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News Article

Are Big Techs in Danger If Biden Wins the US Election?

By Andrea Villar | Wed, 10/07/2020 - 17:37

Large technology companies are still targeted by the US Congress. On Tuesday, Democrat members said that Amazon, Apple, Google and Facebook hold "monopoly power" in key business segments and have misused their market dominance. If presidential candidate Joe Biden wins the November election, analysts foresee a strong congressional stance on technology companies. 

In a report, the House National Committee's antitrust panel wrote that there is "significant evidence" to show that anti-competitive business conduct has hindered innovation, reduced consumer choice and weakened democracy. These accusations have accumulated for 16 months when Congress began investigating the matter. According to analysts consulted by Reuters, this paves the way for possible legislation to regulate large technology companies. 

“To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kind of monopolies we last saw in the era of oil barons and railroad tycoons,” states the report. “By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power but also abuse it by charging exorbitant fees, imposing oppressive contract terms and extracting valuable data from the people and businesses that rely on them.”

“This basically lays out the Democratic Party’s position on tech platforms and how antitrust laws need to be refined and strengthened,” the CEO of the American Economic Liberties Project Sarah Miller told Reuters. The report, she added, has done a lot of work to “set up where and why a Biden administration should act and how it should prioritize the recommendations in the report.”

Among the report's recommendations to reduce corporate dominance is "structural separation," meaning that companies like Amazon would be forced to stop competing on the same platforms they operate until new tools and funding are provided to antitrust enforcement agencies.

In Mexico, there is still a long way to go in terms of regulation but the first step was taken on June 1, when the digital business tax came into force. Digital platforms such as Uber, DiDi, Amazon, Netflix, TikTok, Facebook, Zoom or Spotify that do not comply with the taxes proposed by the López Obrador administration in FY21, will have to pay penalties and may even have their services blocked. In May, companies like Netflix, Nintendo and Mercado Libre increased prices to their users to cover the digital tax. From November onward, Spotify will also increase its prices in the country. The government hopes that up to MX$100 billion (US$4.4 billion) can be collected from digital platforms in taxes. "We are just starting to work on the issue of digital taxes but to have an order of magnitude, once we have a stable mechanism, this should represent more than MX$100 billion (US$4.4 billion) in taxes like VAT and ISR,” said Minister of Finance Arturo Herrera back in June.

What Did the Companies Have to Say?

Google rejected the sub-committee’s report and many of its recommendations. "We are competing fairly in a highly competitive and fast-moving industry. We disagree with today's reports, which present outdated and inaccurate allegations from business rivals about search and other services," the company said in a statement.

Meanwhile, Apple said it disagreed "vehemently" with the report, saying it does not have a dominant market share in any of its business segments. "Competition drives innovation and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with security and privacy at our core, and we will continue to do so".

Amazon, on the other hand, spoke out against the accusations and described "misguided interventions in the free market as marginal notions." "Large companies are not dominant by definition and the assumption that success can only be the result of anti-competitive behavior is simply incorrect.

The data used in this article was sourced from:  
Reuters
Andrea Villar Andrea Villar Journalist and Industry Analyst