MAJORITY STAFF

SUBCOMMITTEE ON ANTITRUST, COMMERCIAL AND ADMINISTRATIVE LAW

SLADE BOND

Chief Counsel

LINA KHAN

Counsel

PHILLIP BERENBROICK

Counsel

JOSEPH EHRENKRANTZ

Special Assistant

AMANDA LEWIS

Counsel on Detail, Federal Trade Commission

ANNA LENHART

Technologist

CATHERINE LARSEN

Special Assistant

JOSEPH VAN WYE

Professional Staff Member

COMMITTEE ON THE JUDICIARY

PERRY APELBAUM

Staff Director and Chief Counsel

AMY RUTKIN

Chief of Staff

JOHN DOTY

Senior Advisor

AARON HILLER

Deputy Chief Counsel

JOHN WILLIAMS

Parliamentarian

DAVID GREENGRASS

Senior Counsel

SHADAWN REDDICK-SMITH

Communications Director

DANIEL SCHWARZ

Director of Strategic Communications

ARYA HARIHARAN

Deputy Chief Oversight Counsel

JESSICA PRESLEY

Director of Digital Strategy

MADELINE STRASSER

Chief Clerk

MOH SHARMA

Director of Member Services and 

Outreach & Policy Advisor

MATTHEW ROBINSON

Counsel

KAYLA HAMEDI

Deputy Press Secretary

NATHAN ADAL

Legal Fellow

KARNA ADAM

Legal Fellow

WILLIAM BEKKER

Legal Fellow

KYLE BIGLEY

Legal Fellow

MICHAEL ENSEKI-FRANK

Legal Fellow

BENJAMIN FEIS

Legal Fellow

CORY GORDON

Legal Fellow

ETHAN GURWITZ

Legal Fellow

DOMENIC POWELL

Legal Fellow

ARMAN RAMNATH

Legal Fellow

REED SHOWALTER

Legal Fellow

JOEL THOMPSON

Legal Fellow

KURT WALTERS

Legal Fellow

KRYSTALYN WEAVER

Legal Fellow 
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TABLE OF CONTENTS

A. Chairs’ Foreword ....................................................................................................................... 6

B. Executive Summary ................................................................................................................... 9

Subcommittee’s Investigation ................................................................................................ 9

Findings................................................................................................................................ 10

Recommendations................................................................................................................ 19

A. Requests for Information and Submissions ............................................................................. 21

First-Party Requests for Information.................................................................................... 21

Process for Obtaining Responses to First-Party Requests.................................................... 25

Third-party Requests for Information .................................................................................. 26

Antitrust Agencies Requests for Information....................................................................... 28

B. Hearings................................................................................................................................... 29

C. Roundtables.............................................................................................................................. 31

D. Prior Investigations.................................................................................................................. 32

A. Overview of Competition in Digital Markets.......................................................................... 36

The Role of Competition Online .......................................................................................... 36

Market Structure................................................................................................................... 37

Barriers to Entry ................................................................................................................... 40

B. Effects of Platform Market Power ........................................................................................... 46

Innovation and Entrepreneurship ......................................................................................... 46

Privacy and Data Protection ................................................................................................. 51

The Free and Diverse Press.................................................................................................. 57

Political and Economic Liberty............................................................................................ 73

A. Online Search........................................................................................................................... 77

B. Online Commerce .................................................................................................................... 84

C. Social Networks and Social Media .......................................................................................... 88

Social Networks are Distinguishable from Social Media .................................................... 91

Market Concentration........................................................................................................... 92

D. Mobile App Stores................................................................................................................... 93

E. Mobile Operating Systems..................................................................................................... 100
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F. Digital Mapping ..................................................................................................................... 108

G. Cloud Computing................................................................................................................... 110

H. Voice Assistant ...................................................................................................................... 121

I. Web Browsers........................................................................................................................ 127

J. Digital Advertising................................................................................................................. 130

A. Facebook ................................................................................................................................ 133

Overview ............................................................................................................................ 133

Social Networking.............................................................................................................. 134

Digital Advertising............................................................................................................. 171

B. Google.................................................................................................................................... 175

Overview ............................................................................................................................ 175

Search ................................................................................................................................. 177

Digital Advertisements....................................................................................................... 207

Android and Google Play Store.......................................................................................... 212

Chrome ............................................................................................................................... 224

Maps................................................................................................................................... 231

Cloud .................................................................................................................................. 246

C. Amazon .................................................................................................................................. 248

Overview ............................................................................................................................ 248

Amazon.com....................................................................................................................... 255

Fulfillment and Delivery .................................................................................................... 304

Alexa’s Internet of Things Ecosystem ............................................................................... 306

Amazon Web Services ....................................................................................................... 317

D. Apple...................................................................................................................................... 332

Overview ............................................................................................................................ 332

iOS and the App Store........................................................................................................ 336

Siri Intelligent Voice Assistant........................................................................................... 375

A. Restoring Competition in the Digital Economy..................................................................... 379

Reduce Conflicts of Interest Thorough Structural Separations and Line of Business 

Restrictions................................................................................................................................... 379

Implement Rules to Prevent Discrimination, Favoritism, and Self-Preferencing.............. 383

Promote Innovation Through Interoperability and Open Access....................................... 385

Reduce Market Power Through Merger Presumptions...................................................... 388
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Create an Even Playing Field for the Free and Diverse Press............................................ 390

Prohibit Abuse of Superior Bargaining Power and Require Due Process ......................... 391

B. Strengthening the Antitrust Laws .......................................................................................... 392

Restore the Antimonopoly Goals of the Antitrust Laws.................................................... 392

Invigorate Merger Enforcement ......................................................................................... 393

Rehabilitate Monopolization Law...................................................................................... 397

Additional Measures to Strengthen the Antitrust Laws ..................................................... 400

C. Strengthening Antitrust Enforcement .................................................................................... 400

Congressional Oversight .................................................................................................... 400

Agency Enforcement.......................................................................................................... 402

Private Enforcement........................................................................................................... 404

A. Amazon .................................................................................................................................. 407

B. Apple...................................................................................................................................... 415

C. Facebook ................................................................................................................................ 424

D. Google.................................................................................................................................... 432
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INTRODUCTION

A. Chairs’ Foreword

In June 2019, the Committee on the Judiciary initiated a bipartisan investigation into the state 

of competition online, spearheaded by the Subcommittee on Antitrust, Commercial and Administrative 

Law. As part of a top-to-bottom review of the market, the Subcommittee examined the dominance of 

Amazon, Apple, Facebook, and Google, and their business practices to determine how their power 

affects our economy and our democracy. Additionally, the Subcommittee performed a review of 

existing antitrust laws, competition policies, and current enforcement levels to assess whether they are 

adequate to address market power and anticompetitive conduct in digital markets.

Over the course of our investigation, we collected extensive evidence from these companies as 

well as from third parties—totaling nearly 1.3 million documents. We held seven hearings to review 

the effects of market power online—including on the free and diverse press, innovation, and privacy—

and a final hearing to examine potential solutions to concerns identified during the investigation and to 

inform this Report’s recommendations.

A year after initiating the investigation, we received testimony from the Chief Executive 

Officers of the investigated companies: Jeff Bezos, Tim Cook, Mark Zuckerberg, and Sundar Pichai. 

For nearly six hours, we pressed for answers about their business practices, including about evidence 

concerning the extent to which they have exploited, entrenched, and expanded their power over digital 

markets in anticompetitive and abusive ways. Their answers were often evasive and non-responsive, 

raising fresh questions about whether they believe they are beyond the reach of democratic oversight.

Although these four corporations differ in important ways, studying their business practices has 

revealed common problems. First, each platform now serves as a gatekeeper over a key channel of 

distribution. By controlling access to markets, these giants can pick winners and losers throughout our 

economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, 

imposing oppressive contract terms, and extracting valuable data from the people and businesses that 

rely on them. Second, each platform uses its gatekeeper position to maintain its market power. By 

controlling the infrastructure of the digital age, they have surveilled other businesses to identify 

potential rivals, and have ultimately bought out, copied, or cut off their competitive threats. And, 

finally, these firms have abused their role as intermediaries to further entrench and expand their 

dominance. Whether through self-preferencing, predatory pricing, or exclusionary conduct, the 

dominant platforms have exploited their power in order to become even more dominant.

To put it simply, companies that once were scrappy, underdog startups that challenged the 

status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad 

tycoons. Although these firms have delivered clear benefits to society, the dominance of Amazon, 

Apple, Facebook, and Google has come at a price. These firms typically run the marketplace while 
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also competing in it—a position that enables them to write one set of rules for others, while they play 

by another, or to engage in a form of their own private quasi regulation that is unaccountable to anyone 

but themselves. 

The effects of this significant and durable market power are costly. The Subcommittee’s series 

of hearings produced significant evidence that these firms wield their dominance in ways that erode 

entrepreneurship, degrade Americans’ privacy online, and undermine the vibrancy of the free and 

diverse press. The result is less innovation, fewer choices for consumers, and a weakened democracy.

Nearly a century ago, Supreme Court Justice Louis Brandeis wrote: “We must make our 

choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we 

cannot have both.” Those words speak to us with great urgency today. 

Although we do not expect that all of our Members will agree on every finding and 

recommendation identified in this Report, we firmly believe that the totality of the evidence produced 

during this investigation demonstrates the pressing need for legislative action and reform. These firms 

have too much power, and that power must be reined in and subject to appropriate oversight and 

enforcement. Our economy and democracy are at stake.

As a charter of economic liberty, the antitrust laws are the backbone of open and fair markets. 

When confronted by powerful monopolies over the past century—be it the railroad tycoons and oil 

barons or Ma Bell and Microsoft—Congress has acted to ensure that no dominant firm captures and 

holds undue control over our economy or our democracy. We face similar challenges today. 

Congress—not the courts, agencies, or private companies—enacted the antitrust laws, and Congress 

must lead the path forward to modernize them for the economy of today, as well as tomorrow. Our 

laws must be updated to ensure that our economy remains vibrant and open in the digital age. 

Congress must also ensure that the antitrust agencies aggressively and fairly enforce the law. 

Over the course of the investigation, the Subcommittee uncovered evidence that the antitrust agencies 

failed, at key occasions, to stop monopolists from rolling up their competitors and failed to protect the 

American people from abuses of monopoly power. Forceful agency action is critical.

Lastly, Congress must revive its tradition of robust oversight over the antitrust laws and 

increased market concentration in our economy. In prior Congresses, the Subcommittee routinely 

examined these concerns in accordance with its constitutional mandate to conduct oversight and 

perform its legislative duties. As a 1950 report from the then-named Subcommittee on the Study of 

Monopoly Power described its mandate: “It is the province of this subcommittee to investigate factors 

which tend to eliminate competition, strengthen monopolies, injure small business, or promote undue 
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concentration of economic power; to ascertain the facts, and to make recommendations based on those 

findings.”

1

Similarly, the Subcommittee has followed the facts before it to produce this Report, which is 

the product of a considerable evidentiary and oversight record. This record includes: 1,287,997 

documents and communications; testimony from 38 witnesses; a hearing record that spans more than 

1,800 pages; 38 submissions from 60 antitrust experts from across the political spectrum; and 

interviews with more than 240 market participants, former employees of the investigated platforms, 

and other individuals totaling thousands of hours. The Subcommittee has also held hearings and 

roundtables with industry and government witnesses, consultations with subject-matter experts, and a 

careful—and at times painstaking—review of large volumes of evidence provided by industry 

participants and regulators. 

In light of these efforts, we extend our deep gratitude to the staff of the Subcommittee and Full 

Committee for their diligent work in this regard, particularly during the COVID-19 pandemic and 

other challenging circumstances over the past year. 

Finally, as an institutional matter, we close by noting that the Committee’s requests for 

information from agencies and any non-public briefings were solely for the purpose of carrying out our 

constitutionally based legislative and oversight functions. In particular, the information requested was 

vital to informing our assessment of whether existing antitrust laws are adequate for tackling current 

competition problems, as well as in uncovering potential reasons for under-enforcement. The Report 

by Subcommittee staff is based on the documents and information collected during its investigation, 

and the Committee fully respects the separate and independent decisional processes employed by 

enforcement authorities with respect to such matters.

Although the companies provided substantial information and numerous documents to the 

Subcommittee, they declined to produce certain critical information and crucial documents we 

requested. The material withheld was identified by the Committee as relevant to the investigation and 

included, primarily, two categories of information: (1) documents the companies’ claimed were 

protected by common law privileges; and (2) documents that were produced to antitrust authorities in 

ongoing investigations, or that related to the subject matter of these ongoing investigations. 

Institutionally, we reject any argument that the mere existence of ongoing litigation prevents or 

prohibits Congress from obtaining information relevant to its legislative and oversight prerogatives. 

We strongly disagree with the assertion that any requests for such materials and any compliance with 

those requests interfere with the decisional processes in ongoing investigations. Furthermore, while 

Congress is fully subject to constitutional protections, we cannot agree that we are bound by common 

1 Aluminum: Report of the Subcomm. On Study of Monopoly Power of the H. Comm. on the Judiciary, 82nd Cong. H. Rep. 

No. 255, 2 (1st Sess. 1951).
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law privileges as asserted by the companies. While we determined that insufficient time exists to 

pursue these additional materials during this Congress, the Committee expressly reserves the right to 

invoke other available options, including compulsory process, to obtain the requested information in 

the future. 

The views and conclusions contained in the Report are staff views and do not necessarily 

reflect those of the Committee on the Judiciary or any of its Members.

B. Executive Summary

Subcommittee’s Investigation

On June 3, 2019, the House Judiciary Committee announced a bipartisan investigation into 

competition in digital markets,2led by the Subcommittee on Antitrust, Commercial, and 

Administrative Law.3 The purpose of the investigation was to (1) document competition problems in 

digital markets; (2) examine whether dominant firms are engaging in anticompetitive conduct; and (3) 

assess whether existing antitrust laws, competition policies, and current enforcement levels are 

adequate to address these issues.4 The Committee initiated the investigation in response to broadranging investigative reporting, and activity by policymakers and enforcers, that raised serious 

concerns about the platforms’ incentives and ability to harm the competitive process.5

2 Press Release, H. Comm. on the Judiciary, House Judiciary Committee Launches Bipartisan Investigation into 

Competition in Digital Markets (June 3, 2019), https://judiciary.house.gov/news/press-releases/house-judiciary-committeelaunches-bipartisan-investigation-competition-digital. 

3 We extend our sincere thanks to Peter Karafotas, Rich Luchette, and Francis Grubar, in the Office of Congressman David 

N. Cicilline, for their relentless work and selfless devotion throughout the investigation. We would also like to recognize 

the following staff for their significant contributions during the investigation: Dick Meltzer, Michael Tecklenburg, Kenneth 

DeGraff, and Victoria Houed in the Office of the Speaker of the U.S. House of Representatives; Daniel Flores, former 

Minority Chief Counsel, Subcommittee on Antitrust, Commercial and Administrative Law; Danny Johnson, former 

Minority counsel, Committee on the Judiciary; Jacqui Kappler, Legislative Director, the Honorable Henry “Hank” Johnson, 

Jr.; Devon Ombres, Legislative Counsel, the Honorable Jamie Raskin; Elly Kugler, Senior Counsel, the Honorable Pramila 

Jayapal; Jennifer Chan, Legislative Director, the Honorable Pramila Jayapal; Stuart Styron, Senior Legislative Assistant, 

the Honorable Val Demings; Keanu Rivera, Legislative Assistant, the Honorable Mary Gay Scanlon; Lindsey Garber, 

Legislative Counsel, the Honorable Joe Neguse; Miya Patel, former Legislative Assistant, the Honorable Joe Neguse; and 

Natalie Knight, Legislative Counsel, the Honorable Lucy McBath. Staff would also like to thank Matthew Bisenius in the 

Office of F. James Sensenbrenner, as well as Garrett Ventry in the Office of Congressman Ken Buck, for their commitment 

to bipartisan cooperation. We also thank Hillary Marston, Legal Intern for the Committee on the Judiciary, for her 

assistance. Finally, we thank Clare Cho and Mari Lee at the Congressional Research Service for their support, as well as 

graphics and data visualization used within this Report. 

4 Press Release, H. Comm. on the Judiciary, House Judiciary Committee Launches Bipartisan Investigation into 

Competition in Digital Markets (June 3, 2019), https://judiciary.house.gov/news/press-releases/house-judiciary-committeelaunches-bipartisan-investigation-competition-digital. 

5 See, e.g., Meehreen Khan, EU Targets Tech Giants over Unfair Business Practices, FIN. TIMES (Apr. 25, 2018), 

https://www.ft.com/content/d7228bec-4879-11e8-8ee8-cae73aab7ccb; Adam Satariano, Google is Fined $57 Million Under 

Europe’s Data Privacy Law, N.Y. TIMES (Jan. 21, 2019), https://www.nytimes.com/2019/01/21/technology/google-europegdpr-fine.html; Richard Waters et al., Global Regulators’ Net Tightens Around Big Tech, FIN. TIMES, (June 5, 2019), 

https://www.ft.com/content/973f8b36-86f0-11e9-97ea-05ac2431f453.
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As part of the investigation, the Subcommittee held seven oversight hearings that provided 

Members of the Subcommittee with an opportunity to examine the state of competition in digital 

markets and the adequacy of existing antitrust laws. A diverse group of witnesses offered testimony on 

topics related to the effects of market power on the free and diverse press, on innovation, and on 

privacy. Other witnesses who testified included executives from businesses with concerns about the 

dominance of the investigated firms. The hearings also provided an opportunity for key executives 

from Facebook, Google, Amazon, and Apple—including the Chief Executive Officers of these firms—

to address evidence that was uncovered during the investigation in a public-facing venue. After each of 

the hearings, Members of the Subcommittee submitted questions for the record (QFRs) to the 

witnesses.

The Committee requested information from the dominant platforms, from market participants, 

from the Federal antitrust agencies, and from other relevant parties, for the purpose of obtaining 

information that was not otherwise publicly available but was important to assembling a 

comprehensive record. The Committee also sent requests for submissions to various experts in the 

field, including academics, representatives of public interest groups, and practicing antitrust lawyers. 

The responses to these requests were indispensable to staff’s ability to complete this Report and its 

recommendations for congressional oversight of the antitrust agencies and legislative action. 

This Report is intended to provide policymakers, antitrust enforcers, market participants, and 

the public with a comprehensive understanding of the state of competition in the online marketplace. 

The Report also provides recommendations for areas of legislative activity to address the rise and 

abuse of market power in the digital economy, as well as areas that warrant additional congressional 

attention.

Findings

a. Overview

The open internet has delivered significant benefits to Americans and the U.S. economy. Over 

the past few decades, it has created a surge of economic opportunity, capital investment, and pathways 

for education. The COVID-19 pandemic has underscored the importance of internet access that is 

affordable, competitive, and widely available for workers, families, and businesses.

The online platforms investigated by the Subcommittee—Amazon, Apple, Facebook, and 

Google—also play an important role in our economy and society as the underlying infrastructure for 

the exchange of communications, information, and goods and services. As of September 2020, the 

combined valuation of these platforms is more than $5 trillion—more than a third of the value of the 

S&P 100. As we continue to shift our work, commerce, and communications online, these firms stand 

to become even more interwoven into the fabric of our economy and our lives.
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Over the past decade, the digital economy has become highly concentrated and prone to 

monopolization. Several markets investigated by the Subcommittee—such as social networking, 

general online search, and online advertising—are dominated by just one or two firms. The companies 

investigated by the Subcommittee—Amazon, Apple, Facebook, and Google—have captured control 

over key channels of distribution and have come to function as gatekeepers. Just a decade into the 

future, 30% of the world’s gross economic output may lie with these firms, and just a handful of 

others.6

In interviews with Subcommittee staff, numerous businesses described how dominant 

platforms exploit their gatekeeper power to dictate terms and extract concessions that no one would 

reasonably consent to in a competitive market. Market participants that spoke with Subcommittee staff 

indicated that their dependence on these gatekeepers to access users and markets requires concessions 

and demands that carry significant economic harm, but that are “the cost of doing business” given the 

lack of options.

This significant and durable market power is due to several factors, including a high volume of 

acquisitions by the dominant platforms. Together, the firms investigated by the Subcommittee have 

acquired hundreds of companies just in the last ten years. In some cases, a dominant firm evidently 

acquired nascent or potential competitors to neutralize a competitive threat or to maintain and expand 

the firm’s dominance. In other cases, a dominant firm acquired smaller companies to shut them down 

or discontinue underlying products entirely—transactions aptly described as “killer acquisitions.”

7

In the overwhelming number of cases, the antitrust agencies did not request additional 

information and documentary material under their pre-merger review authority in the Clayton Act, to 

examine whether the proposed acquisition may substantially lessen competition or tend to create a 

monopoly if allowed to proceed as proposed. For example, of Facebook’s nearly 100 acquisitions, the 

Federal Trade Commission engaged in an extensive investigation of just one acquisition: Facebook’s 

purchase of Instagram in 2012. 

During the investigation, Subcommittee staff found evidence of monopolization and monopoly 

power. For example, the strong network effects associated with Facebook has tipped the market toward 

6 Catherine Fong et al., Prime Day and the broad reach of Amazon’s ecosystem, MCKINSEY & CO. (Aug. 2, 2019), 

https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/prime-day-and-the-broad-reach-ofamazons-ecosystem (“This ecosystem strategy in particular has significant competitive implications because McKinsey 

estimates that in ten years, 30 percent of the world’s gross economic output will be from companies that operate a network 

of interconnected businesses, such as those run by Amazon, Alibaba, Google, and Facebook.”).

7 Colleen Cunningham, Florian Ederer & Song Ma, Killer Acquisitions *1 (Yale School of Management Working Paper, 

Mar. 2019), https://perma.cc/L6YL-YL8K (describing the practice of “acquir[ing] innovative targets solely to discontinue 

the target’s innovative projects and preempt future competition.”). See also C. Scott Hemphill and Tim Wu, Nascent 

Competitors, 168 U. PA. L. REV. *2 (forthcoming 2020), https://perma.cc/62HH-34ZL (“A nascent competitor is a firm 

whose prospective innovation represents a serious future threat to an incumbent.”). 
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monopoly such that Facebook competes more vigorously among its own products—Facebook, 

Instagram, WhatsApp, and Messenger—than with actual competitors.

As demonstrated during a series of hearings held by the Subcommittee and as detailed in this 

Report,8the online platforms’ dominance carries significant costs. It has diminished consumer choice, 

eroded innovation and entrepreneurship in the U.S. economy, weakened the vibrancy of the free and 

diverse press, and undermined Americans’ privacy. 

These concerns are shared by the majority of Americans. On September 24, 2020, Consumer 

Reports (CR) published a survey titled “Platform Perceptions: Consumer Attitudes on Competition and 

Fairness in Online Platforms.”

9 Among its findings:

• 85% of Americans are concerned—either very concerned or somewhat concerned—

about the amount of data online platforms store about them, and 81% are concerned that 

platforms are collecting and holding this data in order to build out more comprehensive 

consumer profiles.

• 58% are not confident that they are getting objective and unbiased search results when 

using an online platform to shop or search for information.

• 79% say Big Tech mergers and acquisitions unfairly undermine competition and 

consumer choice.10

• 60% support more government regulation of online platforms, and mandating 

interoperability features, to make it easier for users to switch from one platform to 

another without losing important data or connections.

b. Facebook

Facebook has monopoly power in the market for social networking. Internal communications 

among the company’s Chief Executive Officer, Mark Zuckerberg, and other senior executives indicate 

that Facebook acquired its competitive threats to maintain and expand its dominance. For example, a 

senior executive at the company described its acquisition strategy as a “land grab” to “shore up”

Facebook’s position,11 while Facebook’s CEO said that Facebook “can likely always just buy any 

8 See infra Section V. 

9 CONSUMER REPORTS, PLATFORM PERCEPTIONS: CONSUMER ATTITUDES ON COMPETITION AND FAIRNESS IN ONLINE 

PLATFORMS (2020), https://advocacy.consumerreports.org/wp-content/uploads/2020/09/FINAL-CR-survey-report.platformperceptions-consumer-attitudes-.september-2020.pdf.

10 Id.

11 Production from Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045388 (Feb. 18, 2014), 

https://judiciary.house.gov/uploadedfiles/0004538800045389.pdf (“[W]e are going to spend 5-10% of our market cap every 
13

competitive startups,”

12 and agreed with one of the company’s senior engineers that Instagram was a 

threat to Facebook.13

Facebook’s monopoly power is firmly entrenched and unlikely to be eroded by 

competitive pressure from new entrants or existing firms. In 2012, the company described its 

network effects as a “flywheel” in an internal presentation prepared for Facebook at the 

direction of its Chief Financial Officer.14 This presentation also said that Facebook’s network 

effects get “stronger every day.”

15

More recent documents produced during the investigation by Facebook show that it has 

tipped the social networking market toward a monopoly, and now considers competition within 

its own family of products to be more considerable than competition from any other firm. 

These documents include an October 2018 memorandum by Thomas Cunningham, a senior 

data scientist and economist at Facebook,16 for Mr. Zuckerberg and Javier Olivan, Facebook’s 

Director of Growth.

17 Among other things, the Cunningham Memo found that the network 

effects of Facebook and its family of products are “very strong,”

18 and that there are strong 

tipping points in the social networking market that create competition for the market, rather 

than competition within the market.19

According to a former senior employee at Instagram who was involved in the preparation of 

this document for review by Mr. Zuckerberg and Mr. Olivan, the Cunningham Memo guided 

Facebook’s growth strategy, particularly with regard to Instagram.20 They explained: 

The question was how do we position Facebook and Instagram to not compete with 

each other. The concern was the Instagram would hit a tipping point . . . There was 

couple years to shore up our position . . . I hate the word ‘land grab’ but I think that is the best convincing argument and we 

should own that.”). 

12 Production from Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00067600 (Apr. 9, 2012), 

https://judiciary.house.gov/uploadedfiles/0006760000067601.pdf.

13 Id.

14 Production of Facebook, to Comm. on the Judiciary, FB-HJC-ACAL-00049006 (Apr. 18, 2012) (“Network effects make 

it very difficult to compete with us - In every country we’ve tipped we are still winning.”) (on file with Comm.).

15 Id.

16 Production of Facebook, to Comm. on the Judiciary FB-HJC-ACAL-00111406 (Oct. 2018) (on file with Comm.) 

[hereinafter Cunningham Memo] (“Facebook has high reach and time-spent in most countries. User growth is tracking 

internet growth: global reach is roughly stable.”).

17 Id.

18 Cunningham Memo at 11. 

19 Id. at 9.

20 Id.
14

brutal in-fighting between Instagram and Facebook at the time. It was very tense. It was 

back when Kevin Systrom was still at the company. He wanted Instagram to grow 

naturally and as widely as possible. But Mark was clearly saying “do not compete with 

us.” . . . It was collusion, but within an internal monopoly. If you own two social media 

utilities, they should not be allowed to shore each other up. It’s unclear to me why this 

should not be illegal. You can collude by acquiring a company.21

Facebook has also maintained its monopoly through a series of anticompetitive business 

practices. The company used its data advantage to create superior market intelligence to identify 

nascent competitive threats and then acquire, copy, or kill these firms. Once dominant, Facebook 

selectively enforced its platform policies based on whether it perceived other companies as competitive 

threats. In doing so, it advantaged its own services while weakening other firms. 

In the absence of competition, Facebook’s quality has deteriorated over time, resulting in worse 

privacy protections for its users and a dramatic rise in misinformation on its platform.

c. Google

Google has a monopoly in the markets for general online search and search advertising. 

Google’s dominance is protected by high entry barriers, including its click-and-query data and the 

extensive default positions that Google has obtained across most of the world’s devices and browsers. 

A significant number of entities—spanning major public corporations, small businesses, and 

entrepreneurs—depend on Google for traffic, and no alternate search engine serves as a substitute.

Google maintained its monopoly over general search through a series of anticompetitive tactics. 

These include an aggressive campaign to undermine vertical search providers, which Google viewed as 

a significant threat. Documents show that Google used its search monopoly to misappropriate content 

from third parties and to boost Google’s own inferior vertical offerings, while imposing search 

penalties to demote third-party vertical providers. Since capturing a monopoly over general search, 

Google has steadily proliferated its search results page with ads and with Google’s own content, while 

also blurring the distinction between paid ads and organic results. As a result of these tactics, Google 

appears to be siphoning off traffic from the rest of the web, while entities seeking to reach users must 

pay Google steadily increasing sums for ads. Numerous market participants analogized Google to a 

gatekeeper that is extorting users for access to its critical distribution channel, even as its search page 

shows users less relevant results.

A second way Google has maintained its monopoly over general search has been through a 

series of anticompetitive contracts. After purchasing the Android operating system in 2005, Google 

used contractual restrictions and exclusivity provisions to extend Google’s search monopoly from 

21 Interview with Former Instagram Employee (Oct. 2, 2020).
15

desktop to mobile. Documents show that Google required smartphone manufacturers to pre-install and 

give default status to Google’s own apps, impeding competitors in search as well as in other app 

markets. As search activity now migrates from mobile to voice, third-party interviews suggest Google 

is again looking for ways to maintain its monopoly over search access points through a similar set of 

practices.

Since capturing the market for online search, Google has extended into a variety of other lines 

of business. Today Google is ubiquitous across the digital economy, serving as the infrastructure for 

core products and services online. Through Chrome, Google now owns the world’s most popular 

browser—a critical gateway to the internet that it has used to both protect and promote its other lines of 

business. Through Google Maps, Google now captures over 80% of the market for navigation mapping 

service—a key input over which Google consolidated control through an anticompetitive acquisition 

and which it now leverages to advance its position in search and advertising. And through Google 

Cloud, Google has another core platform in which it is now heavily investing through acquisitions, 

positioning itself to dominate the “Internet of Things,” the next wave of surveillance technologies.

Internal communications also reveal that Google exploits information asymmetries and closely 

tracks real-time data across markets, which—given Google’s scale—provide it with near-perfect 

market intelligence. In certain instances, Google has covertly set up programs to more closely track its 

potential and actual competitors, including through projects like Android Lockbox.

Each of its services provides Google with a trove of user data, reinforcing its dominance across 

markets and driving greater monetization through online ads. Through linking these services together, 

Google increasingly functions as an ecosystem of interlocking monopolies.

d. Amazon

Amazon has significant and durable market power in the U.S. online retail market. This 

conclusion is based on the significant record that Subcommittee staff collected and reviewed, including 

testimonials from third-party sellers, brand manufacturers, publishers, former employees, and other 

market participants, as well as Amazon’s internal documents. Although Amazon is frequently 

described as controlling about 40% of U.S. online retail sales, this market share is likely understated, 

and estimates of about 50% or higher are more credible.

As the dominant marketplace in the United States for online shopping, Amazon’s market power 

is at its height in its dealings with third-party sellers. The platform has monopoly power over many 

small- and medium-sized businesses that do not have a viable alternative to Amazon for reaching 

online consumers. Amazon has 2.3 million active third-party sellers on its marketplace worldwide, and 
16

a recent survey estimates that about 37% of them—about 850,000 sellers—rely on Amazon as their 

sole source of income.22

Amazon achieved its current dominant position, in part, through acquiring its competitors, 

including Diapers.com and Zappos. It has also acquired companies that operate in adjacent markets, 

adding customer data to its stockpile and further shoring up its competitive moats. This strategy has 

entrenched and expanded Amazon’s market power in e-commerce, as well as in other markets. The 

company’s control over and reach across its many business lines enable it to self-preference and 

disadvantage competitors in ways that undermine free and fair competition. As a result of Amazon’s 

dominance, other businesses are frequently beholden to Amazon for their success. 

Amazon has engaged in extensive anticompetitive conduct in its treatment of third-party 

sellers. Publicly, Amazon describes third-party sellers as “partners.” But internal documents show that, 

behind closed doors, the company refers to them as “internal competitors.” Amazon’s dual role as an 

operator of its marketplace that hosts third-party sellers, and a seller in that same marketplace, creates 

an inherent conflict of interest. This conflict incentivizes Amazon to exploit its access to competing 

sellers’ data and information, among other anticompetitive conduct. 

Voice assistant ecosystems are an emerging market with a high propensity for lock-in and selfpreferencing. Amazon has expanded Alexa’s ecosystem quickly through acquisitions of 

complementary and competing technologies, and by selling its Alexa-enabled smart speakers at deep 

discounts. The company’s early leadership in this market is leading to the collection of highly sensitive 

consumer data, which Amazon can use to promote its other business, including e-commerce and Prime 

Video.

Finally, Amazon Web Services (AWS) provides critical infrastructure for many businesses with 

which Amazon competes. This creates the potential for a conflict of interest where cloud customers are 

forced to consider patronizing a competitor, as opposed to selecting the best technology for their 

business.

e. Apple

Apple has significant and durable market power in the mobile operating system market. 

Apple’s dominance in this market, where it controls the iOS mobile operating system that runs on 

Apple mobile devices, has enabled it to control all software distribution to iOS devices. As a result, 

Apple exerts monopoly power in the mobile app store market, controlling access to more than 100 

million iPhones and iPads in the U.S.

22 JUNGLESCOUT, THE STATE OF THE AMAZON SELLER 2020 4 (2020), https://www.junglescout.com/wpcontent/uploads/2020/02/State-of-the-Seller-Survey.pdf.
17

Apple’s mobile ecosystem has produced significant benefits to app developers and consumers. 

Launched in 2008, the App Store revolutionized software distribution on mobile devices, reducing 

barriers to entry for app developers and increasing the choices available to consumers. Despite this, 

Apple leverages its control of iOS and the App Store to create and enforce barriers to competition and 

discriminate against and exclude rivals while preferencing its own offerings. Apple also uses its power 

to exploit app developers through misappropriation of competitively sensitive information and to 

charge app developers supra-competitive prices within the App Store. Apple has maintained its 

dominance due to the presence of network effects, high barriers to entry, and high switching costs in 

the mobile operating system market.

Apple is primarily a hardware company that derives most of its revenue from sales of devices 

and accessories. However, as the market for products like the iPhone has matured, Apple has pivoted 

to rely increasingly on sales of its applications and services, as well as collecting commissions and fees 

in the App Store. In the absence of competition, Apple’s monopoly power over software distribution to 

iOS devices has resulted in harms to competitors and competition, reducing quality and innovation 

among app developers, and increasing prices and reducing choices for consumers.

f. Effects of Market Power

The Subcommittee also examined the effects of market power in digital markets on the free and 

diverse press, innovation, privacy and data, and other relevant matters summarized below for ease of 

reference. 

As part of this process, the Subcommittee received testimony and submissions showing that the 

dominance of some online platforms has contributed to the decline of trustworthy sources of news, 

which is essential to our democracy.23 In several submissions, news publishers raised concerns about 

the “significant and growing asymmetry of power” between dominant platforms and news 

organizations, as well as the effect of this dominance on the production and availability of trustworthy 

sources of news. Other publishers said that they are “increasingly beholden” to these firms, and in 

particular, to Google and Facebook.24 Google and Facebook have an outsized influence over the 

distribution and monetization of trustworthy sources of news online,25 undermining the quality and 

23 Free and Diverse Press Hearing at 1–3 (statement of David Pitofsky, Gen. Counsel, News Corp).

24 Submission from Source 53 to H. Comm. on the Judiciary, 7 (Oct. 14, 2019) (on file with Comm.) Although Apple News 

and Apple News Plus are increasingly popular news aggregators, most market participants that the Subcommittee received 

evidence from during the investigation do not view it as a critical intermediary for online news at this time. Some 

publishers raised competition concerns about the tying of payment inside Apple’s news product. Others, however, did raise 

concern about Apple News and Apple News Plus, noting that it is “not creating any original journalism itself” and 

competes “against publishers’ news products . . . for subscription revenues.” 

25 Submission of Source 52 to H. Comm. on the Judiciary, 12 (Oct. 30, 2019) (on file with Comm.).
18

availability of high-quality sources of journalism.26 This concern is underscored by the COVID-19 

pandemic, which has laid bare the importance of preserving a vibrant free press in both local and 

national markets.

The rise of market power online has also materially weakened innovation and entrepreneurship 

in the U.S. economy.27 Some venture capitalists, for example, report that there is an innovation “kill 

zone” that insulates dominant platforms from competitive pressure simply because investors do not 

view new entrants as worthwhile investments.28 Other investors have said that they avoid funding 

entrepreneurs and other companies that compete directly or indirectly with dominant firms in the 

digital economy.29 In an interview with Subcommittee staff, a prominent venture capital investor 

explained that due to these factors, there is a strong economic incentive for other firms to avoid headon competition with dominant firms.30

Additionally, in the absence of adequate privacy guardrails in the United States, the persistent 

collection and misuse of consumer data is an indicator of market power online.31 Online platforms 

rarely charge consumers a monetary price—products appear to be “free” but are monetized through 

people’s attention or with their data.32 In the absence of genuine competitive threats, dominant firms 

offer fewer privacy protections than they otherwise would, and the quality of these services has 

deteriorated over time. As a result, consumers are forced to either use a service with poor privacy 

safeguards or forego the service altogether.33

26 Free and Diverse Press Hearing at 3 (statement of David Chavern, President and CEO, News Media Alliance) (“In effect, 

a couple of dominant tech platforms are acting as regulators of the digital news industry.”).

27 Innovation and Entrepreneurship Hearing at 1 (statement of Timothy Wu, Julius Silver Professor of Law, Columbia Law 

School); Data and Privacy Hearing at 1–3 (statement of Jason Furman, Professor of the Practice of Economic Policy, 

Harvard Kennedy School).

28 Raghuram Rajan, Sai Krishna Kamepalli & Luigi Zingales, Kill Zone (Becker Friedman Institute Working Paper No. 

2020-19), https://ssrn.com/abstract=3555915. 

29 See generally United States Department of Justice Antitrust Division Public Workshop on Venture Capital and Antitrust 

(Feb. 12, 2020) [hereinafter Venture Capital and Antitrust Workshop], 

https://www.justice.gov/atr/page/file/1255851/download; CHICAGO BOOTH STIGLER CTR. FOR THE STUDY OF ECON. &

STATE, STIGLER CMTE. ON DIG. PLATFORMS 9 (2019) [hereinafter Stigler Report].

30 See Interview with Source 146 (May 28, 2020). 

31 Howard A. Shelanski, Information, Innovation, and Competition Policy for the Internet, 161 U. PA. L. REV. 1663, 1689 

(2013) (“One measure of a platform’s market power is the extent to which it can engage in [privacy exploitation] without 

some benefit to consumers that offsets their reduced privacy and still retain users.”).

32 Data and Privacy Hearing at 3 (statement of Jason Furman, Professor of the Practice of Economic Policy, Harvard 

Kennedy School); Data and Privacy Hearing at 4-5 (statement of Tommaso Valletti, Professor of Economics, Imperial 

College Business School). 

33 DIG. COMPETITION EXPERT PANEL, UNLOCKING DIGITAL COMPETITION 43 (2019) (“[T]he misuse of consumer data and 

harm to privacy is arguably an indicator of low quality caused by a lack of competition,”) [hereinafter Dig. Competition 

Expert Panel Report]; Dina Srinivasan, The Antitrust Case Against Facebook: A Monopolist’s Journey Towards Pervasive 

Surveillance in Spite of Consumers’ Preference for Privacy, 16 BERKELEY BUS. L.J. 39, 88 (2019) (“Consumers effectively 

face a singular choice—use Facebook and submit to the quality and stipulations of Facebook’s product or forgo all use of 

the only social network.”).
19

Finally, the market power of the dominant platforms risks undermining both political and 

economic liberties. Subcommittee staff encountered a prevalence of fear among market participants 

that depend on the dominant platforms, many of whom expressed unease that the success of their 

business and their economic livelihood depend on what they viewed as the platforms’ unaccountable 

and arbitrary power. Additionally, courts and enforcers have found the dominant platforms to engage 

in recidivism, repeatedly violating laws and court orders. This pattern of behavior raises questions 

about whether these firms view themselves as above the law, or whether they simply treat lawbreaking 

as a cost of business. Lastly, the growth in the platforms’ market power has coincided with an increase 

in their influence over the policymaking process. Through a combination of direct lobbying and 

funding think tanks and academics, the dominant platforms have expanded their sphere of influence, 

further shaping how they are governed and regulated.

