What is the reason behind the substantial fines faced by Apple, Amazon, Google, and Meta? Can these fines ensure consumer protection?

After an extensive inquiry, the United States Justice Department is preparing to take legal action against Apple, accusing the company of potentially violating antitrust regulations. The department claims that Apple is employing hardware and software restrictions that create obstacles for competitors seeking to rival iPhones and iPads. If the lawsuit is filed, it will mark the fourth instance in the past five years where the US federal government has sued one of the “big four” tech giants, including Amazon, Meta, Google, and Apple, for engaging in monopolistic business practices.

As digital markets continue to grow, many countries such as the European Union, Japan, the United Kingdom, the United States, China, South Korea, India, and Australia have either introduced or are planning to introduce competition laws for technology companies.

But what are competition laws? And how are the tech giants breaking them?

What are competition laws?

Antitrust legislation originated in the US Sherman Antitrust Act of 1890. This law prohibited business arrangements in restraint of trade and attempts to monopolize.

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Over time, the Sherman Antitrust Act evolved into today’s competition law, adopted in countries all over the world.

Antitrust laws are enforced at the national level, and allegations of violations of these laws concern the domestic market. These laws – also known as competition laws – prohibit business practices that promote unfair monopolies, stifle competition, and strengthen a dominant position or power.

In recent years, technology products—whether they’re apps or physical products like phones and computers—have come under enormous scrutiny. The requirements for regulating the development and use of technology have a dominant focus on artificial intelligence.

At the same time, the business practices of tech giants receive less public attention. So it’s notable that antitrust lawsuits against the Big Four focus on the companies, not just their products.

The argument is that these companies concentrate the market and therefore charge higher margins for their goods and services, but have less incentive to innovate in ways that benefit consumers.

How do tech giants break competition laws?

Of the Big Four, Apple is not the first to be accused of violating antitrust laws.

Over the past decade, the European Union has fined Google a total of €8.25 billion (AU$13.6 billion) for three separate violations of EU competition law.

These related to the abuse of Google Shopping to put competitors at a disadvantage in 2017, the unfair dominance of the Android operating system market in 2018, and the abuse of online advertising in 2019. The advertising business accounts for 80 percent of Google’s revenue.

Although Google and its parent company Alphabet made some changes to their policies following these EU rulings, Google has so far not paid these fines and is still appealing them in several cases.

In 2020, the United States Department of Justice also filed an antitrust lawsuit against Google for monopolizing several digital advertising technology products.

The ongoing lawsuit alleges that Google monopolizes the “ad tech stack” — the key technologies used by publishers and advertisers to sell and buy ads. Google allegedly neutralized or eliminated ad tech competitors through acquisitions, forcing publishers and advertisers to use its products.

In 2021, the US Federal Trade Commission and more than 40 states sued Meta, alleging that the tech company eliminated competition by buying its competitors.

The two biggest purchases under scrutiny are Instagram, bought for $1 billion in 2013, and WhatsApp, bought for $19 billion in 2015. The lawsuit claims these purchases eliminated competition that could have challenged Meta’s dominance.

In 2023, the US Federal Trade Commission and 17 state attorneys general sued Amazon, alleging that the technology company used anti-competitive and unfair strategies to maintain a dominant market position.

The US lawsuits against Google, Meta and Amazon are ongoing and no decisions have been made yet.

What is Australia doing to protect consumers?

The Australian federal government has also investigated global tech giants. From 2021 onwards, the government has been exploring legislative approaches to protect Australian consumers.

One example is the Australian Competition and Consumer Commission’s (ACCC) News Media Bargaining Code. The code requires digital platforms operating in Australia to pay domestic news publishers for the use of content.

Despite these advances, Chandni Gupta, executive vice president and director of digital policy at the Center for Consumer Policy Research, notes:

There are gaps in both Australia’s data protection and consumer laws, which could leave Australians far less protected online than consumers in the US and other countries.

The ACCC released its second Digital Platform Services Inquiry interim report in 2021. The report’s findings show that Google’s Play Store and Apple’s App Store have significant market power in the distribution of mobile apps in Australia, and action is needed. Examples of measures proposed by the ACCC include increasing transparency and providing consumers with a greater choice of default apps.

In 2023, ACCC Chair Gina Cass-Gottlieb spoke publicly about the dangers of the Big Four. The commissioner referred to the tech giants as “serial acquirers” and expressed concern about their actions to expand and protect their market power.

Competition legislation exists to maintain fair competition between companies. Violating these laws means that companies influence the market at the expense of other, usually smaller, companies.

If governments succeed in holding tech giants accountable, this could radically redefine the technology market, allowing for fairer competition and more ethical business practices.

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