By Ryan Tracy and John D. McKinnon
WASHINGTON -- America's biggest technology companies have leveraged their dominance to stamp out competition and stifle innovation, according to a Democratic-led House panel, which called on Congress to force tech giants to separate popular online platforms from other business lines.
The report released Tuesday from Democratic staff of the House Antitrust Subcommittee capped a 16-month inquiry into the market power of Amazon.com Inc., Facebook Inc., Alphabet Inc.'s Google and Apple Inc.
It says Facebook and Google have monopoly power, while Apple and Amazon have "significant and durable market power," and criticizes U.S. antitrust enforcement agencies as failing to curb their dominance.
The 449-page report recommends Congress consider a series of measures in response, including legislation forcing them to separate certain dominant online platforms from other business lines as well as changes to antitrust laws to reinvigorate a perceived lack of strong enforcement.
The report carries no legal consequences on its own, but lawmakers hope its conclusions will spur policy makers to action.
"To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," the report says. "These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement. Our economy and democracy are at stake."
Republicans on the House panel didn't sign on to the report and have said in interviews in recent days that they share concerns about the tech companies but disagree with some farther-reaching Democratic policy recommendations.
"It's very important that we proceed with a scalpel and not a chain saw, " said Rep. Ken Buck (R., Colo.), a member of the subcommittee.
The companies are expected to vigorously challenge the report's findings.
Ahead of the report's release, the Consumer Technology Association, an industry group, published a statement saying the tech sector is "the reason for America's global innovation leadership and powers our economy" and warned against action targeting its most successful companies. "To undercut our nation's 'crown jewel' companies would take our competitiveness out at the knees."
The companies didn't immediately respond to requests for comment.
The report wraps up a probe launched in June 2019. Lawmakers had access to reams of internal corporate documents -- more than the companies wanted to give but fewer than what the committee sought -- and gathered evidence from more than 100 market participants.
The probe intensified in July when lawmakers called out some tech executives' personal emails during a contentious, five-hour videoconference hearing.
The committee's conclusions weren't wholly surprising. Rep. David Cicilline (D., R.I.), the antitrust panel's chairman, and other lawmakers have long been skeptical of Big Tech. At a July 2019 hearing, Mr. Cicilline warned the internet was "growingly hostile to innovation and entrepreneurship."
The bipartisan inquiry publicized new evidence that gives momentum to the companies' critics in both parties. While passing new legislation targeting competition in the tech sector remains an uphill battle, it appears more likely now than a year ago.
"This report could end up being a turning point in antitrust and tech," said Paul Gallant, an analyst for investment bank Cowen Inc. "It creates momentum for legislation next year, and it also might nudge regulators to bring cases even under existing law knowing they've got congressional backup."
The report gave a detailed account of the market power of the four tech giants. It said Facebook has achieved an impregnable competitive advantage in the market for social networks, thanks in part to its acquisition strategy.
"Despite significant changes in the market...Facebook has held an unassailable position in the social network market for nearly a decade, demonstrating its monopoly power," the report said. It said that internal documents including communications among senior leaders over strategy and other matters "support the conclusion that Facebook's monopoly power is insulated from competitive threats."
Facebook Chief Executive Mark Zuckerberg and other executives contend that the social-network marketplace is robust and highly competitive.
The report found that Google enjoys durable monopoly power in the market for general online search. "Google overwhelmingly dominates the market for general online search," it said, pointing to the company's strength in data, its size and "aggressive business tactics that Google wielded at key moments to thwart competition."
Google has said that it faces strong competition from other search engines such as Microsoft Corp.'s Bing and DuckDuckGo.
The subcommittee's report criticized Amazon for a "lack of candor" in its responses to congressional inquiries. The report concluded that the e-commerce giant is the dominant digital marketplace controlling about 65-70% of U.S. online market sales. Amazon has said it should be viewed as part of the overall retail market, where its share is much lower.
The report says Apple has "significant and durable" market power in its mobile app store. Apple contends that its restrictions on mobile app sales for its devices are necessary to control the quality of user experience.
Write to Ryan Tracy at email@example.com and John D. McKinnon at firstname.lastname@example.org
(END) Dow Jones Newswires