Recommendations

As part of the investigation of competition in digital markets, the Subcommittee conducted a 

thorough examination of the adequacy of current laws and enforcement levels. This included receiving 

submissions from experts on antitrust and competition policy who were selected on a careful, 

bipartisan basis to ensure the representation of a diverse range of views on these matters. The 

Subcommittee also received other submissions from leading experts—including Executive Vice 

President Margrethe Vestager of the European Commission and Chair Rod Sims of the Australian 

Competition and Consumer Commission—to inform this inquiry. Most recently, on October 1, 2020, 

the Subcommittee held an oversight hearing on “Proposals to Strengthen the Antitrust Laws and 

Restore Competition Online” to examine potential solutions to concerns identified during the 

investigation to further inform the Report’s recommendations.

Based on this oversight activity, Subcommittee Chairman Cicilline requested that staff provide 

a menu of reforms to Members of the Subcommittee for purposes of potential legislative activity 

during the remainder of the 116th Congress and thereafter. As he noted in remarks to the American 

Antitrust Institute in June 2019:

[I]t is Congress’ responsibility to conduct oversight of our antitrust laws and 

competition system to ensure that they are properly working and to enact changes when 

they are not. While I do not have any preconceived ideas about what the right answer is, 

as Chairman of the Antitrust Subcommittee, I intend to carry out that responsibility with 

the sense of urgency and serious deliberation that it demands.34

34 David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 

Keynote Address at American Antitrust Institute’s 20th Annual Policy Conference (June 20, 2019), 

https://cicilline.house.gov/press-release/cicilline-delivers-keynote-address-american-antitrust-institute%E2%80%99s-20thannual-policy. 
20

In response to this request, Subcommittee staff identified a broad set of reforms for further 

examination by the Members of the Subcommittee for purposes of crafting legislative responses to the 

findings of this Report. These reforms include proposals to: (1) address anticompetitive conduct in 

digital markets; (2) strengthen merger and monopolization enforcement; and (3) improve the sound 

administration of the antitrust laws through other reforms. We intend these recommendations to serve 

as a complement to vigorous antitrust enforcement. Consistent with the views expressed by Chairman 

Nadler and Subcommittee Chairman Cicilline in the Foreword to this Report, we view these 

recommendations as complements, and not substitutes, to forceful antitrust enforcement.

For ease of reference, these recommendations for further examination are summarized below.

a. Restoring Competition in the Digital Economy

• Structural separations and prohibitions of certain dominant platforms from operating in 

adjacent lines of business;

• Nondiscrimination requirements, prohibiting dominant platforms from engaging in selfpreferencing, and requiring them to offer equal terms for equal products and services;

• Interoperability and data portability, requiring dominant platforms to make their services 

compatible with various networks and to make content and information easily portable between 

them;

• Presumptive prohibition against future mergers and acquisitions by the dominant platforms; 

• Safe harbor for news publishers in order to safeguard a free and diverse press; and

• Prohibitions on abuses of superior bargaining power, proscribing dominant platforms from 

engaging in contracting practices that derive from their dominant market position, and 

requiring due process protections for individuals and businesses dependent on the dominant 

platforms.

b. Strengthening the Antitrust Laws

• Reasserting the anti-monopoly goals of the antitrust laws and their centrality to ensuring a 

healthy and vibrant democracy;

• Strengthening Section 7 of the Clayton Act, including through restoring presumptions and 

bright-line rules, restoring the incipiency standard and protecting nascent competitors, and 

strengthening the law on vertical mergers;
21

• Strengthening Section 2 of the Sherman Act, including by introducing a prohibition on abuse of 

dominance and clarifying prohibitions on monopoly leveraging, predatory pricing, denial of 

essential facilities, refusals to deal, tying, and anticompetitive self-preferencing and product 

design; and

• Taking additional measures to strengthen overall enforcement, including through overriding 

problematic precedents in the case law.

c. Reviving Antitrust Enforcement

• Restoring robust congressional oversight of the antitrust laws and their enforcement;

• Restoring the federal antitrust agencies to full strength, by triggering civil penalties and other 

relief for “unfair methods of competition” rules, requiring the Federal Trade Commission to 

engage in regular data collection on concentration, enhancing public transparency and 

accountability of the agencies, requiring regular merger retrospectives, codifying stricter 

prohibitions on the revolving door, and increasing the budgets of the FTC and the Antitrust 

Division; and

• Strengthening private enforcement, through eliminating obstacles such as forced arbitration 

clauses, limits on class action formation, judicially created standards constraining what 

constitutes an antitrust injury, and unduly high pleading standards.

THE INVESTIGATION OF COMPETITION IN DIGITAL MARKETS

A. Requests for Information and Submissions

First-Party Requests for Information

On September 13, 2019, the Committee sent bipartisan requests for information (RFIs) to each 

of the four investigated platforms: Alphabet,35 Amazon, Apple, and Facebook. For each company, the 

RFI asked for a comprehensive set of information about each of the company’s products and services. 

In addition, the RFI asked the company to submit communications among high-level executives 

relating to various potentially anticompetitive acquisitions and conduct. The Committee requested that 

the platforms respond to the RFIs by October 14, 2019.

35 In 2015, Google reorganized under a new name and parent company, Alphabet, separated various businesses, and placed 

Sundar Pichai as chief executive of Google. Larry Page, chief executive of Google, became head of Alphabet with Sergey 

Brin. See Conor Dougherty, Google to Reorganize as Alphabet to Keep Its Lead as an Innovator, N.Y. TIMES (Aug. 10, 

2015), https://www.nytimes.com/2015/08/11/technology/google-alphabet-restructuring.html. 
22

a. Alphabet

The Committee’s RFI to Alphabet, the parent company of Google, asked for information 

necessary to understand how the company operates and its role in the digital marketplace.36 For 

example, in Request A, the RFI asked for detailed financial statements and a description of Alphabet’s 

relevant products and services, including Google Ads, Google Search, YouTube, and Waze. In 

addition, the RFI asked for information helpful for determining whether Alphabet has monopoly power 

for any of its products or services, including for each product or service: (i) a list of Alphabet’s top ten 

competitors; and (ii) internal or external analyses of Alphabet’s market share relative to its 

competitors. Request A also asked for copies of documents and information that Alphabet had 

submitted to any U.S. or international antitrust enforcement agency for antitrust investigations that 

took place in any of those agencies within the past decade.37

Request B asked for all communications from high-level executives, including former CEO 

Larry Page and current CEO Sundar Pichai, relating to a number of Alphabet’s key acquisitions and 

potentially anticompetitive conduct, most of which have been widely reported in the news.38 The RFI 

asked for communications, including, but not limited to, discussions relating to the deal rationale and 

any competitive threat posed by the acquired company for the following acquisitions: Google/Android 

in 2005, Google/YouTube in 2006, Google/DoubleClick in 2007, Google/AdMob in 2009, and 

Google’s acquisition of a minority stake in Vevo in 2013. Request B of the Alphabet RFI also 

requested executive communications relating to certain categories of potential anticompetitive 

conduct.39

In response to this request, Alphabet produced 1,135,398 documents, including strategy 

memoranda, presentations, and materials produced in prior investigations. Although Google produced 

a significant amount of material, Subcommittee staff did not view this volume as a proxy for quality.

36 Letter from Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm 

on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary to Larry Page, Chief Executive Officer, Alphabet (Sept. 13, 2019) 

[hereinafter Committee Request for Information, Alphabet] 

https://judiciary.house.gov/sites/democrats.judiciary.house.gov/files/documents/alphabet%20inc.%20rfi%20-

%20signed%20(003).pdf. 

37 Id. at 1–4.

38 The Alphabet RFI defines the term “Relevant Executives” as Larry Page, Sergey Brin, Ruth Porat, David Drummond, 

Eric Schmidt, Sundar Pichai, Susan Wojcicki, Philipp Schindler, Prabhakar Raghavan, Thomas Kurian, Hiroshi 

Lockheimer, Rishi Chandra, Keith Enright, and Kent Walker. See id. at 4.

39 Id. at 4–9.
23

b. Amazon

The Committee’s RFI to Amazon asked for similar types of information helpful for 

understanding the competitive dynamics of the digital marketplace and the company’s role.40 For 

example, in Request A, the RFI asked for detailed financial statements and a description of Amazon’s 

relevant products and services, including Alexa, Amazon Marketplace, Amazon Prime, and Amazon 

Web Services (AWS). In addition, the RFI asked for information helpful for determining whether 

Amazon has monopoly power for any of its products or services, including for each product or service: 

(i) a list of Amazon’s top ten competitors; and (ii) internal or external analyses of Amazon’s market 

share relative to its competitors. Request A also asked for copies of documents and information that 

Amazon had submitted to any U.S. or international antitrust enforcement agency for antitrust 

investigations that took place in any of those agencies within the past decade.41

Request B asked for all communications from high-level executives, including CEO Jeff Bezos 

and Jay Carney, Senior Vice President for Global Corporate Affairs, relating to a number of Amazon’s 

key acquisitions and potentially anticompetitive conduct, most of which have been widely reported in 

the news.42 The RFI asked for communications, including, but not limited to, discussions relating to 

the deal rationale and any competitive threat posed by the acquired company for the following 

acquisitions: Amazon/Audible in 2008, Amazon/Zappos in 2009, Amazon/Quidsi (Diapers.com) in 

201043, Amazon/Whole Foods in 2017, and Amazon/Ring in 2018. Request B of the Amazon RFI also 

requested executive communications relating to certain categories of potential anticompetitive 

conduct.44

In response to the Committee’s requests, Amazon produced 24,299 documents, including 

internal emails among the company’s senior executives, memoranda, presentations, and other 

materials.

40 Letter from Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm 

on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary to Jeff Bezos, Chief Executive Officer, Amazon (Sept. 13, 2019) 

[hereinafter Committee Request for Information, Amazon] 

https://judiciary.house.gov/sites/democrats.judiciary.house.gov/files/documents/amazon%20rfi%20-%20signed.pdf.

41 Id. at 1–3.

42 The Amazon RFI defines the term “Relevant Executives” as Jeff Bezos, Jeff Wilke, Andy Jassy, Jeff Blackburn, Dave 

Limp, Brian Olsavsky, David Zapolsky, and Jay Carney. See id. at 3.

43 Amazon acquired “Quidsi, the e-commerce company that runs Diapers.com” in 2010. Claire Cain Miller, Amazon Has a 

Reported Deal to Buy Parent of Diapers.com, N.Y. TIMES (Nov. 7, 2010), 

https://www.nytimes.com/2010/11/08/technology/08amazon.html. 

44 Committee Request for Information, Amazon at 3–7.
24

c. Apple

The Committee’s RFI to Apple also asked for information helpful for understanding the 

company’s role in the digital marketplace. For example, in Request A, the RFI asked for detailed 

financial statements and a description of Apple’s relevant products and services, including the iPhone, 

App Store, and Apple Pay.45 In addition, the RFI asked for information helpful for determining 

whether Apple has monopoly power for any of its products or services, including for each product or 

service: (i) a list of Apple’s top ten competitors; and (ii) internal or external analyses of Apple’s 

market share relative to its competitors. Request A also asked for copies of documents and information 

that Apple had submitted to any U.S. or international antitrust enforcement agency for antitrust 

investigations that took place in any of those agencies within the past decade.46

Request B asked for all communications from high-level executives, including CEO Tim Cook 

and Eddy Cue, Senior Vice President of Internet Software and Services, relating to potentially 

anticompetitive conduct, most of which has been widely reported in the news.47 The RFI asked for 

communications, including, but not limited to, discussions relating to certain categories of potentially 

anticompetitive conduct.48

In response to the Committee’s requests, Apple produced 2,246 documents. These documents 

include internal communications among the company’s senior executives describing governance of the 

App Store, as well as the company’s internal deliberations and strategy responding to recent 

controversies. 

d. Facebook

The Committee’s RFI to Facebook also asked for information helpful for understanding how 

the company operates and its role in the digital marketplace.49 For example, in Request A, the RFI 

45 Letter from Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm 

on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary to Tim Cook, Chief Executive Officer, Apple (Sept. 13, 2019) [hereinafter 

Committee Request for Information, Apple] 

https://judiciary.house.gov/sites/democrats.judiciary.house.gov/files/documents/apple%20rfi%20-%20signed.pdf. 

46 Id. at 1–3.

47 The Apple RFI defines the term “Relevant Executives” as Tim Cook, Katherine Adams, Eddy Cue, Philip Schiller, Johny 

Srouji, Dan Riccio, Jonathan Ive, Craig Frederighi, Luca Maestri, Jeff Williams, Steve Dowling, Tor Myhren, Lucas 

Maestri, and Jane Horvath. See id. at 3. 

48 Id. at 3–6.

49 Letter from Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm 

on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary to Mark Zuckerberg, Chief Executive Officer, Facebook (Sept. 13, 2019) 
25

asked for detailed financial statements and a description of Facebook’s relevant products and services, 

including Facebook, Instagram, and WhatsApp. In addition, the RFI asked for information helpful for 

determining whether Facebook has monopoly power for any of its products or services, including for 

each product or service: (i) a list of Facebook’s top ten competitors; and (ii) internal or external 

analyses of Facebook’s market share relative to its competitors. Request A also asked for copies of 

documents and information that Facebook had submitted to any U.S. or international antitrust 

enforcement agency for antitrust investigations that took place in any of those agencies within the past 

decade.50

Request B asked for all communications from high-level executives, including Founder and 

CEO Mark Zuckerberg and Sheryl Sandberg, Chief Operating Officer, relating to a number of 

Facebook’s key acquisitions and potentially anticompetitive conduct, most of which have been widely 

reported in the news.51 The RFI asked for communications, including, but not limited to, discussions

relating to the deal rationale and any competitive threat posed by the acquired company for the 

following acquisitions: Facebook/Instagram in 2012, Facebook/Onavo in 2013, and 

Facebook/WhatsApp in 2014. Request B of the Facebook RFI also requested executive 

communications relating to certain categories of potentially anticompetitive conduct.52

In response to the Committee’s requests, Facebook produced 41,442 documents, including 

documents produced in response to prior investigations into Facebook’s acquisitions and into whether 

it had abused its dominance. Facebook also produced 83,804 documents in connection with litigation 

in an ongoing matter. Among other items, these documents include internal communications among 

the company’s senior executives describing Facebook’s acquisition and overall competition strategy. 

In response to supplemental requests by Subcommittee staff, Facebook produced internal market data 

over a multi-year period, as well as a memorandum prepared by a senior data scientist and economist 

at the company related to competition among Facebook’s family of products and other social apps. 

Process for Obtaining Responses to First-Party Requests

After sending the RFIs, Subcommittee staff invested considerable time and resources in making 

themselves available for calls with the platforms to answer any questions the platforms had about 

responding to the requests, on a nearly weekly basis from October 2019 through March 2020. On these 

calls, staff addressed a range of issues, including clarifying the meaning and intent of language in the 

[hereinafter Committee Request for Information, Facebook] 

https://judiciary.house.gov/sites/democrats.judiciary.house.gov/files/documents/facebook%20rfi%20-%20signed.pdf.

50 See id. at 1–2. 

51 The Facebook RFI defines the term “Relevant Executives” as Mark Zuckerberg, Sheryl Sandberg, Jennifer Newstead, 

Javier Olivan, Chris Cox, Mike Schroepfer, David Wehner, Colin Stretch, Will Cathcart, Adam Mosseri, Stan Chudnovsky, 

Fidji Simo, Chris Daniels, Erin Egan, and Kevin Martin. See id. at 2–3.

52 See id. at 2–5. 
26

request; maintaining the confidentiality of sensitive business information; and, where appropriate, 

narrowing requests in an effort to balance the Committee’s need for relevant information against the 

platforms’ burden of production. Each of the investigated platforms failed to meet the October 14, 

2019 deadline, citing various difficulties.

On December 4, 2019, nearly three months after the deadline for submitting the RFI responses, 

the Committee sent a letter to the platforms’ CEOs pointing out their failure to comply. The 

Committee stated its expectation that the platforms would complete production by December 18, 2019 

for Request A and January 2, 2020 for Request B, to avoid the need to invoke other processes and 

procedures to obtain the requested materials.53

After the platforms failed to meet the revised deadlines, in early February 2020, staff asked for the 

companies’ outside counsel to attend in-person meetings to discuss the substantial gaps in production 

that remained, and to identify ways to address any obstacles the platforms identified to filling those 

gaps. Despite the Committee’s best efforts to address those obstacles—and allowing substantial time 

for the platforms to navigate delays relating to the COVID-19 pandemic—staff again had to reach out 

to the platforms regarding the deficiency of their responses. On June 9, 2020, in a final effort to avoid 

resorting to issuing subpoenas to the platforms to compel the production of documents and 

information, staff requested that the platforms voluntarily provide information responsive to a reduced 

list of targeted requests by June 22, 2020.

Third-party Requests for Information

As part of the investigation, the Subcommittee collected a large amount of information from 

market participants, including customers and competitors of Amazon, Apple, Facebook, and Google. 

Staff also received information and analysis from other third parties, including academics, former 

antitrust government officials, public interest organizations, and trade associations.

a. Market Participants

In September, the Committee sent a request for information to over 80 market participants. The 

RFI asked the recipient to voluntarily provide information regarding the state of competition in the 

digital marketplace for various products and services, including number and identity of market 

participants, market shares, and barriers to entry. These third-party RFIs also asked for a description of 

any conduct by Amazon, Apple, Facebook, or Google that raises competition concerns, and the impact 

of such conduct on the recipient’s business. The Committee also sought to gather information through 

53 See e.g., Letter from Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, 

H. Comm on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of 

the H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary to Mark Zuckerberg, Chief Executive Officer, Facebook (Dec. 4, 2019) (on 

file with House Comm. on the Judiciary). 
27

these RFIs regarding broader questions based on the recipient’s experience in the digital marketplace, 

including (i) whether market participants are able to compete on the merits of their goods and services; 

(ii) the adequacy of antitrust enforcement relating to merger review and anticompetitive conduct; (iii) 

the adequacy of current antitrust law to address anticompetitive mergers and anticompetitive conduct; 

and (iv) suggestions for improving enforcement of antitrust law and making changes to antitrust law 

itself, statutory or otherwise.

On January 7, 2020, the Committee sent a second round of RFIs to 29 market participants. 

These RFI recipients consisted of additional businesses and individuals that staff had identified during 

the first half of the investigation as likely to have relevant information and an interest in sharing that 

information with the Committee. These RFIs asked for similar information to the September RFIs and 

provided staff with additional valuable information and insights into the functioning and challenges of 

operating in the digital marketplace.

Unfortunately, some market participants did not respond to substantive inquiries due to fear of 

economic retaliation. These market participants explained that their business and livelihoods rely on 

one or more of the digital platforms. One response stated, “Unfortunately, [the CEO] is not able to be 

more public at this time out of concern for retribution to his business,” adding, “I am pretty certain we 

are not the only ones that are afraid of going public.”

54 Another business that ultimately declined to 

participate in the investigation expressed similar concerns, stating, “We really appreciate you reaching 

out to us and are certainly considering going on the record with our story. . . . Given how powerful 

Google is and their past actions, we are also quite frankly worried about retaliation.”

55 Stacy Mitchell, 

Co-Director of the Institute for Local Self-Reliance, similarly testified that many businesses have a 

fear of speaking out about Amazon, stating, “I spend a lot of time interviewing and talking with 

independent retailers, manufacturers of all sizes. Many of them are very much afraid of speaking out 

publicly because they fear retaliation.”

56

54 Email from Source 685 to Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking 

Member, H. Comm on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. 

Law of the H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary (July 11, 2020) (on file with H. Comm. on the Judiciary).

55 Email from Source 147 to Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking 

Member, H. Comm on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. 

Law of the H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary (July 15, 2019) (on file with H. Comm. on the Judiciary).

56 Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship: Hearing Before the Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. 250 (2019) (Stacy F. Mitchell, CoDirector, Institute for Local Self-Reliance), ) [hereinafter Innovation and Entrepreneurship Hearing] 

https://docs.house.gov/meetings/JU/JU05/20190716/109793/HHRG-116-JU05-Wstate-MitchellS-20190716.pdf. 
28

b. Antitrust Experts

The Committee’s final round of outreach to third parties involved sending letters on March 13, 

2020, soliciting insights and analysis from several dozen antitrust experts who were identified on a 

bipartisan basis and whose submissions represent a diverse range of experience and perspectives. In 

support of the investigation’s objective to assess the adequacy of existing antitrust laws, competition 

policies, and current enforcement levels, the Committee invited submissions on three main topics. The 

first topic covered the adequacy of existing laws—case law and statutes—that prohibit monopolization 

and monopolistic conduct. The second topic similarly dealt with the adequacy of existing law, but 

focused on its sufficiency to address anticompetitive mergers and acquisitions, including vertical and 

conglomerate mergers, serial acquisitions, data acquisitions, and strategic acquisitions of potential 

competitors. Third, the Committee sought feedback on whether the institutional structure of antitrust 

enforcement is adequate to promote the robust enforcement of the antitrust laws, including current 

levels of appropriations to the antitrust agencies, existing agency authorities, and congressional 

oversight of enforcement.

c. Additional Outreach and Submissions

In addition to sending the RFIs in September and January, Subcommittee staff engaged in 

extensive outreach to additional third parties based on public reports and non-public information 

gathered throughout the investigation, suggesting that such entities had relevant information.

Subcommittee staff also received submissions from numerous individuals and businesses 

throughout the course of the investigation. These submissions came from a wide range of sources and 

in a variety of forms. For example, an anonymous source sent thumb drives to the Committee’s main 

office in the Rayburn House Office Building. Other examples included former or current employees 

submitting tips to the Subcommittee’s investigation email address, or through the form for anonymous 

submissions posted on the Subcommittee’s investigation website.

Antitrust Agencies Requests for Information

As part of the Committee’s September 2019 efforts to gather information, the Committee also 

sent requests for information to the Federal Trade Commission and the Department of Justice. In part, 

the Committee sought this information to carry out its function as the principal oversight authority for 

the Department of Justice, including its component agencies, its personnel, and its law enforcement 

activities.57 Similarly, the Committee’s jurisdiction extends to the FTC’s antitrust-related work, and to 

administrative practice and procedure, including at the FTC.58 The Committee’s RFIs requested 

57 Government Oversight, U.S. HOUSE OF REPRESENTATIVES JUDICIARY COMMITTEE, 

https://judiciary.house.gov/issues/government-oversight/. 

58 RULES OF THE HOUSE OF REPRESENTATIVES, 116th Cong., lst Sess., Rule X, cl. (1)(1)(2) (2019), 

http://clerk.house.gov/legislative/house-rules.pdf. 
29

documents relating to the agencies’ decisions to open or close investigations into potential violations of 

antitrust law in digital markets, decisions to challenge mergers or conduct in federal district court or in 

administrative action, and decisions to forego litigation in favor of a settlement agreement.59 Senior 

officials from the FTC and the Antitrust Division also provided several briefings to Members of the 

Subcommittee and staff in response to the requests of the Subcommittee Chairman and Ranking 

Member. These briefings served as an opportunity for Members to obtain information and updates 

about the current state of antitrust law and enforcement in digital markets.

B. Hearings

On June 11, 2019, the Subcommittee held part one of its series of investigation hearings titled 

“Online Platforms and Market Power, Part 1: The Free and Diverse Press.” At this hearing, the 

Subcommittee heard testimony from the following Majority witnesses: David Chavern, President of 

the News Media Alliance; Gene Kimmelman, President and CEO of Public Knowledge; Sally 

Hubbard, Director of Enforcement Strategy at Open Markets Institute (OMI); and Matthew Schruers, 

Vice President for Law and Policy at Computer and Communications Industry Association (CCIA). 

The Minority witnesses were David Pitofsky, General Counsel for News Corp; and Kevin Riley, Editor 

of the Atlanta-Journal Constitution.

60

On July 16, 2019, the Subcommittee held its second hearing, a two-paneled hearing titled 

“Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship.” On the first panel, the 

Subcommittee heard testimony from the following: Adam Cohen, Director of Economic Policy at 

Google; Nate Sutton, Associate General Counsel, Competition, at Amazon; Matt Perault, Head of 

Global Policy Development at Facebook; and Kyle Andeer, Vice President and Corporate Law and 

Chief Compliance Officer at Apple. On the second panel, the Subcommittee heard testimony from the 

following Majority witnesses: Timothy Wu, Julius Silver Professor of Law, Science and Technology at 

Columbia Law School; Fiona Scott Morton, Theodore Nierenberg Professor of Economics at Yale 

University School of Management; and Stacy Mitchell, Co-Director of the Institute for Local SelfReliance. On the second panel, the Minority witnesses were Maureen Ohlhausen, Partner at Baker 

Botts and former Commissioner and Acting Chairwoman of the Federal Trade Commission; Morgan 

Reed, Executive Director of The App Association; and Carl Szabo, Vice President and General 

Counsel at NetChoice.61

59 Subcommittee staff recognizes that publication of these documents could cause competitive injury to firms that 

cooperated with prior investigations or in ongoing investigations. Where possible, this Report summarizes or draws 

conclusions from these sources without reproducing them.

60 Online Platforms and Market Power, Part 1: The Free and Diverse Press: Hearing Before the Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. (2019) [hereinafter Free and Diverse Press 

Hearing] https://judiciary.house.gov/legislation/hearings/online-platforms-and-market-power-part-1-free-and-diverse-press. 

61 Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship: Hearing Before the Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. (2019) [hereinafter Innovation and 

Entrepreneurship Hearing] https://judiciary.house.gov/legislation/hearings/online-platforms-and-market-power-part-2-

innovation-and-entrepreneurship. 
30

On October 18, 2019, the Subcommittee held its third hearing titled “Online Platforms and 

Market Power, Part 3: The Role of Data and Privacy in Competition.” At this hearing, the 

Subcommittee heard testimony from the following Majority witnesses: the Honorable Rohit Chopra, 

Commissioner at the Federal Trade Commission; Dr. Jason Furman, Professor of the Practice of 

Economic Policy at Harvard Kennedy School and former Chairman of the Council of Economic 

Advisers (CEA); and Dr. Tommaso Valletti, Professor of Economics and Head of the Department of 

Economics & Public Policy at Imperial College Business School and former Chief Competition 

Economist of the European Commission’s Directorate General for Competition (DG-Comp). The 

Minority witness at the hearing was Dr. Roslyn Layton, Visiting Scholar at the American Enterprise 

Institute.62

On November 13, 2019, the Subcommittee held its fourth hearing titled “Online Platforms and 

Market Power, Part 4: Perspectives of the Antitrust Agencies.” At this hearing, the Subcommittee 

heard testimony from the following witnesses: the Honorable Makan Delrahim, Assistant Attorney 

General for the Antitrust Division at the Department of Justice; and the Honorable Joseph J. Simons, 

Chairman of the Federal Trade Commission.63

On January 17, 2020, the Subcommittee held its fifth hearing titled “Field Hearing: Online 

Platforms and Market Power, Part 5: Competitors in the Digital Economy.” At this hearing, which took 

place in the congressional district of Subcommittee Vice Chairman Joe Neguse (D-CO) at the 

University of Colorado School of Law, the Subcommittee heard testimony from the following Majority 

witnesses: Patrick Spence, Chief Executive Officer of Sonos; David Barnett, Founder and Chief 

Executive Officer of PopSockets; and Kirsten Daru, Vice President and General Counsel at Tile. The 

Minority witness at the hearing was David Heinemeier Hansson, Founder and Chief Technology 

Officer of Basecamp.64

On July 29, 2020, the Subcommittee held its sixth hearing titled “Online Platforms and Market 

Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google.” At this hearing, 

the Subcommittee heard testimony from the following witnesses: Jeff Bezos, Chief Executive Officer 

62 Online Platforms and Market Power, Part 3: The Role of Data and Privacy in Competition: Hearing Before the 

Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. (2019) [hereinafter 

Data and Privacy Hearing] https://judiciary.house.gov/calendar/eventsingle.aspx?EventID=2248. 

63 Online Platforms and Market Power, Part 4: Perspectives of the Antitrust Agencies: Hearing Before the Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. (2019) [hereinafter Antitrust 

Agencies Hearing] https://judiciary.house.gov/calendar/eventsingle.aspx?EventID=2287. 

64 Online Platforms and Market Power, Part 5: Competitors in the Digital Economy: Hearing Before the Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. (2020) [hereinafter Competitors 

Hearing] https://judiciary.house.gov/calendar/eventsingle.aspx?EventID=2386.
31

at Amazon; Sundar Pichai, Chief Executive Officer at Alphabet and Google; Tim Cook, Chief 

Executive Officer at Apple; and Mark Zuckerberg, Chief Executive Officer at Facebook.65

On October 1, 2020, the Subcommittee held its seventh hearing titled “Proposals to Strengthen 

the Antitrust Laws and Restore Competition Online.” The Majority witnesses at the hearing included: 

William Baer, Visiting Fellow, Brookings Institution, and former Associate Attorney General, 

Department of Justice; Zephyr Teachout, Associate Professor of Law, Fordham University School of 

Law; Michael Kades, Director of Markets and Competition Policy, Washington Center for Equitable 

Growth; Sabeel Rahman, Associate Professor of Law, Brooklyn Law School and President, Demos; 

and Sally Hubbard, Director of Enforcement Strategy, Open Markets Institute. The Minority witnesses 

at the hearing were Christopher Yoo, John H. Chestnut Professor of Law, Communication, and 

Information Science, University of Pennsylvania Carey Law School; and Rachel Bovard, Senior 

Director of Policy, Conservative Partnership Institute; and Tad Lipsky, Antonin Scalia Law School, 

George Mason University.66

C. Roundtables

In addition to holding public hearings, the Subcommittee also held a series of bipartisan 

roundtables for Members of the Subcommittee and staff to provide Members with an opportunity to 

conduct further oversight of (1) the state of competition and problems in digital markets; (2) whether 

dominant firms have engaged in anticompetitive conduct; and (3) if antitrust laws, competition 

policies, and current enforcement levels are adequate to address these issues. In total, the 

Subcommittee held twelve briefings and roundtables in Washington, DC; four roundtables in Boulder, 

CO; and a virtual roundtable with stakeholders from Rhode Island and elsewhere in New England.67

The Subcommittee hosted multiple briefings and roundtables with experts on the digital 

economy on a range of topics. Experts included state antitrust enforcers, former officials from the 

Antitrust Division of the Department of Justice and the Federal Trade Commission, former technology 

industry executives, small business owners, representatives from the news industry, entrepreneurs, 

antitrust scholars, representatives from civil society, and representatives from libraries. 

The briefings and roundtables covered a broad array of topics related to competition in the 

digital marketplace. These topics included:

65 Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google: 

Hearing Before the Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. 

(2020) [hereinafter CEO Hearing] https://judiciary.house.gov/calendar/eventsingle.aspx?EventID=3113.

66 Online Platforms and Market Power, Part 7: Proposals to Strengthen the Antitrust Laws and Restore Competition 

Online: Hearing Before the Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th 

Cong. (2020) [hereinafter Remedies Hearing] https://judiciary.house.gov/calendar/eventsingle.aspx?EventID=3367. 

67 This roundtable was originally scheduled to take place physically as a field hearing in Providence, Rhode Island, but was 

held virtually due to the COVID-19 pandemic. 
32

• The effect that small algorithm changes by dominant platforms can have on small businesses 

that rely on the platform; 

• The data advantages that dominant online platform companies have over smaller competitors 

and startups, and how those data advantages can reinforce dominance and serve as a barrier to 

entry; 

• The effect of dominant online platform company power and practices on a free and diverse 

press and the local newsgathering and reporting; 

• The impact of dominant online platform company power and practices on investment in 

startups by venture capital firms; 

• The fear of economic retaliation by dominant platforms against smaller companies that raise 

concerns about anticompetitive conduct in the digital marketplace; 

• Other features of digital markets—including, but not limited to, network effects, economies of 

scale and scope, and barriers to entry—that make them prone to high concentration and 

monopolization;

• Enforcement of the antitrust laws; and

• Modernization of antitrust statutes and competition policy. 

Additionally, the Subcommittee held briefings also allowed representatives from Google, 

Amazon, Facebook, and Apple to make their own presentations to Subcommittee staff and to answer 

questions and provide details regarding their companies’ business practices, structures, and strategies 

in the marketplace.

D. Prior Investigations

The Subcommittee’s current review of competition in the digital marketplace continues a long 

oversight tradition. Over many decades, the House Judiciary Committee and its antitrust subcommittee 

have conducted careful, fact-based inquiries into industrial sectors showing signs of undue 

concentration and anticompetitive conduct. As a 1951 report from the then-named Subcommittee on 

the Study of Monopoly Power described its mandate, “It is the province of this subcommittee to 

investigate factors which tend to eliminate competition, strengthen monopolies, injure small business, 
33

or promote undue concentration of economic power; to ascertain the facts, and to make 

recommendations based on those findings.”

68

The Subcommittee followed the same process “to ascertain the facts” in this investigation. It 

has included hearings with industry and government witnesses, consultations with subject-matter 

experts, and a careful—and at times painstaking—review of large volumes of evidence provided by 

industry participants and regulators. Recognizing that antitrust investigations are by their nature factdependent, teams of investigators invested significant resources to study the structure of the relevant 

markets and the important firms in those markets.69

The purpose of these exercises was not to supersede the activities of antitrust enforcers such as 

the Federal Trade Commission (FTC) and the Department of Justice (DOJ), but to compile the 

Committee’s own record about current market conditions; to assess how antitrust laws and principles 

are being applied in the current business environment; and to determine whether revised laws, or new 

laws, or better enforcement are needed to protect competition. 

While the Committee’s investigations were not intended to interfere with the enforcement 

activities of antitrust enforcers or regulators, they often conducted inquiries into the same sectors and 

issues that DOJ, the FTC, the Federal Communications Commission (FCC), and other agencies with 

authority over competition policy or enforcement were also examining. As Members and staff of the 

Committee charged with the “protection of trade and commerce against unlawful restraints and 

monopolies,”

70 these investigators exercised their legislative authority to probe any aspect of antitrust 

that they deemed warranted attention. 

These investigations were guided by the principle that “[h]istory has proven that the most 

conducive environment for innovation and new product availability is a competitive market,”

71 and 

that a “free competitive economy” is an important American value.72 It was a value that had been 

formally embedded in our economy and society by the Sherman Act of 1890, “the peculiarly American 

68 Aluminum: Report of the Subcomm. on Study of Monopoly Power of the H. Comm. on the Judiciary, 82d Cong., H. REP.

NO. 255, 2 (1st Sess. 1951).

69 See, e.g., The Ocean Freight Industry: Report of the Antitrust Subcomm. of the H. Comm. on the Judiciary, 87th Cong., 

H. Rep. No. 1419, 2 (2d Sess. 1962) [hereinafter 1962 Ocean Freight Industry Report] (describing how Subcommittee staff 

spent more than nine months examining “tens of thousands of documents in the files of over 50 ocean-freight conferences” 

and other materials).

70 RULES OF THE HOUSE OF REPRESENTATIVES, 116th Cong., lst Sess., Rule X, cl. (1)(1)(16) (2019), 

http://clerk.house.gov/legislative/house-rules.pdf. 

71 Antitrust Reform Act of 1992, H. Comm. on the Judiciary, H. REP. NO. 102-850, 15 (1992) [hereinafter Antitrust Reform 

Act of 1992].

72 The Mobilization Program: Report of the Subcomm. on Study of Monopoly Power of the H. Comm. on the Judiciary, 82d 

Cong., H. REP. NO. 1217, at 1 (1st Sess. 1951) [hereinafter 1951 Mobilization Program Report].
34

charter of economic freedom.”

73 In a 1958 report on the airline industry, the then-named Antitrust 

Subcommittee explained that Americans’ social and political freedoms depended on “opportunity for 

market access and market rivalries in a private-enterprise economy.”

74 The “freedom of entry into any 

industry or field of endeavor,” a 1962 Subcommittee report explained, is a cornerstone of U.S. antitrust 

policy that has “encouraged extensive individual proprietorship . . . and has made our free enterprise 

system great and strong.”

75 A 1992 Committee report recommended restrictions on the monopolistic 

Regional Bell Operating Companies (RBOCs) “[f]or the sake of the democratic economic and political 

values which depend on the preservation of free markets.”

76

In some cases, antitrust investigations exposed antitrust problems that the Committee 

concluded required attention from regulators. For example, a 1958 Antitrust Subcommittee report on 

the rapidly growing domestic airline industry exposed the behind-the-scenes anticompetitive campaign 

that incumbent air carriers and their advocacy group, the Air Transport Association of America (ATA), 

had been waging to prevent the Civil Aeronautics Board (CAB) from approving market entry by new 

air carriers (known at the time as “nonskeds”).77 The Committee found the conduct of the ATA so 

egregious that it recommended an investigation by the DOJ Antitrust Division.78 As for international 

air transportation, the report concluded that Pan American’s dominance in the market was the “result 

of its use of devices to foreclose competition in order to secure and maintain control over markets in 

which it does business,” and recommended that the CAB undertake a broad investigation of the 

company.79

In other cases, the Committee investigated matters that were currently under review by antitrust 

enforcers. In a 1957 report on the broadcast television industry, which was quickly reshaping 

Americans’ consumption of news and entertainment, the then-named Antitrust Subcommittee 

described the anticompetitive tactics CBS and NBC were using to promote their own content at the 

expense of independent content producers.80 According to the report, networks were improperly using 

their power as vertical distributors of content to extract financial concessions from independent 

competitors seeking to place their programming on network affiliates.81 There was also evidence that 

73 Id. at 2. 

74 The Airlines Industry: Report of the Antitrust Subcomm. of the H. Comm. on the Judiciary, 85th Cong., H. REP. NO. 1328, 

at 1 (2d Sess. 1958) [hereinafter 1958 Airlines Industry Report].

75 1962 Ocean Freight Industry Report at 394.

76 Antitrust Reform Act of 1992, H. Comm. on the Judiciary, H. REP. NO. 102-850, 10 (1992) [hereinafter Antitrust Reform 

Act of 1992].

77 Airlines Industry Report at 268–69.

78 Id. at 272.

79 Id. at 278.

80 The Television Broadcasting Industry: Report of the Antitrust Subcomm. of the Comm. on the Judiciary, 85th Cong., H.

REP. NO. 607, at 143 (1st Sess. 1957).

81 Id.
35

the networks were using their substantial power with advertisers to unfairly favor their own content.82

After praising the DOJ Antitrust Division’s “alertness to vindicate the competitive dictates of the 

antitrust laws,” the Subcommittee urged the Division to press its investigation into this conduct with 

“vigor and dispatch.”

83

In the case of the Committee’s inquiry into the RBOCs’ conduct in the aftermath of the 1984 

breakup of AT&T, we concluded that federal courts and regulators were not adequately protecting 

competition in the telecommunications marketplace and that new legislation was necessary. A 1992 

Committee report reviewed the long, troubled history of attempts by DOJ and the FCC84 to check the 

monopolistic power of AT&T, culminating in the famous Modified Final Judgment (the “MFJ”) that 

Judge Harold Greene approved in August 1982 to break up the company.85 But even after the MFJ, the 

report found, the FCC had failed to prevent the RBOCs from using their local monopolies to commit a 

number of anticompetitive violations, “many eerily reminiscent of pre-divestiture Bell System 

abuses.”

