GAFAMs under a new US administration

The inauguration of Joe Biden as the new president of the US takes place today. While such an event should only be of interest for American citizens, it may well have implications for our industry worldwide and for the life of the rest of us.

Dominant positions from technology companies have already been an issue for a while. History is a perpetual pendulum movement between totally free markets that lead to limitless growth of some economic players and government attempts to break monopolies and reduce dominant positions. For instance, the US government decided in 1984 to use its antitrust laws to break up Bell System into Bell operating companies leading to the end of a dominant position and an increase in competition.

Nowadays, Facebook which was already under scrutiny under the Trump administration may be facing government action from the newly elected administration. In December 2020, the US Federal Trade Commission (FTC) has filed an antitrust lawsuit against Facebook for its “anticompetitive conduct and unfair methods of competition;” this includes its 2012 acquisition of Instagram and 2014 acquisition of WhatsApp. Facebook, the FTC alleges, has a monopoly on social networking. In March 2018, the FTC already inflicted a US$ 5 billion (EUR 4.1 billion) fine to Facebook further to a probe of the company’s privacy policies. Now, 47 States along with the FTC filed a lawsuit claiming that the company has a monopoly on social networking, is abusing a dominant position to eliminate competitors and stifle innovation and should divest from Instagram and WhatsApp.

Other GAFAM (Google Amazon Facebook Apple Microsoft) companies are also under pressure: Democrat representatives ran an investigation on their monopolistic practices and asked for an increased enforcement of antitrust regulations, and in October 2020, the Department of Justice filed an antitrust suit against Google.

At the same time, Facebook announced a change in the privacy policy of its subsidiary WhatsApp: they announced that from February 8, 2021, users would have to grant access not only to their own phone number and other data but also to phone numbers of their contacts in their address book, along with their profile names and pictures, and that this access would be shared among all Facebook group of companies.

The announcement has triggered a worldwide wave of disapproval with millions of users canceling their WhatsApp subscription and sometimes their Facebook account and switching to Telegram, Signal or even France-based Olvid and Skred. The EU Commission announced they would use Signal from now on and Facebook had to explain their unprivate privacy policy would be watered down for European residents in order to comply with RGPD. In India, the Ministry of Information and Technology (MEITY) has written a letter to WhatsApp asking it to keep Indian users out of the new privacy policy and the new terms and conditions. The Australian government has launched discussions within the IT Ministry over the implications of the announcement. Of course, many other governments and non-governmental organizations also joined in the outcry.

As a consequence, WhatsApp had to step back and announce they would only enforce their new policies on May 15.

The arrival of the Biden administration is bound to increase pressure on the GAFAMs. According to several analysts, most concerns about the GAFAMs over the years have been voiced by the Democrats, and their coming into power does not bode well for these megacorporations. Already in May 2019, Joe Biden declared to Associated Press that it was worth taking a look at breaking up Facebook. He added that “a very strong case [has] to be made for cracking down on tech giants.” Also, in an interview with The New York Times, he criticized the industry for its “overwhelming arrogance,” considering it is a responsibility of the government to “come in and level the playing field again.”

We cannot expect those huge corporations not to react to these threats by all available means. We will observe the relationships between the new administration and the GAFAMs with great attention as it impacts the whole world citizens and especially our industry based on trust.

Photo credits: Glen Carrie on Unsplash - Morning Brew on Unsplash - Victor Garcia on Unsplash - Gayatri Malhotra on Unsplash