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Are tech giants like Google, Amazon, and Facebook operating fairly?

06 May 15:00 by Mark Baker

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In March, a 150-page report issued by the Government revealed that large companies operating in digital spaces, including search, social media, advertising and e-commerce are becoming threats to competition, innovation and personal privacy. 

The report, led by Harvard University professor Jason Furman, who was a chief economic advisor to former President Barack Obama, found that global tech giants don’t face enough competition and state that existing rules are outdated and need to be strengthened.

The report made the following recommendations:

Getting big companies to share data with startups while safeguarding personal information to help foster innovation and business ideas. The panel cited Uber’s release of data used to help improve infrastructure and planning decisions as an example.

Drawing up a code of conduct to lay out acceptable behaviour for tech companies in their relationships with users.

Rewriting rules so that authorities can better stop digital mergers likely to “damage future competition, innovation and consumer choice”. Critics have contended one-way tech companies protect their turf is by using their cash and stock collectively worth trillions to buy promising startups before they can evolve into competitive threats.

We’re already seeing action taken in the form of high profile cases from the likes of music streaming service Spotify who filed an antitrust complaint in Europe against Apple for stifling competition through its control over the iPhone’s operating system and app store. The animosity stems from a 30 per cent tax that digital services have to pay to use Apple’s in-app payment system, making a Spotify subscription more expensive than Apple’s own music streaming service. Netflix faces the same issue, having been advised to stop accepting new subscription sign-ups through the app for iPhone, coincidently just as Apple is set to launch its own video streaming service.

European Union authorities have faced down big tech companies with the EU competition commissioner Margrethe Vestager fining Google and ordering Apple to pay back billions in back taxes. Additionally, EU, German and Austrian authorities are looking separately into Amazon’s marketplace platform due to complaints of unfair practices.

The online marketplace is still relatively new, so there will be plenty of change in the years to come in regards to legislation and business practices. Financial secretary Philip Hammond said the government would respond later this year to the report’s recommendations, which must be approved by Parliament to take effect.

Stay tuned to the Claremont Consulting blog for more insights and news from our specialist sectors.