86 We were also critical of the DOJ’s actions to water down the MFJ’s procompetitive line-ofbusiness restrictions on the RBOCs. Describing the massive lobbying campaign that the RBOCs were 

waging to enter the business lines the MFJ had opened up to competitors, we observed, “The thousands 

upon thousands of competitive enterprises now thriving in information service, telecommunications 

equipment, and long distance markets face the prospect of their future prosperity being decided by the 

self-interested designs of a monopoly with ‘bottleneck’ control over the local telephone exchange on 

which they all depend.”

87 In light of the antitrust agencies’ demonstrated failure to protect competition, 

the Committee approved legislation that would codify the MFJ’s line-of-business restrictions into 

law.88

Finally, in these prior investigations, the Committee has not hesitated to recommend that 

antitrust authorities further investigate suspicious conduct. After examining the conduct of the Air 

Transport Association of America, the industry group representing the established passenger airline 

82 Id.

83 Id.

84 Antitrust Reform Act of 1992 at 39 (“The FCC, while claiming boldly to be a forum where complaints about 

monopolistic practices would be received and vigorously pursued had, instead, become a regulatory ‘graveyard’ for 

telecommunications competition policy, characterized by inaction and equivocation.”)

85 Id. at 45.

86 Id. at 51.

87 Antitrust Reform Act of 1992 at 10. The report explained that the RBOCs’ bottleneck, in antitrust terminology, 

functioned as an “essential facility,” which gave them “an inherent ability and – for activities in which they are engaged 

themselves – a natural incentive to impede competition in lines of business dependent upon that essential facility.” Id. at 13.

88 H.R. 5096 (102nd Congress); H.R. 3626 (103rd Congress); see Antitrust and Communications Reform Act of 1994, H. 

Comm. on the Judiciary, H. REP. NO. 103-559, Pt. II at 25 (1994) (“The Judiciary Committee has resolved that the 

Government not lose its nerve once again and allow an industry born in monopoly to be reborn in monopoly.”) The procompetitive policies proposed in this legislation later became law, in modified form, as part of the Telecommunications Act 

of 1996. P.L. 104-104, 110 Stat. 56, §§271-6 (codified at 47 U.S.C., §§ 271-76). 
36

carriers in the 1950s, the Antitrust Subcommittee recommended that the Antitrust Division of the 

Department of Justice further investigate the “serious antitrust problems” it had identified.89

BACKGROUND

A. Overview of Competition in Digital Markets

The Role of Competition Online

At a fundamental level, competition has been a key engine of economic activity in the United 

States,90 resulting in the “pioneering of entire industries that, in time, come to employ millions and 

generate trillions.”

91 This is especially true in the digital economy. As in other industries, competition 

in digital markets incentivizes incumbent firms and new entrants to build new technologies and 

improve business processes.92 It spurs capital investment and incentivizes firms to improve the quality 

of their offerings.93 In its absence, incumbent firms lack incentive to invest in research and 

development.94 This in turn slows the rate of innovation across the industry.95 Disruptive new products 

or services are replaced with slow, incremental alterations96“designed to protect [incumbent firms’] 

89 Airlines Industry Report at 272.

90 Innovation and Entrepreneurship Hearing at 1 (statement of Tim Wu, Julius Silver Prof. of Law, Columbia Univ. School 

of Law).

91 Id. at 1; Roger McNamee, Co-Founder and Managing Director, Elevation Partners, Remarks at United States Dep’t of 

Justice Antitrust Div. Public Workshop on Venture Capital and Antitrust 34 (Feb. 12, 2020), 

https://www.justice.gov/atr/page/file/1255851/download (“[T]here is a case that antitrust has in fact been a major catalysis 

of growth in every wave of technology.”).

92 Antitrust Agencies Hearing at 8 (statement of Makan Delrahim, Ass’t Att’y Gen., U.S. Dep’t of Justice Antitrust Div.) 

(“Competition also promotes improvements and upgrades to the quality and functionality of existing offerings.”); Jeffrey A. 

Rosen, Deputy Att’y Gen., U.S. Dep’t of Justice, Speech at the Free State Foundation’s 12th Annual Telecom Policy 

Conference (Mar. 10, 2020), https://www.justice.gov/opa/speech/deputy-attorney-general-jeffrey-rosen-speaks-free-statefoundations-12th-annual-telecom; Giulio Federico, Fiona Scott Morton & Carl Shapiro, Antitrust and Innovation: 

Welcoming and Protecting Disruption 1 (Nat’l Bureau of Econ. Res. Working Paper No. 26005, June 2019), 

https://www.nber.org/papers/w26005.pdf.

93 Innovation and Entrepreneurship Hearing at 4 (statement of Maureen K. Ohlhausen, Partner, Baker Botts L.L.P.) 

(“Antitrust law’s focus on protecting the competitive process does not mean that it cannot reach many of the competitive 

concerns. . . [that] may include price effects, reductions in quality, and impacts on innovation, as well as the ability of a 

dominant player to acquire and neutralize a nascent competitor.”); Innovation and Entrepreneurship Hearing at 2 (statement 

of Fiona Scott Morton, Theodore Nierenberg Prof. of Econs., Yale Sch. of Mgmt.) (“The harms from insufficient 

competition appear in prices that are higher than competitive prices, quality that is lower than competitive quality, and less 

innovation than consumers would benefit from in competitive markets.”). 

94 Innovation and Entrepreneurship Hearing at 2 (statement of Fiona Scott Morton, Theodore Nierenberg Prof. of Econs, 

Yale School of Mgmt.). 

95 See generally Jeffrey A. Rosen, Deputy Att’y Gen., U.S. Dep’t of Justice, Speech at the Free State Foundation’s 12th 

Annual Telecom Policy Conference (Mar. 10, 2020), https://www.justice.gov/opa/speech/deputy-attorney-general-jeffreyrosen-speaks-free-state-foundations-12th-annual-telecom. (referencing research by economist Kenneth Arrow.).

96 Data and Privacy Hearing at 3 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy 

School). 
37

existing revenue streams.”

97 Slowly but surely, venture capitalists lose the incentive to invest in new 

entrants willing to challenge the dominance of incumbent firms through direct competition.98 What we 

are left with are so-called “kill zones”— the near-complete absence of competition.

The benefits of robust competition in the digital economy go beyond innovation and 

productivity. It can also spur firms to compete along other dimensions such as privacy and data 

protection. As a general matter, inadequate competition not only leads to higher prices and less 

innovation in many cases, but it can also reduce the quality of goods and services.99 Given that many 

digital products do not charge consumers directly for services, these firms often compete on quality.100

Along these lines, lack of competition can result in eroded privacy and data protection.101 Growing 

evidence indicates that a lack of competition goes hand in hand with just such quality degradation.102

Market Structure

a. Winner-Take-All Markets

Certain features of digital markets—such as network effects, switching costs, the selfreinforcing advantages of data, and increasing returns to scale—make them prone to winnertake-all economics.103 As a result, many technology markets “tip” in favor of one or two large 

companies,104 shifting the “the competitive process from competition in the market to 

97 Innovation and Entrepreneurship Hearing at 4 (statement of Tim Wu, Julius Silver Prof. of Law, Columbia Univ. School 

of Law). 

98 Innovation and Entrepreneurship Hearing at 2 (statement of Fiona Scott Morton, Theodore Nierenberg Prof. of Econs., 

Yale Sch. of Mgmt.). See also Sai Krishna Kamepalli, Raghuram Rajan & Luigi Zingales, Kill Zone (Univ. of Chicago, 

Becker Friedman Inst. for Econ. Working Paper No. 2020-19, Apr. 2020), https://ssrn.com/abstract=3555915.

99 Data and Privacy Hearing at 4 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.) (“Quality, 

choice, and innovation are also important aspects for competition and for consumer welfare.”); Innovation and 

Entrepreneurship Hearing at 2–4 (statement of Maureen K. Ohlhausen, Partner, Baker Botts L.L.P.). 

100 Id. at 3 (statement of Rohit Chopra, Comm’r, Fed. Trade Comm’n) (“These services do have a price, and you are paying 

for them with your data.”); Data and Privacy Hearing at 3 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, 

Harvard Kennedy School) (“Consumers may think they are receiving ‘free’ products but they are paying a price for these 

products in a number of ways.”). 

101 Innovation and Entrepreneurship Hearing at 4 (statement of Maureen K. Ohlhausen, Partner, Baker Botts L.L.P.); Data 

and Privacy Hearing at 3–4 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy School); 

Data and Privacy Hearing at 1 (statement of George Slover, Justin Brookman & Jonathan Schwantes) (“[A] dominant 

platform can disregard the interests of consumers in protecting their privacy, and design their platform to maximize its 

ability to monitor, monetize, and manipulate our personal interactions as consumers and as citizens.”).

102 Data and Privacy Hearing at 5 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.).

103 Data and Privacy Hearing at 2 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy 

School) (Other anticompetitive practices in digital markets—such as product design, self-preferencing, and anti-competitive 

contracting, among others—may also contribute to barriers that impede entry by rivals or new firms. While these issues are 

also present in other markets, they are much more pronounced in digital markets.)

104 Id.
38

competition for the market.”

105 In turn, high barriers to entry may diminish the ability of new 

firms to challenge incumbent firms, further undermining the competitive process and protecting 

the dominance of existing firms.106 As the United Kingdom’s Competition and Markets 

Authority explains: 

[I]f potential competitors face substantial barriers to entry and expansion, such that the 

market is no longer properly contestable, then a high market share can translate into 

market power, giving the platform the opportunity to increase prices, reduce quality or 

leverage market power to undermine competition in potentially competitive markets and 

deny innovative rivals the chance to bring new services to market.107

b. Market Concentration

Consistent with winner-take-all dynamics, the digital economy is highly concentrated.108 A 

number of key markets online—such as social media, general online search, and online advertising—

are dominated by just one or two firms.109 In some instances, this concentration is the result of a high 

volume of acquisitions by the dominant digital platforms. Together, the largest technology firms have 

acquired hundreds of companies in the last ten years.110 Antitrust enforcers in the United States did not 

block any of these transactions,111 many of which eliminated actual or potential competitors.112 In 

some instances these acquisitions enabled the dominant firm to neutralize a competitive threat; in other 

instances, the dominant firm shut down or discontinued the underlying product entirely—transactions 

aptly described as “killer acquisitions.”

113

105 Stigler Report at 29, 35. 

106 Data and Privacy Hearing at 2–3 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy 

School). 

107 COMPETITION & MKTS. AUTH., ONLINE PLATFORMS AND DIGITAL ADVERTISING, MARKET STUDY FINAL REPORT 10–11 

(2020) [hereinafter Competition & Mkts. Auth. Report].

108 Data and Privacy Hearing at 1 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy 

School).

109 Id. at 2; Innovation and Entrepreneurship Hearing at 3 (statement of Tim Wu, Julius Silver Prof. of Law, Columbia 

Univ. School of Law).

110 Tim Wu & Stuart A. Thompson, The Roots of Big Tech Run Disturbingly Deep, N.Y. TIMES (June 7, 2019), 

https://www.nytimes.com/interactive/2019/06/07/opinion/google-facebook-mergers-acquisitions-antitrust.html; see 

“Visualizing Tech Giants’ Billion-Dollar Acquisitions,” CB INSIGHTS (May 5, 2020) https://perma.cc/KJD9-HT3Z.

111 Although several transactions, including Google’s acquisition of ITA in 2010, were subject to settlements, U.S. antitrust 

enforcers did not attempt to prevent the consummation of these transactions. 

112 Tim Wu & Stuart A. Thompson, The Roots of Big Tech Run Disturbingly Deep, N.Y. TIMES (June 7, 2019), 

https://www.nytimes.com/interactive/2019/06/07/opinion/google-facebook-mergers-acquisitions-antitrust.html; Carl 

Shapiro, Antitrust in a Time of Populism, 61 INT’L J. INDUS. ORG. 714, 739–40 (2018), 

https://faculty.haas.berkeley.edu/shapiro/antitrustpopulism.pdf. 

113 Colleen Cunningham, Florian Ederer & Song Ma, Killer Acquisitions at 1 (Yale Sch. of Mgmt. Working Paper, Apr. 

2020), https://ssrn.com/abstract=3241707 (describing the practice whereby “an incumbent firm may acquire an innovative 

target and terminate the development of the target’s innovations to preempt future competition.”). See also C. Scott 
39

Evidence also suggests that the venture capital industry, which plays a critical role in funding 

innovative startups, contributes to market consolidation by encouraging startups to exit via a sale to an 

incumbent firm.114 As initial public offerings (IPOs) have become more expensive and timeconsuming in recent decades, venture capitalists have shown a preference for realizing their 

investments through acquisitions rather than through public markets.115

c. The Role of Online Platforms as Gatekeepers

As Amazon, Apple, Facebook, and Google have captured control over key channels of 

distribution, they have come to function as gatekeepers. A large swath of businesses across the U.S. 

economy now depend on these gatekeepers to access users and markets. In interviews with 

Subcommittee staff, numerous businesses described how dominant platforms exploit this gatekeeper 

power to dictate terms and extract concessions that third parties would not consent to in a competitive 

market.116 According to these companies, these types of concessions and demands carry significant 

economic harm but are “the cost of doing business” given the lack of options.

Their role as gatekeepers also gives the dominant platforms outsized power to control the fates 

of other businesses. Reflecting this fact, several major publicly owned firms that rely on the dominant 

platforms have noted in investor statements that this dependent relationship creates an inherent risk to 

their businesses.117 For example, Lyft, a ride-sharing company, has cited its use of Amazon’s cloud 

services and Google Maps as a potential risk to its business model.118 As Lyft stated in a filing, “Some 

of our competitors or technology partners may take actions which disrupt the interoperability of our 

platform with their own products or services.”

119 Pinterest, a photo-sharing service, likewise noted in a 

financial filing that changes to Google’s search algorithm may harm Pinterest. As it noted, Pinterest’s 

“ability to maintain and increase the number of visitors directed to our service from search engines is 

not within our control. Search engines, such as Google, may modify their search algorithms and 

Hemphill & Tim Wu, Nascent Competitors, 168 U. PA. L. REV. (forthcoming 2020) (manuscript at 2), 

https://perma.cc/62HH-34ZL (“A nascent competitor is a firm whose prospective innovation represents a serious future 

threat to an incumbent.”). 

114 Mark Lemley & Andrew McCreary, Exit Strategy at 24–45 (Stanford Law & Economics Olin Working Paper No. 542, 

Jan. 2020), https://ssrn.com/abstract=3506919.

115 Id.

116 See infra Section V.

117 Gerrit De Vynck, The Power of Google and Amazon Looms Over Tech IPOs, BLOOMBERG (July 1, 2019), 

https://www.bloomberg.com/news/articles/2019-07-01/google-s-and-amazon-s-power-looms-over-procession-of-tech-ipos

(noting that 17 of 22 initial public offerings by technology companies cited online platforms as competitors or risks to their 

businesses). 

118 Id.

119 Id.
40

policies or enforce those policies in ways that are detrimental to us.”

120 In submissions and interviews 

with Subcommittee staff, many companies reiterated the general concern that a single act or decision 

by one of the dominant platforms could wreck their businesses.

Since the dominant platforms in many cases have also integrated into adjacent lines of 

business, these firms operate both as key intermediaries for third-party companies as well as direct 

competitors to them. Numerous entrepreneurs, small businesses, and major companies told 

Subcommittee staff that the dominant platforms’ dual role raises significant competition concerns.121

In recent years, significant reporting has documented how the dominant platforms can exploit this dual 

role, through data exploitation,122 self-preferencing,123 appropriation of key technologies,124 and abrupt 

changes to a platform’s policies.125 The Subcommittee’s investigation uncovered numerous examples 

of this exploitative conduct, suggesting that these are increasingly systemic, rather than isolated, 

business practices.

Barriers to Entry

a. Network Effects

Digital markets tend to be characterized by strong network effects, making them prone to 

concentration and monopolization.126 There are two types of network effects: direct and indirect. In 

markets with direct network effects, the more people who use a product or service, the more valuable 

that product or service becomes to other users.127 By contrast, indirect network effects arise when 

120 Id.

121 See infra Section V.

122 See Press Release, Eur. Comm’n, Antitrust: Commission opens investigation into possible anti-competitive conduct of 

Amazon (July 17, 2019), https://ec.europa.eu/commission/presscorner/detail/en/IP_19_4291 (“Based on the Commission’s 

preliminary fact-finding, Amazon appears to use competitively sensitive information – about marketplace sellers, their 

products and transactions on the marketplace.”).

123 Tripp Mickle, Apple Dominates App Store Search Results, Thwarting Competitors, WALL ST. J. (July 23, 2019), 

https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221.

124 Jack Nicas & Daisuke Wakabayashi, Sonos, Squeezed by the Tech Giants, Sues Google, N.Y. TIMES (Jan. 7, 2020), 

https://www.nytimes.com/2020/01/07/technology/sonos-sues-google.html. 

125 Reed Albergotti, Apple says recent changes to operating system improve user privacy, but some lawmakers see them as 

an effort to edge out its rivals, WASH. POST (Nov. 26, 2019), 

https://www.washingtonpost.com/technology/2019/11/26/apple-emphasizes-user-privacy-lawmakers-see-it-an-effort-edgeout-its-rivals/; Jason Del Rey, An Amazon revolt could be brewing as the tech giant exerts more control over brands, Vox: 

RECODE (Nov. 29, 2018), https://www.vox.com/2018/11/29/18023132/amazon-brand-policy-changes-marketplace-controlone-vendor.

126 JAY SHAMBAUGH, RYAN NUNN, AUDREY BREITWISER & PATRICK LIU, BROOKINGS INST., THE STATE OF COMPETITION 

AND DYNAMISM: FACTS ABOUT CONCENTRATION, START-UPS, AND RELATED POLICIES, 10 (June 2018), 

https://www.brookings.edu/wp-content/uploads/2018/06/ES_THP_20180611_CompetitionFacts_20180611.pdf.

127 See Luigi Zingales & Guy Rolnik, A Way To Own Your Social-Media Data, N.Y. TIMES (June 30, 2017), 

https://www.nytimes.com/2017/06/30/opinion/social-data-google-facebook-europe.html. 
41

greater use of a product or service forms a new type of standard and increases the incentive for third 

parties to invest in developing compatible technologies, which in turn reinforces the popularity of the 

original product or service with users.128

Online platforms display strong network effects because they connect disparate market 

segments. For example, online commerce platforms like Amazon connect buyers and sellers. Just as 

with social networks, the value of Amazon marketplace increases as more users—both sellers and 

buyers—engage with the platform.129 Similarly, the value of online platforms that facilitate 

advertising, such as Google, increases with the number of users, as advertisers gain access to a larger 

consumer base and therefore to a larger trove of consumer data.130

Similarly, social networks like Facebook exhibit powerful direct network effects because they 

become more valuable as more users engage with the network—no person wants to be on a social 

network without other users.131 Meanwhile, once a firm captures a network it can become extremely 

difficult to dislodge or replace. As Mark Zuckerberg explained to then-CFO David Ebersman the 

benefits that would accrue to Facebook from acquiring Instagram:

[T]here are network effects around social products and a finite number of different social 

mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to 

supplant them without doing something different. It’s possible someone beats Instagram by 

building something that is better to the point that they get network migration, but this is harder 

as long as Instagram keeps running as a product.132

Strong network effects serve as a powerful barrier to entry for new firms to enter a market and 

displace the incumbent.133 When combined with other entry barriers such as restrictions on consumers 

or businesses easily switching services, network effects all but ensure not just market concentration but 

durable market power.134

b. Switching Costs

Switching costs present another barrier for potential market entrants. In many cases, large 

technology firms can maintain market power in part because it is not easy for users to switch away 

128 MAURICE E. STUCKE & ALLEN P. GRUNES, BIG DATA AND COMPETITION POLICY 163 (2016). 

129 Id.

130 Id.

131 Stigler Report at 38.

132 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00063222 (Feb. 27, 2012), 

https://judiciary.house.gov/uploadedfiles/0006322000063223.pdf. 

133 See Stigler Report at 40.

134 See Dig. Competition Expert Panel Report at 35. 
42

from the incumbent’s technology. A market exhibits “lock-in” when switching costs are sufficiently

high that users stay with an incumbent firm rather than switch to a firm whose product or service they 

would prefer.135 Over time, lock-in tends to reduce competition, deter market entry, and may even 

worsen data privacy.136

High switching costs are a central feature of digital search and social media platforms, such as 

Google and Facebook, where users contribute data to the platform but may not be able to migrate that 

data to a competing platform. For example, a user may upload a variety of data to Facebook, including 

photos and personal information, but may not be able to easily download that data and move it to 

another social media site; instead, the user would have to start from scratch, re-uploading her photos 

and re-entering her personal information to the new platform.137 An online seller who has generated 

hundreds of product reviews and ratings on Amazon may face a similar challenge when considering 

migrating to a different platform. Other significant factors that contribute to switching costs in digital 

markets include anticompetitive contracting terms, default settings, product design that favor dominant 

platforms.138

c. Data

The accumulation of data can serve as another powerful barrier to entry for firms in the digital 

economy. Data allows companies to target advertising with scalpel-like precision, improve services 

and products through a better understanding of user engagement and preferences, and more quickly 

identify and exploit new business opportunities.139

Much like a network effect, data-rich accumulation is self-reinforcing. Companies with 

superior access to data can use that data to better target users or improve product quality, drawing more 

users and, in turn, generating more data—an advantageous feedback loop.140 In short, new users and 

greater engagement bring in more data, which enables firms to improve user experiences and develop 

135 MAURICE E. STUCKE & ALLEN P. GRUNES, BIG DATA AND COMPETITION POLICY 159 (2016). 

136 Id.

137 Data and Privacy Hearing at 3 (statement of Dina Srinivasan, Fellow, Yale Thurman Arnold Project).

138 Dig. Competition Expert Panel Report at 36. Unlike the European Union, which provides internet users with a right to 

data portability, the U.S. does not have any law requiring online platforms to make data portable. Platforms like Google and 

Facebook are therefore largely uninhibited in imposing switching costs for users, hurting competition in the process. Allen 

St. John, Europe’s GDPR Brings Data Portability to U.S. Consumers, CONSUMER. REPS. (May 25, 2018), 

https://www.consumerreports.org/privacy/gdpr-brings-data-portability-to-us-consumers; see Chris Dixon, The 

Interoperability of Social Networks, BUS. INSIDER (Nov. 10, 2010), https://www.businessinsider.com/the-interoperabilityof-social-networks-2011-2; Josh Constine, Friend Portability Is the Must-Have Facebook Regulation, TECHCRUNCH (May 

12, 2019), https://technologycrunch.com/2019/05/12/friends-wherever. 

139 Dig. Competition Expert Panel Report at 23.

140 Maurice E. Stucke, Should We Be Concerned About Data-opolies?, 2 GEO. L. TECH. REV. 275, 323 (2018) (discussing 

the dynamics of data-driven network effects).
43

new products—in turn capturing more data.141 While data is non-rivalrous—meaning that one party’s 

use does not prevent or diminish use by another—firms may nonetheless exclude rivals from using 

their data through technical restrictions and legal contracts.142 These exclusionary tactics can close off 

markets and shield incumbents from competition.143

In addition to serving as a barrier to entry, superior access to data can enable and exacerbate 

anticompetitive conduct in digital markets. This is particularly true when a dominant platform operates 

as both a marketplace for third-party goods as well as a seller of its own products on that same 

marketplace.144 Through this dual role, a dominant platform can mine commercially valuable 

information from third-party businesses to benefit its own competing products.145 Additionally, a 

dominant platform can use its market power to extract more data from users, undermining their 

privacy.146

Persistent data collection can also create information asymmetries and grant firms access to 

non-public information that gives them a significant competitive edge. These insights include 

information on user behavior as well as on broader usage trends that enable the dominant platforms to 

track nascent competitive threats. In an interview with Subcommittee staff, a senior executive at a 

social media company referred to this ability as akin to having “a spy camera on the production floor”

of a competitive threat.147 Roger McNamee, the Co-Founder of Elevation Partners, has noted that the 

dominant platforms’ role as digital infrastructure gives them both leverage and insights that other

competitors lack: 

Essentially, the interplay of Google’s dominant position in ... infrastructure elements 

[such as] ad tech infrastructure, Chrome browser, [and Nest] ... collectively provide 

leverage over other market participants, which include not just startups, but also 

advertisers, and other would-be competitors. And the key thing is, it’s not just about 

Google’s infrastructure. When you add in Gmail, Search, Maps, apps, and all the other 

things that Google does so well ... [t]hey provide further levels of user lock-in—further 

141 MAURICE E. STUCKE & ALLEN P. GRUNES, BIG DATA AND COMPETITION POLICY 36–50 (2016); PATRICK BARWISE &

LEO WATKINS, The Evolution of Digital Dominance: How and Why We Got to GAFA, in DIGITAL DOMINANT: THE POWER 

OF GOOGLE, AMAZON, FACEBOOK, AND APPLE 28–29 (2018), http://www.lse.ac.uk/law/Assets/Documents/orlalynskey/orla-3.pdf.

142 MAURICE E. STUCKE & ALLEN P. GRUNES, BIG DATA AND COMPETITION POLICY 23–34 (2016). 

143 Id. at 34 (2016). 

144 JACQUES CRÉMER, YVES-ALEXANDRE DE MONJOYE & HEIKE SCWHEITZER, EUR. COMM’N, COMPETITION POLICY FOR THE 

DIGITAL ERA 66–67 (2019) [hereinafter Eur. Comm’n Competition Report]. 

145 Id. at 66.

146 See Dina Srinivasan, The Antitrust Case Against Facebook: A Monopolist’s Journey Towards Pervasive Surveillance in 

Spite of Consumers’ Preference for Privacy, 16 BERKELEY BUS. L.J. 39, 70 (2019); Data and Privacy Hearing at 1 

(statement of Dina Srinivasan, Fellow, Yale Thurman Arnold Project).

147 Interview with Source 247 (June 4, 2020). 
44

protective modes that really limit the opportunity of competitors and even, frankly, 

suppliers and advertisers, to do the things that they should be able to do in a freely 

competitive economy.148

This significant data advantage also enables dominant platforms to identify and acquire rivals 

early in their lifecycle. Leading economists and antitrust experts have expressed concern that serial 

acquisitions of nascent competitors by large technology firms have stifled competition and

innovation.149 This acquisition strategy exploits dominant firms’ information advantages in order to 

acquire rapidly growing companies just before those companies become true threats.150 Lacking access 

to this same information or failing to appreciate its significance, enforcers may fail to identify these 

acquisitions as anticompetitive. This is more likely when the dominant platform buys a nascent threat 

before it has fully developed into a rival.

In a briefing before Members of the Subcommittee, Jonathan Sallet, former Deputy Assistant 

Attorney General at the Antitrust Division, explained that data-driven acquisitions of nascent or 

potential rivals can significantly undermine competition while systematically evading antitrust 

scrutiny.151 One reason is that upstart competitors are often data-rich but cash-poor, a combination that 

is unlikely under a price-centric framework to trigger antitrust scrutiny if the acquisition is priced 

below the relevant threshold for merger review.152 For example, had Microsoft sought to exploit its 

monopoly power in the market for personal computer operating systems by acquiring Netscape—

rather than by foreclosing it—it is unlikely that antitrust enforcers would have taken action. He noted 

that this type of acquisition can tip the market in favor of a dominant firm, having the same ultimate 

effect as monopolistic conduct but escaping the antitrust enforcement that monopolistic conduct has 

triggered in the past.153

148 Roger McNamee, Co-Founder and Managing Dir., Elevation Partners, Remarks at U.S. Dep’t of Justice Antitrust Div. 

Public Workshop on Venture Capital and Antitrust 30 (Feb. 12, 2020), 

https://www.justice.gov/atr/page/file/1255851/download.

149 See, e.g., Stigler Report at 74, 87. 

150 See Maurice E. Stucke, Should We Be Concerned About Data-opolies?, 2 GEO. L. TECH. REV. 275, 309 (2018) 

(discussing the growing concern with “kill zone” tactics and the chilling effect on “entrepreneurism and autonomy”). 

151 Briefing by Jonathan Sallet, Deputy Ass’t Att’y Gen., U.S. Dep’t of Justice, Antitrust Div. (July 11, 2020).

152 Colleen Cunningham, Florian Ederer & Song Ma, Killer Acquisitions at 53 (Yale Sch. of Mgmt. Working Paper, Apr. 

2020), https://ssrn.com/abstract=3241707 (finding that killer acquisitions “routinely avoid regulatory scrutiny” because 

they “disproportionately occur just below [HSR] thresholds for antitrust scrutiny”). 

153 Jonathan Sallet, Competitive Edge: Five Building Blocks For Antitrust Success: The Forthcoming FTC Competition 

Report, WASH. CTR. FOR EQUITABLE GROWTH (Oct. 1, 2019), https://equitablegrowth.org/competitive-edge-five-buildingblocks-for-antitrust-success-the-forthcoming-ftc-competition-report/. 
45

d. Economies of Scale and Scope

Increasing returns to scale are another feature of technology markets that make them prone to 

tip towards concentration and monopolization.154 In markets with increasing returns to scale, as sales 

increase, average unit cost decreases.155 Because entry into these markets requires significant up-front 

costs, the market favors firms that are already large, making it difficult for new firms to enter the 

market and challenge large incumbents.156

Likewise, a dominant firm that enjoys economies of scope can extend its reach across adjacent 

markets through an expansive ecosystem of its own products while incurring relatively low cost.157 For 

example, if a firm has sufficient technical expertise or access to consumer data, the cost of applying 

this resource into a new market is relatively low. 

Businesses that specialize in providing information, such as Google, frequently benefit from 

increasing returns to scale.158 These businesses require high upfront fixed costs, but then may scale 

with relatively low increases in cost. For example, “Google can update Google Calendar for 100 

million users with similar fixed expenses as would be needed for only a fraction of such users.”

159

Facebook is another company that benefits from increasing returns to scale.160 Although building the 

Facebook platform required a large upfront investment, the platform was able to grow exponentially 

with relatively little increase in costs. With the benefit of increasing returns to scale, Facebook was 

able to grow from one million users in 2004, the year of its founding, to more than 350 million users in 

only five years.161

Recent economic evidence indicates that economies of scale achieved through data collection 

allow platforms to get more out of consumers than consumers get out of platforms.162 In exchange for 

“free” services, users provide valuable social data—information that may also shed light on other 

people’s behavior—in addition to their own personal information. For instance, a person’s location 

154 Innovation and Entrepreneurship Hearing at 81 (Fiona Scott Morton, Theodore Nierenberg Prof. of Econs., Yale Sch. of 

Mgmt.); Dig. Competition Expert Panel Report at 32; Stigler Report at 13; see also JAY SHAMBAUGH, RYAN NUNN,

AUDREY BREITWIESER & PATRICK LIU, THE BROOKINGS INST., THE STATE OF COMPETITION AND DYNAMISM: FACTS ABOUT 

CONCENTRATION, START-UPS, AND RELATED POLICIES 10 (June 2018), https://www.brookings.edu/wpcontent/uploads/2018/06/ES_THP_20180611_CompetitionFacts_20180611.pdf

155 Stigler Report at 36.

156 Dig. Competition Expert Panel Report at 32.

157 Id.

158 Stigler Report at 37.

159 Id.

160 Id.

161 Id. at 36–37.

162 See generally Dirk Bergemann, Alessandro Bonatti & Tan Gan, The Economics of Social Data (Cowles Foundation 

Discussion Paper No. 2203R Sept. 2019), https://ssrn.com/abstract=3459796. 
46

history using Google Maps reveals valuable and sensitive information about others as well—such as 

traffic patterns and other data. According to Professors Dirk Bergemann, Alessandro Bonatti, and Tan 

Gan, the creation of this “data externality” means that, for firms like Google, Amazon, and Facebook, 

“the cost of acquiring ... individual data can be substantially below the value of the information to the 

platform.”

163 In other words, notwithstanding claims that services such as Google’s Search or Maps 

products or Facebook are “free” or have immeasurable economic value to consumers,164 the social data 

gathered through these services may exceed their economic value to consumers. 

B. Effects of Platform Market Power

Innovation and Entrepreneurship

Competition is a critical source of innovation, business dynamism, entrepreneurship, and the 

“launching of new industries.”

165 Vigorously contested markets have been a critical competitive asset 

for the United States over the past century.166 While large firms with significant resources may invest 

in research and development for new products and services, competition forces companies to “run 

faster” in order to offer improved products and services.167 Without competitive pressure, some level 

of innovation may still occur, but at a slower, iterative pace than would be present under competitive 

market conditions.168

In recent decades, however, there has been a sharp decline in new business formation as well as 

early-stage startup funding.169 The number of new technology firms in the digital economy has 

declined,170 while the entrepreneurship rate—the share of startups and young firms in the industry as a 

163 Id. at 4.

164 See, e.g., Erik Brynjolfsson & Avinash Collis, How Should We Measure the Digital Economy?, HARV. BUS. REV. (Nov.–

Dec. 2019), https://hbr.org/2019/11/how-should-we-measure-the-digital-economy. 

165 Innovation and Entrepreneurship Hearing at 1 (statement of Tim Wu, Julius Silver Prof. of Law, Columbia Univ. School 

of Law).

166 Id.

167 Stigler Report at 74.

168 Innovation and Entrepreneurship Hearing at 1 (statement of Tim Wu, Julius Silver Prof. of Law, Columbia Univ. School 

of Law). 

169 This is trend is also present in the broader U.S. economy as well. See, e.g., Ufuk Akcigit & Sina T. Ates, Knowledge in 

the Hands of the Best, Not the Rest: The Decline of U.S. Business Dynamism, VOXEU (July 4, 2019),

https://voxeu.org/article/decline-us-business-dynamism.

170 IAN HATHWAY, EWING MARION KAUFFMAN FOUND., TECH STARTS: HIGH-TECHNOLOGY BUSINESS FORMATION AND JOB 

CREATION IN THE UNITED STATES 5 (2013), https://www.kauffman.org/-/media/kauffman_org/research-reports-andcovers/2013/08/bdstechnologystartsreport.pdf. 
47

whole—has also fallen significantly in this market.171 Unsurprisingly, there has also been a sharp 

reduction in early-stage funding for technology startups.172

The rates of entrepreneurship and job creation have also declined over this period. The 

entrepreneurship rate—defined as the “share of startups and young firms” in the industry as a whole—

fell from 60% in 1982 to a low of 38% as of 2011.173 As entry slows, the average age of technology 

firms has skewed older.174 Job creation in the high-technology sector has likewise slowed 

considerably.175 In 2000, the job creation rate in the high-technology sector was approaching 20% 

year-over-year. Within a decade, the rate had halved to about 10%.176 Although the job creation rate in 

the high-technology sector has fallen substantially since the early 2000s, the job destruction rate in 

2011 was roughly unchanged from 2000.177 As a result, in 2011 the rate of job destruction in the hightechnology sector was higher than the rate of job creation, a reversal from the year 2000, when the jobcreation rate far outpaced the job-destruction rate.178

In line with this trend, there is mounting evidence that the dominance of online platforms has 

materially weakened innovation and entrepreneurship in the U.S. economy.179 Some venture 

capitalists, for example, report that they avoid funding entrepreneurs and other companies that compete 

directly with dominant firms in the digital economy.180

Often referred to as an innovation “kill zone,” this trend may insulate powerful incumbent 

firms from competitive pressure simply because venture capitalists do not view new entrants as good 

171 Id.

172 The number of technology startup financings fell from above 10,000 startup financings in 2015 to just above 6,000 in 

2018. In 2014, startups closed 4,255 deals in which they raised seed money from investors. By 2018, however, that figure 

had dropped by nearly a half, to 2,206. Gené Teare, Decade in Review: Trends in Seed- and Early-Stage Funding, 

TECHCRUNCH (Mar. 13, 2019), https://technologycrunch.com/2019/03/16/decade-in-review-trends-in-seed-and-early-stagefunding. See also American Technology Giants Are Making Life Tough for Startups, THE ECONOMIST (June 2, 2018), 

https://www.economist.com/business/2018/06/02/american-technology-giants-are-making-life-tough-for-startups. 

173 John Haltiwanger, et al., Declining Business Dynamism in the U.S. High-Technology Sector at 8, EWING MARION 

KAUFFMAN FOUND. (Feb. 2014), https://www.kauffman.org/-/media/kauffman_org/research-reports-andcovers/2014/02/declining_business_dynamism_in_us_high_technology_sector.pdf. 

174 Id. 

175 Id. 

176 Id. at 4.

177 Id.at 5.

178 Id. at 4.

179 Innovation and Entrepreneurship Hearing at 1 (statement of Tim Wu, Julius Silver Prof. of Law, Columbia Univ. School 

of Law); Data and Privacy Hearing at 1–3 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard 

Kennedy School).

180 See generally Venture Capital and Antitrust Workshop; Stigler Report at 9.
48

investments.181 Albert Wenger, the managing partner of Union Square Ventures, commented that the 

“scale of these companies and their impact on what can be funded, and what can succeed, is 

massive.”

182 Paul Arnold, an early-stage investor and founder of Switch Ventures, commented at the 

Justice Department’s recent workshop on the intersection between venture capital and antitrust law that

he considers markets dominated by large platforms to be kill zones.183 He explained:

[T]here’s an incredibly, concentrated market share because of the economies of scale or 

because of network effects, it’s a really hard barrier to overcome. And sometimes 

there’s an answer and often, that will kill things. And I think that that’s my view, that’s 

my, sort of, lived experience as a venture investor, but I think it’s a common view of a 

lot of venture investors.184

In the same vein, Mr. Arnold said in a submission to the Subcommittee that:

Venture capitalists are less likely to fund startups that compete against monopolies’ core 

products ... As a startup investor, I see this often. For example, I will meet yet another 

founder who wants to disrupt Microsoft’s LinkedIn. They will have a clever plan to 

build a better professional social network. I always pass on the investment. It is nearly 

impossible to overcome the monopoly LinkedIn enjoys. It is but one example of an 

innovation kill zone.185

For example, the entrenched power of firms with weak privacy protections has created a kill 

zone around the market for products that enhance privacy online.186 To the extent that a firm 

successfully offers a service to give people tools to control their privacy, “Google or Facebook are 

going to want to pull that back as fast as they possibly can. They don’t want you aggressively limiting 

their extremely valuable information collection.”

187

Other prominent venture capitalists, such as Roger McNamee, the Co-Founder of Elevation 

Partners, have commented that these trends harm more than just startups. The advantages of dominant 

181 Raghuram Rajan, Sai Krishna Kamepalli & Luigi Zingales, Kill Zone (Becker Friedman Institute Working Paper No. 

2020-19 2020), https://ssrn.com/abstract=3555915. 

182 Asher Schechter, Google and Facebook’s “Kill Zone”: “We’ve Taken the Focus Off of Rewarding Genius and 

Innovation to Rewarding Capital and Scale,” PROMARKET (May 25, 2018), https://promarket.org/2018/05/25/googlefacebooks-kill-zone-weve-taken-focus-off-rewarding-genius-innovation-rewarding-capital-scale/. 

183 Venture Capital and Antitrust Workshop Transcript at 24 (statement of Paul Arnold, Founder and Partner, Switch 

Partners).

184 Id.

185 Submission from Paul Arnold, General Partner, Switch Ventures, to H. Comm. on the Judiciary, 2 (Sept. 3, 2020) (on 

file with Comm.).

