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A Government Co-opted by Silicon Valley

Tecnológicas. El American

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After the raid on the Capitol by Donald Trump‘s supporters, all social networks chose to censor the president and with him thousands of his followers. While Trump’s insistence on massive fraud that cost the election was somewhat irresponsible, it’s also undeniable that the response of social networks and technology platforms represents complete censorship of a sector of the population that, rightly or wrongly, deserves to have a voice and political representation.

It is worth asking if the Republican candidates had won in Georgia, guaranteeing the GOP a majority in the Senate, the technology companies would have reacted by censoring everything that smells of Trump on their social networks.

Even private companies such as Parler, which received thousands of migrant Twitter users and soon its services were disconnected by Amazon, and the application deleted from Apple’s servers and Google Play.

Right now, Democrats have the upper hand and Silicon Valley technology companies, as big as they may seem, know that the U.S. government is even more important.

Regardless of who won the presidency, social media giants are facing a wave of public scrutiny in the United States and Europe. In the United States, Facebook faces an antitrust suit by the Federal Trade Commission, while Google faces two lawsuits: one led by the states of the Union and the other by the Department of Justice.

On the other side of the Atlantic, the European Union will strongly regulate all technology companies and all the giants in this sector are subject to antitrust investigations.

In 2021, technology companies will face strong scrutiny from regulators in the United States and the European Union. (EFE)

The case for antitrust

On October 1, the Justice Department filed the first case against Google accompanied by 11 Republican state attorneys general. The lawsuit claims that Google has used anti-competitive tactics to protect its monopoly on search engines and prevent companies with Internet search systems from entering the market.

Notably, the lawsuit claims that the company has paid as much as $12 billion to Apple and a similar amount to Samsung to ensure that Google’s search engine is pre-configured on Iphones and smartphones with Safari. With this Google can get more profit on Internet ads.

In November there was a second lawsuit by a coalition of 30 states led by Texas Attorney General Ken Paxton, who also led the lawsuit of 4 states over a possible modification of the electoral code in full elections before the Supreme Court.

Google has used various tactics to ensure it has a monopoly on online search, including paying smartphone manufacturers to prioritize their search engine. (EFE)

Prosecutor Paxton’s lawsuit, in essence, has the same arguments as the Justice Department’s lawsuit, but adds another key allegation: Google has used its monopoly on general search to discriminate against companies in what is known as the vertical search business, such as Yelp or Kayak.

The idea is that Google wants people to start all their searches on its search engine, instead of going directly to a vertical search site or application. The states argue that Google has made changes over the years in the way search results appear to keep more traffic flowing to their own networks, rather than to vertical search engines.

This policy puts vertical search companies in a difficult position, because if users don’t find them easily through Google, they may not find them at all. This is illegal, states say, because the goal and effect is to entrench Google’s share of the search market, rather than directing users to the best results.

The Federal Trade Commission’s antitrust complaint against Facebook

On the Facebook side, in December 2020 the Federal Trade Commission and the attorneys general of 46 states launched their respective antitrust lawsuits, arguing that the social networking giant has used its dominant position to engage in predatory pricing, forced acquisitions designed to eliminate competition and other practices that hurt consumers, forcing emerging technology companies to change their practices in the marketplace. The lawsuit against Facebook is based on three arguments.

Facebook is investigated for predatory practices in which it copies or buys from competitors, using its dominant position. (EFE)

First, while it is true that users join Facebook for free, advertisers pay for the service. In fact, the company’s main source of revenue comes from advertisers and regulators are concerned that these consumers may be paying inflated prices for inferior products and fraudulent advertising performance.

Second, while there is no monetary cost to join Facebook, users pay a high price in data for access to the platform. Data creates immense value for Facebook’s advertising revenue streams from user contributions.

Third, Facebook’s growth strategy has been to use its market power aggressively to buy or bury competitors, which means both end users and advertisers miss out on significant opportunities for innovation and choice in the social media services marketplace.

Europe has all the major technology companies under its spotlight

The European Union has been less lax than the United States with large technology companies because at this time not only Google and Facebook, but also Apple and Amazon, face antitrust investigations in Europe.

In November, the European Commission opened an investigation into Apple to determine whether the App Store rules for application developers violate European Union competition rules. First, the European Commission will investigate the mandatory use of Apple’s own patented In-Application Purchase (IAP) system for the distribution of paid digital content. Apple charges application developers a 30% commission on all subscription fees through the IAP.

The European Commission is investigating whether the rules established by Apple in its App Store go against the free competition rules of the European Union. (EFE)

Secondly, restrictions on the ability of developers to inform users of alternative purchase possibilities outside of applications will be investigated. While Apple allows users to consume content such as music, e-books and audiobooks purchased elsewhere, (e.g., on the application developer’s website), its rules prevent developers from informing users of cheaper purchase possibilities.

In the case of Amazon, the European Commission is investigating the retail giant for violating European Union antitrust rules by distorting competition in online retail markets. According to the Commission, Amazon has systematically used non-public trade data from independent vendors selling on its platform, to the benefit of Amazon’s own retail business, which competes directly with these outside vendors.

The Commission also opened a second formal antitrust investigation into the possible preferential treatment of Amazon’s own retail offerings and those of market vendors using Amazon’s logistics and delivery services.

The antitrust investigations hanging over Google and Facebook are of the same nature as those faced in the United States. Finally, all of these companies face the possibility of being imposed a sales tax within the European Union, an action initiated by the government of Emmanuel Macron in France with the so-called Google Tax.

Technology Giants Take Refuge in U.S. Government

With the future of their dominant market position uncertain, large technology companies have chosen to please the Democratic establishment by abiding by their will either directly or indirectly. It is possible that the massive network censorship of Trump and his followers, as well as the dismantling of Parler, is nothing more than a disguised bribe to a government that will not have the unconditional support of more than 75 million Americans and needs these giants to preserve stability.

The European Commission accuses Amazon of using its dominant position to distort retail competition on its platform. (EFE)

It is difficult to believe that the Democratic Party is the party of the working class, when Biden himself is surrounded by 14 lobbyists from those very companies, who today censure the people who believed in MAGA.

It’s worth asking if the government will put obstacles in the way of the demands that today’s states are leading against Google and Facebook. It is also worth asking whether the U.S. Justice Department’s lawsuit will be successful if Biden’s nominee, Merrick Garland, is appointed as Attorney General. And finally, one must be on the lookout for American lobbyists who will surely try to interfere with the actions of European regulators to make them more lax with their prized technology.

In an environment where Republican lawmakers remain vigilant about the anti-competitive practices of these large technology companies, and with the European Union increasingly insistent on regulating them, their friends in the Democratic administration, House and Senate may prove a decisive factor in deciding their future.

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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