Google is abusing its monopolistic power. So What?

The US Congress yesterday published its long awaited INVESTIGATION OF COMPETITION IN DIGITAL MARKETS report. The investigation was carried out by the Committee on the Judiciary, and examined the dominance of Amazon, Apple, Facebook, and Google, and their business practices.

Unsurprisingly they concluded that these companies hold far too much power over the digital marketplace. The report is highly critical of the conduct of these companies, and their impact upon the digital marketplace and indeed upon democratic accountability. The following quote from the report introduction encapsulates the findings of the Committee very well:

"A year after initiating the investigation, we received testimony from the Chief Executive Officers of the investigated companies: Jeff Bezos, Tim Cook, Mark Zuckerberg, and Sundar Pichai. For nearly six hours, we pressed for answers about their business practices, including about evidence concerning the extent to which they have exploited, entrenched, and expanded their power over digital markets in anticompetitive and abusive ways. Their answers were often evasive and non-responsive, raising fresh questions about whether they believe they are beyond the reach of democratic oversight.

Although these four corporations differ in important ways, studying their business practices has revealed common problems. First, each platform now serves as a gatekeeper over a key channel of distribution. By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them. Second, each platform uses its gatekeeper position to maintain its market power. By controlling the infrastructure of the digital age, they have surveilled other businesses to identify potential rivals, and have ultimately bought out, copied, or cut off their competitive threats. And, finally, these firms have abused their role as intermediaries to further entrench and expand their dominance. Whether through self-preferencing, predatory pricing, or exclusionary conduct, the dominant platforms have exploited their power in order to become even more dominant."

So What? It's what we all knew anyway, so what's new now?

Well, the report goes on to quote Supreme Court Justice Louis Brandeis:

"We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both."

This sounds a little like the Committee may be laying it on a bit thick; but on further reading, perhaps not. Throughout, the report stresses the lack of democratic accountability, and the consequent harm to the general economy of the unchecked monopoly of these, and a handful of other companies, that they suggest by 2030 could control 30% of global gross economic output. Such dominant economic power is undoubtedly unhealthy, stifling any realistic competition.

There are also other societal impacts - when examining their conduct individually the report highlights that "Amazon expanded its market power through avoiding taxes". This is an accusation that could be levelled at any of them, which routinely 'offshore' their taxes to pay as little as possible in the countries that generate their wealth, with as little as possible meaning 'none' in many cases.

Let's not be hypocritical here: there probably isn't any company, or individual taxpayer, that doesn't do their best to reduce their taxes to the minimum where they can. But for most there is also an innate recognition that paying some tax is fair and reasonable. But recent events in the UK highlights the point that the US Congressional Report may not be far off the mark in that big tech companies now consider themselves untouchable and above the law.

In the UK, the Digital Services Tax (DST) has been introduced to levy a small 2% tax on the big tech companies' revenue to compensate for the way in which international tax law is framed, allowing them to export their tax liabilities and avoid paying any tax in the wealth generating countries in which they operate.

Both Google (and Amazon) have responded by instead of paying the tax out of their own revenues, as intended, they intend to pass it on to their customers in the form of a 'DST Fee' from 1st November - rather than pay the tax themselves, they will pass it onto their customers who, because of Google's and Amazon's monopolistic stranglehold in the digital marketplace, will be forced to pay it on top of their normal fees - to be in their marketplaces you have to pay the gatekeeper.

Ultimately this will pass back through to consumers who will unknowingly find themselves paying Google and Amazon's taxes for them as well as their own.

So that's what. Google's (and Amazon's) conduct in relation to the DST is a warning that maybe they have indeed got too big, where they can simply dump their own tax liability back on their customers and consumers, seemingly without sanction. So it really is time to care about the abusive competitive behaviours of these big tech companies who are demonstrating that unfettered corporate greed and power is all, who have no social conscience and, in the case of Google, abandoned their 'do no evil' ethos long ago. It's one thing to want to minimise your tax liability, but another thing altogether strong-arm your customers, and their customers, to pay a tax they simply don't want to pay.

Read the Congressional Report