186 Venture Capital and Antitrust Workshop Transcript at 24 (Paul Arnold, Founder and Partner, Switch Partners).

187 Id.
49

firms online—access to competitively significant sources of data, network effects, intellectual 

property, and excess capital—are “a barrier to a wide range of activities, not just startups, but actually 

a lot of other market participants.”

188

Merger activity may be another contributor to reduced venture capital investment of startups. In 

a recent study, several leading economists and researchers at the University of Chicago—Raghuram G. 

Rajan, Luigi Zingales, and Sai Krishna Kamepalli—found that major acquisitions by larger firms in 

sectors of the digital economy led to significantly less investment in startups in this same sector.189 As

they note, in the wake of an acquisition by Facebook or Google, investments in startups in the same 

space “drop by over 40% and the number of deals falls by over 20% in the three years following an 

acquisition.”

190

The threat of entry from a large platform has had significant effects on other firms’ incentives 

to innovate,191 while the actual entry of the larger online platform can result in less innovation and an 

additional increase in prices.192 During the investigation, Subcommittee staff interviewed a prominent 

venture capital investor in the cloud marketplace who explained that this power imbalance creates a 

strong economic incentive for other firms to avoid head-on competition. As he noted:

I think of Amazon as the sun. It is useful but also dangerous. If you’re far enough away 

you can bask. If you get too close you’ll get incinerated. So, you have to be far enough 

from Amazon and be doing something that they wouldn’t do. If you’re a net consumer 

of Amazon’s infrastructure, like Uber, then you’re okay. As long as Amazon doesn’t 

want to get into ridesharing. But it’s hard to predict what Amazon wants to get into. If 

they were going to stop at retail and computing, you’re safe. But you can’t know.

193

As discussed in this Report, other behavior by dominant firms—such as cloning the products of new 

entrants—may also undermine the likelihood that new entrants will be able to compete directly or that 

early adopters will switch to a new entrant’s product, lowering the valuation of these companies as well 

as their profitability.194

188 Id. at 29 (statement of Roger McNamee, Co-Founder and Managing Dir., Elevation Partners).

189 Raghuram Rajan, Sai Krishna Kamepalli & Luigi Zingales, Kill Zone at 5 (Becker Friedman Institute Working Paper 

No. 2020-19, 2020), https://ssrn.com/abstract=3555915.

190 Id.

191 See Wen Wen & Feng Zhu, Threat of Platform-Owner Entry and Complementor Responses: Evidence from the Mobile 

App Market, 40 STRATEGIC MGMT. J. 1336 (2019); Feng Zhu & Qihong Liu, Competing with Complementors: An 

Empirical Look at Amazon.com, 39 STRATEGIC MGMT. J. 2618 (2018). 

192 Id.

193 Interview with Source 146 (May 28, 2020). 

194 Raghuram Rajan, Sai Krishna Kamepalli & Luigi Zingales, Kill Zone at 5 (Becker Friedman Institute Working Paper 

No. 2020-19, 2020), https://ssrn.com/abstract=3555915.
50

In July 2019, the Subcommittee held a hearing to examine the effects of market power on 

innovation and entrepreneurship. There, a panel of experts noted that the lack of competitive pressure in 

the U.S. economy has reduced innovation and business formation, while also allowing dominant firms 

to control innovation.195 Professor Tim Wu of Columbia Law School, a pioneer in internet policy, said 

that there is:

no question as to whether there were barriers to entry and whether the tech economies 

have, in fact, become a very difficult place for people to get started . . . the decline in 

the number of startups, almost unthinkable in the United States, which has always had a 

comparative advantage in being the place where startups will get their start.196

Professor Fiona Scott Morton of the Yale University School of Management reinforced this concept in 

her testimony, noting that insufficient competition has given dominant firms the ability to channel 

innovation in the direction they prefer “rather than being creatively spread across directions chosen by 

entrants.”

197

In addition to innovation harms in the digital marketplace, Stacy Mitchell, the Co-Director of the 

Institute for Local Self Reliance, explained that entrepreneurism among locally owned businesses has 

also suffered as a result of this power. As she noted, “Local businesses are disappearing and, with them,

a pathway to the middle class. Producers are struggling to invest in new products and grow their 

companies. New business formation is down to historic lows.”

198

At the Subcommittee’s field hearing, senior executives representing different businesses across 

the economic spectrum offered similar testimony about the effects of market power on innovation and 

entrepreneurship. Patrick Spence, the CEO of Sonos, testified that the lack of fair competition 

diminishes innovation, particularly for firms that cannot afford to sell products at a loss.199 He 

explained:

195 Innovation and Entrepreneurship Hearing at 81 (Fiona Scott Morton, Theodore Nierenberg Professor of Economics, 

Yale Sch. of Mgmt.).

196 Innovation and Entrepreneurship Hearing at 74 (Tim Wu, Julius Silver Professor of Law, Columbia University School of 

Law).

197 Innovation and Entrepreneurship Hearing at 81 (Fiona Scott Morton, Theodore Nierenberg Prof. of Econs, Yale Sch. of 

Mgmt.); Data and Privacy Hearing at 3 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy 

School) (Professor Jason Furman of the Harvard Kennedy School, the former Chairman of the Council on Economic 

Advisers, similarly testified at another hearing that the lack of competition online is that “major platforms have reduced 

incentives to innovate and incumbents have distorted incentives to make more incremental improvements that can be 

incorporated into the dominant platforms rather than more paradigmatic changes that could challenge these platforms.”).

198 Innovation and Entrepreneurship Hearing at 187 (Stacy Mitchell, Co-Director, Inst. for Local Self-Reliance).

199 Competitors Hearing at 7 (statement of Patrick Spence, CEO, Sonos, Inc.).
51

These companies have gone so far as demanding that we suppress our inventions in 

order to work with them. The most recent example of this is Google’s refusal to allow 

us to use multiple voice assistants on our product simultaneously. . . . I think the whole 

spirit of trying to encourage small companies, encourage new innovations and new 

startups is at risk, given how dominant these companies are.200

Furthermore, the ability of a dominant firm to extract economic concessions from 

smaller companies that rely on it to reach the market can also depress innovation. David 

Barnett, the CEO and Founder of PopSockets, testified at the field hearing that Amazon 

required his company “to pay almost two million in marketing dollars in order to remove illegal 

product from the Amazon marketplace.”

201 In response to questions from Representative Ken 

Buck (R-CO) on the effect of this policy on innovation, Mr. Barnett testified that this money 

could have been used to double the number of employees dedicated to developing innovative 

products at the company.202

Privacy and Data Protection

The persistent collection and misuse of consumer data is an indicator of market power in the 

digital economy.203 Traditionally, market power has been defined as the ability to raise prices without a 

loss to demand, such as fewer sales or customers.204 Scholars and market participants have noted that 

even as online platforms rarely charge consumers a monetary price—products appear to be “free” but 

are monetized through people’s attention or with their data205—traditional assessments of market 

power are more difficult to apply to digital markets.206

The best evidence of platform market power therefore is not prices charged but rather the degree 

to which platforms have eroded consumer privacy without prompting a response from the market.207

200 Id.

201 Competitors Hearing at 3 (statement of David Barnett, Founder and CEO, PopSockets LLC).

202 Competitors Hearing at 57 (David Barnett, Founder and CEO, PopSockets LLC).

203 Howard A. Shelanski, Information, Innovation, and Competition Policy for the Internet, 161 U. PA. L. REV. 1663, 1689 

(2013) (“One measure of a platform’s market power is the extent to which it can engage in [privacy exploitation] without 

some benefit to consumers that offsets their reduced privacy and still retain users.”).

204 W. KIP VISCUSI ET AL., ECONOMICS OF REGULATION AND ANTITRUST 164 (3d ed. 2000).

205 Data and Privacy Hearing at 3 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy 

School); Data and Privacy Hearing at 5 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.). 

206 Howard A. Shelanski, Information, Innovation, and Competition Policy for the Internet, 161 U. PA. L. REV. 1663, 1687 

(2013) (“While increased competition, at least on its own, will not always cause firms to better use or protect customer 

information, any competitive effects analysis that misses these two nonprice dimensions of platform market performance 

will be incomplete and could be biased toward underenforcement.”).

207 See, e.g., Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Remarks for the Antitrust 

New Frontiers Conference (June 11, 2019), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahimdelivers-remarks-antitrust-new-frontiers (“It is well-settled, however, that competition has price and non-price 
52

As scholars have noted, a platform’s ability to maintain strong networks while degrading user privacy 

can reasonably be considered equivalent to a monopolist’s decision to increase prices or reduce 

product quality.208 A firm’s dominance can enable it to abuse consumers’ privacy without losing 

customers.209 In the absence of genuine competitive threats, a firm offers fewer privacy protections 

than it otherwise would. In the process, it extracts more data, further entrenching its dominance.210

When paired with the tendency toward winner-take-all outcomes, consumers are forced to either use a 

service with poor privacy safeguards or forego the service altogether.211 As the United Kingdom’s 

Competition and Markets Authority observes, “The collection and use of personal data by Google and 

Facebook for personalised advertising, in many cases with no or limited controls available to 

consumers, is another indication that these platforms do not face a strong enough competitive 

constraint.”

212

Given the increasingly critical role platforms play in mediating access to everyday goods and 

services, users are also far more likely to surrender more information than to cease using the service 

entirely.213 Without adequate competition, firms are able to collect more data than a competitive 

market would allow,214 further entrenching their market power while diminishing privacy in the 

process.215

dimensions.”); Maurice E. Stucke & Ariel Ezrachi, When Competition Fails to Optimize Quality: A Look at Search 

Engines, 18 YALE J.L. & TECH. 70, 103 (2016); ELEONORA OCELLO & CRISTINA SJOODIN, EUR. COMM’N, COMPETITION 

MERGER BRIEF: MICROSOFT/LINKEDIN: BIG DATA AND CONGLOMERATE EFFECTS IN TECH MARKETS 5 (2017), 

http://ec.europa.eu/competition/publications/cmb/2017/kdal17001enn.pdf.

208 Dina Srinivasan, The Antitrust Case Against Facebook: A Monopolist’s Journey Towards Pervasive Surveillance in 

Spite of Consumers’ Preference for Privacy, 16 BERKELEY BUS. L.J. 39, 44 (2019) (“Facebook is a monopolist, and what 

Facebook extracts overtly from consumers today, from a quality perspective, is a direct function of Facebook’s monopoly 

power.”); see also Katharine Kemp, Concealed Data Practices and Competition Law: Why Privacy Matters (UNSW Law 

Research Paper No. 19-53, 2019), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3432769; OECD, BIG DATA:

BRINGING COMPETITION POLICY TO THE DIGITAL ERA (2016), https://one.oecd.org/document/DAF/COMP(2016)14/en/pdf. 

209 Data and Privacy Hearing at 5 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.); Dig. 

Competition Expert Panel Report at 42–45. 

210 David N. Cicilline & Terrell McSweeny, Competition Is at the Heart of Facebook’s Privacy Problem, WIRED (Apr. 24, 

2018), https://www.wired.com/story/competition-is-at-the-heart-of-facebooks-privacy-problem. 

211 Dig. Competition Expert Panel Report at 43 (“[T]he misuse of consumer data and harm to privacy is arguably an 

indicator of low quality caused by a lack of competition.”); Dina Srinivasan, The Antitrust Case Against Facebook: A 

Monopolist’s Journey Towards Pervasive Surveillance in Spite of Consumers’ Preference for Privacy, 16 BERKELEY BUS.

L.J. 39, 40 (2019) (“Consumers effectively face a singular choice—use Facebook and submit to the quality and stipulations 

of Facebook’s product or forgo all use of the only social network.”).

212 Competition & Mkts. Auth. Report at 318. 

213 Giuseppe Colangelo & Mariateresa Maggiolino, Data Protection in Attention Markets: Protecting Privacy through 

Competition?, 8 J. OF EUR. COMPETITION L. & PRACTICE 363, 365 (2017).

214 Data and Privacy Hearing at 4 (statement of Dina Srinivasan, Fellow, Yale Thurman Arnold Project); Innovation and 

Entrepreneurship Hearing at 82 (Fiona Scott Morton, Theodore Nierenberg Prof. of Econs., Yale Sch. of Mgmt.).

215 Data and Privacy Hearing at 2 (statement of Jason Furman, Prof. of the Practice of Econ. Pol’y, Harvard Kennedy 

School); Data and Privacy Hearing at 5 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.); Dig. 

Competition Expert Panel Report at 4 (“It can be harder for new companies to enter or scale up.”); Giuseppe Colangelo & 

Mariateresa Maggiolino, Data Protection in Attention Markets: Protecting Privacy through Competition?, 8 J. OF EUR.
53

Because persistent data collection online is often concealed,216 it is more difficult to compare 

privacy costs across different products and services.217 Consumers are largely unaware of firms’ data 

collection practices, which are presented in dense and lengthy disclosures.218 The use of manipulative 

design interfaces has also become a pervasive tool “to increase the likelihood of users consenting to 

tracking.”

219 These behavioral nudges—referred to as dark patterns—are commonly used in online 

tracking and advertising markets to enhance a firm’s market power and “maximize a company’s ability 

to extract revenue from its users.”

220 And in e-commerce, Jamie Luguri and Lior Strahilevitz observe 

that dark patterns “are harming consumers by convincing them to surrender cash or personal data in 

deals that do not reflect consumers’ actual preferences and may not serve their interests. There appears 

to be a substantial market failure where dark patterns are concerned—what is good for ecommerce 

profits is bad for consumers.”

221

More recently, as remote work became commonplace during the COVID-19 pandemic, Google 

attempted to manipulate users into using its Google Meet videoconferencing tool instead of upstart 

competitor Zoom. As Zoom emerged as the market leader during the early stages of the pandemic, 

Google introduced a new widget for Meet inside Gmail. A similar message could be found inside 

Google Calendar, which prompted users to “Add Google Meet video conferencing” to their 

appointments. “For people with the Zoom Video Communications Inc. extension on their Chrome 

browsers, the prompt sits directly above the option to: ‘Make it a Zoom Meeting.’”

222

COMPETITION L. & PRACTICE 363, 365 (2017) (“Similarly, in such a market, a dominant firm could abuse its power to 

exclude a rival producing privacy-friendly goods that consumer would otherwise prefer.”); Stigler Report at 67 (“When 

facing a zero-money price, and when quality is difficult to observe, consumers are not receiving salient signals about the 

social value of their consumption because the price they believe they face does not reflect the economics of the transaction,

and they are ignorant of those numbers.”).

216 Data and Privacy Hearing at 4-5 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.).

217 Maurice E. Stucke, Should We Be Concerned About Data-opolies?, 2 GEO. L. TECH. REV. 275, 311 (2018).

218 See, e.g., Paul Hitlin & Lee Rainie, Facebook Algorithms and Personal Data, PEW RES. CTR. (Jan. 16. 2019), 

https://www.pewinternet.org/2019/01/16/facebook-algorithms-and-personal-data/. See AUSTL. COMPETITION & CONSUMER 

COMM’N, DIG. PLATFORMS INQUIRY FINAL REPORT 11 (2019) [hereinafter Austl. Competition & Consumer Comm’n 

Report]; Ryan Calo & Alex Rosenblat, The Taking Economy: Uber, Information, and Power, 117 COLUM. L. REV. 1623

(2017); Dina Srinivasan, The Antitrust Case Against Facebook: A Monopolist’s Journey Towards Pervasive Surveillance in 

Spite of Consumers’ Preference for Privacy, 16 BERKELEY BUS. L.J. 39, 41 (2019) (“[A]ccepting Facebook’s policies in 

order to use its service means accepting broad-scale commercial surveillance.”).

219 Arvind Narayanan, Arunesh Mathur, Marshini Chetty & Mihir Kshirsagar, Dark Patterns: Past, Present, and Future, 

18(2) ACM QUEUE 67, 77 (2020) https://queue.acm.org/detail.cfm?id=3400901.

220 Id. at 77 (2020); NORWEGIAN CONSUMER COUNCIL, DECEIVED BY DESIGN (June 27, 2018) (describing the use of “dark 

patterns”), https://fil.forbrukerradet.no/wp-content/uploads/2018/06/2018-06-27-deceived-by-design-final.pdf.

221 Jamie Luguri & Lior Strahilevitz, Shining a Light on Dark Patterns at 29 (Univ. of Chicago Public Law Working Paper 

No. 719, 2019), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3431205. 

222 Mark Bergen, Google Really Wants You to Try Its New Video Tool, BLOOMBERG (May 19, 2020), 

https://www.bloomberg.com/news/newsletters/2020-05-19/google-really-wants-you-to-try-its-new-video-tool. 
54

To the extent that consumers are aware of data collection practices, it is often in the wake of 

scandals involving large-scale data breaches or privacy incidents such as Cambridge Analytica.223 As 

Dina Srinivasan notes, “Today, nuances in privacy terms are relegated to investigative journalists to 

discover and explain. When the media does report on them—as they did around Google’s practice of 

letting employees and contractors read Gmail users’ emails—consumers often switch to a competitor 

that offers a better product or service.”

224 The opacity of data collection and use contributes to 

consumer confusion and the misperception that consumers do not care about their privacy—the socalled privacy paradox—simply because they use services that have become essential.225

While insufficient competition can lead to reduced quality in many markets, the loss of quality 

due to monopolization—and in turn, privacy and data protection—is even more pronounced in digital 

markets because product quality is often the “relevant locus of competition.”

226 Without transparency 

or effective choice, dominant firms may impose terms of service with weak privacy protections that are 

designed to restrict consumer choice,227 creating a race to the bottom.228 As David Heinemeier 

Hansson, the Co-Founder and Chief Technology Officer of Basecamp,229 explained in his testimony 

before the Subcommittee:

When businesses do not have to account for the negative externalities they cause, it’s a 

race to the bottom. The industrial-scale exploitation of privacy online is much the same. 

Facebook and Google have built comprehensive dossiers on almost everyone, and they 

can sell incredibly targeted advertisement on that basis. When Facebook knows you’re 

pregnant, or worse, thinks it knows when you’re pregnant, they can target ads for baby 

clothes or strollers with striking efficiency. But doing so represents an inherent 

violation of the receiver’s privacy. Every ad targeted using personal information 

223 Dig. Competition Expert Panel Report at 45; David N. Cicilline & Terrell McSweeny, Competition Is at the Heart of 

Facebook’s Privacy Problem, WIRED (Apr. 24, 2018), https://www.wired.com/story/competition-is-at-the-heart-offacebooks-privacy-problem. 

224 Data and Privacy Hearing at 4 (statement of Dina Srinivasan, Fellow, Yale Thurman Arnold Project).

225 Brooke Auxier, et al., Americans and Privacy: Concerned, Confused and Feeling Lack of Control Over Their Personal 

Information, PEW RES. CTR. (Nov. 15 2019), https://www.pewresearch.org/internet/2019/11/15/americans-and-privacyconcerned-confused-and-feeling-lack-of-control-over-their-personal-information/; Daniel J. Solove, The Myth of the 

Privacy Paradox, 89 GEO. WASH. L. REV. (forthcoming 2021).

226 Data and Privacy Hearing at 4 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.).

227 Id.

228 Competitors Hearing at 11 (statement of David Heinemeier Hansson, Co-Founder and CTO, Basecamp); Dig. 

Competition Expert Panel Report at 6 (“[W]ell-functioning competitive digital markets have the potential to develop new 

solutions and increased choice for consumers, where privacy and quality of service can be differentiating factors.”); 

Howard A. Shelanski, Information, Innovation, and Competition Policy for the Internet, 161 U. PA. L. REV. 1663, 1691 

(2013) (“Competition, however, may drive platforms to adopt and adhere to stronger privacy policies, making it worthwhile 

for a platform to advertise such policies to consumers in order to differentiate itself from its competitors.”).

229 Basecamp is an internet software firm based in Chicago, Illinois, that sells project-management and team-collaboration 

tools. Competitors Hearing at 2 (statement of David Heinemeier Hansson, Co-Founder and CTO, Basecamp).
55

gathered without explicit, informed consent is at some level a violation of privacy. And 

Facebook and Google are profiting immensely by selling these violations to advertisers. 

Advertisers who may well feel that purchasing these violations go against their ethics,

but see no choice to compete without participating.230

In addition to creating a race to the bottom, this same dynamic can also prevent new firms from 

offering products with strong privacy protections or reduce the incentive of new entrants or rivals to 

compete directly.231 Roger McNamee, the Co-Founder and Managing Director of Elevation Partners,

has also explained that to the extent there is direct competition between a firm with a privacy-centric 

business model, such as DuckDuckGo’s search engine, they can “still have trouble applying different 

business models once they’re not compatible with the business models that have made the Internet 

platforms so successful.”

232

Conversely, without adequate safeguards in place, measures that appear to improve privacy for 

consumers may also have anticompetitive effects. Kirsten Daru, Chief Privacy Officer and General 

Counsel of Tile, told the Subcommittee: “Apple has used the concept of privacy as a shield by making 

changes in the name of privacy that at the same time give it a competitive advantage.”

233 In particular, 

she testified at the Subcommittee’s field hearing: 

Apple has attempted to justify its own collection of sensitive information and disparate 

treatment of competitors because FindMy is ‘part of the OS,’ as well as due to a need 

for enhanced consumer privacy. But the changes don’t meaningfully improve or 

enhance privacy of third-party app developers.234

Ram Shriram, a prominent investor who is a founding board member of Google, noted that 

“[p]rivacy does impact how you think about dominance, for example, in a market because Google and 

Apple both eliminated third-party cookies, which then makes your data a little more private. But it 

ironically will hurt the young companies that are trying to build digital advertising businesses while 

improving user privacy.235

The Subcommittee held several hearings during the investigation that examined the role of 

competition and privacy online. 

230 Competitors Hearing at 11 (statement of David Heinemeier Hansson, Co-Founder and CTO, Basecamp).

231 Data and Privacy Hearing at 3–4 (statement of Dina Srinivasan, Fellow, Yale Thurman Arnold Project); Venture Capital 

and Antitrust Workshop at 24 (Paul Arnold, Founder and Partner, Switch Partners).

232 Venture Capital and Antitrust Workshop at 30 (statement of Roger McNamee, Co-Founder and Managing Dir., 

Elevation Partners). 

233 Competitors Hearing at 3 (response to Questions for the Record of Kirsten Daru, Vice Pres. and Gen. Counsel, Tile).

234 Competitors Hearing at 2 (statement of Kirsten Daru, Vice Pres.and Gen. Counsel, Tile).

235 Venture Capital and Antitrust Workshop at 36 (Ram Shriram, Managing Partner, Sherpalo Ventures LLC).
56

In September 2016, the Subcommittee held a hearing on the role of data and privacy in 

competition. There, Federal Trade Commissioner Rohit Chopra testified that dominant firms have the 

ability to impose “complex and draconian” terms of service that can change suddenly “to collect and 

use data more expansively and more intensely.”

236 As he noted, this behavior is the equivalent of a 

price hike that would be difficult to impose unilaterally in a competitive marketplace.237 Without 

sufficient competition, however, “companies can focus on blocking new entrants and limiting choice to 

protect their dominance and pricing power.”

238 Tommaso Valletti, the former Chief Competition 

Economist for the European Commission, noted that it is “self-evident that data is key to digital 

platforms, and that some applications imply real-time knowledge of consumer behaviour as well as 

cross linkages across apps that only very few digital players have access to.”

239 And finally, Jason 

Furman, the former Chairman of the Council of Economic Advisers and an author of the “Unlocking 

Digital Competition” report, said that “the misuse of consumer data and harm to privacy is arguably an 

indicator of low quality caused by a lack of competition.”

240

At the Subcommittee’s oversight hearing in November 2019, Makan Delrahim, the Assistant 

Attorney General of the Justice Department’s Antitrust Division, testified that because privacy is a 

dimension of quality, protecting competition “can have an impact on privacy and data protection.”

241

And finally, Maureen Ohlhausen, the former Acting Chair of the FTC, echoed this point at the 

Subcommittee’s hearing on innovation and entrepreneurship, noting that quality reductions online 

could “include factors such as reduced features, restricted consumer choice, or lessened control over 

privacy.”

242

Leading international antitrust enforcers offered similar testimony before the Subcommittee. 

Margrethe Vestager, the European Union’s Competition Commissioner, testified that due to the 

Commission’s finding that data protection is an important dimension of competition that could be 

undermined by certain merger activity, the Commission “has ... integrated, where appropriate, data 

protection as a quality parameter for the assessment of merger cases.”

243 Similarly, Rod Sims, the 

Chair of the Australian Competition and Consumer Commission, told the Subcommittee that the 

ACCC’s “Digital Platforms Inquiry” report recommends “[u]pdating Australia’s merger law to 

236 Data and Privacy Hearing at 3 (statement of Rohit Chopra, Comm’r, Fed. Trade Comm’n).

237 Id.

238 Id.

239 Data and Privacy Hearing at 2 (statement of Tommaso Valletti, Prof. of Econs., Imperial College Bus. Sch.).

240 Dig. Competition Expert Panel Report at 43.

241 Antitrust Agencies Hearing at 15 (statement of Makan Delahim, Assistant Attorney General, United States Dep’t of 

Justice Antitrust Div.).

242 Innovation and Entrepreneurship Hearing at 4 n.14 (statement of Maureen K. Ohlhausen, Partner, Baker Botts, L.L.P.).

243 Data and Privacy Hearing at 4 (statement of Margrethe Vestager, then-Eur. Comm’r for Competition).
57

incorporate ... the nature and significance of assets, including data and technology, acquired through a 

merger.”

244

The Free and Diverse Press

A free and diverse press is essential to a vibrant democracy. Whether exposing corruption in 

government, informing citizens, or holding power to account, independent journalism sustains our 

democracy by facilitating public discourse. 

Since 2006, newspaper advertising revenue, which is critical for funding high-quality 

journalism, fell by over 50%.245 Despite significant growth in online traffic among the nation’s leading 

newspapers,246 print and digital newsrooms across the country are laying off reporters or folding 

altogether.247 As a result, communities throughout the United States are increasingly going without 

sources for local news. The emergence of platform gatekeepers—and the market power wielded by 

these firms—has contributed to the decline of trustworthy sources of news.248

a. Journalism in Decline

Since 2006, the news industry has been in economic freefall, primarily due to a massive 

decrease in advertising revenue. Both print and broadcast news organizations rely heavily on 

advertising revenue to support their operations, and as the market has shifted to digital platforms, news 

organizations have seen the value of their advertising space plummet steeply.249 For newspapers, 

advertising has declined from $49 billion in 2006 to $16.5 billion in 2017.250 This decrease has been 

felt by national and local news sources alike. As total annual advertising revenues have fallen over 

244 Id. at 8 (statement of Rod Sims, Chair, Austl. Competition & Consumer Comm’n). 

245 Noah Smith, Opinion, Goodbye, Newspapers. Hello, Bad Government., BLOOMBERG (June 1, 2018), 

https://www.bloomberg.com/opinion/articles/2018-06-01/goodbye-newspapers-hello-bad-government.

246 Free and Diverse Press Hearing at 2 (statement of David Chavern, President and CEO, News Media Alliance).

247 Douglas McLennan & Jack Miles, Opinion, A Once Unimaginable Scenario: No More Newspapers, WASH. POST: THE 

WORLDPOST (Mar. 21, 2018), 

https://www.washingtonpost.com/news/theworldpost/wp/2018/03/21/newspapers/?utm_term=.c1b57c9efcd7. 

248 Free and Diverse Press Hearing at 2–3 (statement of David Pitofsky, Gen. Counsel, News Corp).

249 eMarketer estimates that Google’s and Facebook’s U.S. ad revenues will be $39.58 billion and $31.43 billion, 

respectively, in 2020. eMarketer, Google Ad Revenues to Drop for the First Time (June 23, 2020). According to BIA, local 

TV and radio station ad revenues (counting both their OTA and much more limited digital revenues) will total $31.3 billion 

this year. See BIA Advisory Services, BIA Revises Local Radio Advertising Estimates Down to $12.8B in 2020 Due to 

Pandemic (June 25, 2020); BIA Advisory Services, BIA Lowers 2020 Local Television Station Advertising Revenue 

Forecast to $18.5B (May 21, 2020).

250 Michael Barthel, Despite Subscription Surges for Largest U.S. Newspapers, Circulation and Revenue Fall for Industry 

Overall, PEW RES. CTR.: FACTTANK (June 1, 2017), https://www.pewresearch.org/fact-tank/2017/06/01/circulation-andrevenue-fall-for-newspaper-industry; Newspapers Fact Sheet, PEW RES. CTR. (June 13, 2018), 

https://www.journalism.org/fact-sheet/newspapers. 
58

62% across the industry since 2008, one major national newspaper told the Subcommittee that its 

annual advertising revenue has fallen 48% over that period.251 Additionally, ethnic news outlets have 

suffered from the shift from broadcast and print ads to digital ads.252 Regarding television and radio 

broadcast news, the National Association of Broadcasters told the Subcommittee, “[T]his year, the 

U.S. advertising revenue of a single company—Google—are projected to exceed the combined ad 

revenue of all TV and radio stations in the country by over $8 billion.”

253

While the decline of advertising revenue has most severely affected local news publishers, 

prominent digital publishers have also been affected. In January 2019, Buzzfeed announced layoffs of 

220 employees, about 15% of its workforce, due to advertising losses.254 Jonah Peretti, the Chief 

Executive Officer of BuzzFeed, commented prior to the layoffs that consolidation of digital publishers 

into a single large digital media company may be the only path forward for profitability, suggesting 

that publishers’ lack of bargaining power in negotiations with online platforms is the central obstacle 

to long-term survival.255

Despite a recent boost in the number of digital subscriptions and the level of online traffic for 

the top newspapers in the United States, these increases did not offset losses in online advertising or 

circulation in the industry overall.256 As one news publisher told the Subcommittee, “For the vast 

majority of news publishers, digital subscription revenues remain a minor revenue stream and do not 

appear to be on a path to replace the decline in print subscriptions.”

257 Over the past two decades, 

hundreds of local news publishers have been acquired or gone bankrupt.258 In some cases, private 

251 Submission from Source 220, to H. Comm. on the Judiciary, 7 (Oct. 14, 2019) (on file with Comm.).

252 See PENELOPE MUSE ABERNATHY, UNIV. N.C. SCH. OF MEDIA AND JOURNALISM, NEWS DESERTS AND GHOST 

NEWSPAPERS: WILL LOCAL NEWS SURVIVE 45 (2020), https://www.usnewsdeserts.com/wpcontent/uploads/2020/06/2020_News_Deserts_and_Ghost_Newspapers.pdf.

253 Submission from Nat’l Ass’n of Broads., to H. Comm. on the Judiciary, 2 (Oct. 14, 2019), 

http://www.nab.org/documents/newsRoom/pdfs/09220_HJC_Local_Journalism_At_Risk_Submission.pdf. 

254 Oliver Darcy & Tom Kludt, Media Industry Loses About 1,000 Jobs as Layoffs Hit News Organizations, CNN (Jan. 24, 

2019), https://edition.cnn.com/2019/01/24/media/media-layoffs-buzzfeed-huffpost-gannett/index.html; Edmund Lee, 

Founder’s Big Idea to Revive BuzzFeed’s Fortunes? A Merger with Rivals, N.Y. TIMES (Nov. 19, 2018), 

https://www.nytimes.com/2018/11/19/business/media/buzzfeed-jonah-peretti-mergers.html. 

255 Edmund Lee, Founder’s Big Idea to Revive BuzzFeed’s Fortunes? A Merger with Rivals, N.Y. TIMES (Nov. 19, 2018), 

https://www.nytimes.com/2018/11/19/business/media/buzzfeed-jonah-peretti-mergers.html. 

256 Michael Barthel, Despite Subscription Surges for Largest U.S. Newspapers, Circulation and Revenue Fall for Industry 

Overall, PEW RES. CTR.: FACTTANK (June 1, 2017), https://www.pewresearch.org/fact-tank/2017/06/01/circulation-andrevenue-fall-for-newspaper-industry/; Newspapers Fact Sheet, PEW RES. CTR (July 9, 2019),

https://www.journalism.org/fact-sheet/newspapers; David Chavern, Opinion, Protect the News From Google and 

Facebook, WALL ST. J. (Feb. 25, 2018), https://www.wsj.com/articles/protect-the-news-from-google-and-facebook1519594942. 

257 Submission from Source 220, to H. Comm. on the Judiciary, 7 (Oct. 14, 2019) (on file with Comm.).

258 PENELOPE MUSE ABERNATHY, UNIV. N.C. SCH. OF MEDIA AND JOURNALISM, THE EXPANDING NEWS DESERT 33 (2018), 

https://www.cislm.org/wp-content/uploads/2018/10/The-Expanding-News-Desert-10_14-Web.pdf. 
59

equity firms and hedge funds have purchased major regional chains and newspapers, resulting in mass 

layoffs of journalists and increased debt burdens for publishers.259

In recent years, news consumption has largely shifted to a model of content aggregation, 

through which platforms consolidate content from multiple news sources.260 In submissions to the 

Subcommittee and public statements, publishers across the spectrum say they have little choice but to 

participate in content aggregation, particularly those run by dominant platforms because the 

aggregators’ “use of news publishers’ content does send substantial traffic to news publishers.”

261 But 

this can also prevent traffic from flowing to newspapers. As some publishers have noted, news 

aggregators package and present content to users using attention-grabbing quotes from high points of 

stories, which can make it unnecessary for the user to click through to the publisher’s website.262 As 

these publishers noted, this dynamic forces news organizations to effectively compete with their own 

content, lowering the potential revenue from user traffic to news organizations’ websites.263

As a result of falling revenues, newspapers and broadcast stations are steadily losing the ability 

to financially support their newsrooms, which are costly to maintain but provide immense value to 

their communities.264 A robust local newsroom requires the financial freedom to support in-depth, 

sometimes years-long reporting, as well as the ability to hire and retain journalists with expertise in 

fundamentally local issues, such as coverage of state government.265

The societal value of local news is significant. As noted by the National Association of 

Broadcasters, local broadcast stations provide on-the-air programming which is “rooted in localism 

and the public interest,” offering content which “[is] still free to the public and accessible to all 

Americans.”

266 Kevin Riley, the editor of The Atlanta Journal-Constitution, similarly testified before 

the Subcommittee that “it would be impossible to even put a cost estimate on the work” of local 

journalists.267

259 Alex Shephard, Finance Is Killing the News, NEW REPUBLIC (Apr. 18, 2018), 

https://newrepublic.com/article/148022/finance-killing-news. 

260 Lesley Chiou & Catherine Tucker, Content Aggregation by Platforms: The Case of the News Media (NBER Working 

Paper No. 21404, 2015), https://www.nber.org/papers/w21404.pdf. 

261 NEWS MEDIA ALLIANCE, HOW GOOGLE ABUSES ITS POSITION AS A MARKET DOMINANT PLATFORM TO STRONG-ARM 

NEWS PUBLISHERS AND HURT JOURNALISM 2 (2020), http://www.newsmediaalliance.org/wpcontent/uploads/2020/06/Final-Alliance-White-Paper-June-18-2020.pdf. 

262 Id. at 12.

263 Id. at 12–14 (2020).

264 Submission from the Nat’l Association of Broads, to H. Comm. on the Judiciary, 9 (Sept. 2, 2020), 

http://www.nab.org/documents/newsRoom/pdfs/09220_HJC_Local_Journalism_At_Risk_Submission.pdf. 

265 Free and Diverse Press Hearing at 3–4 (statement of Kevin Riley, Editor, The Atlanta Journal-Constitution).

266 Submission from the Nat’l Association of Broads, to H. Comm. on the Judiciary, 1 (Sept. 2, 2020), 

http://www.nab.org/documents/newsRoom/pdfs/09220_HJC_Local_Journalism_At_Risk_Submission.pdf. 

267 Free and Diverse Press Hearing at 2 (statement of Kevin Riley, Editor, The Atlanta Journal-Constitution).
60

The COVID-19 pandemic has particularly highlighted the importance of local news sources. 

Despite taking major revenue losses,268 local journalists have provided valuable reporting on the 

transmission of the novel coronavirus, particularly for underserved and vulnerable communities.269 For 

example, PBS New Mexico provided an in-depth focus on the effects of the coronavirus on Native 

Americans “dealing with scarce resources as they respond to novel coronavirus outbreaks on tribal 

lands.”

270 Apart from serving their communities, local news stories bring national attention to these 

critical issues.271 In addition to news coverage, the National Association of Broadcasters aired publicservice announcements in response to the pandemic “more than 765,000 times for an estimated ad 

value of more than $156,500,000,” a number which “do[es] not include the likely much greater number 

of other coronavirus-related PSAs” aired by local television and radio stations across the United 

States.272

To run a new operation, broadcast stations must be able to sustain “the basic costs of running a 

station, including engineering, sales, [and] programming” costs, and must make significant capital 

expenditures in equipment, such as satellite trucks.273 These expenses must be satisfied before 

broadcast stations can invest in improvements to keep pace with changing technologies, “including 

ultra-high definition programming, better emergency alerting, mobile services, interactivity, hyperlocal content and more.”

274

The costs of news production add up. From 2003 to 2013, these costs “accounted for nearly 24 

percent of TV stations’ total expenses (and nearly 26 percent of the total expenses of 

ABC/CBS/Fox/NBC stations).”

275 In light of the expenses associated with producing high-quality 

journalism, declining revenue has major implications for the maintenance—let alone enrichment—of 

quality news production.

268 Sara Fischer & Margaret Harding McGill, Coronavirus Sends Local News Into Crisis, AXIOS (Mar. 21, 2020), 

https://www.axios.com/coronavirus-local-news-853e96fa-51aa-43cc-a990-eb48cc896b17.html. 

269 Mark Glaser, 6 Ways Local News Makes a Crucial Impact Covering COVID-19, KNIGHT FOUND. (Apr. 20, 2020), 

https://knightfoundation.org/articles/6-ways-local-news-makes-a-crucial-impact-covering-covid-19/. 

270 COVID-19 Response from Native Tribes, NEW MEXICO PBS (Mar. 30, 2020), 

https://www.newmexicopbs.org/productions/newmexicoinfocus/covid-19-response-from-native-tribes/. 

271 See, e.g., Bill Chappell, Coronavirus Cases Spike In Navajo Nation, Where Water Service Is Often Scarce, NPR (Mar. 

26, 2020), https://www.npr.org/sections/coronavirus-live-updates/2020/03/26/822037719/coronavirus-cases-spike-innavajo-nation-where-water-service-is-often-scarce. 

272 Submission from the Nat’l Ass’n of Broads., to H. Comm. on the Judiciary, 2 (Sept. 2, 2020), 

http://www.nab.org/documents/newsRoom/pdfs/09220_HJC_Local_Journalism_At_Risk_Submission.pdf. 

273 Id. at 4, 7 n.16.

274 Id. at 7. 

275 Id. at 4 (citing NAB Television Financial Reports 2004–19)
61

Budget cuts have also led to a dramatic number of newsroom job losses. This decline has been 

primarily driven by a reduction in newspaper employees, who have seen employment fall by half over 

a recent eight-year period, from 71,000 in 2008 to 35,000 in 2019.276 In 2019 alone, 7,800 media 

industry employees were laid off.277 The Bureau of Labor Statistics estimates that the total 

employment of reporters, correspondents, and broadcast news analysts will continue to decline by 

about 11% between 2019 and 2029.278

Researchers at the University of North Carolina School of Media and Journalism found that the 

United States has lost nearly 1,800 newspapers since 2004 either to closure or merger, 70% of which 

were in metropolitan areas.279 As a result, the majority of counties in America no longer have more 

than one publisher of local news, and 200 without any paper.280 At the Subcommittee’s hearing on 

online platforms’ effects on a free and diverse press, Mr. Riley described this new media landscape 

characterized by digital platform dominance and disappearing local newspapers:

We produce journalism that is distinguished by its depth, accuracy and originality. That 

costs money and is expensive, but if the system works correctly, it also makes money 

that the paper uses to investigate and develop the next story or cover the next local 

event. If others repackage our journalism and make money off it, yet none of that 

money makes its way back to the local paper, then it makes breaking that next story or 

exposing the next scandal more challenging. If that cycle continues indefinitely, quality 

local journalism will slowly wither and eventually cease to exist.281

This cycle has a profoundly negative effect on American democracy and civic life. 

