Big Tech

Alphabet, Amazon, Facebook, and Apple are commonly referred to as GAFA, the Big Four, or colloquially as the Four Horsemen.[21][22][23][24] Former Google CEO Eric Schmidt, author Phil Simon, and NYU professor Scott Galloway have each grouped the GAFA companies together, on the basis that those companies have driven major societal change via their dominance and role in online activities. This is unlike other large tech companies such as Microsoft and IBM, according to Simon and Galloway.[23][25] Eric Schmidt has excluded Microsoft from the grouping, noting that "Microsoft is not driving the consumer revolution in the minds of the consumers."[26]

A more inclusive grouping referred to as GAFAM, the Big Five, or FAAMG, defines Alphabet, Amazon, Facebook, Apple, and Microsoft as the tech giants.[27][28][29][30] Besides Saudi Aramco, the GAFAM companies are the five most valuable public corporations in the world as measured by market capitalization.[10] Nikos Smyrnaios justified the GAFAM grouping as an oligopoly that appears to take control of the Internet by concentrating market power, financial power and using patent rights and copyright within a context of capitalism.[31] Sometimes, the Big Five are referred to as the FAAAM stocks, where the letters are rearranged and Alphabet is abbreviated using an "A" instead of a "G."[32]

FAANG refers to the five prominent American technology companies: Facebook, Amazon, Apple, Netflix, and Alphabet (GOOG).[33][34] The term was coined by Jim Cramer, the television host of CNBC's Mad Money in 2013, calling these companies "totally dominant in their markets."[35] Until 2017, FANG was limited to Facebook, Amazon, Netflix, and Alphabet. Another variant of this acronym is "FANGAM," which includes Microsoft.[36]

"BATX" refers specifically to the largest internet companies in China:[37] Baidu, Alibaba, Tencent, and Xiaomi.[38][39] BATX are among the first tech companies started in the 2000s during the Chinese tech revolution, and became widely used among Chinese netizens. Other Chinese tech companies like Huawei, DiDi, JD.com and ByteDance started later and seek to challenge the biggest tech giants.[40][41]

According to Smyrnaios, globalization has allowed GAFAM to minimize its global taxation load and pay international workers much lower wages than would be required in the United States.[31]

Smyrnaios argued in 2016 that GAFA combines six vertical levels of power, data centers, internet connectivity, computer hardware including smartphones, operating systems, Web browsers and other user-level software, and online services. He also discussed horizontal concentration of power, in which diverse services such as email, instant messaging, online searching, downloading and streaming are combined internally within any of the GAFA members.[31] For example Google and Microsoft pay to have their web search engines appear as first and second in Apple's iPhone.[48]

In 2019 and 2020, the Big Tech industry become center of antitrust attention from the United States Department of Justice and the United States Federal Trade Commission that included requests to provide information about prior acquisitions and potentially anticompetitive practices. Some Democratic candidates running for president proposed plans to break up Big Tech companies and regulate them as utilities. "The role of technology in the economy and in our lives grows more important every day," said FTC Chairman Joseph Simons. "As I’ve noted in the past, it makes sense for us to closely examine technology markets to ensure consumers benefit from free and fair competition."[49][50]

The spirit of the antitrust law is to protect consumers from the anticompetitive behavior of businesses that have either monopoly power in their market or companies that have banded together to exert cartel market behavior. Monopoly or cartel collusion creates market disadvantages for consumers. However, the antitrust law clearly distinguishes between purposeful monopolies and businesses that found themselves in a monopoly position purely as the result of business success. The purpose of the antitrust law is to stop businesses from deliberately creating monopoly power.[51]

Consumer welfare, not assumptions that large firms are automatically harmful to competition, should be the core consideration of any antitrust action. The consumer welfare standard serves as the "good reason" in antitrust enforcement as it appropriately looks at the impact on consumers and economic efficiency.[52] So far, it is not apparent that there has been a harm to consumer welfare and many technology companies continue to innovate and are bringing real benefits to consumers.[53]

Discussions of antitrust policy are often clouded by common myths about this widely misunderstood area of the law. For example, the Sherman Antitrust Act of 1890 criminalizes monopolistic business practices, specifically agreements that restraint of trade or commerce. At the same time, the Sherman Act allows organic creation of legitimately successful businesses that gain honest profits from consumers. The Act's main function is to preserve a competitive marketplace. The Big Tech companies are large and successful companies, but success alone is not reason enough for antitrust action. A legitimate breach of antitrust law must be the cause of any action against a business. Antitrust law doesn't condemn a firm for developing a universally popular search engine, such as Google, even if that success leads to market dominance. It's how a monopoly is obtained or preserved that matters — not its mere existence.[54]

The correlation between alleged anticompetitive behavior and questionable online privacy practices is also far from clear. Antitrust law is narrowly tailored to protect consumers from business conduct that harms the competitive process itself. Questionable practices that relate to privacy, however, may require their own regulatory framework of online privacy laws.[54]

The United States House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law began investigating Big Tech on an antitrust basis in June 2020, and published a report in January 2021 concluding that Apple, Amazon, Facebook, and Google each operating in antitrust manners that requires some type of corrective action that either could be implemented through Congressional action or through legal actions taken by the Department of Justice, including the option of splitting up these companies.[55][56]

The European Commission, which has imposed sanctions on several of the high tech giants.

In June 2020, the European Union opened two new antitrust investigations into practices by Apple. The first investigation focuses on issues including whether Apple is using its dominant position in the market to stifle competition using its Apple music and book streaming services. The second investigation focuses on Apple Pay, which allows payment by Apple devices to brick and mortar vendors. Apple limits the ability of banks and other financial institutions to use the iPhones' near field radio frequency technology.[57][58]

Fines are insufficient to deter anti-competitive practices by high tech giants, according to European Commissioner for Competition Margrethe Vestager. Commissioner Vestager explained, "fines are not doing the trick. And fines are not enough because fines are a punishment for illegal behaviour in the past. What is also in our decision is that you have to change for the future. You have to stop what you're doing."[59]

On May 9, 2019, the Parliament of France passed a law intended to force GAFA to pay for related rights (the reuse of substantial amounts of text, photos or videos), to the publishers and news agencies of the original materials. The law is aimed at implementing Article 15 of the Directive on Copyright in the Digital Single Market of the European Union.[61]