Scrutiny of tech giants not before time

For many years, America's big tech companies have been seen as much more than just a generator of enormous profits. They have promoted themselves as playing an essential part in the democratisation of technology and information for the greater good of society. But after a prolonged period of uninhibited expansion and dominance, the likes of Google and Facebook are facing tough questions about how they operate. It is not before time.

This week, America's Federal Trade Commission and more than 40 American states took aim at Facebook, accusing it of buying up rivals to illegally stamp out competition. In the commission's sights are Facebook's purchase of Instagram in 2012 for $US1 billion and the WhatsApp messaging service that was bought in 2014 for $US19 billion.

While Facebook has vehemently denied the claims, what should be most troubling for the social media giant is that despite deep divisions in Washington, the Federal Trade Commission's move has attracted widespread bipartisan political support.

Facebook CEO Mark Zuckerberg.Credit:AP

This latest attempt to rein in Facebook follows a similar move in October when America's Justice Department took on Google, accusing it of illegally abusing its dominance in internet search in ways that harm competitors and consumers. The US government claims deals such as the one Google has with Apple – the company pays billions of dollars a year to have its search engine set as the default option on iPhones – illegally protect its dominant position.

Closer to home, Australia is also taking on the big tech companies. Earlier this week, Treasurer Josh Frydenberg unveiled the government’s long-awaited news media bargaining code, which would force Google and Facebook to pay Australian news organisations for their content.

The tech companies got some concessions from the government – the code includes a provision for lower amounts to be paid out if news companies earn revenue from their content being distributed on the Google and Facebook platforms. But it could still set a global precedent.

Although the US antitrust case against Facebook may throw a spanner in the works. A spokesperson for the Australian Competition and Consumer Commission, the regulator that did the groundwork for the Australian code, said any move to force Facebook to sell off parts of its business would have implications around the world.

If that's not enough for big tech companies to worry about, they are also facing pressure over the amount of taxes they pay into the coffers of countries in which they operate. The Organisation for Economic Co-operation and Development is trying to revamp the international tax regime to clamp down on multinational businesses such as Google, Apple and Facebook which extract large amounts of revenue from individual nations then shift the earnings to low-taxing countries. Australia tried to go it alone in 2018 with a digital tax but reversed course, fearing the US administration would launch retaliatory measures.

Some of the wealthiest people in the world have been catapulted to such heights by the enormous success of a select group of big tech companies. These businesses have managed to maintain their incredible growth in share price and dominance by buying up or aggressively taking on any competition, as well as by effective tax avoidance on a global scale.

The Age welcomes the attempts by governments and international bodies to finally take on big tech. If successful the efforts will, with luck, rekindle some genuine competition in the industry and force the giants to refrain from acting in a way that is intended to simply maximise their own revenue.

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