Communities without quality local news coverage have lower rates of voter turnout.282 Government 

276 Elizabeth Grieco, U.S. newspapers have shed half of their newsroom employees since 2008, PEW RES. CTR: FACTTANK 

(Apr. 20, 2020), https://www.pewresearch.org/fact-tank/2020/04/20/u-s-newsroom-employment-has-dropped-by-a-quartersince-2008/.

277 Benjamin Goggin, 7,800 People Lost Their Media Jobs in a 2019 Landslide, BUS. INSIDER (Dec. 10, 2019), 

https://www.businessinsider.com/2019-media-layoffs-job-cuts-at-buzzfeed-huffpost-vice-details-2019-2#spin-mediagroup-29-jobs-september-and-january-18.

278 Occupational Outlook Handbook: Reporters, Correspondents, and Broadcast News Analysts, U.S. DEP’T OF LABOR:

BUR. OF LABOR STATS. (last modified Apr. 12, 2019), https://www.bls.gov/ooh/media-and-communication/reporterscorrespondents-and-broadcast-news-analysts.htm.

279 PENELOPE MUSE ABERNATHY, UNIV. N.C. SCH. OF MEDIA AND JOURNALISM, THE EXPANDING NEWS DESERT 10-11

(2018), https://www.cislm.org/wp-content/uploads/2018/10/The-Expanding-News-Desert-10_14-Web.pdf. 

280 Id. at 8, 10.

281 Free and Diverse Press Hearing at 3 (statement of Kevin Riley, Editor, The Atlanta Journal-Constitution)

282 Matthew Gentzkow, et al., The Effects of Newspaper Entry and Exit on Electoral Politics, 101 AM. ECON. REV. 2980 

(2011) (“We find that newspapers have a robust positive effect on political participation, with one additional newspaper 

increasing both presidential and congressional turnout by approximately 0.3 percentage points.”).
62

corruption may go unchecked, leaving communities vulnerable to serious mismanagement.283

Relatedly, these communities see local government spending increase.284 Towns without robust local 

news coverage also exhibit lower levels of social cohesion, undermining a sense of belonging in a 

community.285 As fewer publishers operate in local markets, local news is supplanted by aggregation 

of national coverage, reducing residents’ knowledge of local happenings and events, and generally 

leaving them less connected to their communities.286

Compounding this problem, the gap created by the loss of trustworthy and credible news 

sources has been increasingly filled by false and misleading information. Once communities lack a 

local newspaper source, people tend to get their local news from social media. As local news dies, it is 

filled by unchecked information, some of which can spread quickly and can have severe consequences.

b. The Effect of Market Power on Journalism

During the Subcommittee’s investigation, news publishers raised concerns about the 

“significant and growing asymmetry of power” between dominant online platforms and news 

publishers, as well as the effect of this dominance on the production and availability of trustworthy 

sources of news. In interviews, submissions, and testimony before the Subcommittee, publishers with 

distinct business models and distribution strategies said they are “increasingly beholden” to these 

firms, and in particular, Google and Facebook.287 As a result, several dominant firms have an outsized 

influence over the distribution and monetization of trustworthy sources of news online,288 undermining 

the availability of high-quality sources of journalism.289

283 Mary Ellen Klas, Less Local News Means Less Democracy, NIEMAN REPORTS (Sept. 20, 2019), 

https://niemanreports.org/articles/less-local-news-means-less-democracy/. 

284 Noah Smith, Opinion, Goodbye Newspapers. Hello, Bad Government, BLOOMBERG (June 1, 2018), 

https://www.bloomberg.com/opinion/articles/2018-06-01/goodbye-newspapers-hello-bad-government (“[T]he authors 

show that without local newspapers, local governments tend to engage in more inefficient or dubious financing 

arrangements.”). 

285 Amy Mitchell, et al., Civic Engagement Strongly Tied to Local News Habits, PEW RES. CTR. (Nov. 3, 2016), 

https://www.journalism.org/2016/11/03/civic-engagement-strongly-tied-to-local-news-habits. 

286 Danny Hayes & Jennifer L. Lawless, As Local News Goes, So Goes Citizen Engagement: Media, Knowledge, and 

Participation in U.S. House Elections, 77 J. POL. 447, 447 (2014). 

287 Submission from Source 220, to H. Comm. on the Judiciary, 7 (Oct. 14, 2019) (on file with Comm.). Although Apple 

News and Apple News Plus are increasingly popular news aggregators, most market participants interviewed by 

Subcommittee staff do not view it as a critical intermediary for online news at this time, although some publishers raised 

concerns about the tying of payments inside Apple’s news product. 

288 Submission of Source 955, to H. Comm. on the Judiciary, 12 (Oct. 30, 2019) (on file with Comm.).

289 Free and Diverse Press Hearing at 3 (statement of David Chavern, President and CEO, News Media Alliance) (“In 

effect, a couple of dominant tech platforms are acting as regulators of the digital news industry.”).
63

i. Distribution of News Online

Several dominant platforms function as intermediaries to news online. Due to their outsized 

role as digital gateways to news, a change to one of these firm’s algorithm can significantly affect the 

online referrals to news publishers,290 directly affecting their advertising revenue.291 One news 

publisher stated in its submission to the Subcommittee that it and other news organizations “depend on 

a few big tech platforms to help them distribute their journalism to consumers.”

292

In submissions to the Subcommittee, several news publishers noted that the dominance of 

Google and Facebook allows them to “pick winners” online by adjusting visibility and traffic.293

For example, an update to Google’s search algorithm in June 2019 decreased a major news publisher’s 

online traffic “by close to 50%” even as their referrals from other sources—such as their home page 

and apps—grew during the same period.294 As they noted, a “smaller business would have been 

crushed” by this decline.295

Similarly, news organizations were negatively affected when, in January 2018, Facebook 

adjusted its News Feed algorithm to prioritize content based on audience engagement.296 According to 

an internet analytics firm, these changes significantly affected the visibility of news content on 

Facebook, resulting in a 33% decrease in referral traffic from Facebook to news publishers’ sites.297 As 

one publisher noted in its submission to the Subcommittee, this change “was made without notice, 

consultation or warning to the market, [leading] to significant disruption for a range of businesses.”

298

Nicholas Thompson, the Editor-in-Chief of Wired magazine, and Wired contributing editor Fred 

Vogelstein described the relationship between publishers and Facebook as being “sharecroppers on 

Facebook’s massive industrial farm,” writing that:

290 See, e.g., Submission of Source 140, to H. Comm. on the Judiciary, 2 (Oct. 15, 2019) (on file with Comm.) 

(“Facebook’s decision, announced in June 2016, to make significant changes to its algorithm to [favor] content from friends 

and family, which was made without notice, consultation or warning to the market, and which led to significant disruption 

for a range of businesses.”).

291 Submission of Source 114, to H. Comm. on the Judiciary, 12 (Oct. 2, 2019) (on file with Comm.); Data and Privacy 

Hearing at 6 (statement of Rod Sims, Chair, Austl. Competition & Consumer Comm’n).

292 Submission of Source 220, to H. Comm. on the Judiciary, 3 (Mar. 10, 2020) (on file with Comm.).

293 Submission of Source 955, to H. Comm. on the Judiciary, 12 (Oct. 15, 2019) (on file with Comm.).

294 Id. at 17.

295 Id.

296 Adam Mosseri, Bringing People Closer Together, FACEBOOK: NEWSROOM (Jan. 11, 2018), 

https://newsroom.fb.com/news/2018/01/news-feed-fyi-bringing-people-closer-together. 

297 How Much Have Facebook Algorithm Changes Impacted Publishers?, MARKETING CHARTS (Apr. 4, 2019), 

https://www.marketingcharts.com/digital/social-media-107974.

298 Submission from Source 140, to H. Comm. on the Judiciary, 2 (Oct. 15, 2019) (on file with Comm.).
64

Even at the best of times, meetings between Facebook and media executives can feel 

like unhappy family gatherings. The two sides are inextricably bound together, but they 

don’t like each other all that much. . . . And then there’s the simple, deep fear and 

mistrust that Facebook inspires. Every publisher knows that, at best, they are 

sharecroppers on Facebook’s massive industrial farm. The social network is roughly 

200 times more valuable than the Times. And journalists know that the man who owns 

the farm has the leverage. If Facebook wanted to, it could quietly turn any number of 

dials that would harm a publisher—by manipulating its traffic, its ad network, or its 

readers.

299

The Subcommittee has also received evidence that the dominance of several online platforms 

has created a significant imbalance of bargaining power. In several submissions, news publishers note 

that dominant firms can impose unilateral terms on publishers, such as take-it-or-leave-it revenue 

sharing agreements.300 A prominent publisher described this relationship as platforms having a “finger 

on the scales” with the ability to suppress publishers that do not “appease platforms’ business 

terms.”

301

During the Subcommittee’s hearing on the effects of market power on journalism,302 several 

witnesses also testified about the lack of equal bargaining power between news publishers and 

dominant platforms.303 At the Subcommittee’s hearing on market power and the free and diverse press, 

Sally Hubbard, Director of Enforcement Strategy at the Open Markets Institute, testified that the lack 

of competition online has led to diminished bargaining power among news publishers. Consequently, 

in response to changing terms and algorithmic treatment by platforms, “publishers have little choice 

but to adapt and accommodate regardless of how the changes may negatively affect their own 

profitability.”

304 David Chavern, President of the News Media Alliance, similarly testified that 

publishers have a “collective action problem,” stating that “no news organization on its own can stand 

up to the platforms. The risk of demotion or exclusion from the platforms is simply too great.”

305

299 Nicholas Thompson & Fred Vogelstein, Inside the Two Years That Shook Facebook—and the World, WIRED (Feb. 12, 

2018), https://www.wired.com/story/inside-facebook-mark-zuckerberg-2-years-of-hell/ (emphasis added).

300 See, e.g., Submission of Source 140, to H. Comm. on the Judiciary, 2 (Oct. 15, 2019) (on file with Comm.) (“Apple’s 

decision to tie all payments made through iOS apps to its own payment system, which takes a 30% share of any 

contributions and subscriptions made to news [publishers] through news apps downloaded from the Apple store.”).

301 Submission of Source 114, to H. Comm. on the Judiciary, 12 (Oct. 2, 2019) (on file with Comm.).

302 Free and Diverse Press Hearing.

303 Data and Privacy Hearing at 4 (statement of Rod Sims, Chair, Austl. Competition & Consumer Comm’n) (testifying that 

the power of dominant platforms “creates an imbalance of bargaining power between digital platforms and news media 

businesses, meaning that agreements they reach are likely much different to those that would be reached in a competitive 

market.”).

304 Free and Diverse Press Hearing at 8 (statement of Sally Hubbard, Dir. of Enforcement Strategy, Open Mkts. Inst.).

305 Free and Diverse Press Hearing at 5 (statement of David Chavern, Pres., News Media Alliance).
65

In June 2020, the News Media Alliance published a white paper examining the relationship 

between news publishers and Google based on interviews with its members over the course of more 

than a year.306 As it notes, “Google has exercised control over news publishers to force them into 

several relationships that benefit Google at the publishers’ expense.”

307 In the context of Google’s 

placement of news on accelerated mobile pages (AMP)—a format for displaying web pages on mobile 

devices—publishers raised concerns that “Google effectively gave news publishers little choice but to 

adopt it,” requiring the creation of parallel websites “that are hosted, stored and served from Google’s 

servers rather than their own.”

308

While this format has benefits in terms of loading information quickly on mobile devices, 

publishers argue that these benefits “could have been achieved through means that did not so 

significantly increase Google’s power over publishers or so favor its ability to collect data to foster its 

market domination.”

309 And when a publisher attempts to avoid this cost by moving its content behind 

a paywall, its rise in subscriptions was offset by declines in traffic from Google and other platforms.310

Referring to this tradeoff as a “Hobson’s choice,” the News Media Alliance explained:

Newspapers such as The Wall Street Journal employ a highly customized paywall on 

their websites, significantly varying the number of free articles that a user is permitted 

to read before being asked to subscribe to the newspaper. This flexibility is highly 

beneficial, allowing them to maximize engagement and increase subscriptions. For 

AMP articles, however, Google restricts the paywall options. Unless publishers rebuild 

their paywall options and their meters for AMP, they can only provide all of their 

content for free or none of their content for free. The only other option is to use 

Subscribe with Google, which has many benefits for Google and downsides for news 

publishers.311 Accordingly, unless they invest in building another and separate paywall, 

news publishers who do not want to use Subscribe with Google have a de facto all-ornothing choice regarding the imposition of a paywall, which lowers subscriber 

conversion rates.312

306 NEWS MEDIA ALLIANCE, HOW GOOGLE ABUSES ITS POSITION AS A MARKET DOMINANT PLATFORM TO STRONG-ARM 

NEWS PUBLISHERS AND HURT JOURNALISM (2020), http://www.newsmediaalliance.org/wp-content/uploads/2020/06/FinalAlliance-White-Paper-June-18-2020.pdf. 

307 Id. at 1.

308 Id. at 5.

309 Id. at 7.

310 Id. at 6. 

311 Id. at 8 n.14 (“These include the following: (1) Google gets the subscriber data; (2) the user must use Google Wallet or 

Google Pay, instead of providing its credit card to the news publisher and establishing a direct relationship with the 

publisher; and (3) Google takes a 5-15% cut. See Nushin Rashidian, George Civeris, Pete Brown, Platforms and 

Publishers: The End of an Era, COLUM. JOURNALISM REV. (Nov. 22, 2019), 

https://www.cjr.org/tow_center_reports/platforms-and-publishers-end-of-an-era.php.“)). 

312 Id. at 8.
66

Google has responded to this concern by noting that AMP does not prevent publishers from placing 

ads on AMP pages, but restricting the number of ads “leads to improved page load times, increased site 

traffic, superior ad engagement, and thus typically increases advertising revenue overall.”

313 Google 

also said in its responses to Subcommittee Chairman Cicilline’s questions for the record that it “does 

not privilege publishers who use AMP over publishers that adopt non-Google technical solutions that 

would also guarantee fast-loading pages.”

314

Finally, because news is often accessed online through channels other than the original 

publication—including search results, voice assistants, social platforms, or news aggregators—

journalism has increasingly become “atomized” or removed from its source and placed alongside other 

content.315 In the context of audio news, one market participant noted that aggregating different news 

sources can create a bad experience for users.316 The aggregation of different news sources without 

editorial oversight can also cause reputational harm to news publishers, such as when highly credible 

reporting appears alongside an opinion-based news source.317

Indirectly, the atomization of news may increase the likelihood that people are exposed to 

disinformation or untrustworthy sources of news online. When online news is disintermediated from its 

source, people generally have more difficulty discerning the credibility of reporting online. This 

process may also “foster ambivalence about the quality and nature of content that garners users’

attention,” particularly among young people.318

For example, during the Subcommittee’s sixth hearing, Subcommittee Chairman David N. 

Cicilline presented Facebook CEO Mark Zuckerberg with evidence of a Breitbart video that claimed 

313 Submission from Google Australia Pty. Ltd., to Austl. Competition & Consumer Comm’n, at 45–46 (Feb. 18, 2019), 

https://www.accc.gov.au/system/files/Google%20%28February%202019%29.PDF. But see Austl. Competition & 

Consumer Comm’n Report at 240 (“[T]here is a broader issue about the extent to which Google, by way of AMP, retains 

users within its ecosystem and reduces monetisation opportunities for media businesses outside of AMP. That is, rather 

than directing users to the websites of media businesses, AMP’s design encourages users to stay within the Google 

ecosystem. As a result, media businesses are less likely to monetise content on their own properties, either through 

advertising or subscription revenue.”).

314 Innovation and Entrepreneurship Hearing at 27 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC).

315 Austl. Competition & Consumer Comm’n at 297 (describing atomization as “the process by which news is ‘decoupled 

from its source’ and consumed on a ‘story-by-story basis.”). Free and Diverse Press Hearing at 3 (statement of David 

Chavern, Pres., News Media Alliance) (“These tech giants use secret, unpredictable algorithms to determine how and even 

whether content is delivered to readers. They scrape news organizations’ content and use it to their own ends, without 

permission or remuneration for the companies that generated the content in the first place. They also suppress news 

organizations’ brands, control their data, and refuse to recognize and support quality journalism.”).

316 Submission of Source 114, to H. Comm. on the Judiciary, 12 (Oct. 2, 2019) (on file with Comm.);

317 Interview with Source 114 (Oct. 2, 2019).

318 Submission of Source 140, to H. Comm. on the Judiciary, 2 (Oct. 15, 2019) (on file with Comm.).
67

that “you don’t need a mask and hydroxychloroquine is a cure for COVID.”

319 As he noted, within the 

first five hours of this video being posted, it had nearly “20 million views and over 100,000 comments 

before Facebook acted to remove it.”

320 Mr. Zuckerberg responded that “a lot of people shared that, 

and we did take it down because it violate[d] our policies.”

321 In response, Chairman Cicilline asked if 

“20 million people saw it over the period of five hours . . . doesn’t that suggest, Mr. Zuckerberg, that 

your platform is so big that, even with the right policies in place, you can’t contain deadly content?”

322

Mr. Zuckerberg responded by claiming that Facebook has a “relatively good track record of finding 

and taking down lots of false content.”

323

Moreover, because there is not meaningful competition, dominant firms face little financial 

consequence when misinformation and propaganda are promoted online.324 Platforms that are 

dependent on online advertising have an incentive to prioritize content that is addictive or exploitative 

to increase engagement on the platform.325 And the reliance on platforms by advertisers has generally 

diminished their ability to push for improvements in content standards. As a news publisher explained 

in a submission to the Subcommittee: 

As advertisers have become more reliant on dominant search and social platforms to 

reach potential consumers, they have lost any leverage to demand change in the policies 

or practices of the platforms. In the era of newspapers, television, radio, or indeed direct 

sales of digital advertising online, there was a connection between advertising and the 

content it funds, creating a high degree of accountability for both parties in that 

transaction. This maintained high content standards, and enabled advertisers to demand 

or pursue change from publishers whose content standards fell. While many highquality publishers continue to operate stringent policies in relation to the digital 

advertising that they permit to appear within their services, in a world of programmatic 

319 CEO Hearing Transcript at 143 (Rep. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. 

Law of the H. Comm. on the Judiciary).

320 Id.

321 Id. (Mark Zuckerberg, CEO, Facebook).

322 Id. at 143-144 (Rep. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary).

323 Id. at 144 (statement of Mark Zuckerberg, CEO, Facebook).

324 Free and Diverse Press Hearing at 8 (statement of Sally Hubbard, Dir. of Enforcement Strategy, Open Mkts. Inst.); 

Charlie Warzel, Opinion, Facebook Can’t Be Reformed, N.Y. TIMES (July 1, 2020),

https://www.nytimes.com/2020/07/01/opinion/facebook-zuckerberg.html. 

325 Conversely, the decline of trustworthy sources of news due to rising market power and declining ad revenue has also 

contributed to this harm. Competition & Mkts Auth. Report at 9 (“[C]oncerns relating to online platforms funded by digital 

advertising can lead to wider social, political and cultural harm through the decline of authoritative and reliable news 

media, the resultant spread of ‘fake news’ and the decline of the local press which is often a significant force in sustaining

communities.”).
68

audience trading that self-regulated compact between advertisers and platform does not 

exist.326

During the Subcommittee’s sixth hearing, Representative Jamie Raskin (D-MD) raised this 

concern. As he noted, in July 2020, Facebook faced an advertiser boycott by hundreds of companies.327

This effort, which has been spearheaded by the Stop Hate for Profit campaign, a coalition of civil 

rights groups organizing in protest of “the rapid spread of hate messages online, the presence of 

boogaloo and other right-wing extremist groups trying to infiltrate and disrupt Black Lives Matter 

protests and the fact that alt-right racists and anti-Semitic content flourishes on Facebook.”

328

As a result of this campaign, more than a thousand major companies—including Disney, CocaCola, and General Motors—announced that they would pull $7 billion in advertisements on Facebook 

as part of the Stop Hate for Profit boycott.329 But as Representative Raskin pointed out during the 

hearing Facebook does not “seem to be that moved by their campaign.”

330

Representative Pramila Jayapal (D-WA) also noted during the hearing that Mr. Zuckerberg 

reportedly told Facebook’s employees at an internal meeting that the company is “not gonna change 

our policies or approach on anything because of a threat to a small percent of our revenue, or to any 

percent of our revenue.”

331 During that meeting, Mr. Zuckerberg reportedly acknowledged that the 

boycott “hurts us reputationally,” but said that the company was insulated from threats by large 

advertisers due to advertising revenue from small businesses.332 In response to this report, Ms. Jayapal 

asked Mr. Zuckerberg whether Facebook is “so big that you don’t care how you’re impacted by a 

major boycott of 1,100 advertisers?”

333 Mr. Zuckerberg responded that “[o]f course we care. But we’re 

326 Submission of Source 140, to H. Comm. on the Judiciary, 5 (Oct. 15, 2019) (on file with Comm.).

327 CEO Hearing Transcript at 57 (Rep. Jamie Raskin, Member, Subcomm. on Antitrust, Commercial and Admin. Law of 

the H. Comm. on the Judiciary). 

328 Id. Stop Hate for Profit was established by the Anti-Defamation League, the NAACP, Color of Change, and other civil 

rights groups in the wake of the May 2020 police killing of George Floyd, an unarmed black man, in Minneapolis and the 

ensuing national protests. Shirin Ghaffary & Rebecca Heilweil, Why Facebook Is “The Front Line in Fighting Hate 

Today,” RECODE (July 15, 2020), https://www.vox.com/recode/2020/7/15/21325728/facebook-stop-hate-for-profitcampaign-jonathan-greenblatt-anti-defamation-league. 

329 Steven Levy, Facebook Has More to Learn From the Ad Boycott, WIRED (Aug. 6, 2020), 

https://www.wired.com/story/rashad-robinson-facebook-ad-boycott/. 

330 CEO Hearing Transcript at 57 (statement of Rep. Jamie Raskin, Subcomm. on Antitrust, Commercial and Admin. Law 

of the H. Comm. on the Judiciary).

331 Id. (statement of Mark Zuckerberg, CEO, Facebook).

332 Id. 

333 Id. at 216 (question of Rep. Pramila Jayapal, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on 

the Judiciary).
69

also not going to set our content policies because of advertisers. I think that that would be the wrong 

thing for us to do.”

334

Since then, the civil rights groups have said that although Facebook made some changes in 

response to the boycott—such as the creation of a position within the company dedicated to overseeing 

civil rights and algorithmic bias—it ultimately has not made meaningful changes at scale, and “lags 

competitors in working systematically to address hate and bigotry on their platform.”

335

The group organized further action in September 2020, when it called for companies and public 

figures to stop posting on Instagram beginning September 16th.336 This protest, aimed again at 

Facebook’s treatment of hate groups, was spurred by the police shooting of Jacob Blake in Kenosha, 

Wisconsin.337 In the aftermath, Facebook failed to remove a group promoting the coalescence of an 

armed militia in the streets of Kenosha, despite numerous users reporting the page.338 Mr. Zuckerberg 

called this failure an “operational mistake.”

339

ii. Monetization

The rise of market power online has severely affected the monetization of news, diminishing 

the ability of publishers to deliver valuable reporting.340

The digital advertising market is highly concentrated, with Google and Facebook controlling 

the majority of the online advertising market in the United States,341 capturing nearly all of its growth

334 Id. at 216 (statement of Mark Zuckerberg, CEO, Facebook).

335 Statement from Stop Hate For Profit on July 2020 Ad Pause Success and #StopHateForProfit Campaign, STOP HATE 

FOR PROFIT (July 30, 2020), https://www.stophateforprofit.org/.

336 Donie O’Sullivan, Group That Led Facebook Boycott Is Back With New Action, CNN BUSINESS (Sept. 14, 2020), 

https://www.cnn.com/2020/09/14/tech/facebook-boycott-return/index.html. 

337 Id.

338 Brian Fung, Facebook CEO Admits ‘Operational Mistake’ In Failure To Remove Kenosha Militia Page, CNN BUSINESS

(Sept. 4, 2020), https://www.cnn.com/2020/08/28/tech/zuckerberg-kenosha-page/index.html. 

339 Id.

340 See, e.g., Austl. Competition & Consumer Comm’n Report at 7; David Chavern, Opinion, Protect the News from Google 

and Facebook, WALL ST. J. (Feb. 25, 2018), https://www.wsj.com/articles/protect-the-news-from-google-and-facebook1519594942; infra section II.C.3.

341 See e.g., Hamza Shaban, Digital Advertising To Surpass Print and TV for the First Time, Report Says, WASH. POST:

TECH. (Feb. 20, 2019), https://www.washingtonpost.com/technology/2019/02/20/digital-advertising-surpass-print-tv-firsttime-report-says/.
70

in recent years.342 Although Amazon has grown its digital advertising business to become the third 

largest competitor in the market,343 it still accounts for a relatively small percentage.

344

News publishers have raised concerns that this significant level of concentration in the online 

advertising market—commonly referred to as the digital ad duopoly—has harmed the quality and 

availability of journalism.345 They note that as a result of this dominance, there has been a significant 

decline in advertising revenue to news publishers,346 undermining publishers’ ability to deliver 

valuable reporting, and “siphon[ing] revenue away from news organizations.”

347

Jason Kint, the CEO of Digital Content Next, a trade association that represents both digital 

and traditional news publishers, notes that there is “a clear correlation between layoffs and buyouts 

with the growth in market share for the duopoly—Google and Facebook.”

348 David Chavern, the 

President and CEO of the News Media Alliance, has likewise said that “[t]he problem is that today’s 

internet distribution systems distort the flow of economic value derived from good reporting.”

349 The 

effects of this revenue decline are most severe at the local level, where the decimation of local news 

sources is giving rise to local news deserts.350

Other news publishers have expressed concerns about the dual role of platforms as both 

intermediaries and platforms for people’s attention.351 By keeping people inside a “walled garden,”

platforms can monetize their attention through ads, creating a strong economic incentive to minimize 

342 Sarah Sluis, Digital Ad Market Soars To $88 Billion, Facebook And Google Contribute 90% Of Growth, AD 

EXCHANGER (May 10, 2018), https://adexchanger.com/online-advertising/digital-ad-market-soars-to-88-billion-facebookand-google-contribute-90-of-growth.

343 Jean Baptiste Su, Amazon Is Now The #3 Digital Ad Platform In The U.S. Behind Google And Facebook, Says 

eMarketer, FORBES (Sept. 20, 2018), https://www.forbes.com/sites/jeanbaptiste/2018/09/20/amazon-is-now-the-3-digitalad-platform-in-the-u-s-behind-google-and-facebook-says-emarketer/#333342de3926.

344 Id.

345 See, e.g., Shannon Bond, Google and Facebook Build Digital Ad Duopoly, FIN. TIMES (Mar. 14, 2017), 

https://www.ft.com/content/30c81d12-08c8-11e7-97d1-5e720a26771b; John Diaz, Opinion, How Google and Facebook 

Suppress the News, S.F. CHRON. (Apr. 5, 2019), https://www.sfchronicle.com/opinion/diaz/article/How-Google-andFacebook-suppress-the-news-13745431.php.

346 Data and Privacy Hearing at 5 (statement of Rod Sims, Chair, Austl. Competition & Consumer Comm’n); Free and 

Diverse Press Hearing at 3 (statement of David Pitofsky, General Counsel, News Corp).

347 Free and Diverse Press Hearing at 3 (statement of David Chavern, Pres., News Media Alliance).

348 Daniel Funke, What’s Behind the Recent Media Bloodbath? The Dominance of Google and Facebook, POYNTER (June 

14, 2017), https://www.poynter.org/business-work/2017/whats-behind-the-recent-media-bloodbath-the-dominance-ofgoogle-and-facebook.

349 David Chavern, Opinion, How Antitrust Undermines Press Freedom, WALL ST. J. (July 9, 2017), 

https://www.wsj.com/articles/how-antitrust-undermines-press-freedom-1499638532. 

350 PENELOPE MUSE ABERNATHY, UNIV. N.C. SCH. OF MEDIA AND JOURNALISM, THE EXPANDING NEWS DESERT 33 (2018), 

https://www.cislm.org/wp-content/uploads/2018/10/The-Expanding-News-Desert-10_14-Web.pdf.

351 Submission of Source 140, to H. Comm. on the Judiciary, 11 (Oct. 15, 2019) (on file with Comm.); Submission of 

Source 114, to H. Comm. on the Judiciary, 13 (Oct. 2, 2019) (on file with Comm.).
71

outbound referrals that lead to a decline in users’ attention and engagement. In turn, this diminishes the 

incentives of publishers to invest in high-quality journalism.352 David Pitofsky, the General Counsel of 

NewsCorp, described this as a free-riding problem in his testimony before the Subcommittee, 

explaining that platforms:

[D]eploy our highly engaging news content to target our audiences, then turn around 

and sell that audience engagement to the same advertisers news publishers are trying to 

serve. Dominant platforms take the overwhelming majority of advertising revenue 

without making any investment in the production of the news, all while foreswearing 

any responsibility for its quality and accuracy. As a result, one of the pillars of the news 

industry’s business model, advertising revenue, is crumbling.353

c. International Scrutiny

Several of the concerns regarding the distribution and monetization of news through platform 

intermediaries were raised as part of a comprehensive inquiry by the Australian Competition and 

Consumer Commission (ACCC). Over the span of several years, the Commission collected evidence 

from more than a hundred market participants and organizations as part of its review. Following its 

publication of a Preliminary Report in December 2018 and an Issues Paper in February 2018, the 

ACCC issued an extensive Final Report spanning more than 600 pages and including submissions 

from more than 100 market participants.354

Among its findings, the ACCC concluded that Facebook and Google have significant and 

durable market power over the distribution of news online.355 As the ACCC noted, “Google and 

Facebook are the gateways to online news media for many consumers,” accounting for a significant 

amount of referral traffic to news publishers’ websites.356 As a result, news publishers are reliant on 

these platforms for reaching people online, which affects publishers’ ability to monetize journalism, 

particularly on formats such as Google’s Accelerated Mobile Pages (AMP).357

352 Competition & Mkts Auth. Report at 319.

353 Free and Diverse Press Hearing at 2 (statement of David Pitofsky, Gen. Counsel, News Corp).

354 Press Release, Austl. Competition & Consumer Comm’n, Holistic, Dynamic Reforms Needed to Address Dominance of 

Digital Platforms (July 26, 2019), https://www.accc.gov.au/media-release/holistic-dynamic-reforms-needed-to-addressdominance-of-digital-platforms. 

355 Austl. Competition & Consumer Comm’n Report at 226.

356 Id. at 296.

357 Id. at 206, 247 (concluding that AMP is a “must have” product for publishers).
72

The ACCC made 23 recommendations to address concerns across a broad range of issues, 

including antitrust, privacy, and consumer protection.358 Within the context of addressing the effects of 

market power on the news industry—particularly as it relates to the imbalance of bargaining power 

between platforms and publishers—the Commission recommended developing “a code of conduct to 

govern the relationship between media businesses and digital platforms [which] seeks, among other 

things, to address this imbalance.”

359

On July 31, 2020, the Commission released a draft code to address a “fundamental bargaining 

power imbalance” between news publishers and dominant platforms that has led to “news media 

businesses accepting less favourable terms for the inclusion of news on digital platform services than 

they would otherwise agree to in response to a request by the Australian government.”

360

Under this code, Facebook, Google, and other platforms with significant bargaining power 

designated by Australia’s Treasurer must negotiate with covered news publishers “in good faith over 

all issues relevant to news on digital platform services.”

361 News publishers may negotiate either 

individually or collectively over a three-month period, allowing local and rural publishers “to negotiate 

from a stronger position than negotiating individually.”

362

If publishers are unable to reach an agreement during the mediated negotiation period, they 

may bring the dispute to compulsory arbitration. As part of this process, the arbitrator must consider 

the parties’ final offers covering: (1) the benefits of news content to the platform; (2) the costs of 

producing news by the publisher; and (3) whether a payment model would unduly burden the 

commercial interests of the platform.363 The arbitrator must choose one of the parties’ proposals, 

encouraging both parties to make reasonable offers.364

Facebook and Google have responded to the draft code by warning that they may no longer 

display news on their respective platforms in Australia. Despite an “unprecedented surge in audiences 

358 Press Release, Austl. Competition & Consumer Comm’n, ACCC Commences Inquiry Into Digital Platforms (Dec. 4, 

2017), https://www.accc.gov.au/media-release/accc-commences-inquiry-into-digital-platforms. 

359 Austl. Competition & Consumer Comm’n Report at 245.

360 AUSTL. COMPETITION & CONSUMER COMM’N, DRAFT NEWS MEDIA BARGAINING CODE, https://www.accc.gov.au/focusareas/digital-platforms/draft-news-media-bargaining-code (last visited on Sept. 27, 2020).

361 AUSTL. COMPETITION & CONSUMER COMM’N, Q&AS: DRAFT NEWS MEDIA AND DIGITAL PLATFORMS MANDATORY 

BARGAINING CODE 7 (July 2020), https://www.accc.gov.au/system/files/DPB%20-

%20Draft%20news%20media%20and%20digital%20platforms%20mandatory%20bargaining%20code%20Q%26As.pdf. 

362 Id. at 6.

363 Id. at 9.

364 Id.
73

for news websites and TV news,”

365 Google claims that the draft code does not reflect the “more than 

$200 million in value that Google provides to publishers each year by sending people to their 

websites.”

366 Facebook described the draft code as “unprecedented in its reach,” notwithstanding 

similar proposals in other countries, including France,367 as well as the United States.368

In response to Google’s threat to boycott journalism in Australia, ACCC Chair Rod Sims said 

that Google’s statement contained “misinformation” about the draft code, asserting that the draft code 

responds to “a significant bargaining power imbalance between Australian news media businesses and 

Google and Facebook.”

369 Australia’s Treasurer, Josh Frydenberg, similarly said that the country 

would not “respond to coercion or heavy-handed threats wherever they come from.”

370

Political and Economic Liberty

During the investigation, the Subcommittee examined the effects of market power on political 

and economic liberty. Concerns about the democratic effects of private monopolies trace back to the 

foundational antitrust statutes, where lawmakers worried that monopolies were “a menace to 

republican institutions themselves.”

371 The Subcommittee’s examination of these matters follows a 

long tradition of congressional attention to this issue.372

365 Amanda Meade, News Corp To Suspend Print Editions Of 60 Local Newspapers As Advertising Revenue Slumps, THE 

GUARDIAN (Mar. 31, 2020), https://www.theguardian.com/media/2020/apr/01/news-corp-to-suspend-print-editions-of-60-

local-newspapers-as-advertising-revenue-slumps. 

366 Update To Our Open Letter to Australians, GOOGLE, https://about.google/google-in-australia/an-open-letter/. 

367 Natasha Lomas, France’s Competition Watchdog Orders Google To Pay For News Reuse, TECHCRUNCH (Apr. 9, 2020), 

https://techcrunch.com/2020/04/09/frances-competition-watchdog-orders-google-to-pay-for-news-reuse/. 

368 Ashley Cullins, National Association of Broadcasters Warns Congress Tech Giants Could Kill Local Journalism, 

HOLLYWOOD REPORTER (Sept. 3, 2020), https://www.hollywoodreporter.com/thr-esq/national-association-of-broadcasterswarns-congress-tech-giants-could-kill-local-journalism. 

369 Naaman Zhou, Google’s Open Letter To Australians About News Code Contains ‘Misinformation’, ACCC Says, THE 

GUARDIAN (Aug. 17, 2020), https://www.theguardian.com/technology/2020/aug/17/google-open-letter-australia-newsmedia-bargaining-code-free-services-risk-contains-misinformation-accc-says. 

370 Jamie Smyth & Alex Barker, Battle Lines Drawn As Australia Takes On Big Tech Over Paying For News, FIN. TIMES 

(Sept. 2, 2020), https://www.ft.com/content/0834d986-eece-4e66-ac55-f62e1331f7f7. 

371 21 CONG. REC. 3146 (1890) (statement of Sen. Hoar).

372 Id. at 2459 (statement of Sen Sherman); see 95 CONG. REC. 11486 (statement of Rep. Celler) (“[B]usiness concentration 

is politically dangerous, leading inevitably to increasing Government control”); also 96 CONG. REC. 16,452 (1950) 

(statement of Rep. Kefauver) (“the history of what has taken place in other nations where mergers and concentrations have 

placed economic control in the hands of a very few people is too clear to pass over easily. A point is eventually reached, 

and we are rapidly reaching that point in this country, where the public steps in to take over when concentration and 

monopoly gain too much power. The taking over by the public through its government always follows one or two methods 

and has one or two political results. It either results in a Fascist state or the nationalization of industries and thereafter a 

Socialist or Communist state.”)
74

Based on interviews and submissions from market participants, along with other evidence 

examined by the Subcommittee, there are several ways in which the market power of the dominant 

platforms affects political and economic power. 

First, the Subcommittee encountered a prevalence of fear among market participants who 

depend on the dominant platforms. Repeatedly, market participants expressed deep concern that 

speaking about the dominant platforms’ business practices—even confidentially without attribution—

would lead a platform to retaliate against them, with severe financial repercussions. The source of this 

fear was twofold. Some firms were so dependent on the platform that even potentially risking 

retaliation caused alarm. Others had previously seen a platform retaliate against someone for raising 

public concerns about their business practices and wanted to avoid the same fate. 

Several market participants told the Subcommittee that they “live in fear” of the platforms. One 

said, “It would be commercial suicide to be in Amazon’s crosshairs . . . If Amazon saw us criticizing, I 

have no doubt they would remove our access and destroy our business.”

373 Another told the 

Subcommittee, “Given how powerful Google is and their past actions, we are also quite frankly 

worried about retaliation.”

374 An attorney representing app developers said they “fear retaliation by 

Apple” and are “worried that their private communications are being monitored, so they won’t speak 

out against abusive and discriminatory behavior.”

375

Market participants also expressed unease about the success of their business and their 

economic livelihood depending on the decision-making of the platforms. A single tweak of an 

algorithm, intentional or not, could cause significant costs if not financial disaster—with little recourse. 

Market participants routinely characterized the platforms as having arbitrary and unaccountable 

power—the same forms of undue power that antitrust laws were designed to prevent. As Senator John 

Sherman (R-OH) explained, antitrust was essential to preserve liberty “at the foundation of the equality 

of all rights and privileges” because concentrations of power outside of democratic institutions were a 

“kingly prerogative, inconsistent with our form of government.”

376

Additionally, courts and regulators have found that several of the dominant platforms have 

engaged in recidivism. For example, Facebook settled charges brought in 2012 by the Federal Trade 

Commission (FTC) that it had “deceived consumers by telling them they could keep their information 

on Facebook private, and then repeatedly allowing it to be shared and made public.”

377 As part of this 

373 Interview with Source 636 (Mar. 11, 2020)

374 Submission from Source 147 (on file with Comm.).

375 Submission from Source 88 (on file with Comm.).

376 21 CONG. REC. 2457 (1890) (statement of Sen. Sherman).

