Source Code: Your daily look at what matters in tech.

source-codesource codeauthorBen BrodyNoneWant your finger on the pulse of everything that's happening in tech? Sign up to get David Pierce's daily newsletter.64fd3cbe9f
×

Get access to Protocol

Will be used in accordance with our Privacy Policy

I’m already a subscriber
Protocol | Policy

How to wage an antitrust war

After years of keeping silent, disgruntled competitors and interest groups are sharpening their daggers and going after Big Tech.

How to wage an antitrust war

Antitrust complaints against Apple, Google, Amazon and Facebook have become an industry all their own.

Image: Apple

Epic's public antitrust battle against Apple began with a deliberate taunt and a slick video mocking Apple's legendary "1984"-themed Super Bowl ad.

Kosta Eleftheriou's began with a tweet.

"For the longest time, I've been afraid to speak up about my story with App Review, fearing I'd put my popular app at risk," Eleftheriou wrote in June 2020, outlining a frustrating two-year-long process of approval and rejection of his keyboard app. Earlier this year, he sued Apple for unfair competition, alleging the company first tried to buy his technology and then let scams and copycats run amok to put pressure on him.

"When no one has spoken up yet, for all practical purposes, most people think that everything is going great," Eleftheriou, who now describes himself as a "professional" critic of the App Store, told Protocol about why he went public.

The drumbeat of criticism against big tech firms' competitive practices is getting louder, and the number of companies complaining about Google, Facebook, Apple and Amazon has grown dramatically. Some have massive resources available: Epic's complaint against Apple went to trial, and the two are hammering at each other in court this week. But other complaints are coming from small developers with fewer resources, or the leaders of companies whose business models seem outdated.

They all claim, though, that the biggest companies are behaving like monopolies — squeezing them for unfair profits or squashing them when they dare to compete. And the business — and strategy — of making such a claim has become an industry all its own.

The first rule of a public antitrust complaint is to prepare for reprisals — but know that going public can offer its own form of protection. Many company leaders who have recently gone public with complaints claimed they didn't talk openly about their concerns for years, until what they were experiencing was so damaging that it couldn't get much worse. Still, they wrestled with the possibility of losing their business entirely for stating their concerns out loud, or made sure they could rely on other income.

"They're controlling our business," said Ben Volach, the founder of Blix, which sued Apple over allegations it stole Blix's privacy technology for the "Sign in with Apple" feature and tried to shut out the rival's email app. "If they want, tomorrow they can kick us out of the store and our business is doomed."

In public

Apps and third-party merchants have alleged Apple and Amazon let fake reviews proliferate, deprecated their listings, copied their ideas, blocked them from the platforms and extracted ridiculous fees to do business. The Department of Justice and attorneys general for the vast majority of U.S. states and territories are suing Google in separate cases, alleging anticompetitive behavior toward rivals in search, browsers or ad tech. Facebook stands accused of using an array of tactics, including bullying and acquisition, to kill nascent competitors. The companies deny the allegations.

Still, complainants in many cases said they found a measure of relief in going public, both because of the support they received from others and because they knew that the outside world was watching to see if big tech companies would take revenge. In many cases, people who announced their concerns about the big companies said they now view those companies as particularly sensitive about their image, and thus susceptible to public pressure.

Blix wrote an open letter to Apple CEO Tim Cook in 2019 and another to the developer community last year, less than a week before its mail app, BlueMail, was reinstated in the App Store.

"We were openly saying: 'Look, this is what happened,'" Volach said. "If Apple wants to deny any of that, they can."

A federal court recently dismissed Blix's patent theft complaints, but the company may appeal, Volach said. The court previously rejected the competition complaints, which Blix has now amended.

Getting the word out can be slow, dour and policy-heavy, but some companies have also tried stunts and hot rhetoric to liven the issues. Epic had its animated mock commercial, which has nearly 8 million views on YouTube and helped launch the hashtag #FreeFortnite with a jab at the ad that Ridley Scott put together for Apple.

Luther Lowe, Yelp's senior vice president of public policy, has a habit of taking public jabs at all things Google because of the behemoth's moves into local business reviews. He took advantage of a literal jab to strike yet another, turning to his vaccine selfie to advance the cause of cracking down on big tech.

On April 28, Lowe posted a photo of himself, masked, with a needle about to go into his left arm and his left hand holding a mug that said "Wu & Khan & Kanter" — the first two being antitrust reformers that President Joe Biden has sought to bring into government, and the third being a longtime Google critic that many big tech foes hope will be selected.

"Good stuff, @POTUS," he tweeted. "What else have you got brewing?" Lowe had previously tweeted the mug was "the cutest urn for my incinerated copy" of a book by conservative Robert Bork that helped push competition law in a more business-friendly direction. Progressive members of Congress have shared pictures of themselves with the mug as well.

"Stunts can be a surefire way of getting eyeballs on your issue quickly," though they shouldn't hurt a company's brand, said Steve Thomas, general counsel of U.K.-based Kelkoo Group, which has complained about Google's rival shopping-comparison service.

