers/citizens both now and future generations.
Google and Facebook’s antitrust problem is getting much more serious
Google and Facebook are two of the largest tech companies in the world, but they also face scrutiny over how they use their power in the market. The antitrust issue between the two companies has been building up for years, and now it appears to worsen.
In this article, we’ll look at the antitrust problem in more detail, and what it might mean for the future of these companies.
Google and Facebook’s increasing market power
Google and Facebook have become a formidable duopoly in the online advertising market, leading to an increase in their market power and growing concerns over antitrust violations. In 2019, Google and Facebook accounted for more than 60 percent of all global digital ad revenue, with Google owning almost 50 percent of the total and Facebook about 20 percent. This has led to a significant power imbalance between these tech giants and smaller players in the digital ad space.
Google and Facebook’s dominance has hindered innovation, with startups struggling to gain a foothold due to the high cost of entry into the online advertisement market. Moreover, this duopoly has become entrenched. As a result, users typically have few alternatives to spend their time or money, meaning they’re likely to stick with one or both companies instead of switching platforms. The concentration of power also means that these two companies can set prices at will without any competition for pricing decisions—they can simply raise prices as much as they want, hurt their rivals by charging them lower rates, or foreclose smaller firms from digital marketing opportunities altogether.
The increasing market clout held by Google and Facebook is already raising eyebrows among antitrust regulators worldwide; if left unchecked, new regulations may be created that could significantly shift the balance within this arena. With more oversight from governments needed on this matter, what remains certain is that this antitrust problem is only getting worse for Google and Facebook.
The potential for a monopoly
The potential for a monopoly exists when one company controls large portions of the market, making it difficult for others to compete. This can be particularly problematic in the tech industry because of the increasing interconnectivity of companies and services, leading to opportunities to gain control of a wide range of markets. The most concerning example is Google and Facebook, which have gained large market share in digital advertising, giving them significant power over the market.
The evidence against Google and Facebook regarding their market dominance is mounting. Lawmakers from various countries have investigated their practices and can cite numerous violations contributing to their monopolisation. In addition, regulators in Europe and America are accusing them of abusing their power by unfairly favouring their services over competitors, thus creating an unfair landscape for the rest of the digital advertising industry.
This is why antitrust enforcement is essential – it regulates monopolies and prevents companies from exploiting their power to secure unfair advantages. It is clear that if left unchecked, Google and Facebook will continue to dominate the digital advertising markets, with only minor competitors managing to exist alongside them. Therefore, before it’s too late, decisive action must be taken to prevent further entrenchment of these monopolistic practices on behalf of both Google and Facebook.
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Tech expert fresh from the Australian Coast. Been in the tech industry more than 9 years, as part of a Business Growth Group. His out of office days are 100% for freestyle surfing and waves chasing.