Facebook. Apple. Google. Amazon. The Big Four tech giants have become a much-needed, and sometimes much-loathed, part of our everyday. But just as their stranglehold over the consumer continues to grow, Congress is stepping in. But what will Congressional oversight mean for the Big Four and potentially other industries?
The social media world was sent into shock as Facebook, Instagram, and a slew of other apps went down. (All are part of the Facebook family.) What was most noticeable about the outage, however, was the timing. Facebook, as well as Amazon, Google, and Apple, are increasingly finding themselves at the mercy of lawmakers. While Facebook went offline, a former employee turned whistleblower was testifying about the platform’s practice to Congress.
The testimony sharply criticized Facebook’s apparent lack of safety concerns for its users, as well their failure to take any responsibility in the January 6th Capital Insurrection. Although the testimony has caused many Facebook executives to scramble to cover their tracks, many others saw it as “nothing new.” Earlier in the year, Congress sparked debate over investigations into the Big Four tech companies and their general domination in the marketplace. How have these companies become so pervasive that even if consumers wanted to get away from them…they can’t?
A series of hearings led Congress to sprint to update antitrust laws to meet the new digital era. Congress accused Facebook, Amazon, Apple, and Google of creating monopolies that not only stifled any competition, but also locked in their users who felt they had no alternative. Especially Facebook and Google.
New research shows that nearly 70% of Americans are on Facebook. That type of audience means the platform has access to the largest online consumer population. And they’re using it to their advantage. The pandemic has meant a huge increase in the time spent online connecting with friends and brands. Because of this, Facebook saw a nearly 56% increase in their ad revenue over the past year. (Learn how your brand can take advantage of social media E-commerce trends.)
Google faces a similar crisis, but this time from smaller, younger, brands. The increasing cost of “pay-to-play” advertising means that only established companies with large advertising budgets get the opportunity to place their ads in front of the consumer. It doesn’t help that Google is routinely being accused of monopolizing the marketplace by acquiring seemingly every search and ad buying/optimizing engine out there. As of today, Google controls about 90% of the global internet searches.
However, the Congressional hearings could potentially introduce sweeping reforms that would be give both consumers and smaller brands the chance to fight back against tech giants. It was suggested that smaller competitors and brands would be given the chance to sue the companies for damages if it was proven that the Big Four had chosen to show favorability to their own products rather than a competitor. This would hit Amazon directly in their wallet as Amazon continues to expand their own branded products.
Currently, Amazon has over 100 branded products that range from paper goods to clothing. It’s been reported that in 2018, Amazon branded products generated over $7.5 billion in sales with it growing by leaps and bounds every year. And there’s good reason for it. Over 89% of online shoppers report they are more likely to buy off Amazon than any other online retailer. (Read how your brand should be shifting it’s digital strategy to compete consumer demands in a post-Covid online world.
Shared friends lists was also suggested as a way for users to leave social media platforms without losing contacts. This would give a Facebook user the option to go to a smaller competitor without the risk of having to start all over. The 2020 election results saw a massive surge in social media users looking. to migrate to other platforms that more aligned with their political and social beliefs. That attempt largely failed due to the lacking contact sharing
The laws have not been finalized and more and more scandals seem to come out of Silicon Valley every week. But the big takeaway is that while tech companies are looking to expand their power, consumers are resisting…and they have law on their side.