377 Press Release, Federal Trade Comm’n, Facebook Settles FTC Charges That It Deceived Consumers By Failing To Keep 

Privacy Promises (Nov. 29, 2011) (proposed settlement), https://www.ftc.gov/news-events/pressreleases/2011/11/facebook-settles-ftc-charges-it-deceived-consumers-failing-keep.
75

settlement, Facebook agreed to abide by an administrative order requiring that Facebook not 

misrepresent its privacy protections.378 Seven years later, the FTC concluded that Facebook had almost 

immediately begun violating that order following its adoption.379 Ruling on the FTC’s subsequent 

settlement with Facebook, District Court Judge Timothy Kelley wrote that “the unscrupulous way in 

which the United States alleges Facebook violated both the law and the administrative order is 

stunning.”

380 The FTC has similarly sanctioned Google on several occasions for privacy violations.381

In 2010, Apple settled charges it had conspired to fix employees’ wages.382 Two years later, Apple was 

found guilty of orchestrating a price-fixing conspiracy.383 In that case, the presiding judge stated that 

the record “demonstrated a blatant and aggressive disregard” by Apple “for the requirements of the 

law,” noting that the conduct “included Apple lawyers and its highest level executives.”

384

Lastly, the growth in the platforms’ market power has coincided with an increase in their 

influence over the policymaking process. Over the past decade, the dominant online platforms have 

significantly increased their lobbying activity,385 which tends to create a feedback loop for large 

companies. More money spent on lobbying may deliver higher equity returns and market share,386

which, in turn, may spur more lobbying.

378 Id.

379 United States v. Facebook, Inc., No. CV 19-2184 (TJK), 2020 WL 1975785, *4 (D.D.C. Apr. 23, 2020) (“The United 

States now alleges that Facebook violated the 2012 Order by “subvert[ing] users privacy choices to serve its own business 

interests” in several ways, starting almost immediately after agreeing to comply with the 2012.”).

380 Id. at *1.

381 Press Release, Federal Trade Comm’n, FTC, Google and YouTube Will Pay Record $170 Million for Alleged 

Violations of Children’s Privacy Law (Sept. 4, 2019), https://www.ftc.gov/news-events/press-releases/2019/09/googleyoutube-will-pay-record-170-million-alleged-violations. 

382 Press Release, Dep’t of Justice, Justice Department Requires Six High Tech Companies to Stop Entering into 

Anticompetitive Employee Solicitation Agreements (Sept. 24, 2010), https://www.justice.gov/opa/pr/justice-departmentrequires-six-high-tech-companies-stop-entering-anticompetitive-employee. 

383 United States v. Apple Inc., 952 F. Supp. 2d 638, 644 (S.D.N.Y. 2013), aff’d, 791 F.3d 290 (2d Cir. 2015).

384 August 27, 2013 Hr’g Tr. at 17:1-6, United States v. Apple, Inc. et al., (S.D.N.Y 2012) (No. 12-cv-2826). During the 

investigation, the Subcommittee also encountered instances in which the platforms did not appear fully committed to telling 

lawmakers the truth, including one incident in which members of the Subcommittee were forced to question whether 

Amazon had committed perjury. Letter from U.S. Rep. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, et al., to Jeff 

Bezos, CEO, Amazon.com, Inc. (May 1, 2020), https://judiciary.house.gov/uploadedfiles/2020-05-

01_letter_to_amazon_ceo_bezos.pdf. 

385 See e.g., Spencer Soper et al., Amazon’s Jeff Bezos Can’t Beat Washington, So He’s Joining It: The Influence Game, 

BLOOMBERG, (Feb. 14, 2018), https://www.bloomberg.com/graphics/2018-amazon-lobbying/. This is a trend for the 

industry. The total reported lobbying expenditures by digital platforms increased from $1,190,000 a year in 1998, to 

$74,285,000 in 2019 as the industry consolidated and gained market power. LOBBYING SPENDING DATABASE, CTR. FOR 

RESPONSIVE POLITICS, https://www.opensecrets.org/lobby/top.php?indexType=i&showYear=2019 (last visited on Sept. 27, 

2020).

386 See J.H. Kim, Corporate Lobbying Revisited, 10 BUS. AND POL, 1 (2008) (analyzing lobbying’s effect on equity returns); 

Brian Shaffer et al., Firm Level Performance Implications of Nonmarket Actions, 39 BUS. AND SOC. 126 (2000) (analyzing 

lobbying’s effect on market share).
76

Outside of traditionally reported and regulated lobbying, firms with market power and 

dispensable income fund think tanks and nonprofit advocacy groups to steer policy discussion. For 

example, Facebook, Google, and Amazon reportedly donated significant amounts to the American 

Enterprise Institute (AEI), which, in turn, has argued that antitrust critiques of the big platforms are 

“astonishingly weak.”

387 More recently, Google and Amazon have contributed significant funding to 

the Global Antitrust Institute at the George Mason University’s Antonin Scalia School of Law, which 

advocates against antitrust scrutiny of the dominant platforms.388 By funding academics and advocacy 

groups, the dominant platforms can expand their sphere of influence, further shaping how they are 

governed and regulated.

At several hearings, Members of the Subcommittee noted that the outsized political influence 

of dominant firms has adverse effects on the democratic process. At the Subcommittee’s field hearing 

in Colorado, Representative Ken Buck (R-CO) asked each of the witnesses about this issue.389 As Rep. 

Buck noted, the dominant platforms are generally well represented in the policymaking process:

Part of what we are dealing with here is the reality that [dominant firms] walk into our 

offices and they tell us their side of the story and we very rarely hear the other side of 

the story, and somehow part of this solution has to be that public policymakers elected, 

appointed, have to have access to that kind of information. So I thank you for being here 

and I also would encourage you to make sure that, you know, we are accessible. We are 

trying our best to make sure that we continue to create the environment for your kinds 

of companies.390

During the Subcommittee’s sixth hearing, Subcommittee Chairman David Cicilline (D-RI) noted the 

democratic stakes of the Subcommittee’s work. He said, “Because concentrated economic power also 

leads to concentrated political power, this investigation also goes to the heart of whether we, as a 

people, govern ourselves, or whether we let ourselves be governed by private monopolies.”

391

387 Andrew Perez and Tim Zelina, Facebook, Google, Amazon are ramping up their secretive influence campaigns in D.C., 

FAST COMPANY (Oct. 31, 2019), https://www.fastcompany.com/90424503/facebook-google-amazon-are-ramping-up-theirsecretive-influence-campaigns-in-dc. 

388 Daisuke Wakabayashi, Big Tech Funds a Think Tank Pushing for Fewer Rules. For Big Tech., N.Y. TIMES (July 24, 

2020), https://www.nytimes.com/2020/07/24/technology/global-antitrust-institute-google-amazon-qualcomm.html. 

389 Competitors Hearing at 57. 

390 Id.

391 CEO Hearing Transcript at 7 (statement of Rep. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and 

Admin Law).
77

MARKETS INVESTIGATED

A. Online Search

Online search engines enable users to retrieve webpages and information stored on the Internet. 

After a user enters a query into the search engine, the search provider returns a list of webpages and 

information that are relevant to the search term entered.

There are two types of search engines: horizontal and vertical. Horizontal search engines are 

designed to retrieve a comprehensive list of general search results. Vertical search engines are designed 

to retrieve a narrower category of content, such as photo images (e.g., Dreamstime) or travel (e.g., 

Expedia). The majority of general search engines monetize the service through selling ad placements 

rather than charging search users a monetary price. The overwhelmingly dominant provider of general 

online search is Google, which captures around 81% of all general search queries in the U.S. on 

desktop and 94% on mobile. Other search providers include Bing, which captures 6% of the market, 

Yahoo (3%), and DuckDuckGo (1%).392

392 Search Engine Market Share United States of America: Sept. 2019–Sept. 2020, STATCOUNTER,

http://gs.statcounter.com/search-engine-market-share/all/united-states-of-america (last visited Oct. 3, 2020). 
78

U.S. Desktop and Mobile Search Market Share393

Online search is comprised of three distinct activities. First, an engine must “crawl” the Internet 

by using an automated bot to collect copies of all of the webpages it can find. Once a crawler has 

recorded all of this material, it must be collated and organized into an “index,” or a map of the Internet 

that can be searched in real-time. Indexing organizes the information into the formats and databases 

required for the querying function. When a user enters a query into the search engine, the engine draws 

from the index to pull a list of responsive websites, ordered in terms of relevance. The relevance, in 

turn, is determined by the search algorithm applied by the search engine. A search engine can function

only if it has access to an index, and an index can exist only once web pages have been crawled and 

collated into a repository.394 Indexing has high fixed costs and requires significant server storage and 

393 Prepared by the Subcomm. based on Desktop & Mobile Search Engine Market Share United States Of America January 

2009 to September 2020, STATCOUNTER https://gs.statcounter.com/search-engine-market-share/desktop-mobile/unitedstates-of-america/#monthly-200901-202009. The “Other” category includes AOL, Ask Jeeves, DuckDuckGo, MSN, 

Webcrawler, Windows Live, AVG Search, Baidu, Comcast, Babylon, Dogpile, Earthlink, Norton Safe Search, YANDEX 

RU. Id.

394 Submission from Source 531, to H. Comm. on the Judiciary, Source 531-000017 (Nov. 21, 2011) (on file with Comm.) 

(According to one market participant, “[t]he greatest challenges in building a search index are finding the URLs for 

documents stored on the Web and then being able to parse the best URLs and documents to include in the index. 

Overcoming these challenges requires massive amounts of data on user interactions with websites to discover new URLs 

and then filter down to the 5% of known URLs [the search engine] uses to determine which documents to index, and how 

frequently these documents should be refreshed.”).
79

compute power.395 The ability to invest heavily in computing power and storage yields a significant 

advantage.396

Several online search features tilt the market towards the dominant incumbent and make entry 

by new market participants difficult. First, web crawling is costly and strongly favors first-movers.397

In a submission to the Subcommittee, one expert described how Google’s early efforts have locked in 

its dominance.398 In particular, Google was the first company to crawl the entirety of the Internet, a feat 

motivated in part due to its PageRank algorithm, which used links between pages to identify the most 

relevant webpages for specific topics and queries. Unlike most search engine algorithms at the time, 

the quality of PageRank results improved with more webpages, incentivizing Google to crawl a greater

portion of the web. 

The web has grown exponentially over the last two decades, 399 which means the cost of 

crawling the entire Internet has increased too, despite advances in crawling technology. Today several 

major webpage owners block all but a select few crawlers, in part because being constantly crawled by 

a large number of bots can hike costs for owners and lead their webpages to crash. The one crawler 

that nearly all webpages will allow is Google’s “Googlebot,” as disappearing from Google’s index 

would lead most webpages to suffer dramatic drops in traffic and revenue.400 Any new search engine 

crawler, by contrast, would likely be blocked by major webpage owners unless that search engine was 

driving significant traffic to webpages—which a search engine cannot do until it has crawled enough 

webpages.401

395 Submission from Source 531, to H. Comm. on the Judiciary, Source 531-000016–19 (July 26, 2011) (on file with 

Comm).

396 Submission from Source 209, to H. Comm. on the Judiciary, Source 209-000537–38 (Aug. 24, 2009) (on file with 

Comm.) (“Comprehensiveness, freshness, and responsiveness are all directly related to the amount of computing power and 

storage capacity brought to bear on the problem of crawling and indexing the web. It would therefore be implausible to 

attribute Google’s massive search advantage to superior technology. Rather, the main driver of search performance is scale. 

Scale is driven primarily by the level of financial investment in search infrastructure.”).

397 See, e.g., Submission from Source 534, to H. Comm. on the Judiciary, 1 (Oct. 14, 2019) (on file with Comm.) (“[The 

Company] does not own its own search index and is not planning to invest into building an own index because of the high 

investment costs.”; Google Search (Shopping) Commission Decision (non-confidential version), European Commission 66 

(June 27, 2017); Submission from Source 481, to H. Comm. on the Judiciary (“Bing and Google each spend hundreds of 

millions of dollars a year crawling and indexing the deep Web. It costs so much that even big companies like Yahoo and 

Ask are giving up general crawling and indexing. Therefore, it seems silly to compete on crawling and, besides, we do not 

have the money to do so.”). 

398 Submission from Zack Maril, to H. Comm. on the Judiciary (Sept. 30, 2019) (on file with Comm.).

399 Total Number of Websites, INTERNET LIVE STATS, https://www.internetlivestats.com/total-number-of-websites (last 

visited Oct. 3, 2020) (In 2000, the Internet had around 17,000 websites; today, it has more than 1.8 billion. Internet Live 

Stats, Total Number of Websites.).

400 Submission from Submission from Zack Maril, to H. Comm. on the Judiciary (Sept. 30, 2019) (on file with Comm.); see 

also Submission from Source 481, to H. Comm on the Judiciary (Feb. 20, 2020) (on file with Comm.); Innovation and 

Entrepreneurship Hearing at 2 (statement of Megan Gray, Chief Counsel and Policy Advocate, DuckDuckGo). 

401 Submission from Submission from Zack Maril, to H. Comm. on the Judiciary (Sept. 30, 2019) (on file with Comm.). 
80

The high cost of maintaining a fresh index and the decision by many large webpages to block 

most crawlers significantly limits new search engine entrants. In 2018, Findx—a privacy-oriented 

search engine that had attempted to build its own index—shut down its crawler, citing the impossibility 

of building a comprehensive search index when many large websites only permit crawlers from 

Google and Bing.402 Today the only English-language search engines that maintain their own 

comprehensive webpage index are Google and Bing.403 Other search engines—including Yahoo and 

DuckDuckGo—must purchase access to the index from Google and/or Bing through syndication 

agreements that provide syndicated search engines with access to search results and search 

advertising.404 While Yahoo previously maintained an independent index, it entered a deal with 

Microsoft in 2009 to integrate search technologies—a move driven by the two firms’ belief that 

combining was necessary to provide a real alternative to Google.405

A second major competitive advantage enjoyed by search engine incumbents is their access to 

voluminous click-and-query data. This data, which tracks what users searched for and how they 

interacted with the search results, benefits search engines in several key ways.406 First, search engines 

rely on click-and-query data to guide their search index’s upkeep, as this data helps identify which 

webpages are most relevant and should be most regularly updated in the index.407 Second, click-andquery-data is used to refine the search algorithm and the relevance of search results, as past user 

interactions improve the algorithm’s ability to predict future interactions.408 In particular, data on “tail”

402 Findx, Game over (Sept. 21, 2019), https://web.archive.org/web/20190921180535/https://privacore.github.io (“Many 

large websites like LinkedIn, Yelp, Quora, Github, Facebook and others only allow certain specific crawlers like Google 

and Bing to include their webpages in a search engine index. . . . That meant that the Findx search index was incomplete 

and was not able to return results that were likely both relevant and good quality. When you compare any independent 

search engine’s results to Google for example, they have no chance to be as relevant or complete because many large 

websites refuse to allow any other search engine to include their pages.”); Submission from Source 407, to H. Comm. on 

the Judiciary, Source 407-000024 (Nov. 21, 2011) (on file with Comm.); Competition & Mkts. Auth. Report at 91. 

403 Competition & Mkts. Auth. Report at 89.

404 Innovation and Entrepreneurship Hearing at 3 (statement of Megan Gray, Gen. Counsel and Pol’y Advocate, 

DuckDuckGo) (noting that alternatives to serving ads through Google or Microsoft, such as only showing product ads from 

Amazon or travel ads from Booking.com, as “not sufficiently lucrative to cover the costs of purchasing organic links,” 

which means “an aspiring search engine start-up today (and in the foreseeable future) cannot avoid the need to sign a search 

syndication contract.”).

405 Submission from Source 209 to H. Comm. on the Judiciary, Source 209-0000346 (Aug. 24, 2009) (on file with Comm.).

406 Competition & Mkts. Auth. Report at 11–12.

407 Submission from Source 26, to H. Comm. on the Judiciary, Source 26-000016 (Nov. 21, 2011) (on file with Comm.) 

(“Queries are a critical component of the user data necessary to identify and rank URLs and documents for inclusion in a 

search index. Fewer queries mean fewer opportunities to identify relevant URLs and documents, which ultimately means a 

smaller usable search index.”); rep-000026 (Nov. 21, 2011) (“Index freshness also is an important factor in the quality of a 

search engine’s result . . . A [] survey found that a lack of freshness was a significant driver of dissatisfaction among users 

searching in the Entertainment and News categories.”).

408 Id. at Source 531-000015 (“The more user queries the search engine handles, the more data it obtains to improve the 

relevance of the search results it serves.”); Source 531-000060 (“The secret to successful algorithmic search matching 

algorithms is user feedback . . . Ultimately this feedback helps the engine improve core relevance and other experience 

factors—driving higher engagement.”); Innovation and Entrepreneurship Hearing at 3 (statement of Megan Gray, Gen. 
81

(or rare) queries enable a search engine to offer relevant results across a higher set of potential 

queries—improving the overall quality of the search engine—and Google’s internal documents show 

that the company recognizes its long-tail advantage.409 And third, increased query scale increases 

advertiser engagement rates, given that more user queries generally translate to more advertisement 

clicks, generating greater revenue for advertisers.410

Overall there are significant advantages to scale in click-and-query data, though the marginal 

benefit of additional data on tail queries is higher than the marginal benefit of additional data on 

“head” (or relatively common) queries.411 Some market participants also stated that the benefits of 

scale diminish once a search engine reaches a certain size.412 The benefits of scale create a feedback 

loop, where access to greater click-and-query data improves search quality, which drives more usage 

and generates additional click-and-query data.

A third barrier to competition in general online search is that Google has established extensive 

default positions across both browsers and mobile devices. Among desktop browsers, Google enjoys 

default placement in Chrome (which captures 51% of the U.S. market), Safari (31%), and Firefox 

(5%)—or 87% of the browser market.413 Meanwhile, Microsoft’s Edge, which captures 4% of the 

Counsel and Pol’y Advocate, DuckDuckGo) (“Another barrier facing a start-up search engine is that it needs data, such as 

the most commonly clicked links for a particular query, in order to produce a useful ranking of organic links, i.e., what 

organic link is first, second, etc.”); Submission from Source 209, to H. Comm. on the Judiciary, Source 209-0000346–52 

(Aug. 24, 2009) (on file with Comm.) (“Increased search traffic brings more indications of user intent, facilitating more 

experimentation and allowing a search platform to generate more relevant natural and paid search results.”); see also

Schaefer, M, Sapi, G and Lorincz, S (2018); He, D, Kannan, A, Liu, TY, McAfee, RP, Qin, T and Rao, JM, ‘Scale Effects 

in Web Search’, International Conference on Web and Internet Economics, 294–310 (2017).

409 Production of Google, to H. Comm. on the Judiciary , GOOG-HJC-03815864 (Apr. 23, 2010) (“Google leads 

competitors. . . Our long-tail precision is why users continue to come to Google. Users may try the bells and whistles of 

Bing and other competitors, but Google still produces the results. As soon as this ceases to be the case, our business is in 

jeopardy.”); Competition & Mkts. Auth. Report Appendix I, at 15 (finding “that around 1% of Google ‘tail’ search events 

are for queries which are seen by Bing,” whereas “31% of Bing ‘tail’ search events are for queries which are seen by 

Google.” Furthermore, “0.8% of Google’s ‘tail’ distinct queries are seen by Bing, whereas 30% of Bing’s ‘tail’ distinct 

queries are seen by Google.”); see also Submission from Source 209, to H. Comm. on the Judiciary, Source 209-0000528 at 

Source 209-0000532 (Feb. 17, 2011) (on file with Comm.) (“[W]ithout strong tail performance, a horizontal search engine 

cannot compete against Google.”); id. at Source 209-0000535–36 (“[P]oor search engine performance in the tail means 

overall weak search engine performance.”).

410 See, e.g., Submission from Source 531, to H. Comm. on the Judiciary, Source 531-000056 (July 11, 2011) (on file with 

Comm.) (stating that query scale increases advertiser engagement, since at scale the platform “makes better matches, has 

higher value generation”).

411 See Competition & Mkts. Auth. Report Appendix I at 18.

412 Submission from Source 531, to H. Comm. on the Judiciary, Source 531-000874 (May 5, 2011) (on file with Comm.) 

(“As a platform gains more and more scale, the associated benefits begin to taper off such that eventually additional scale 

provides only modest returns.”); Source 531-000025 (Nov. 21, 2011) (on file with Comm.) (“Above 30 billion documents, 

user satisfaction improves rapidly with increased index size; above 90 billion documents, it still continues to improve albeit 

at a slower rate.”).

413 Innovation and Entrepreneurship Hearing at 5 (statement of Megan Gray, Gen. Counsel and Pol’y Advocate, 

DuckDuckGo).
82

desktop browser market, sets Bing as its search default, leaving little opening for independent search 

engines.414 In mobile, Google Search is primarily the default on Android and on Apple’s iOS mobile 

operating system—together Android and iOS account for over 99% of smartphones in the United 

States.415 This default position provides Google with a significant advantage over other search engines, 

given users’ tendency to stick with the default choice presented. Moreover, market participants 

identified several ways Google dissuades even those users who do attempt to switch default search 

engines on Chrome.416

Google won itself default placement across the mobile and desktop ecosystem through both 

integration and contractual arrangements. By owning Android, the world’s most popular mobile 

operating system, Google ensured that Google Search remained dominant even as mobile replaced 

desktop as the critical entry point to the Internet. Documents submitted to the Subcommittee show that 

at certain key moments, Google conditioned access to the Google Play Store on making Google Search 

the default search engine, a requirement that gave Google a significant advantage over competing 

search engines.417 Through revenue-sharing agreements amounting to billions of dollars in annual 

payments, Google also established default positions on Apple’s Safari browser (on both desktop and 

mobile) and Mozilla’s Firefox.418

In public statements, Google has downplayed the significance of default placement, claiming 

that “competition is just a click away.”

419 However, Google’s internal documents show that when 

Google was still jostling for search market share, Google executives closely tracked search defaults on 

Microsoft’s Internet Explorer and expressed concern that non-Google defaults could impede Google 

Search.420 In an internal presentation about Internet Explorer’s default search selection, Google 

recommended that users be given an initial opportunity to select a search engine and that browsers 

minimize the steps required to change the default search engine.421 These discussions—along with the 

steep sums Google pays Apple and various browsers for default search placement—further highlight 

the competitive significance of default positions.

414 Id.

415 Mobile Operating System Market Share in United States Of America – September 2020, STATCOUNTER,

https://gs.statcounter.com/os-market-share/mobile/united-states-of-america (last visited Oct. 3, 2020).

416 Submission from Source 534, to H. Comm. on the Judiciary, 1 (Oct. 14, 2019) (on file with Comm.).

417 See infra Section V.

418 Innovation and Entrepreneurship Hearing at 12 (response to Questions for the Record of Kyle Andeer, Vice Pres., Corp. 

Law, Apple, Inc.). 

419 See, e.g., Adam Kovacevich, Google’s approach to competition, GOOGLE PUBLIC POLICY BLOG (May 8, 2009), 

https://publicpolicy.googleblog.com/2009/05/googles-approach-to-competition.html.

420 See, e.g., Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01196214 (May 31, 2005) (on file with 

Comm.).

421 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01680749 (February 16, 2006) (on file with Comm.) 

(identifying several recommendations, including, “[f]ewest clicks required to change default, which promotes search 

innovation by facilitating the user’s ability to switch.”).
83

Independent search engines told the Subcommittee that because they are not set as the default 

search engine on popular browsers, they face significant business challenges. As a result, 

DuckDuckGo said it was compelled to invest in browser technology, including creating its own 

browser for Android and iOS and various browser extensions.422 It noted, however, that “the same 

default placement challenges exist in the browser market, just one level up – with the device makers 

requiring millions or billions of dollars to become a default browser on a device.”

423

A fourth challenge facing upstart search engines is the growing number of features and services 

that a general search provider must offer to be competitive with Google. Through the mid-2000s, a 

general search engine could compete through providing organic links alone. Since Google and Bing 

now incorporate information boxes and various specialized services directly onto their general search 

results page, a market entrant would similarly need to provide a broader set of search features and 

services. One market participant told the Subcommittee that this set of “mandatory high-quality search 

features” includes maps, local business answers, news, images, videos, definitions, and “quick 

answers.”

424 Delivering this variety of features requires access to various sources of data, raising the 

overall costs of entry. 

Vertical search providers differ from horizontal search engines in several ways. By offering 

specialized search focused on a particular topic or activity, they fulfill a separate role and require 

distinct tools and expertise. The necessary inputs vary by search vertical. Flight search, for example, 

requires access to flight software and data, whereas certain local search providers rely on usergenerated content such as reviews. Many vertical providers use structured data feeds that pull from 

third-party databases, rather than from a general index. 

A significant challenge for vertical providers is reaching users. Although they serve distinct 

needs, most vertical search providers still depend on horizontal search engines—and specifically on 

Google—to reach users.425 In submissions to the Subcommittee, even some of the largest and most 

well-known verticals stated that they depend on Google for up to 80–95% of their traffic.426 Since 

Google now also provides vertical search services, it has the incentive and ability to use its dominance 

in horizontal search to disfavor vertical providers that compete with its own vertical search services. 

422 Innovation and Entrepreneurship Hearing at 5 (statement of Megan Gray, Gen. Counsel and Pol’y Advocate, 

DuckDuckGo).

423 Id. at 5–6. 

424 Id. at 1.

425 Submission from Source 564, to H. Comm. on the Judiciary, 5 (Nov. 12, 2019) (on file with Comm.) (“The most 

important source of traffic for local search services are general search websites”).

426 Submission from Source 564, to H. Comm. on the Judiciary, 5 (Nov. 12, 2019) (on file with Comm.); Submission from 

Source 115, to H. Comm. on the Judiciary, 19 (Dec. 27, 2019) (on file with Comm.); Submission from Source 887, to H. 

Comm. on the Judiciary, 3 (Oct. 28, 2019) (on file with Comm.); Submission from Foundem, to H. Comm. on the 

Judiciary, 9 (Dec. 12, 2016) (on file with Comm.).
84

Internal documents from Google show that it has used its dominance in general search to closely track 

traffic to competing verticals, demanding that certain verticals permit Google to scrape their usergenerated content and demote several verticals. Several market participants told the Subcommittee that 

Google’s preferential treatment of its own verticals, as well as its direct listing of information in the 

“OneBox” that appears at the top of Google search results, has the net effect of diverting traffic from

competing verticals and jeopardizing the health and viability of their business.427

Google’s internal documents and submissions from third-party market participants suggest that 

verticals are both a complement to horizontal search as well as a competitive threat to it. One market 

participant explained that while vertical search providers can increase demand for horizontal search 

engines in the short-term, they can divert traffic from horizontal search providers in the long-term, as 

the growing popularity of a vertical may lead users to navigate to it directly.428 Diverting traffic from 

general search providers, in turn, would deprive them of both advertiser revenue as well as valuable 

click-and-query data. Given these dynamics, a dominant horizontal search provider that also enters 

vertical search faces a significant conflict of interest that can skew search results to the detriment of 

third-party businesses and users alike.

B. Online Commerce

Online commerce, also known as e-commerce, is the activity of buying or selling products or 

services using the Internet.429 E-commerce transactions take place through a variety of channels, 

including online marketplaces like Amazon Marketplace, where a wide variety of brands and products 

from different sellers are sold in one place, or a business’s direct to consumer website like Nike.com. 

In 2019, the U.S. Census Bureau estimated e-commerce retail sales to be about $600 billion,430

compared to just under $33 billion in 2001.431 As the COVID-19 pandemic pushes more American 

427 Submission from Source 564, to H. Comm. on the Judiciary, 5 (Nov. 12, 2019) (on file with Comm.); Submission from 

Source 115, to H. Comm. on the Judiciary, 19 (Dec. 27, 2019) (on file with Comm.); Submission from Source 887, to H. 

Comm. on the Judiciary, 3 (Oct. 28, 2019) (on file with Comm.); Submission from Foundem, to H. Comm. on the 

Judiciary, 9 (Dec. 12, 2016) (on file with Comm.).

428 Submission from Source 407, to H. Comm. on the Judiciary, Source 407-000071 (Nov. 12, 2019) (on file with Comm.).

429 Press Release, U.S. Dep’t of Commerce, U.S. Census Bur., Retail E-Commerce Sales in Fourth Quarter 2001 Were 

$10.0 Billion, Up 13.1 Percent from Fourth Quarter 2000, Census Bureau Reports (Feb. 20, 2002), 

https://www2.census.gov/retail/releases/historical/ecomm/01q4.pdf (defining e-commerce as “sales of goods and services 

where an order is placed by the buyer or price and terms of sale are negotiated over an Internet, extranet, Electronic Data 

Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made 

online.”). 

430 Press Release, U.S. Dep’t of Commerce, U.S. Census Bur., Quarterly Retail E-Commerce Sales 4th Quarter 2019, 

https://www2.census.gov/retail/releases/historical/ecomm/19q4.pdf.

431 Press Release, U.S. Dep’t of Commerce, U.S. Census Bur., Retail E-Commerce Sales in Fourth Quarter 2001 Were 

$10.0 Billion, Up 13.1 Percent from Fourth Quarter 2000, Census Bureau Reports (Feb. 20, 2002). 

https://www2.census.gov/retail/releases/historical/ecomm/01q4.pdf. 
85

shoppers online, e-commerce growth has exploded.432 This is particularly true for online marketplaces, 

where sales for essential items like groceries, masks, and electronics for home offices increased 

sharply in the wake of the pandemic.433

An online marketplace’s most basic function is to serve as a platform that connects buyers and 

sellers. Marketplaces include product listings from a variety of sellers. Some online marketplaces, such 

as Amazon and eBay, aim to be fully integrated, multi-category e-commerce sites. Other marketplaces, 

however, operate as vertical, single-category sites, such as Newegg.com, for computer hardware and 

consumer electronics. The primary customers of e-commerce marketplaces are customers looking to 

buy an item or service online, and businesses looking to sell goods or services to customers online. 

Because of this, a successful marketplace must be attractive to consumers and third-party sellers. 

The consumer-facing side of the marketplace allows users to search for and purchase products. 

Most online marketplaces offer features that enable users to compare competing products based on 

details like their price, popularity, and customer satisfaction reviews. Amazon is by far the largest 

marketplace.434 Other marketplaces that are popular with consumers include eBay, Walmart, and 

Wayfair.435

Online marketplaces also serve third-party sellers. Third-party sellers have needs that are 

distinct from consumers visiting the marketplace to make a purchase. The seller-facing side of the 

business consists of providing third-party sellers with a platform to list their products for consumers to 

purchase. Often, the marketplace will supply vendors with services such as inventory tracking and 

pricing recommendations. Online marketplaces usually offer additional paid services to third-party 

sellers such as advertising and fulfillment services, consisting of warehousing, packing, and shipping. 

432 Gayle Kesten, As Online Prices Increase, Consumers’ Purchasing Power Declines, ADOBE: RETAIL (July 13, 2020), 

https://blog.adobe.com/en/2020/07/13/as-online-prices-increase-consumers-purchasing-power-declines.html#gs.dv6lwa

(“[T]otal online spending of $73 billion in June marked a 76.2 percent increase year-over-year.”); see also ANDREW 

LIPSMAN, EMARKETER, US ECOMMERCE BY CATEGORY 2020: HOW THE PANDEMIC IS RESHAPING THE PRODUCT CATEGORY 

LANDSCAPE (July 22, 2020), https://www.emarketer.com/content/us-ecommerce-by-category-2020 (“US ecommerce sales 

will surge 18.0% to $709.78 billion, while brick-and-mortar retail sales will experience a historically significant decline of 

14.0% to $4.184 trillion.”). 

433 FEEDVISOR, 2020 Q4 TRENDS AND PROJECTIONS: THE DIGITAL REVOLUTION OF RETAIL AND E-MARKETPLACES at 2–3, 5 

(2020) (showing that Grocery and Gourmet sales on Amazon and Walmart were up 91% and 46% over the months of 

March and April 2020, respectively, compared to February); see also Giselle Abramovich, How COVID-19 is Impacting 

Online Shopping Behavior, ADOBE: COVID-19 (Mar. 26, 2020), https://blog.adobe.com/en/2020/03/26/how-covid-19-isimpacting-online-shopping-behavior.html#gs.dv63z7 (reporting that after the COVID-19 outbreak, “purchases for cold, 

cough & flu products increased 198%, while online purchases for pain relievers increased 152%”). 

434 See, e.g., ANDREW LIPSMAN, EMARKETER, TOP 10 US ECOMMERCE COMPANIES 2020 (Mar. 10, 2020), 

https://www.emarketer.com/content/top-10-us-ecommerce-companies-2020 (forecasting Amazon’s e-commerce market 

share for 2020 at 38.7%, compared to second-place Walmart at 5.3% and third-place eBay at 4.7%); see also Production of 

Amazon, to H. Comm. on the Judiciary, AMAZON_HJC_00061156 (Oct. 30, 2019) (on file with Comm.) (showing that 

Amazon.com was about five times larger than eBay in 2018, its next closest marketplace competitor at the time).

435 ANDREW LIPSMAN, EMARKETER, TOP 10 US ECOMMERCE COMPANIES 2020 (Mar. 10, 2020), 

https://www.emarketer.com/content/top-10-us-ecommerce-companies-2020.
86

The businesses that own and operate e-commerce marketplaces may host only independent, 

third-party seller listings, or list their own items for sale alongside third-party sellers. Amazon 

Marketplace is an example of the latter, in that customers view Amazon Retail offers for its own 

private-label brands, such as AmazonBasics,436 alongside independent, third-party seller offers. 

Amazon Retail also acts as a reseller of brand-name items, purchasing items like Levi’s jeans from a 

wholesaler, and then reselling them on the marketplace. In these circumstances, third-party sellers are 

both customers and competitors of online marketplaces.

Marketplace operators benefit financially from the sale of services to third-party sellers and 

consumers.437 On the seller-facing side of their business, marketplaces usually take a cut of third-party 

sales and charge fees for sales-related services like fulfillment, payment, and advertising. If the 

marketplace operators also sell products on their own platforms, they make money like a typical 

retailer from the difference between the wholesale and retail price. Marketplaces may also make 

money from fees paid by customers to participate in membership programs. For example, Amazon 

offers Amazon Prime for $119 per year as a paid membership program that provides customers with 

benefits such as unlimited free shipping on eligible items and digital streaming video.438 Other revenue 

sources for marketplaces may include credit card and gift card services that are tied to the platform.439

A few large companies dominate the e-commerce industry, and Amazon is the clear leader 

among them. The market research company eMarketer estimates that Amazon is about eight times 

larger than eBay and Walmart in terms of market share.440 Other metrics further demonstrate 

Amazon’s role as a gatekeeper for e-commerce. Amazon is the most-visited website globally for ecommerce and shopping,441 and recent analyses suggest that over 60% of all online product searches in 

the U.S. begin on Amazon.com.442

436 Production of Amazon, to H. Comm. on the Judiciary, 1 (Oct. 14, 2019) (on file with Comm.) (“AmazonBasics is an 

Amazon private brand that launched in 2009. The brand offers a number of products, including electronics accessories, 

luggage, and office products.”). 

437 See, e.g., Amazon.com, Inc., Quarterly Report (Form 10-Q) 18 (July 31, 2020), 

http://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/a77b5839-99b8-4851-8f37-0b012f9292b9.pdf (showing net sales 

for third-party seller services increased from $23 billion in the first six months of 2019 to $32 billion in the first six months 

of 2020).

438 Production of Amazon, to H. Comm. on the Judiciary, 1–2 (Oct. 14, 2019) (on file with Comm.).

439 See, e.g., Amazon.com, Inc., Annual Report (Form 10-K) 23, 47 (Jan. 31, 2017), 

https://www.sec.gov/Archives/edgar/data/1018724/000101872417000011/amzn-20161231x10k.htm. 

440 ANDREW LIPSMAN, EMARKETER, TOP 10 US ECOMMERCE COMPANIES 2020 (Mar. 10, 2020), 

https://www.emarketer.com/content/top-10-us-ecommerce-companies-2020.

441 Worldwide E-Commerce and Shopping Category Performance, SIMILARWEB (July 2020), 

https://pro.similarweb.com/#/industry/overview/E-commerce_and_Shopping/999/1m/?webSource=Total (showing that 

Amazon had 2.6 billion visits compared to 940.8 million for eBay in July 2020). 

442 Lucy Koch, Looking for a New Product? You Probably Searched Amazon, EMARKETER (Mar. 31, 2019), 

https://www.emarketer.com/content/looking-for-a-new-product-you-probably-searched-amazon (last visited Oct. 3, 2020) 
87

Amazon’s dominance in e-commerce extends to its role as a marketplace operator and its 

relationship with sellers. Because of its size and scale, no other marketplace comes close to providing 

sellers with access to such a large pool of buyers, as well as sales-related services. There are over 112 

million Prime members in the United States—about 44% of the adult population. The number of Prime 

members has doubled since reaching 50 million members in 2015, with Amazon projecting additional 

growth.443 Amazon.com has 2.3 million active sellers on its marketplace worldwide.444 In comparison, 

Amazon’s closest e-commerce competitor, Walmart, has roughly 54,000 sellers on its marketplace.445

In general, the more sellers a platform has, the more buyers it can attract and vice versa.446 According 

to a competing online marketplace, sellers feel forced to be on Amazon because that is where the 

buyers are.447

If current trends continue, no company is likely to pose a threat to Amazon’s dominance in the 

near or distant future. Although some alternatives to Amazon have experienced growth during the 

pandemic, there is still a massive gap between the market leader and its competitors.448 Several factors 

privilege Amazon as the dominant e-commerce marketplace, and also make entry or expansion by a 

challenger unlikely. While some of these barriers to entry are inherent to e-commerce—such as 

economies of scale and network effects—others result from Amazon’s anticompetitive conduct. As 

discussed elsewhere in the Report, Amazon’s acquisition strategy and many of its business practices 

were successfully designed to protect and expand its market power. An Amazon executive referred to 

some of these tactics as the company’s “Big Moats,” and suggested “doubl[ing] down” on them in a 

(citing FEEDVISOR, THE 2019 AMAZON CONSUMER BEHAVIOR REPORT 14 (2019)); see also WUNDERMAN THOMPSON 

COMMERCE, THE FUTURE SHOPPER REPORT 2020, 11 (2020) (on file with Comm.).

443 Press Release, Consumer Intelligence Research Partners, LLC, U.S. Amazon Prime Members – Slow, Steady Growth 

(Jan. 16, 2020), https://files.constantcontact.com/150f9af2201/9f9e47b4-0d66-4366-ad76-552ae3daa4f0.pdf (last visited 

Oct. 3, 2020); see Todd Bishop, Amazon Tops 150M Paid Prime Subscribers Globally After Record Quarter for 

Membership Program, GEEKWIRE (Jan. 30, 2020) https://www.geekwire.com/2020/breaking-amazon-tops-150m-paidprime-members-globally-record-quarter/; Parkev Tatevosian, Will Amazon Prime Reach 200 Million Members by the End 

of 2020?, MOTLEY FOOL (July 18, 2020), https://www.fool.com/investing/2020/07/18/will-amazon-prime-reach-200-

million-members-by-the.aspx (noting a 29% increase in Amazon’s revenue in the second quarter of 2020 versus the same 

quarter in 2019, primarily as a result of COVID-19). 

444 Number of Sellers on Amazon Marketplace, MARKETPLACE PULSE, https://www.marketplacepulse.com/amazon/numberof-sellers (last visited Oct. 3, 2020). 

445 Walmart’s Fulfillment Service for Sellers Not Seeing Adoption, MARKETPLACE PULSE, (Sept. 1, 2020), 

https://www.marketplacepulse.com/articles/walmarts-fulfillment-service-for-sellers-not-seeing-adoption.

