Amazon and Google Face Possible Scrutiny by the FTC and DOJ

Laura BednarCybersecurityLeave a Comment

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Several well-known tech companies are now under the close watch of the Federal Trade Commission (FTC) and the Department of Justice (DoJ) over antitrust investigations. Tech giants Google and it’s parent company Alphabet (Fiber, Nest, Amazon, and Facebook, were all questioned about their business practices.

What Triggered the Investigation?

Lawmakers on both ends of the spectrum reportedly held the opinion that tech companies are too powerful in the economic areas of American life. Essentially, this comes down to there being too much control from one tech giant in a sales market.

The DoJ and the FTC have joined together and split up responsibility for overseeing companies to ensure fairness throughout the commerce process. Antitrust laws are a mixture of federal and state government laws that regulate the organization of businesses in order to provide fair competition to benefit consumers.

What Are the Points of Concern?

This new investigation by the Department of Justice is a second strike for Google, who was reviewed by another federal agency six years ago. The claims were similar in not allowing for healthy competition and being generally too large. The investigation here would be an examination of some of the specific complaints from lawmakers and the E.U.:

  • How Google presents search results
  • How it licenses Android smartphones to device makers
  • Advertising practices

The other large name in tech under possible review is Amazon. The FTC is already looking into the company’s business practices.

The first concern is that Amazon may be influencing merchants to sell on their site. Amazon charges vendors who use their site for selling $4.76 to pack, ship and offer customer service for products between one and two pounds. For vendors who use their own site or another marketplace, but still use Amazon for shipping and packaging are charged 75% more.

Secondly, Amazon encourages small businesses to sell their products directly to Amazon customers on their own site. Yet the marketplace is filled with similar products that are Amazon brand. The question is whether or not Amazon is using data on the products and seller to better market their own items.

The final concern is that the bundling service for Prime customers which includes TV shows, movies, songs, and online storage, is undercutting competitors who just sell a single service.

What Does This Mean?

With rumors of investigations, stocks for each of the tech giants have begun to fall. Aside from the business end, both U.S. political parties have been reviewing privacy laws, misinformation laws, and economic consolidation. If the investigations proceed, the tech giants may see a possible break up of their companies and stricter laws concerning a fair marketplace.

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