Regulation of global IT giants urged as alarm rises over oligopoly concerns

Tokyo

THE headwinds against the US information technology giants that have Internet market dominance have apparently intensified further, according to an editorial in the Yomiuri Shimbun.

The US Justice Department has launched an investigation into whether major IT companies have conducted practices that violate antitrust laws. The Federal Trade Commission (FTC) is also moving in step with the department.

Google, Apple, Facebook and Amazon.com, collectively dubbed Gafa, are the companies the authorities have in mind. This indicates a wariness over the four companies becoming too powerful.

The investigation is not just limited to cases in which the IT giants bully subcontractors using their stronger position.

These companies have acquired technology-savvy startups one after another before the firms become their rivals. Indeed, Facebook bought image-sharing service Instagram while Google acquired video website YouTube.

The Justice Department believes following such a strategy could hinder future competition and technological innovation. Japanese and European authorities have similar concerns.

In addition to the massive amounts of customer information the IT giants usually handle, their accumulation of the information moves them closer to becoming oligopolies. Besides, if they expand their businesses through acquisitions, their dominance will strengthen even more. Efforts should be made to develop a fair market environment through measures including stricter screenings of acquisitions.

The threat of these IT giants has been increasingly perceived because their services have spread rapidly and their social impact has grown.

During the 2016 US presidential election, fake news spread through social media. Furthermore, it has been revealed that an organisation deeply connected to Russia had placed numerous political advertisements on Facebook and Google.

Public distrust in data protection is also growing. The FTC has fined Facebook US$5 billion for privacy violations on the data of up to 87 million users.

The US Congress has launched a bipartisan investigation, including a series of hearings, into the IT giants. Even the idea of breaking up the four companies has emerged. Deep discussions are called for on how to have regulations and oversight that are in line with the times. Many countries have been frustrated by the IT giants, claiming that they make huge profits but do not pay sufficient taxes.

In France, a bill has been passed to introduce a digital services tax targeting IT companies of a certain business size that are engaged in online transactions. A 3 per cent tax will be imposed on the sales of these companies earned in France.

It takes time to reach agreement on international taxation rules. France's attempt can perhaps be said to be a move of raising a question over the situation in which regulatory systems have not caught up with the rise of the IT giants. BLOOMBERG