Published on: August 13,2021 10:55 IST
By Meher Sunil Dabrai
Introduction
Most people have barely heard about the chair of the United States Federal Commission until this year. The Commission has been all over the news for questioning the privacy and trust policies of some of the biggest tech giants in the world.
The Commission is known to have raised its concerns on the privacy policy of Amazon and Facebook among other such popular technologies. The Federal Trade Commission has raised an enquiry on these websites and brought them to the Court which has led to a huge controversy in the American news.
Here is all you need to know about the issue between the Federal Trade Commission and these companies.
What is the Federal Trade Commission?
The Federal Trade Commission is an independent agency of the United States government whose principal mission is the enforcement of civil US antitrust law and the promotion of consumer protection. Its headquarters are at Washington DC.
The Commission is headed by five commissioners who each serve seven year terms and the Commissioners are nominated by the President and confirmed by the Senate. One of these Commissioners is chosen by the President to act as the chair.
What does the Federal Trade Commission do?
The Federal Trade Commission was created to establish economic control and protect the consumers. The Federal Trade Commission aims to create a vibrant economy characterized by vigorous competition and consumer access to accurate information.
The Federal Trade Commission, also called as the FTC, has a lot of powers to investigate, bring enforcement and create rules and penalties for violations. The FTC makes decisions based on a democratic majority which means that the decisions of the FTC rely on votes but the Chairperson has the power to set the agenda for the entire agency.
The current Chair of the Federal Trade Commission who has raised objections against the biggest tech giants in the world is Lina Khan who has been appointed by the current US President Joe Biden.
The Federal Trade Commission protects the anti-trust laws in the country. These laws were created by the Congress to preserve competition among businesses and prevent any one business from dominating in a single industry and establishing a monopoly.
When businesses compete and monopolies are restricted the companies have strong incentives to operate efficiently and keep the prices down while keeping the qualities up. These laws are the pillars that support the capitalism in the United States.
What is the issue with Facebook?
The FTC has sued Facebook for breaking anti-trust law by gobbling up many smaller social media startups and acquiring several large, well-established competitors in what amounts to a concerted effort to build a monopoly in the social media market.
This is evident by the fact that Facebook has bought most of the smaller startups that aimed to compete with the company. Facebook recently acquired an app called Kustomer that specialized in customer service tools and chat bots.
Facebook considered the app to be an asset to their “social commerce” initiative. Facebook has used the Covid 19 pandemic to its advantage to market itself as a shopping platform for small businesses many of which had to close their physical shops and places of business due to the government regulations and the lockdowns.
These smaller start-ups like Kustomer do not aim to make their mark in the digital market when they are given an offer by Facebook that they cannot refuse.
The heart of this lawsuit are two of the biggest and popular acquisitions that have been made by Facebook namely; Instagram and WhatsApp. These acquisitions established a direct control by Facebook over a large portion of the social media landscape.
The acquisition of Instagram and WhatsApp make Facebook the monopoly of the digital market. The FTC focuses on these aspects as one of its major objectives and has asked the Court to reverse these acquisitions and leave them as independent businesses that can compete with Facebook.
What is the issue with Amazon?
Amazon is one of the leading e-commerce websites across the globe. The Covid-19 pandemic has played a key role in the popularity of the app. The app became incredibly successful as people could shop online from the comfort of their homes, thereby safeguarding themselves from the deadly pandemic that had been raging across the world.
While this was extremely useful, once smaller shops started opening up, the FTC realized that Amazon had become a tough competitor to smaller businesses and initiated an investigation.
In its investigation, the FTC looked for the conflict of interest of Amazon with smaller business sellers such as those in the actual regular markets.
The FTC is looking at the inherent conflict of Amazon competing with smaller sellers on its platform including allegations that they use information from the sellers on the platform to decide what products to introduce.
How have the companies reacted?
Facebook filed a petition to have the Chair of the FTC, Lina Khan recused from an anti-trust case involving the company. They argued that the statements made by her in the past writings and comments make her biased against the company.
Amazon has also been under immense pressure by the FTC and has filed a similar motion to have Khan recused from the proceedings involving it as well.
There have been precedents in cases involving the FTC where the courts have often ruled that the Chair refusing to recuse himself from a proceeding has been considered to be a denial of due process.
The Court has also disqualified a chair rom the hearing because he had conducted a previous investigative work for the Senate Subcommittee on the Antitrust and Monopoly.
Even if the firm’s recusal requests are unsuccessful, however, experts say this move by Big Tech may cast a shadow over the FTC’s involvement and Khan’s leadership in future antitrust cases.
The Chair has made statements saying that there is no need for her to recuse herself under the ethics law which primarily focuses on financial conflicts.
She pledged to rely on the facts of the case during her confirmation process and said that if she was faced with any challenges while dispensing her duties, she would consult with the FTC ethics monitors.
What was the Court Ruling?
The Court decision was in three elements. The first issue that the Court focused on was that these major companies along with other popular tech companies such as Google and Apple had been accused of using their technological infrastructure such as apps that are available across multiple devices as the sources of unfair treatment for businesses and to aggravate the conditions for privacy violations, information and democratic disorders.
The court, in its verdict, clearly said that the current anti-trust law simply does not view a dominant market position in and of itself as a problem.
As per the second element of the Court ruling, the Court provides that the Congress with the further rationale for reform in its insistence that the lawful monopolies have no duty to deal with the competitors.
The FTC sought an injunction to require Facebook to interconnect its social networking platform with companies that are seeking to provide similar services.
The Congress and the FTC have seen the prevalent positions of Facebook in social media and Amazon in online retailing as sources of unfair treatment for dependent businesses and aggravating conditions for privacy violations and other market disorders.
The Court decision makes it quite apparent that the current antitrust laws do not view the dominant market positions of these companies as a threat to the common market or the establishment of a monopolistic market in the country.
Conclusion
The American courts have always made several interpretations about the anti-trust laws in the country. These narrow interpretations have made these government cases difficult to win.
This case showed that the country requires more specific anti-trust reforms as well as additional tools and resources for the FTC to be able to continue establishing effective control over the Big Tech companies that engage in anticompetitive conduct.
The lawmakers in the Congress have decided to try to change the anti-trust system while maintaining a keen eye towards the digital economy that has been the current rage in the country.
Most other countries including European countries such as Germany have been stalled in courts when they have raised their concerns about the antitrust regulations specially targeting Facebook and Amazon for their data collection and privacy infringement practices.
All these cases have been dismissed in vain and no measures have been taken to establish efficient and judicious antitrust laws against these companies till date but this does not mean that this is a losing battle as most legislators ae working on establishing specific laws to govern the antitrust laws governing these technologies and keeping them under control before these companies kill the global economies and markets.
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