Steps from the House’s antitrust report are too little, too late when it comes to big tech

Jonathan Shieber
·3 mins read
Capitol building
Capitol building

The U.S. House Judiciary Committee has finally released its omnibus report on its investigation into the monopoly powers held by Apple, Amazon, Alphabet, and Facebook and its findings will do nothing to stem the power of big tech.

For startups, the most relevant points are the potential solutions the committee proposes for addressing big tech and they primarily boil down to giving small companies the benefit of the doubt when they claim that bigger rivals are exercising monopolistic advantages -- and prevent the kinds of acquisitions in the future that allowed these companies to reach the unassailable positions they currently occupy in their chosen markets.

The Committee asserts that in their core areas of business: search, ecommerce, social networking and mobile development platforms and applications, each of the companies is, indeed, a monopoly. And the committee argues that in the future judicial and legislative bodies should define down their definition of market dominance to give smaller companies more standing in cases where they challenge the actions of these large competitors.

Here's the relevant passage from the report:

"To address this concern, Subcommittee staff recommends that Congress consider extending the Sherman Act to prohibit abuses of dominance.Furthermore, the Subcommittee should examine the creation of a statutory presumption that a market share of 30% or more constitutes a rebuttable presumption of dominance by a seller, and a market share of 25% or more constitute a rebuttable presumption of dominance by a buyer."

The other interesting section -- and the one that will likely prove most troubling for investors and startup founders who are looking to exit their businesses relates to how regulators should handle future mergers and acquisitions from big technology companies.

Here, the Judiciary Committee suggests that the default view should be to rule against transactions involving startups by established tech companies... which... yikes.

The report says:

"Since startups can be an important source of potential and nascent competition, the antitrust laws should also look unfavorably upon incumbents purchasing innovative startups. One way that Congress could do so is by codifying a presumption against acquisitions of startups by dominant firms, particularly those that serve as direct competitors, as well as those operating in adjacent or related markets."

For the most part, it seems that the word from regulators is that they should have done more, sooner, to limit the power of big tech, but won't go so far as to take steps that would actually limit the power of big tech.

Instead, they're punishing entrepreneurs and pulling up the ladder behind the companies that have already achieved market dominance. And are making it tougher for any company to actually mount a realistic challenge through an M&A strategy of its own.

These regulations seem like they'll make it harder for Snap to make strategic deals that could put it in more direct competition with Facebook (just a random example).

Furthermore, some of the most strategic acquisitions, which create the opportunities for anti-competitive behavior aren't obvious. Facebook's acquisition of Onavo, for instance, likely would never have gone up for review. It's only thanks to reporting from publications like TechCrunch, that the misuse or abuse of the company's technology was even revealed.

So, the result of all of the hours of testimony, millions of documents, and every other bit of labor that went into the investigation the results are simply -- an exhortation for regulators to #bebetter.

Regulators do, indeed, need to be better. Congress should have done a better job when it would have mattered at all.