446 Stigler Report at 38 (describing indirect, multi-sided network effects in e-commerce, noting that “in ecommerce 

platforms, which intermediate trade between sellers and buyers, a buyer does not directly benefit from the presence of other 

buyers but does benefit from the presence of more sellers—who are in turn attracted by the presence of the buyers.”).

447 Submission from Source 718, to H. Comm. on the Judiciary, 5 (Oct. 14, 2019) (on file with Comm.).

448 ANDREW LIPSMAN, EMARKETER, TOP 10 US ECOMMERCE COMPANIES 2020 (Mar. 10, 2020), 

https://www.emarketer.com/content/top-10-us-ecommerce-companies-2020 (illustrating that although Walmart’s increased 

share of the U.S. retail e-commerce market will allow it to overtake eBay for second place, it will remain a distant second to 

Amazon).
88

business strategy document.449 Similarly, in 2018, an investment analyst report expressed skepticism 

about Walmart’s ability to challenge Amazon, commenting, “[W]e are concerned Amazon’s Prime 

membership program is fortifying an impenetrable moat around its customers.”

450

C. Social Networks and Social Media

Social media products and services include social networking, messaging, and media platforms 

designed to engage people by facilitating sharing, creating, and communicating content and 

information online.451 Although the boundaries of the social media market are imprecise,452 social 

media platforms generally allow users on their networks to interact with people or groups they know, 

display content through linear feeds, or otherwise add socially layered functionality for services online, 

usually through a mobile app. In response to the Committee’s requests for information, several market 

participants said they view social media as driven by networks, while many social media products and 

services include common functionalities, such as public profiles, curated feeds, followers, messaging, 

and other use cases.453 Others focus on certain aspects of public and private communications.454

A principal feature of social media platforms is that they typically offer their services for a zero 

monetary price to the platform’s users.455 The platform develops a service it hopes will attract a critical 

mass of users to then attract advertisers to the platform.456 Some social media companies offer 

additional services to users for a price or allow users to pay for additional functionality. For example, 

449 Production of Amazon, to H. Comm. on the Judiciary, AMAZON_HJC_00068510 (Sep. 8, 2010) (on file with Comm.).

450 See Lydia Ramsey Pflanzer, Walmart’s talks with an insurance giant could be part of an assault on Amazon Prime, BUS.

INSIDER (Apr. 3, 2018), https://www.businessinsider.com/morgan-stanley-why-walmart-could-bid-on-humana-2018-4. 

451 Competition & Mkts. Auth. Report at 53.

452 Jan H. Kietzmann, Kristopher Hermkens, Ian P. McCarthy & Bruno S. Silvestre, Social Media? Get Serious! 

Understanding the Functional Building Blocks of Social Media, 54 BUS. HORIZONS 241 (2011),

http://summit.sfu.ca/system/files/iritems1/18103/2011_social_media_bh.pdf. 

453 Submission from Source 247, to H. Comm. on the Judiciary, Source 247-0000000006 (Oct. 23, 2019) (on file with 

Comm.); Competition & Mkts. Auth. Report at 53.

454 Submission from Source 471, to H. Comm. on the Judiciary, 4 (Oct. 15, 2019) (on file with Comm.) (“[T]here are a 

number of other competitors who focus on different or additional aspects of public and private communication. For 

example, some competitors focus on sharing and expression though images and other media (e.g., Instagram, YouTube, and 

Pinterest). Some companies focus more on private communications (e.g., WhatsApp, Snap (for the most part), Facebook, 

Signal, and Telegram). Other companies focus on communications about specific topics (e.g., Discord for gaming and 

Slack for workplace communications).”).

455 Submission from Source 164, to H. Comm. on the Judiciary, Source 164-000015 (Oct. 28, 2019) (on file with Comm.) 

(describing how online advertising requires building an ad product, a sales team to sell that product, the engineering and 

product capacity to target and measure the effectiveness of those ads.).

456 FIONA M. SCOTT & DAVID C. DINIELLI, OMIDYAR NETWORK, ROADMAP FOR AN ANTITRUST CASE AGAINST FACEBOOK 3

(June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-AgainstFacebook.pdf. 
89

LinkedIn Premium provides users with an option to pay for additional features, such as their network 

and in-app messaging insights.457

Social media platforms with a larger network of users are more likely to attract users and 

advertisers.458 In a briefing to Subcommittee members and staff, Brad Smith, the President of 

Microsoft, described this value:

You don’t always need to have a proven business model to attract capital. You just need 

an idea that will get a lot of users. And then people assume you’ll find a way to turn that 

usage into a business model that will produce revenue. That’s been very important for 

the US. It distinguishes us and allows venture funding. There’s something magical 

about 100 million active monthly users (MAU) in the United States. At that level a 

company becomes a force unto themselves. If you see a company acquire another 

company that’s in the same product market and is on the path to reach 100 million 

MAU, that’s more likely to raise a competitive concern. Historically, I think regulators 

were slow to notice that issue.459

As another market participant describes it, “attracting a critical mass of users is essential 

to delivering a viable social network, as there is no reason for users to start using a social 

network if there is no one there with whom they can connect.”

460

Social media companies may also focus on attracting particular types or groups of consumers to 

differentiate themselves from larger companies.461 Many of the top-ranking apps on iOS are 

complementary to popular social media applications. For example, Dazz Cam, a vintage-inspired 

photo-editing app used with TikTok, was popular in the U.S. in 2020.462 Similarly, Lens is a popular 

457 LINKEDIN PREMIUM, https://premium.linkedin.com/ (last visited Oct. 3, 2020). 

458 Production from Facebook, to H. Comm. on the Judiciary, FB_HJC_ACAL_00059100 (Apr. 6, 2012) (on file with 

Comm.) (“Advertising is a scale thing, it wasn’t until we reached 350 million users did we become interesting to big 

brands.”).

459 Briefing with Brad Smith, President, Microsoft, in Washington, D.C. (June 23, 2020).

460 Submission from Source 164, to H. Comm. on the Judiciary, Source 164-000014 (Oct. 28, 2019) (on file with Comm.). 

But see Bundeskartellamt, B6-22/16, Case Summary, Facebook, Exploitative business terms pursuant to Section 19(1) 

GWB for inadequate data processing, 8 (Feb. 15, 2019), 

https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Fallberichte/Missbrauchsaufsicht/2019/B6-22-

16.pdf?__blob=publicationFile&v=4 (“At least as far as the services affected in this case are concerned, it is not sufficient 

to have a ‘critical mass’ of users or technical, financial and personal expertise in order to be able to enter neighbouring 

markets and be as successful as on the original market. As the example of Google+ has shown, a service cannot expect to 

have the same reach when providing a different type of service, due to strong direct network effects.”). 

461 Competition & Mkts. Auth. Report at 115. 

462 Michelle Santiago Cortes, These Are the TikTok Editing Apps You’ve Been Seeing on Your ‘For You’ Page, REFINERY29

(Mar. 25, 2020, 5:00 PM), https://www.refinery29.com/en-us/tik-tok-editing-apps (last visited Oct. 3, 2020).
90

iOS app that allows users to browse, like, and comment on photos and videos on Instagram using the 

Apple Watch.463

Due to network effects in the social media market, new entrants may choose to begin as a 

complement by relying on the incumbent platform’s application programming interfaces (APIs) such 

as Facebook’s Open Graph or Twitter’s search API.464 However, because incumbent platforms control 

access to these APIs and can foreclose access to a complementary app that is successful or gaining 

users,465 some market participants view relying on these platforms to reach users as a constant business 

risk.466 One market participant noted that in addition to harming their business, these actions also 

“restrict users’ ability to multi-home and increase barriers to entry, including network effects and 

switching costs.”

467

Given Facebook’s dominance, the primary way for new entrants to compete is to attract a 

subgroup or niche.468 One market participant explained, “competitors may be limited to niche 

strategies that do not challenge the incumbent directly. For example, Facebook (including Instagram) 

is by far the most popular social networking platform. Although there are several competitors, such as 

LinkedIn, and fast-growing new entrants, such as TikTok, most or all employ niche strategies to 

varying degrees, and most have far less user engagement, attention, and data and a smaller share of 

advertising revenue than Facebook.”

469

463 Zac Hall, Lens Is a Modern and Feature-Packed Instagram App for Apple Watch that Works Without the iPhone, 

9TO5MAC (Apr. 24, 2019, 12:28 PM), https://9to5mac.com/2019/04/24/lens-instagram-for-apple-watch/ (last visited Oct. 3, 

2020).

464 FIONA M. SCOTT & DAVID C. DINIELLI, OMIDYAR NETWORK, ROADMAP FOR AN ANTITRUST CASE AGAINST FACEBOOK 

22 (June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-AgainstFacebook.pdf.

465 Id. at 22–25; Submission from Source 471, to H. Comm. on the Judiciary, 8 (Oct. 15, 2019) (on file with Comm.) (“In or 

around 2010, [Source 471] restricted the access of our API by some third-party developers because we had significant 

concerns regarding some third-party developers use of [Source 471]’s private data. In order to protect private data, [Source 

471] determined such changes were necessary to ensure that these data were not used improperly.”).

466 Submission from Source 164, to H. Comm. on the Judiciary, Source 164-00023 (Oct. 28, 2019) (on file with Comm.); 

Submission from Source 471, to H. Comm. on the Judiciary, 10 (Oct. 15, 2019) (on file with Comm.) (“[Our company’s] 

business would be affected if other social networking networks were to disallow cross-posting . . . to their platforms or 

discontinue APIs central to the functionality of our products or services.”).

467 Submission from Source 471, to H. Comm. on the Judiciary, 10 (Oct. 15, 2019) (on file with Comm.). 

468 FIONA M. SCOTT & DAVID C. DINIELLI, OMIDYAR NETWORK, ROADMAP FOR AN ANTITRUST CASE AGAINST FACEBOOK 

16 (June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-AgainstFacebook.pdf. 

469 Submission from Source 407, to H. Comm. on the Judiciary, 4 (Nov. 1, 2019); Competition & Mkts. Auth. Report at 55 

(“Differentiation can incentivise consumers to access multiple platforms, allowing for the co-existence of platforms.”).
91

Social Networks are Distinguishable from Social Media

While a broad view of the social media market is useful for considering the wider landscape for 

social data and online advertising,470 it is important to focus on the actual use, demand, and 

substitutability of social products when examining competition among social platforms online.471 The 

critical distinction between social networking and social media markets is how people use the 

platform. As Germany’s Federal Cartel Office (Bundeskartellamt) and the United Kingdom’s 

Competition and Markets Authority (CMA) have noted, the specific demand for social networks “is 

fundamentally different from the demand for other social media.”

472

Social network platforms facilitate their users finding, interacting, and networking with other 

people they already know online, and by providing a “rich social experience” through features on their 

products.473 People regularly use social network platforms to exchange “experiences, opinions and 

contents among specific contacts which the users define based on identity.”

474

In contrast, social media platforms principally facilitate the distribution and consumption of 

content. Much of the content on YouTube, for example, can be enjoyed by users with a wide range of 

relationships to the person posting, including by strangers.475 Similarly, TikTok describes itself as a 

“global platform for users to express their ideas by sharing videos with a broader community.”

476 In 

light of this distinction, the CMA concluded that YouTube is focused on offering content and does not 

470 Submission from Source 164, to H. Comm. on the Judiciary, Source-32-000014 (Oct. 28, 2019) (on file with Comm.) 

(discussing how they see “social media sites” as competitors for ads even though they don’t think they are in that market.).

471 See United States v. Microsoft Corp., 253 F.3d 34, 51–52 (D.C. Cir. 2001) (“the relevant market must include all 

products ‘reasonably interchangeable by consumers for the same purposes.’”) (quoting United States v. Du Pont & Co., 351 

U.S. 377, 395 (1956)); see also Competition & Mkts. Auth. Report at 117–18 (“the closeness of competition between 

different platforms depends on the degree to which consumers consider them substitutes, rather than the extent to which 

they share common functionalities.”). 

472 Competition & Mkts. Auth. Report at 54 (citing Bundeskartellamt (Feb. 6, 2019), B6-22/16, para. 249, 

https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Entscheidungen/Missbrauchsaufsicht/2019/B6-22-

16.pdf?__blob=publicationFile&v=5). 

473 Id.

474 Id.

475 FIONA M. SCOTT & DAVID C. DINIELLI, OMIDYAR NETWORK, ROADMAP FOR AN ANTITRUST CASE AGAINST FACEBOOK 6

(June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-AgainstFacebook.pdf. 

476 Letter from Michael Beckerman, Vice Pres., Head of U.S. Public Pol’y, TikTok, to Hon. David Cicilline, Chairman, 

Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, 

Ranking Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. Jerrold 

Nadler, Chairman, H. Comm. on the Judiciary, Hon. Jim Jordan, Ranking Member, H. Comm. on the Judiciary (July 29 

2020) at 1, https://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-116-JU05-20200729-SD005.pdf. 
92

compete with Facebook, facilitating communication and sharing content among groups of friends who 

choose each other and enjoy content in large part because of those relationships.477

In sum, social networking sites have a robust social graph, whereas content-centric sites do 

not.478 Although users can share videos or stream events on Facebook and YouTube in similar ways, 

there is a fundamental difference between sharing a video among a person’s social network on 

Facebook, Instagram, or WhatsApp—such as a child’s first steps—and broadcasting it publicly on 

YouTube. While people may spend significant time on both YouTube and Facebook,479 these firms 

provide distinct services to their users, and including both in the same market would be inconsistent 

with how users engage with each platform.

Market Concentration

Social platforms that are within a broad definition of social media include YouTube, Facebook 

and its family of products—Instagram, Messenger, and WhatsApp—as well as TikTok, Twitter, 

LinkedIn, Pinterest, Reddit, and Tumblr.480 According to Facebook’s internal market data, YouTube 

and Facebook’s family of products were by far the most popular social media sites by Monthly Active 

Persons (MAP) as of December 2019.481

477 FIONA M. SCOTT & DAVID C. DINIELLI, OMIDYAR NETWORK, ROADMAP FOR AN ANTITRUST CASE AGAINST FACEBOOK 6

(June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-AgainstFacebook.pdf. 

478 THOMAS CUNNINGHAM, POSSIBLE END STATES FOR THE FAMILY OF APPS (2018) (on file with Comm.) (discussing social 

networking platforms with comparable and orthogonal social graphs.).

479 Average Time Spent Daily on Social Media (Latest 2020 Data), BROADBAND SEARCH, 

https://www.broadbandsearch.net/blog/average-daily-time-on-social-media#post-navigation-4 (last visited Oct. 3, 2020). 

480 Competition & Mkts. Auth. Report at 115 n.140 (indicating that there are several other smaller firms that conform to this 

definition of social media but lack a significant user base). 

481 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-00086585 (Jan. 2020) (on file with Comm.).
93

Social Media Companies by Monthly Active Persons (MAP) in Millions482

The social network marketplace is highly concentrated. Facebook (1.8 billion users) and its 

family of products—WhatsApp (2.0 billion users), Instagram (1.4 billion users)— have significantly 

more users and time spent on its platform than its closest competitors, Snapchat (443 million users) or 

Twitter (582 million users).483 TikTok is growing quickly and is often referenced as evidence that the 

social media landscape is competitive.484 Although it meets the broad definition of social media as a 

social app for distributing and consuming video content, TikTok is not a social network.

D. Mobile App Stores

Mobile application stores (app stores) are digital stores that enable software developers to 

distribute software applications (apps) to mobile device users.485 A mobile app is a standardized piece 

482 Prepared by the Subcomm. based Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-00086585 (Jan. 

2020) (on file with Comm.). (metrics collected by Facebook).

483 THOMAS CUNNINGHAM, POSSIBLE END STATES FOR THE FAMILY OF APPS (2018) (on file with Comm.) (discussing social 

networking platforms with comparable and orthogonal social graphs.).

484 See Alex Sherman, TikTok reveals detailed user numbers for the first time, CNBC (Aug. 24, 2020), 

https://www.cnbc.com/2020/08/24/tiktok-reveals-us-global-user-growth-numbers-for-first-time.html. 

485 See e.g., Letter from Apple to H. Comm. on the Judiciary, HJC_APPLE_000003 (Oct. 14, 2019) (on file with Comm.); 

Letter from Executive at Source 736, to Members of the Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, 4 (Oct. 31, 2019) (on file with Comm.); BRICS COMPETITION, INNOVATION, LAW & POL’Y CTR,
94

of software optimized for use on a mobile device. Users can install this software to access digital 

content or services, share content, play games, or make transactions for physical goods and services. 

Apps are configured to run on a device’s operating system as “native apps.” These apps may be preinstalled on a mobile device as a component of the operating system or by the device manufacturer, 

downloaded from an app store, or loaded directly from the web using a browser—a process referred to 

as sideloading. Software developers upload apps and updates to app stores, and mobile device users 

can then install apps by downloading them from the app store to their device.

App stores include free and paid apps that charge a fee. In addition to allowing users to install 

apps, app stores enable users to search, browse, and find reviews for apps, as well as remove apps from 

their devices.486 The leading app stores also offer tools and services to support developers to building 

apps for the app store.487 App stores have rules that govern the types of apps permitted in the app store, 

conduct of app developers, how users pay for apps, the distribution of revenue between the app and the 

app store, and other details regarding the relationship between the app store operator and the app 

developers that distribute apps through the store.488

App stores provide mobile device users with a sense of trust and security that the apps they 

install from an app store have been reviewed, will not harm the user’s mobile device, will function as 

intended, and will not violate user privacy.489 App stores also reduce customer acquisition costs for app 

developers by allowing developers to reach an extraordinarily large consumer base—every mobile 

device user in the U.S. is addressable by developing for the Apple App Store and the Google Play 

Store. By reducing the costs of app developers, app stores help make software applications more 

affordable for consumers.490

DIGITAL ERA COMPETITION: A BRICS VIEW 347 (2019), 

http://bricscompetition.org/upload/iblock/6a1/brics%20book%20full.pdf. 

486 Neth. Auth. for Consumers & Mkts. Study at 20.

487 NETH. AUTH. FOR CONSUMERS & MKTS. MARKET STUDY INTO MOBILE APP STORES 20 (2019),

https://www.acm.nl/sites/default/files/documents/market-study-into-mobile-app-stores.pdf [hereinafter Neth. Auth. 

for Consumers & Mkts Study].

488 See Apple App Store Review Guidelines, APPLE, https://developer.apple.com/app-store/review/guidelines/#legal; Apple 

Developer Program License Agreement, APPLE, https://developer.apple.com/servicesaccount/agreement/XV2A27GUJ6/content/pdf; Google Play Developer Policy Center, GOOGLE, 

https://play.google.com/about/developer-content-policy/; Google Play Developer Distribution Agreement, GOOGLE, 

https://play.google.com/intl/ALL_us/about/developer-distribution-agreement.html . 

489 See CEO Hearing Transcript at 3 (response to Questions for the Record of Tim Cook, CEO, Apple, Inc.) 

https://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-116-JU05-20200729-QFR054.pdf; See also JOHN 

BERGMAYER, PUBLIC KNOWLEDGE, TENDING THE GARDEN: HOW TO ENSURE THAT APP STORES PUT USERS FIRST 1, 5, 18 

(2020), https://www.publicknowledge.org/wp-content/uploads/2020/06/Tending_the_Garden.pdf. 

490 Production of Apple, to H. Comm. on the Judiciary, HJC_APPLE_000003 (Oct. 14, 2019) (on file with Comm.); Neth. 

Auth. for Consumers & Mkts. Study at 108.
95

Deloitte has explained that app stores provide developers with various benefits, including 

providing a consistent interface and experience for users on a mobile operating system, a secure 

platform for apps, storage systems for hosting apps and managing downloads and updates, and billing 

and payment management systems that can reduce overhead for developers.491 Apple and Google also 

provide developers with software-development tools to create, test, and publish apps; technical support 

and analytics tools; and tutorials.492

The mobile operating system on a device determines which app stores the user can access. The 

provider of the mobile operating system determines which app stores may be pre-installed on devices 

running the operating system, and whether and how additional app stores may be installed. As 

discussed elsewhere in the Report, both Apple and Google have durable and persistent market power in 

the mobile operating system market; iOS and Android run on more than 99% of mobile devices in the 

U.S. and globally.493 There are high switching costs in the mobile operating system market and high 

barriers to entry. Due to their dominance in the mobile operating system market, Apple and Google 

have the power to dictate the terms and extent of competition for distributing software on to mobile 

devices running their respective mobile operating systems.494

The Google Play Store is the primary app store installed on all Android devices. The Apple 

App Store is the only app store available on iOS devices.495 Apps are not interoperable between 

operating systems—native apps developed for iOS only work on iOS devices, and native apps 

developed for Android only work on Android devices.496 The App Store and the Play Store do not 

compete against one another. Android users cannot access the Apple App Store, and iOS users cannot 

access the Google Play Store, so the dominance of the Play Store is not constrained by the App Store 

and vice versa.497

491 DELOITTE, THE APP ECONOMY IN THE UNITED STATES 8 (2018), 

https://www.ftc.gov/system/files/documents/public_comments/2018/08/ftc-2018-0048-d-0121-155299.pdf

492 Neth. Auth. for Consumers & Mkts. Study at 29.

493 Id. at 15.

494 See Data and Privacy Hearing at 15 (statement of Maurice E. Stucke, Prof. of Law, Univ. of Tennessee, and Ariel 

Ezrachi, Slaughter and May Prof. of Competition Law, Univ. of Oxford, Fellow, Pembroke Coll., Dir., Oxford Ctr. For 

Competition Law and Pol’y), https://docs.house.gov/meetings/JU/JU05/20191018/110098/HHRG-116-JU05-20191018-

SD010.pdf.

495 Neth. Auth. for Consumers & Mkts. Study at 4, 21.

496 See Interview with Source 407 (Sept. 10, 2020); Interview with Source 143 (Aug. 27, 2020); Neth. Auth. for Consumers 

& Mkts. Study at 51–52, 67, 73.

497 See Press Release, Eur. Comm’n, Antitrust: Commission Fines Google €4.34 Billion for Illegal Practices Regarding 

Android Mobile Devices to Strengthen Dominance of Google’s Search Engine (July 18, 2018) 

https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581; Letter from Executive at Source 181, to Members of 

the Subcomm.on Antitrust, Commercial and Admin. Law, 4 (Oct. 31, 2019) ( on file with Comm.); Submission from 

Source 301, to H. Comm. on the Judiciary, 5, 7 (Oct. 15, 2019) (on file with Comm).
96

Statista reports that in the first quarter of 2020 there were approximately 2.56 million apps 

available in the Google Play Store and 1.847 million apps available in Apple’s App Store.498 Apple’s 

App Store is the only means to distribute software on iOS devices.499 The Google Play Store is the 

dominant app store on Android devices; however, Google does permit users to sideload alternative app 

stores. Some Android device partners, such as Samsung, pre-install their own app stores on their 

devices.500 Leading alternative Android app stores include Amazon’s Appstore, Aptoide, F-Droid, and 

the Samsung Galaxy Store.501 App developers who want to reach the entire addressable market of U.S. 

or global smartphone users must have an app in both the App Store and the Play Store.502 Apple and 

Google also determine the terms and conditions app developers must agree to in order to distribute 

software through the App Store and Play Store, respectively. As a result, app developers and industry 

observers agree that Apple and Google control the app distribution market on mobile devices.503

There is no method for a third-party app store to challenge the App Store on iOS devices. 

Apple CEO Tim Cook told the Subcommittee that Apple has no plans to open iOS to alternative app 

stores.504 For a third-party app store to successfully challenge the Play Store, consumers must be able 

to install the app store and the store must have popular apps that users want. As with mobile operating 

systems, network effects create momentum so that as more consumers install software from the app 

store, more developers will build apps for the app store, increasing the value of the app store for users 

and attracting more consumers. Once users have migrated to a large platform—such as an operating 

system and its app store, it is difficult for smaller competitors to attract users and app developers.505

498 Number of Apps Available in Leading App Stores as of 1st Quarter 2020, STATISTA,

(https://www.statista.com/statistics/276623/number-of-apps-available-in-leading-app-stores/ .

499 Neth. Auth. for Consumers & Mkts. Study at 50; Interview with Source 766 (July 2, 2020). 

500 Neth. Auth. for Consumers & Mkts. Study at 50. See Press Release, Eur. Comm’n, Antitrust: Commission Fines Google 

€4.34 Billion for Illegal Practices Regarding Android Mobile Devices to Strengthen Dominance of Google’s Search Engine 

(July 18, 2018), https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581 (explaining that worldwide, excluding 

China, “the Play Store accounts for more than 90% apps downloaded on Android devices”).

501 Joe Hindy, 10 Best Third Party App Stores for Android and Other Options Too, Android Authority (Aug. 28, 2020), 

https://www.androidauthority.com/best-app-stores-936652/.

502 Neth. Auth. for Consumers & Mkts. Study at 15.

503 See e.g., Interview with Source 143 (Aug. 27, 2020); Production of Facebook, to H. Comm. on the Judiciary, FB-HJCACAL-00045377 (Feb. 14, 2014) (on file with Comm.) (demonstrating that Facebook COO Sheryl Sandberg explained to 

Facebook’s Board of Directors that Apple and Google’s positions as dominant mobile operating system and app store 

operators posted a “significant strategic threat” to Facebook’s business and adding another popular mobile app to 

Facebook’s suite of apps “would make it more difficult for operating system providers to exclude the Company’s mobile 

applications from mobile platforms.”); Letter from Executive at Source 181, to Members of the Subcomm. on Antitrust, 

Commercial and Admin. Law, 4 (Oct. 31, 2019) ( on file with Comm.); Kara Swisher, Is It Finally Hammer Time for Apple 

and Its App Store, N.Y. TIMES (June 19, 2020), https://www.nytimes.com/2020/06/19/opinion/apple-app-storehey.html?referringSource=articleShare.

504 CEO Hearing at 3 (response to Questions for the Record of Tim Cook, CEO, Apple, Inc.).

505 Data and Privacy Hearing at 5 (statement of Maurice E. Stucke, Prof. of Law, Univ. of Tennessee, and Ariel Ezrachi, 

Slaughter and May Prof. of Competition Law, Univ. of Oxford, Fellow, Pembroke Coll., Dir., Oxford Ctr. For Competition 

Law and Pol’y).
97

The United Kingdom’s Competition and Markets Authority observed that “almost all mobile 

app downloads are made through the App Store, on iOS devices, or Google Play, on Android 

devices.”

506 Alternatives app distribution methods such as third-party app stores, gaming platforms, or 

sideloading are often irrelevant to the mobile applications market, not always practical options for 

users, have significant disadvantages compared to the pre-installed app stores, and offer only limited 

functionality.507

Web sites and web apps are not competitively significant alternatives to the dominant app 

stores on iOS and Android devices for distributing software to mobile devices. Apps provide a deeper, 

richer user experience and can provide additional functionality by accessing features within the mobile 

device’s hardware and operating system, such as a camera or location services.508 Web apps and 

browsers are also reliant on the device being connected to the Internet. Native apps can continue to 

work even when a device loses access to the Internet.509 Apple’s App Store Review Guidelines 

differentiate apps from websites, explaining that apps submitted to the App store “should include 

features, content and [a user interface] that elevate [the app] beyond a repackaged website.”

510

Curation and centralized review of apps is an advantage touted by app store operators. Apple CEO Tim 

Cook explained to the Subcommittee that on iOS devices, Apple’s control of software installation 

through the App Store ensures downloaded apps “meet our high standards for privacy, performance, 

and security,” which is important for maintaining user trust.511 Additionally, distributing software via 

app stores lowers customer acquisition costs for software developers.512

Consumers do access content on their mobile devices via the open Internet. However, mobile 

apps are the primary way users access content and services on mobile devices and have become 

506 Competition & Mkts. Auth. Report at 29; see also Japan Fair Trade Commission, Press Release, Report Regarding 

Trade Practices on Digital Platforms: Business-to-Business Transactions on Online Retail Platform and App Store 24–25 

(Oct. 2019), https://www.jftc.go.jp/en/pressreleases/yearly-2019/October/191031Report.pdf (explaining that consumers 

rely on pre-installed app stores to install apps, so developers believe they “have no choice but to use the app store services” 

to reach consumers). 

507 See Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00068877 (Feb. 21, 2012) (on file with 

Comm.) (“Native apps will dominate over mobile-web for a long time (maybe forever) and we cannot prop up HTML-5 / 

are not strong enough to lead a shift - The mobile OS makers have a strong incentive in native apps performing better / 

working better than the web? so theory / what is possible aside, native apps will work better & be better experiences than 

the mobile web.”); Neth. Auth. for Consumers & Mkts. Study at 42–51, 69.

508 See Letter from Executive at Source 181, to Members of the Subcomm. on Antitrust, Commercial and Admin. Law of 

the H. Comm. on the Judiciary, 1 (Oct. 31, 2019) (on file with Comm.); Neth. Auth. for Consumers & Mkts. Study at 59, 

81. 

509 See Interview with Source 88 (May 12, 2020).

510 App Store Review Guidelines, § 4.2, APPLE, https://developer.apple.com/app-store/review/guidelines/#design (last 

visited Oct. 4, 2020).

511 CEO Hearing at 3 (response to Questions for the Record of Tim Cook, CEO, Apple, Inc.).

512 See Production of Apple, to H. Comm. on the Judiciary, HJC_APPLE_000003 (Oct. 14, 2019) (on file with Comm.); 

Neth. Auth. for Consumers & Mkts. Study at 102.
98

integral in Americans’ daily lives for basic communication, business transactions, entertainment, and 

news. In the U.S., nearly 90% of the time users spend online on mobile devices occurs in apps.513

Software distribution via web apps or through a website accessible on a browser is not a competitively 

significant alternative to distributing apps through the dominant app store on a mobile device and does 

not discipline the market power of the dominant app stores controlled by Apple and Google.

Similarly, the ability for consumers to sideload apps—installing apps without using an app 

store—does not discipline the dominance of Apple and Google in the mobile app store market. Apple 

does not permit users to sideload apps on iOS devices, and few consumers have the technical savvy to 

“jailbreak” an iOS device to sideload apps.514 Google does permit sideloading on Android devices, but 

developers find that given the option, consumers prefer to install apps from app stores and few opt for 

sideloading.515 Google has created significant friction for sideloading apps to Android devices. One 

developer explained to Subcommittee staff that sideloading entails a complicated twenty-step process, 

and users encounter multiple security warnings designed to discourage sideloading.516 Additionally, 

software developers that have left the Play Store to distribute software to Android users via sideloading 

have experienced precipitous declines in downloads and revenue and report problems updating their 

apps.517 Thus, the option for sideloading apps on mobile devices does not discipline the market power 

of dominant app stores.

There are no competitive constraints on the power Apple and Google have over the software 

distribution marketplace on their mobile ecosystems. The core benefit of mobile app stores—

centralizing and curating software distribution—also gives Apple and Google control over which apps 

users discover and can install.

518 As the gateways to the primary way users access content and services 

on mobile devices, the App Store and the Play Store can extract revenue from and exercise control 

over everything users do on their devices.519 This dominance enables Apple and Google to establish 

terms and conditions app developers have to comply with, leaving developers with the choice of 

complying or losing access consumers. The terms and conditions app stores impose include 

513 COMSCORE, 2019 REPORT GLOBAL STATE OF MOBILE 7 (2019); see also Letter from Executive at Source 181, to 

Members of the Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 1 (Oct. 31, 2019) 

( on file with Comm.); Submission from Source 301, to H. Comm. on the Judiciary, 7 (Oct. 15, 2019) (on file with Comm.).

514Neth. Auth. for Consumers & Mkts. Study at 45–46; Submission from Source 736, to H. Comm. on the Judiciary, Source 

736-00000166 (July 1, 2019).

515 Interview with Source 59 (May 13, 2020). 

516 Interview with Source 83 (June 30, 2020). 

517 See Neth. Auth. for Consumers & Mkts. Study at 48; JOHN BERGMAYER, PUBLIC KNOWLEDGE, TENDING THE GARDEN:

HOW TO ENSURE THAT APP STORES PUT USERS FIRST 44 (June 2020), https://www.publicknowledge.org/wpcontent/uploads/2020/06/Tending_the_Garden.pdf; Interview with Source 83 (June 30, 2020). 

518 See JOHN BERGMAYER, PUBLIC KNOWLEDGE, TENDING THE GARDEN: HOW TO ENSURE THAT APP STORES PUT USERS 

FIRST 19 (2020), https://www.publicknowledge.org/wp-content/uploads/2020/06/Tending_the_Garden.pdf.

519 See id. at 7, 19. 
99

requirements regarding app functionality, content, interactions with consumers, collection, and 

distribution of revenue between the app and app store.520

Mobile app stores charge app developers commissions on sales of paid apps through the app 

store. Apple and Google, along with other mobile app stores on Android devices, charge a 30% 

commission when users install the app.521 Apple established its 30% commission on paid apps in 2009 

with the introduction of the App Store, and that rate has become the industry standard.522

Apple and Google have both developed mechanisms for collecting payments from users for 

purchases within applications—these transactions are called in-app purchases (IAP). Apple and Google 

both charge developers a standard 30% for IAP.523 In collecting IAP, Apple and Google collect user 

personal and payment information, process the payment, and then remit the payment to the app 

developer, minus a processing fee or commission.524 Developers selling digital content through their 

apps on iOS and Android devices are required to use the app store operator’s IAP.525 For subscription 

services, like news apps or streaming media, the commission is 15% for the second year and 

thereafter.526 IAP systems provide mobile device users with convenience by allowing consumers to 

make transactions in their apps and only enter their payment details a single time, and protects user 

privacy by limiting sharing of sensitive financial information.527 However, developers have noted that 

lack of competition in pricing by app stores, particularly given the scale the App Store and Play Store 

have achieved since introducing their standard commission rates for paid apps and in-app purchases, 

demonstrates the lack of competition in the software distribution market on both the iOS and Android 

520 See Neth. Auth. for Consumers & Mkts. Study at 3, 15.

521 See ANALYSIS GROUP, APPLE’S APP STORE AND OTHER DIGITAL MARKETPLACES: A COMPARISON OF COMMISSION 

RATES 4–6 (July 22, 2020), 

https://www.analysisgroup.com/globalassets/insights/publishing/apples_app_store_and_other_digital_marketplaces_a_com

parison_of_commission_rates.pdf. 

522 See id. at 4.

523 See Neth. Auth. for Consumers & Mkts. Study at 23, 29, 86, 89.

524 See e.g., Letter from Executive at Source 181, to Members of the Subcomm. on Antitrust, Commercial and Admin. Law 

of the H. Comm. on the Judiciary, 3, 5–6 (Oct. 31, 2019) ( on file with Comm.); Submission from Source 736, to H. Comm. 

on the Judiciary, Source 736-00000009 (on file with Comm.); Submission from Source 304, to H. Comm. on the Judiciary, 

7–8 (Sept. 3, 2020); see also Reed Albergotti & Tony Romm, Tinder and Fortnite criticize Apple for its ‘App Store 

monopoly’, WASH. POST (June 16, 2020), https://www.washingtonpost.com/technology/2020/06/16/apple-antitrusteuropean-commission/.

525 See Neth. Auth. for Consumers & Mkts. Study at 29.

526 Id. at 29.

527 Id. at 7.
100

ecosystems.528 Developers have also said that the 30% commissions charged by app stores have led 

them to increase prices for consumers and diminished innovation by software developers.529

Apple and Google also develop and distribute apps that directly compete against third-party 

developers in their app stores.530 This dynamic, coupled with the fact that App Store and Play Store are 

dominant distribution channels and can exert gatekeeper power over their platforms, has the potential 

to distort competition, lead to discrimination and higher entry barriers for third-party developers, and 

result in the app store operator self-preferencing its own apps, harming consumers and competition.531

New app stores face high barriers to entry. It is unlikely that a third strong mobile app 

ecosystem can emerge. To offer a new mobile app store that is compelling to consumers, the app store 

must have a built-in customer base to attract developers to build apps for the store and must have 

popular apps to attract customers. Before the introduction of the App Store, third-party apps were not a 

central component of the user experience on mobile devices. New entrants, such as Apple, could 

disrupt the mobile device and operating system market by offering superior handset design, user 

interface, and first-party applications. Now, third-party apps are critical to the success of any mobile 

ecosystem. Millions of apps are developed for iOS and Android, and leading device manufacturers 

have built their device ecosystems around those operating systems. As a result, it is unlikely that a new 

mobile operating system entrant can disrupt the current market dynamics.532 Because of the control 

that Apple and Google exert over software distribution on their mobile ecosystems and the 

unlikelihood of entry by a new competitive mobile operating system, it is unlikely that a new, 

competitive app store will be able to successfully challenge the existing, dominant app store operators.

E. Mobile Operating Systems

A mobile operating system (OS) provides a mobile device with its underlying functionality, 

such as user interface, motion commands, button controls, and facilitates the operation of the device’s 

features, such as the microphone, camera, and GPS. The mobile OS is the interface between the mobile 

device hardware, such as the smartphone handset or tablet, and the applications that run on the device, 

like email or streaming apps. The mobile OS is pre-installed on mobile devices; an alternative mobile 

OS cannot be installed or substituted. The characteristics of the mobile OS determine aspects of the 

528 See Interview with Source 83 (June 30, 2020); Competitors Hearing at 8 (statement of David Heinemeier Hansson, 

CTO, Basecamp).

529 See Letter from Executive at Source 181 to Members of the Subcomm. on Antitrust, Commercial and Admin. Law of the 

H. Comm. on the Judiciary, 9–10 (Oct. 31, 2019) ( on file with Comm.) (internal citations omitted); Submission from 

Source 736, Source 736-00000236 (Oct. 23, 2019) (on file with Comm).

530 Japan Fair Trade Comm’n, Press Release, Report Regarding Trade Practices on Digital Platforms: Business-to-Business 

Transactions on Online Retail Platform and App Store 21 (Oct. 2019), https://www.jftc.go.jp/en/pressreleases/yearly2019/October/191031Report.pdf. 

531 See e.g., Neth. Auth. for Consumers & Mkts. Study at 22, 31–32, 69, 89–90, 95–99.

532 Dig. Competition Expert Panel Report at 29–30.
101

mobile device’s performance and functionality, including the app stores and apps that can run on the 

device. The mobile OS also determines which company’s ecosystem of products and services the 

device is integrated with.533

Google’s Android and Apple’s iOS are the two dominant mobile operating systems.534

Combined, they run on more than 99% of all smartphones in the world.535 The third-largest mobile 

operating system is KaiOS, which runs on feature phones (i.e., non-smartphone mobile devices).536

Apple’s mobile devices run on Apple’s proprietary iOS operating system, while other leading handset 

manufacturers, such as Samsung, LG, and Motorola, run on Android.537 iOS is not available on nonApple devices. 

533 See Steven Böhm, Fabian Adam & Wendy Colleen Farrell, Impact of the Mobile Operating System on Smartphone 

Buying Decisions: A Conjoint-Based Empirical Analysis, MOBILE WEB AND INTELLIGENT INFORMATION SYSTEMS 198

(Muhammad Younas, Irfan Awan & Massimo Mecella eds., 2015), https://doi.org/10.1007/978-3-319-23144-0_18. 

534 See GSMA INTEL., GLOBAL MOBILE TRENDS 2020: NEW DECADE, NEW INDUSTRY?, 6, 26 (2019), 

https://data.gsmaintelligence.com/api-web/v2/research-file-download?id=47743151&file=2863-071119-GMT-2019.pdf. 

