The origin of this story started by 22 years old landmark case. The petition was filed in court by the American government against the world’s biggest software company Microsoft. Microsoft was accused of monopolizing the market by adding up new programs in their Operating Systems and providing it for free to the user with their O.S. This action created a mess in the open market competitions. You would question yourself, what’s the big deal if monopoly was created? Let’s have a look at the term monopoly, and we will see an example of how this is affecting the free market competitions.
Suppose that you are living in a village and there is only one vegetable shop, and many people buy vegetables from that shop every day. But what if the shopkeeper gets started selling rotten vegetables and also at a high price? Will you stop eating vegetables? No, you will not. You just ignore him and buy it because you have no other option.
But have you ever thought if there were a number of vegetable shops in your village? You had many options, and maybe you should get the same vegetables at a lower price from another shopkeeper.
The same thing lies in the tech market. If there should be more options for people, there will be healthy competition in the market. On 18 may 1998 American government filed a petition against Microsoft in terms of violation of Antitrust law. Let’s have a look at the antitrust lawsuit.
The Antitrust lawsuit
This is a monitor of the American government. The “trust” word in Antitrust defined by “Big Business Groups.” The law is specially made for keeping healthy competition in the market. Antitrust law has its background dating back to the 1880s. The monopoly trend started in the 1880s by American oil market companies. Soon big companies of cement and railways started monopolizing the market.
Soon the whole economy of America got controlled by a bunch of American people. These actions destroyed the small companies in the market, and unemployment increased. American government saw that this situation was not right for the economy of America, and the free market couldn’t survive by monopolizing the market. Therefore, the American government passed the law in the 1890s named “Sherman Antitrust act.”
Before the 1890s to 1914s, two more acts were passed by the American government named “Federal Trades Commission act” and “Clayton act.” These acts are base on American Federal Antitrust law.
The Antitrust trial against Tech giants
On 29 July 2020, the U.S house judiciary subcommittee did an antitrust trial against tech giants. The members of the committee questioned the CEO of big companies like Facebook, Google, Apple, and Amazon. U.S house judiciary subcommittee investigated last 13 months. During the investigation, they found about 13 lakh documents.
Many of them were related to Facebook. I am going to be listing these questions one by one, which was asked by the subcommittee members.
1-Conquering small tech companies by misuse of market power.
2-Throw out their competitors from the business by using the collected personal data of people for a long time.
3-Copying of the competitor’s product.
4-Becoming is so powerful that it becomes dangerous for your competitors and customers.
Facebook was accused of pressurizing and threatening Instagram, more specifically that they will make a copy of Instagram and throw them out of the market. Subcommittee also told them that Facebook that Instagram is a strong competitor of Facebook in the market, and one day it will take over the market.
The member of the committee asked Amazon how they choose third-party sellers and how they get them verified. Does Amazon steal the idea of products from the sellers and launch competitive products in the market? Committee also told amazon about the feedback they got from sellers. They said that third-party sellers told them that amazon even threatened them.
Committee asked Google, Does google affecting their search results and creating a monopoly in an online advertisement in the market?
Committee members questioned Apple if apple was removing competitors’ apps from their app store by creating their own competitive apps and throwing out small creators from the market.
These are some questions asked by the committee members. Let’s have a look at free-market benefits.
Benefits of free-market competitors
Free markets benefit a customer in many ways. It provides competition in the market, which helps a consumer in choosing the product in a better way. Suppose there is two shop A and B.Both shops provide you with the same product of the same quality but at a different price. Let suppose A gives you the same product at the market price of 120rs, but whereas B provides you with the same product at 100rs. Here, for a consumer, its very easy to choose whose product he will buy. But what if there is only one shop? This creates a mess for a consumer.
Free markets bring innovation to the market. Every start-up company comes with change when they push their feet in the market. This brings new competition in the market for new innovation again. Maybe it should be in their prices or better enhancement in the same product.