In private

Of course, a public complaint isn't the only choice. Kelkoo has been open about its work with competition enforcers, notably pushing for the European Commission's proposed remedy in its Google Shopping case to do more. Talking a grievance to actual antitrust enforcers is a time-honored route that many complainants have taken since the early years of the antitrust laws, especially because they can do so behind closed doors, and a whole industry of expensive competition lawyers and economists have sprung up to support the conversations

And there's a long list of enforcers to complain to: the 56 state and territorial attorneys general in the U.S. (the vast majority of whom are now suing Google and Facebook), the Justice Department (also suing Google) or the Federal Trade Commission (Facebook). Complainants have gone to the European Commission (which has levied massive fines against Google three times and just launched charges against Apple) and a long list of other countries such as the U.K. and Australia, to say nothing of the congressional probe into competition in big tech. While not law enforcement, lawmakers said complainants flocked to the investigation, which resulted in a blockbuster report last year that detailed some of their concerns. (The panel is now preparing legislation to address them.)

Many of the enforcers' cases draw extensively from particular complaints. Rivals including Netscape helped spur the U.S. case against Microsoft for tying its browser and operating system, which began in 1998 and is still considered by many to be the most important tech antitrust case. The lawyers in the Texas antitrust lawsuit against Google told a federal judge last week that the state collected 1.1 terabytes of data from more than two dozen third parties. Some were competitors, Google's lawyer said. Sometimes rivals even follow government enforcers' cases with private suits of their own.

In private, rivals' conversations are focused on "unequivocally proving the harm caused to the business and customers," and it often takes more than one talk to introduce enforcers to a particular industry, said Kelkoo's Thomas, adding that his company wanted to show how the search engine's practices increased costs for advertisers, merchants and above all, consumers.

"All of these things are the antithesis of what comparison shopping is about," he said. Google has described Kelkoo as a partner and said using Google Ads helped it boost traffic to clients.

The antitrust moment

Some worry competition law is being used as a cudgel against business, and see those conversations as an attempt to try to yank the government's enforcement powers for advantage in the regular course of business.

"People are seeing an opportunity to get something that they want that they haven't been able to get in the marketplace by making some competition complaints," said Neil Chilson, a former FTC chief technologist who is now a senior research fellow at the free market Charles Koch Institute.

After all, Chilson and others point out, competition is the essence of a market economy, and it tends to produce losers alongside winners. Just being aggressive in dealings isn't illegal, nor do companies generally have much obligation to work with rivals.

Chilson and others who worry that expansive antitrust enforcement hurts businesses essentially see the spate of companies complaining about big tech not as evidence of monopolies finally facing the competitors they trampled, but as underperforming firms trying to hold on by taking advantage of the vogue for a complex area of law and frustration with corporate giants.

"There are some very successful companies out there who have strong competitors or angry competitors and who are somewhat politically vulnerable," Chilson said. "That's why you're seeing this run towards complaints, I think."

The big companies themselves have argued they face robust competition and say they take the steps they do not to foreclose others in the market but instead to give consumers what they want, including by building opportunities for small businesses like Google's ad tech or the App Store.

The giant companies and their defenders have also suggested that smaller companies that complain without suing may indicate that the actual substance of their concerns is lacking, while the smaller rivals have cited the expense of litigating, or the fact that antitrust law has narrowed significantly in recent decades and is viewed as friendly to defendants. Some complainants are just as big as their rivals too: Google recently slammed Microsoft for reopening their longtime feud. Oracle has long battled Google on a series of fronts, and Yelp is a public company.

In Washington

There's little doubt, however, that it has become easier, or at least more common, for small and medium-sized companies to complain about the biggest players.

"I think that you're seeing a lot of interest and recognition that this needs to be addressed," said Meghan DiMuzio, executive director of the Coalition for App Fairness, a group that sprang up in September 2020 with 13 members including Epic and Spotify objecting to Apple's practices. Today it's nearly 60, and the group has also hired lobbyists from DiMuzio's firm.

Apple is taking notice of CAF too: During her opening statement in the Epic trial, an Apple attorney said Epic had footed the bill for the group and suggested it was part of a campaign to get out of paying fees for the upkeep, privacy and security of the Apple store, rather than any virtuous effort to confront an abusive monopolist.

"It's disrespectful to the coalition because we always had multiple companies," DiMuzio said, calling the allegation "false" and saying Epic isn't the sole driver of the group. "It's just an attempt by Apple to smear the coalition."

CAF is not the first trade group to help amplify the concerns of a particular group of complainants, and indeed sometimes rivals have used their positions in more general trade groups such as the Internet Association to cause headaches for the giants. The group's growing roster suggests, however, that complainants are getting increasingly comfortable coming forward.

"Over time, more and more people speaking up encourages other people," said Eleftheriou, the developer with the keyboard app who said that since he went public, he now hears frequently from others who say they're in the same situation.

"We have reached, actually, a tipping point, where it is much easier and more impactful to speak up," he said.

Latest Stories