535 Neth. Auth. for Consumers & Mkts. Study at 15; see also Dig. Competition Expert Panel Report at 29 (“However 

market shares are measured, Google (Android) and Apple (iOS) have a global duopoly over mobile phone operating 

systems.”); Michael Muchmore, Android vs. iOS: Which Mobile OS Is Best?, PC MAG (Aug. 11, 2020), 

https://www.pcmag.com/comparisons/android-vs-ios-which-mobile-os-is-best (“[W]e’re locked in a duopoly when it comes 

to mobile operating system choice”). 

536 A Short History of KaiOS, KAIOS, https://developer.kaiostech.com/introduction/history (last visited Oct. 4, 2020); 

Stephen Shankland, Mozilla helps modernize feature phones powered by Firefox tech, CNET (Mar. 11, 2020), 

https://www.cnet.com/news/mozilla-helps-modernize-feature-phones-powered-by-firefox-tech/.

537 See Production of Apple, to H. Comm. on the Judiciary, HJC_APPLE_000021 (Oct. 14, 2019) (on file with Comm.) 

(“Many smartphone brands around the world compete with iPhone on the basis of price, performance, features, and design. 

These smartphones generally incorporate Google’s Android operating system.”).
102

Mobile OS Market Share Worldwide538

Over the past decade, once-strong competitors have exited the mobile OS market, and Google 

and Apple have built dominant positions that are durable and persistent.539 While there are other 

538 Prepared by the Subcomm. based on Felix Richter, The Smartphone Market: The Smartphone Duopoly, STATISTA (July 

27, 2020), https://www.statista.com/chart/3268/smartphone-os-market-share/ (citing Mobile Operating System Market 

Share Worldwide, STATCOUNTER GLOBALSTATS. StatCounter which “calculates the data based on more than 1.7 billion 

page views per month worldwide. StatCounter defines a mobile device as a pocket-sized computing device. As a result, 

tablets are not included . . . Nokia devices (including some S40 devices) had been grouped largely under Symbian OS.”). 

539 See Felix Richter, The Smartphone Market: The Smartphone Duopoly, STATISTA (July 27, 2020), 

https://www.statista.com/chart/3268/smartphone-os-market-share/ (“Having started out as a multi-platform market, the 

smartphone landscape has effectively turned into a duopoly in recent years, after Apple’s iOS and Google’s Android 

crowded out any other platform including Microsoft’s Windows Phone, BlackBerry OS and Samsung’s mobile operating 

system called Bada.”); Data and Privacy Hearing at 7 (statement of Maurice E. Stucke, Prof. of Law, Univ. of Tennessee, 

and Ariel Ezrachi, Slaughter and May Prof. of Competition Law, Univ. of Oxford, Fellow, Pembroke Coll., Dir., Oxford 

Ctr. For Competition Law and Pol’y) (“The mobile operating system market went from multiple competitors in 2010 (with 

Google and Apple collectively accounting for 39 percent of unit sales), to a duopoly eight years later.”); Matthew Feld, 

Microsoft Is Finally Killing Off the Windows Phone, The TELEGRAPH (Oct. 9, 2017), 

https://www.telegraph.co.uk/technology/2017/10/09/microsoft-finally-killing-windows-phone/; Arjun Kharpal, TCL 

Launches New $549 Smartphone Under BlackBerry’s Banner, Featuring Android Software, CNBC (Feb. 25, 2017), 

https://www.cnbc.com/2017/02/25/blackberry-keyone-launch-physical-keyboard-android-specs-price.html); Jack Schofield, 

Can I Buy a Phone that Doesn’t Use Anything from Google or Apple?, THE GUARDIAN (July 4, 2019), 

https://www.theguardian.com/technology/askjack/2019/jul/04/can-i-buy-a-phone-that-does-not-use-anything-from-googleor-apple.
103

mobile OSs—such as Tizen, Sailfish OS, and Ubuntu Touch—those OSs make up less than 1% of the 

global mobile OS market.540

Market Share of Mobile Operating Systems in the U.S.541

Although both Google Android and Apple iOS both have dominant positions in the mobile OS 

market, high switching costs and a lack of on-device competition mean that neither firm’s market 

power is disciplined by the presence of the other. The European Commission’s investigation into 

Google’s Android platform found that because iOS is not available on non-Apple devices, it cannot 

constrain Google’s dominance in the mobile OS market.542 Conversely, Android is not available on 

Apple devices and does not constrain Apple’s dominant position and conduct on Apple mobile 

devices. An investment research firm recently noted that switching costs were high for Apple users 

because iOS is not available on non-Apple devices.543

540 See, e.g., Simon O’Dea, Market Share of Mobile Operating Systems in the United States from January 2012 to 

December 2019, STATISTA (Feb. 27, 2020), https://www.statista.com/statistics/272700/market-share-held-by-mobileoperating-systems-in-the-us-since-2009/.

541 Prepared by Subcomm. based on S. O’Dea, Market share of mobile operating systems in the United States from January 

2012 to December 2019, STATISTA (Feb. 27, 2020), https://www.statista.com/statistics/272700/market-share-held-bymobile-operating-systems-in-the-us-since-2009/ (citing Mobile Operating System Market Share in United States Of 

America, STATCOUNTER).

542 Press Release, Eur. Comm’n, Antitrust: Commission Fines Google €4.34 Billion for Illegal Practices Regarding Android 

Mobile Devices to Strengthen Dominance of Google’s Search Engine (July 18, 2018) 

https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581.

543 MORNINGSTAR EQUITY ANALYST REPORT, APPLE INC 1 (Aug. 6, 2020) (on file with Comm.).
104

There are significant barriers to switching between the dominant mobile operating systems. As 

a general matter, consumers rarely switch mobile operating systems. SellCell’s 2019 survey found that 

more than 90% of users with iPhones tend to stick with Apple when they replace their current 

device.544 In 2018, Consumer Intelligence Research Partners reported that more than 85% of iOS users 

who purchased a new device purchased another iOS device, and more than 90% of Android users who 

bought a new device purchased a new Android device.545 A 2017 study from Morgan Stanley found 

that 92% of iPhone owners intending to buy a new mobile device planned to buy another iPhone.546

Mobile carriers—a main retail distribution channel for mobile devices—agreed that it is rare for 

customers to switch from one mobile OS because once customers are used to the mobile OS they 

generally do not switch.547 App developers also said in interviews with Subcommittee staff that they 

observed minimal customer switching between iOS and Android.548

In addition to the cost of buying a new mobile device, consumers encounter other costs to 

switch to a new operating system. Android and iOS have different operating concepts, user interface 

designs, and setting and configuration options. As a result, instead of switching operating systems, 

“users pick one, learn it, invest in apps and storage, and stick with it.”

549

Other barriers to switching include the loss of compatibility with other smart devices designed 

to work in conjunction with the mobile device and its OS, the hassle of porting data from one OS to 

another, re-installing apps and configuring settings, and learning an unfamiliar user interface.550

Apple’s co-founder and former CEO Steve Jobs advocated this approach, noting Apple should “[t]ie 

544 iPhone vs. Android – Cell Phone Brand Loyalty Survey 2019, SELLCELL (Aug. 20, 2019), 

https://www.sellcell.com/blog/iphone-vs-android-cell-phone-brand-loyalty-survey-2019/; see also MORNINGSTAR EQUITY 

ANALYST REPORT, APPLE INC. 2 (Aug. 6, 2020) (“Recent survey data shows that iPhone customers are not even 

contemplating switching brands today. In a December 2018 survey by Kantar, 90% of U.S.-based iPhone users said they 

planned to remain loyal to future Apple devices.”) (on file with Comm.). 

545 Press Release, Consumer Intel. Research Partners, LLC, Mobile Operating System Loyalty: High and Steady, (Mar. 8, 

2018), http://files.constantcontact.com/150f9af2201/4bca9a19-a8b0-46bd-95bd-85740ff3fb5d.pdf.

546 Martin Armstrong, Most iPhone Users Never Look Back, STATISTA (May 22, 2017), 

https://www.statista.com/chart/9496/most-iphone-users-never-look-back/.

547 Interview with Source 72 (June 23, 2020).

548 Interview with Source 83 (June 30, 2020). 

549 Press Release, Consumer Intel. Research Partners, LLC, Mobile Operating System Loyalty: High and Steady (Mar. 8, 

2018), http://files.constantcontact.com/150f9af2201/4bca9a19-a8b0-46bd-95bd-85740ff3fb5d.pdf.

550 See Neth. Auth. for Consumers & Mkts. Study at 55–56; Press Release, Eur. Comm’n, Antitrust: Commission Fines 

Google €4.34 Billion for Illegal Practices Regarding Android Mobile Devices to Strengthen Dominance of Google’s Search 

Engine (July 18, 2018), https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581; see also iPhone vs. Android –

Cell Phone Brand Loyalty Survey 2019, SELLCELL (Aug. 20, 2019), https://www.sellcell.com/blog/iphone-vs-android-cellphone-brand-loyalty-survey-2019/ (finding “21% of iPhone users might be tempted to switch if they weren’t too tied into 

the Apple Ecosystem or it wasn’t so much hassle changing operating system from iOS to Android” and “13% of Samsung 

users might be tempted to switch if they weren’t too tied into the Google/Android Ecosystem or it wasn’t so much hassle 

changing operating system”). 
105

all of our products together, so we further lock customers into our ecosystem.”

551 Recently, 

Morningstar observed that people using Apple’s other products such as the Apple Watch and AirPods 

“lose significant functionality when paired with a smartphone other than the iPhone,” locking iPhone 

users into the iOS ecosystem.552 Competition regulators in the Netherlands explained that this strategy 

creates “path dependency” for consumers. Although mobile devices have a limited lifespan and 

consumers might be expected to “break the lock-in cycle” when it is time to upgrade to a new device, 

consumers often have software, data and files, and other hardware and accessories that are only 

compatible with one product ecosystem, making it unlikely they switch to a non-compatible mobile 

device.553

There are significant entry barriers in the mobile operating system market. One former mobile 

OS competitor observed that its experience showed that it was doubtful that a new, competitive mobile 

OS will emerge in the U.S.554 Another former mobile OS provider explained that it exited the market 

after concluding “the market for mobile operating systems was too established for a new entry.”

555 To 

compete, a new OS must offer a superior product packaged in an attractive handset, as well as a fully 

realized suite of apps and compatible devices comparable to what Apple and Google (and Google’s 

hardware partners) currently offer. Industry experts have testified before the Subcommittee that the 

“reality is that it would be very difficult for a new mobile phone operating system today” to compete 

with Apple and Google, “even if it offered better features.”

556 Investment analysts agree, noting it is 

likely Android and iOS “will continue to power nearly every smartphone around the world in the long 

run.”

557

The mobile OS market is also characterized by strong network effects. In short, a new mobile 

OS must have a sufficiently large user base to attract app developers to build apps to run on the OS. An 

OS with an insufficient number of users and developers is unlikely to receive support from mobile 

551 Don Reisinger, Steve Jobs wanted to ‘further lock customers’ into Apple’s ‘ecosystem’, CNET (Apr. 2, 2014), 

https://www.cnet.com/news/steve-jobs-wanted-to-further-lock-customers-into-apples-ecosystem/. 

552 MORNINGSTAR EQUITY ANALYST REPORT, APPLE INC 2 (Aug. 6, 2020) (on file with Comm.).

553 Neth. Auth. for Consumers & Mkts. Study at 21, 55–56.

554 Interview with Source 407 (Sept. 10, 2020). 

555 Submission from Source 385, to H. Comm. on the Judiciary, 2 (Sept. 18, 2020) (on file with Comm).

556 Data and Privacy Hearing at 8 (statement of Maurice E. Stucke, Prof. of Law, Univ. of Tennessee, and Ariel Ezrachi, 

Slaughter and May Prof. of Competition Law, Univ. of Oxford, Fellow, Pembroke Coll., Dir., Oxford Ctr. For Competition 

Law and Pol’y); see also Richard Trenholm, Elegant Ubuntu Touch OS Impresses for Phones and Tablets (Hands-On), 

CNET (Feb. 28, 2013), https://www.cnet.com/reviews/ubuntu-touch-preview/; Adrian Covert, The Ubuntu Smartphone 

(Which No One Will Use) Is a Glimpse of the Future, CNN BUS. (Jan. 2, 2013), 

https://money.cnn.com/2013/01/02/technology/mobile/ubuntu-smartphone-linux/ (explaining success in the mobile market 

required more than merely building a superior OS to Android or iOS, it also requires a robust app ecosystem). 

557 MORNINGSTAR EQUITY ANALYST REPORT, APPLE INC 3 (Aug. 6, 2020) (on file with Comm.).
106

device manufacturers that will install the OS on their devices, or mobile network operators that will 

support those devices on their networks.558

The most important factor that developers consider before building apps for an OS is the install 

base of the OS—how many users have devices running the OS that can install the app. Developers will 

not build apps for an OS with few users.559 This reinforces the power of dominant mobile operating 

systems. The more consumers use the OS, the more developers will build apps for the OS, increasing 

the value of the OS for users and attracting more consumers.560 Consumers are unlikely to purchase a 

device with an OS that cannot run the most popular apps and lacks a robust app ecosystem comparable 

to what is offered by iOS and Android. Due to the dominance of Apple and Google in the mobile OS 

and app store markets, “there is little incentive for app developers to go the trouble and expense of 

ensuring their apps work on any smaller rival operating systems,” because the user base would be too 

small.561

Additionally, the third-party app ecosystem advantages of iOS and Android make new market 

entry unlikely. The U.K.’s Competition and Markets Authority explained, before the iPhone, thirdparty apps were not part of the mobile experience. As a result, new entrants like Apple could enter the 

market and compete by offering a superior product. But now, there are “millions of apps that have 

been written for Apple’s iOS and Google’s Android, making it hard for a new entrant mobile operating 

system to offer a competitive and attractive product.”

562 The European Commission (E.C.) has 

similarly observed that strong network effects have created high entry barriers in the mobile OS 

market.563

Over the past decade, several large technology companies have attempted and failed to leverage 

their large user bases to compete against Apple and Google in the mobile OS market.564 Facebook and 

Amazon both tried to enter the market with variants of Google’s Android OS. Both companies quickly 

exited the market because consumers were mostly accessing Facebook and Amazon content through 

apps on iOS and Android devices.565 Technology reviewers also expressed disappointment that 

558 Interview with Source 407 (Sept. 10, 2020). 

559 Id.

560 MORNINGSTAR EQUITY ANALYST REPORT, APPLE INC 3 (Aug. 1, 2020) (on file with Comm.).

561 Dig. Competition Expert Panel Report at 29.

562 Id. at 40.

563 See Press Release, Eur. Comm’n, Antitrust: Commission Fines Google €4.34 Billion for Illegal Practices Regarding 

Android Mobile Devices to Strengthen Dominance of Google’s Search Engine (July 18, 2018) 

https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581. 

564 See GSMA INTEL., GLOBAL MOBILE TRENDS 2020: NEW DECADE, NEW INDUSTRY? 26 (2019), 

https://data.gsmaintelligence.com/api-web/v2/research-file-download?id=47743151&file=2863-071119-GMT-2019.pdf; 

Interview with Source 83 (June 30, 2020). 

565 See Ryan Mac, What Amazon Can Learn from The Failed Facebook Phone, FORBES (Jun. 17, 2014), 

https://www.forbes.com/sites/ryanmac/2014/06/17/what-amazon-can-learn-from-the-failed-facebook-
107

Amazon’s Fire Phone did not offer the same extensive library of apps and services as iOS or Android 

devices.566

Companies like Mozilla and Alibaba have also attempted to enter the mobile OS market. 

Mozilla unveiled its Firefox OS in 2013 and exited the market altogether by 2016.567 In 2012, Chinese 

tech giant Alibaba developed a mobile OS called Aliyun for the Chinese market. However, Acer, 

Alibaba’s hardware partner, abruptly canceled its collaboration with Alibaba before the launch of 

Acer’s device running the OS568

Over the past decade, once-competitive mobile operating systems like Nokia, BlackBerry, and 

Microsoft struggled to survive as Apple and Google grew more dominant, eventually exiting the 

marketplace altogether. BlackBerry—once a leading mobile OS developer—now licenses the 

BlackBerry name to TCL to market TCL’s smartphones. TCL’s BlackBerry phones run on Android.569

In the last quarter of 2016, Windows devices accounted for less than half of 1% of new smartphone 

sales.570 In 2017 Microsoft abandoned its mobile OS business, and by that time, more than 99% of all 

new smartphones were running on iOS or Android and market observers expressed no confidence that 

phone/#7f7d402f47de; Roger Cheng, Here’s Why the Facebook Phone Flopped, CNET (May 8, 2013), 

https://www.cnet.com/news/heres-why-the-facebook-phone-flopped/; Marcus Wohlsen, The Amazon Fire Phone Was 

Always Going to Fail, WIRED (Jan. 6, 2015), https://www.wired.com/2015/01/amazon-fire-phone-always-going-fail/; 

Austin Carr, The Inside Story of Jeff Bezos’ Fire Phone Debacle, FAST CO. (Jan. 6, 2015), 

https://www.fastcompany.com/3039887/under-fire.

566 See Austin Carr, The Inside Story of Jeff Bezos’ Fire Phone Debacle, FAST CO. (Jan. 6, 2015), 

https://www.fastcompany.com/3039887/under-fire.

567 See J. Sullivan, Firefox OS: Looking Ahead, MOZILLA BLOG (Jan. 6, 2014), 

https://blog.mozilla.org/blog/2014/01/06/firefox-os-looking-ahead/; Ingrid Lunden, Mozilla Will Stop Developing And 

Selling Firefox OS Smartphones, TECHCRUNCH (Dec. 8, 2015), https://techcrunch.com/2015/12/08/mozilla-will-stopdeveloping-and-selling-firefox-os-smartphones/; Chris Hoffman, Mozilla Is Stopping All Commercial Development on 

Firefox OS, PC WORLD (Sept. 28, 2016), https://www.pcworld.com/article/3124563/mozilla-is-stopping-all-commercialdevelopment-on-firefox-os.html. 

568 See Don Reisinger, Acer Taps Alibaba’s Aliyun OS for New Smartphone, CNET (Sept. 12, 2012), 

https://www.cnet.com/news/acer-taps-alibabas-aliyun-os-for-new-smartphone/; Edward Moyer, Alibaba: Google Just Plain 

Wrong About Our OS, CNET (Sept. 15, 2012), https://www.cnet.com/news/alibaba-google-just-plain-wrong-about-our-os/ ; 

Roger Cheng, Alibaba: Google Forces Acer to Drop Our New Mobile OS, CNET (Sept. 13, 2012), 

https://www.cnet.com/news/alibaba-google-forced-acer-to-drop-our-new-mobile-os/; T.C. Sottek, Acer Cancels Phone 

Launch with Alibaba, Allegedly in Response to Threats from Google, THE VERGE (Sept. 13, 2012), 

https://www.theverge.com/2012/9/13/3328690/acer-google-alibaba-phone; Dieter Bohn, Google Explains Why It Stopped 

Acer’s Aliyun Smartphone Launch (Updated), THE VERGE (Sept. 14, 2012), 

https://www.theverge.com/2012/9/14/3335204/google-statement-acer-smartphone-launch-aliyun-android; Jon Brodkin, 

Google Blocked Acer’s Rival Phone to Prevent Android “Fragmentation”, ARS TECHNICA (Sept. 14, 2012), 

https://arstechnica.com/gadgets/2012/09/google-blocked-acers-rival-phone-to-prevent-android-fragmentation/. 

569 See Arjun Kharpal, TCL Launches New $549 Smartphone Under BlackBerry’s Banner, Featuring Android Software, 

CNBC (Feb. 27, 2017), https://www.cnbc.com/2017/02/25/blackberry-keyone-launch-physical-keyboard-android-specsprice.html.

570 See Press Release, GARTNER Gartner Says Worldwide Sales of Smartphones Grew 7 Percent in the Fourth Quarter of 

2016 (Feb. 15, 2017), https://www.gartner.com/en/newsroom/press-releases/2017-02-15-gartner-says-worldwide-sales-ofsmartphones-grew-7-percent-in-the-fourth-quarter-of-2016).
108

new competition would emerge.571 One key factor leading to Microsoft’s withdrawal from the mobile 

marketplace was that developers were reluctant to develop apps for a third mobile operating system 

when already building apps for iOS and Android.572 These market dynamics remain in place today.

F. Digital Mapping

Digital mapping provides users with virtual maps of the physical world. There are two sets of 

customers for mapping services: consumers, who use map products for navigation, and businesses, 

who use underlying mapping libraries and design tools to produce customized maps. With the 

proliferation of smart devices, digital mapping has become a critical resource for users and businesses 

alike.

The essential input for both types of services is a digital-map database. Mapping data can be 

gathered in a few ways, including through the collection of imagery from satellites and streets, the 

tracking of global positioning system (GPS) traces, and the collation of public domain mapping data. 

Building a digital map database is costly and time-intensive, requiring significant investment in 

mapping technologies and data collection.573 The leading provider of digital mapping data is Google. 

Smaller providers include HERE and TomTom, as well as open-source providers like OpenStreetMap 

(OSM).574 Waze, which developed navigable maps by relying on driver-generated live maps and 

crowd-sourced updates, was an additional mapping provider purchased by Google in June 2013.

Consumer-facing providers of mapping services license map databases and layer search and 

traffic technologies atop of the map data. Consumers use these search and traffic tools either through a 

standalone turn-by-turn navigation service that licenses the underlying data—like MapQuest or Bing 

Maps—or through a vertically integrated provider, like Google Maps, Waze, or Apple Maps.575 The 

dominant providers of consumer mapping applications are Google Maps and Google-owned Waze, 

571 Tom Warren, Windows Phone Dies Today, THE VERGE (July 11, 2017), 

https://www.theverge.com/2017/7/11/15952654/microsoft-windows-phone-end-of-support; see also Press Release, Gartner,

Gartner Says Worldwide Sales of Smartphones Grew 7 Percent in the Fourth Quarter of 2016 (Feb. 15, 2017), 

https://www.gartner.com/en/newsroom/press-releases/2017-02-15-gartner-says-worldwide-sales-of-smartphones-grew-7-

percent-in-the-fourth-quarter-of-2016; James Vincent, 99.6 Percent of New Smartphones Run on Android or iOS, THE

VERGE (Feb. 16, 2017), https://www.theverge.com/2017/2/16/14634656/android-ios-market-share-blackberry-2016. 

572 Dig. Competition Expert Panel Report at 40.

573 Innovation and Entrepreneurship Hearing at 6 (response to Questions for the Record by Kyle Andeer, Vice Pres., Corp. 

Law, Apple, Inc.); Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04208423 (on file with Comm.) 

(showing that prior to being acquired by Google, a Waze presentation stated, “There are very few companies in the world 

that are making navigable maps, and the process is very expensive.”); Submission from Source 531, to H. Comm. on the 

Judiciary, Source 531-000628 (on file with Comm.).

574 Submission from Source 531, to H. Comm. on the Judiciary, Source 531-000628 (on file with Comm.).

575 Although Apple Maps licensed U.S. mapping data from TomTom upon launching in 2012, in 2015 it began developing 

its own map database by deploying cars with cameras and sensors to collect images and mapping data that it could combine 

with anonymized iPhone data to create an independent underlying base map. Lauren Goode, The Biggest Apple Maps 

Change Is One You Can’t See, WIRED (Jan. 31, 2020), https://www.wired.com/story/apple-maps-redesign/.
109

followed by Apple Maps and MapQuest.576 Google and Apple set their mapping products as the default 

options on Android and iOS products—their respective devices—which also enables them to maintain 

and expand their market position. 

These providers of consumer mapping services generally do not charge users a monetary fee. 

Instead, they monetize maps through selling location-based advertisements or by subsidizing 

consumer-facing mapping with enterprise contracts or other lines of business. Although data on the 

value of the consumer-facing digital mapping industry is not publicly available, analysts have 

estimated that Google Maps earned Google around $2.95 billion in revenue last year and that the 

standalone product is worth up to $60 billion.577

Business-facing providers serve map design tools and mapping libraries required to produce 

customized maps. The leading providers of business-to-business mapping software are Google, HERE, 

Mapbox, and TomTom, followed by Apple Maps, Bing, ESRI, Comtech, and Telenav.578 Some of 

these providers operate in more specialized markets. For example, HERE and TomTom primarily 

serve automotive customers, while ESRI provides desktop GIS software used by governments and 

spatial analysts.579

Market participants cite several factors that privilege dominant digital map incumbents and 

impede entry. First is the capacity of dominant firms to invest heavily in creating mapping databases 

and technology without needing to turn a profit. For example, prior to its acquisition by Google, Waze 

executives observed that Google Maps had “disrupted the market” primarily through “financial 

disruption,” namely that it had “unlimited funds” and was giving away Google Maps to users for 

free.580 Startups seeking to enter this market yet lacking the financial cushion that permits them to 

incur losses while developing the product will be at a relative disadvantage.

Another factor is that incumbents that are integrated can collect relevant map and location data 

from across complementary lines of business, feeding this data back into mapping. For example, one 

market participant noted that Google “collects an unparalleled amount of data used in digital mapping 

576 Submission from Source 572, to H. Comm. on the Judiciary, 1 (Oct. 29, 2019) (on file with Comm) (“For vehicle 

navigation, and excluding OEM-provided in-console automotive systems, Google’s Waze and Google Maps are currently 

the most used consumer apps by a wide margin.”); Submission from Source 333, to H. Comm. on the Judiciary, 2 (Oct. 21, 

2019) (on file with Comm.).

577 Daniel Schaal, Google Maps Poised to Be an $11 Billion Business in 4 Years, SKIFT (Aug. 30, 2019), 

https://skift.com/2019/08/30/google-maps-poised-to-be-an-11-billion-business-in-4-years/; ROSS SANDLER, BARCLAYS,

ALPHABET INC., STEADY COMPOUNDER, WITH PLENTY OF INNOVATION AHEAD 20 (Mar. 28, 2017) (on file with Comm.).

578 Submission from Source 572, to H. Comm. on the Judiciary, 1 (Oct. 29, 2019) (on file with Comm).

579 Id.

580 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04209630 (Nov. 2012) (on file with Comm.)
110

from users of its dominant search engine and Android smartphone OS.”

581 Another market participant 

stated that Google’s dominant position in search and advertising incentivizes businesses to closely 

monitor and maintain the accuracy of their information in Google’s systems, “leading to a dynamic by 

which Google enjoys a free, crowdsource effort to improve and maintain their data’s quality,” thereby 

improving the quality of Google Maps.582 Firms without concurrent positions in web search and the 

smartphone market are comparatively disadvantaged. 

A third factor is the superior distribution that integrated firms in maps-adjacent lines of 

business can provide their own mapping product at the expense of third-party mapping products. 

Google gives Google Maps default placement on its Android devices, while Apple does the same with 

Apple Maps on iOS devices. Together, Android and iOS account for 99% of the smartphone operating 

systems in the United States.583

Market participants explained that the default placement of Google Maps on Android devices 

also disadvantages third-party mapping providers technologically. If a developer chooses a third-party 

mapping provider when building an app, downloading that app on Android would involve 

downloading both the app features and the mapping functionality. Choosing to develop the app with 

Google Maps, by contrast, would reduce the app’s file size on Android, as Google Maps is already on 

the device.

Lastly, incumbents benefited from a lack of prohibitions on collecting location data—an 

advantage that startups today lack given the passage of new data restrictions that limit the development 

of digital mapping technology. Notably, many of these rules came into existence following public 

outrage prompted by Google Street View. By the time these rules were implemented, Google had 

already mapped out most of the planet. 

Except for Apple’s independent mapping database, there has been no recent entry in the market 

for underlying mapping data. Similarly, the list of leading providers of consumer mapping services and 

business-to-business services has mostly been unchanged since 2013.

G. Cloud Computing

Cloud computing refers to the service that enables remote storage and software programs on 

demand through the Internet. Prior to cloud computing, data was stored locally on a computer’s hard 

581 Submission from Source 531, to H. Comm. on the Judiciary, Source 531-000624 (on file with Comm); Production of 

Google, H. Comm. on the Judiciary, GOOG-HJC-04211078 (July 24, 2013) (on file with Comm.) (Google made a similar 

observation in July 2013. In a letter responding to the FTC’s request for information relating to its acquisition of Waze, 

Google wrote, “Apple has access to as much or more US GPS traffic data than Google does, with tens of millions of Apple 

iOS users potentially providing Apple with real-time traffic speed and flow information throughout the country.”).

582 Submission from Source 572, to H. Comm. on the Judiciary, 3 (Oct. 29, 2019) (on file with Comm).

583 Neth. Auth. for Consumers & Mkts. Study at 15.
111

drive, in a local server room, or remote data center where companies managed all of the I.T. 

services.584 Today, companies can essentially rent “network access to a shared pool of configurable 

computing resources . . . [including] networks, servers, storage, applications and services.”

585 As a 

result of the convenience and cost savings associated with the ability to scale up or down on demand, 

cloud computing has grown into one of the technology sector’s largest and most lucrative 

businesses.586 It has enabled the growth of enterprise businesses such as Netflix, Airbnb, Lyft, Slack, 

and the Weather Channel, as well as new startups that are not yet household names.

Cloud computing is a critical input to many of the digital markets the Subcommittee 

investigated, providing infrastructure for online commerce, social media and networking, digital 

advertising, voice assistants, and digital mapping—technologies that benefit from dynamic storage and 

computational power. In a future with smart homes, autonomous vehicles, and artificial intelligence 

applications in nearly every sector from agriculture to healthcare, understanding the dynamics of the 

cloud market becomes critical. These ground-breaking technologies work because they can access and 

analyze massive amounts of data in real time, companies looking to innovate in these spaces will 

struggle to rely solely on traditional I.T. and will likely turn to public cloud vendors. The testimony of 

Morgan Reed on behalf of ACT, the App Association, illustrates how important “continuous cloud 

access [is] to create custom software solutions that adapt quickly and rival the products and services of 

larger SaaS companies.”

587

Cloud computing service models vary by vendor, and new models are being developed 

continually. The Subcommittee’s investigation focused on the dynamics between the three models 

most referenced and defined by the National Institute of Standards and Technology.

584 See generally HEIDI M. PETERS, CONG. RESEARCH SERV., R45847, THE DEPARTMENT OF DEFENSE’S JEDI CLOUD 

PROGRAM (2019).

585 See NAT’L INST. OF STANDARDS AND TECH, THE NIST DEFINITION OF CLOUD COMPUTING 2 (Sept. 2011),

https://nvlpubs.nist.gov/nistpubs/Legacy/SP/nistspecialpublication800-145.pdf. 

586 MARKET SHARE ANALYSIS; IAAS AND IUS, WORLDWIDE (July 5, 2019); Production of Amazon, to H. Comm. on the 

Judiciary, AMAZON-HJC-00219352 (on file with Comm.).

587 Innovation and Entrepreneurship Hearing at 7 (statement of Morgan Reed, Pres., ACT | The App Ass’n).
112

Cloud Computing Services588

In the Software as a Service (SaaS) model, the user accesses applications from various client 

devices “through either a thin client interface, such as a web browser, or a program interface.”

589

Common examples include Google Docs, Slack, and Mailchimp. In the Platform as a Service (PaaS) 

model, the user, most often a cloud application developer, builds new applications by accessing 

programming languages, libraries, services, and tools supported by the cloud provider.590 Common 

PaaS tools include AWS Elastic Beanstalk, Google App Engine, and Salesforce’s Heroku. In the 

Infrastructure as a Service (IaaS) model, the user, most often an engineer, can deploy and run software, 

which can include operating systems and applications while the cloud provider provisions fundamental 

computing resources including processing, storage, and network applications.591 Common IaaS tools 

include Amazon Elastic Compute Cloud (EC2), Google Compute Engine, and Microsoft Azure.592

588 Prepared by the Subcomm. based on data from Nat’l Inst. of Standards and Tech.

589 NAT’L INST. OF STANDARDS AND TECH., THE NIST DEFINITION OF CLOUD COMPUTING 2 (Sept. 2011),

https://nvlpubs.nist.gov/nistpubs/Legacy/SP/nistspecialpublication800-145.pdf. 

590 Id. at 2.

591 Id. at 3.

592 HEIDI M. PETERS, CONG. RESEARCH SERV., R45847, THE DEPARTMENT OF DEFENSE’S JEDI CLOUD PROGRAM 1 (2019).
113

SaaS, PaaS, and IaaS can be deployed through several different models.593 Subcommittee staff 

focused primarily on the market for public cloud services in which the cloud provider provisions 

infrastructure for open use by the general public. The infrastructure resides on the premise of the cloud 

provider.594

To review market dynamics, Subcommittee staff examined two types of cloud service 

providers. The first type is infrastructure providers. Amazon Web Services (AWS), Microsoft Azure,

and Google Cloud Platform (GCP) are the most common domestic infrastructure providers. They offer 

customers IaaS, PaaS, and SaaS offerings through their customer consoles or portals, but are distinct in 

their ability to offer IaaS at scale. This Report refers to them as infrastructure providers. They also 

operate online marketplaces for third-party software vendors to list cloud offerings that integrate with 

their infrastructure services.

The second type is third-party software vendors, sometimes referred to as Independent 

Software Vendors (ISVs). Companies such as Salesforce, MariaDB, and The Apache Foundation 

provide operating systems, databases, security, and applications. Third-party software can be delivered 

as a packaged software or managed service. When a third party provides packaged software, it can be 

installed onto a customer’s existing cloud infrastructure. The packaged software can be listed on the 

infrastructure provider’s marketplace or through a third-party vendor’s website.

When third-party software is sold as a managed service, the customer pays a subscription based 

on the number of services used, and the third-party software vendor manages all the underlying 

infrastructure.595 In this scenario, the software has become a cloud offering sold “as-a-service.” The 

underlying infrastructure can be owned and managed by the third-party software vendor or the thirdparty software vendor may have contracts with an infrastructure provider, and in some cases, the 

software vendor uses a combination of owned and rented servers. For example, Salesforce’s Heroku—

a PaaS product—is built using AWS IaaS offerings.596 When a company purchases a Heroku license, 

Salesforce’s use of AWS is included in the price. In the case that a PaaS or SaaS offering uses its own 

infrastructure, it is likely it will need to be able to integrate with products managed by the 

infrastructure providers as it grows and, to expand to new regions, it will need to contract with 

infrastructure providers.597

593 NAT’L INST. OF STANDARDS AND TECH., THE NIST DEFINITION OF CLOUD COMPUTING 3 (Sept. 2011).

594 Id.

595 Id.

596 See e.g., Kelly Cochran, Simplify Your Customer Engagement with AWS and Salesforce Heroku, AWS PARTNER 

NETWORK (APN) BLOG (June 9, 2017), https://aws.amazon.com/blogs/apn/simplify-your-customer-engagement-with-awsand-salesforce-heroku/. 

597 Mark Innes, Salesforce is live on AWS Cloud Infrastructure in Australia, SALESFORCE BLOG (Oct. 17, 2017), 

https://www.salesforce.com/au/blog/2017/10/salesforce-is-live-on-aws-cloud-infrastructure-in-australia.html. For example, 

for many years Salesforce.com’s CRM ran on self-managed infrastructure but when the company expanded to Australia in 

2007, they entered into a contract with AWS.
114

In 2018, public cloud services, including IaaS, PaaS, SaaS, and management services, 

accounted for $182.4 billion of the overall $3.7 trillion information technology (I.T.) infrastructure 

spending worldwide—less than 1%.598 Despite being a small fraction of I.T. spending, Gartner projects 

the market size of the cloud services industry to increase at nearly three times the rate of overall I.T. 

services through 2022, to reach $331 billion.599 AWS is the market leader, capturing approximately 

24% of the U.S. spend on cloud computing in 2018.600

Amazon—the leading cloud platform—is dominant in the cloud market due to the 

concentration of the IaaS market.601 According to Gartner, “the worldwide IaaS market grew 31.3% in 

2018 to total $32.4 billion, up from $24.7 billion in 2017.”

602 As seen in the chart below, AWS is the 

unquestioned leader in the cloud computing infrastructure market, with triple the market share of 

Microsoft. Alibaba, Google, and Microsoft are growing at the fastest rates—rates double that of 

Amazon. Gartner expects the IaaS Worldwide Public Cloud Service Revenue to grow faster than any 

other set of services, and to be worth $76.6 billion in 2022.603

598 Letter from David Zapolsky, Gen. Counsel, Amazon.com, Inc., to Hon. David N. Cicilline, Chairman, Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 6 (July 26, 2019) ( on file with Comm.).

599 Press Release, Gartner, Gartner Says Global IT Spending to Reach $3.7 Trillion in 2018 (July 29, 2019), 

https://www.gartner.com/en/newsroom/press-releases/2019-07-29-gartner-says-worldwide-iaas-public-cloud-servicesmarket-grew-31point3-percent-in-2018. 

600 Letter from David Zapolsky, Gen. Counsel, Amazon.com, Inc., to Hon. David N. Cicilline, Chairman, Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 6 (July 26, 2019) ( on file with Comm.).

601 Submission from Source 170 to H. Comm. on the Judiciary, 6 (Nov. 21, 2011) (on file with Comm.).

602 Press Release, Gartner, Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17.5 Percent in 2019 (Apr. 2, 

2019), https://www.gartner.com/en/newsroom/press-releases/2019-07-29-gartner-says-worldwide-iaas-public-cloudservices-market-grew-31point3-percent-in-2018. 

603 Id.
115

IaaS Worldwide Public Cloud Services Revenue (Millions of US Dollars)604

Industry reports suggest that the cloud computing market is consolidating around three 

providers domestically—AWS, Microsoft Azure, and Google Cloud Platform.605

Market leaders benefit from early-mover advantage coupled with network effects and high 

switching costs that lock-in customers. AWS pioneered cloud computing, launching officially in 

March 2006 with Simple Storage Service (S3) and Elastic Compute Cloud (EC2), two fundamental

IaaS offerings.606 Microsoft announced Azure in October 2008 along with core services that made up

the “Azure Services Platform.”

607 Google’s first public cloud service, App Engine, a PaaS offering, 

was released in 2008.608 Google’s Compute Engine, an AWS Elastic Compute Cloud and Microsoft 

Azure Virtual Machines competitor, went live as a preview in June 2012.609

604 Prepared by Subcomm. based on Press Release, Gartner, Gartner Forecasts Worldwide Public Cloud Revenue to Grow 

17.5 Percent in 2019 (Apr. 2, 2019), https://www.gartner.com/en/newsroom/press-releases/2019-07-29-gartner-saysworldwide-iaas-public-cloud-services-market-grew-31point3-percent-in-2018.

605 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00219350 (July 5, 2019) (on file with Comm).

606 What’s New, AMAZON (Oct. 4, 2006) https://aws.amazon.com/about-aws/whats-new/2006/.

607 Press Release, Microsoft, Microsoft Unveils Windows Azure at Professional Developers Conference (Oct. 27, 2008), 

https://news.microsoft.com/2008/10/27/microsoft-unveils-windows-azure-at-professional-developersconference/#IP8XlBTCMpvORgaV.97. 

608 Paul McDonald, Introducing Google App Engine + our new blog, GOOGLE DEVELOPER BLOG (Apr. 7, 2008), 

http://googleappengine.blogspot.com/2008/04/introducing-google-app-engine-our-new.html. 

609 Ryan Lawler, Google Launches Computer Engine to Take on Amazon Web Services, TECHCRUNCH (June 28, 2012), 

https://techcrunch.com/2012/06/28/google-compute-engine/.
116

A 2010 Google strategy document predicted that the cloud computing market would 

concentrate. An internal document titled “Where Industry is Headed in 5 Years,” stated that there 

would be some concentration in the market within five years, with cloud service providers consisting 

of Google, Amazon, Microsoft, and a hybrid of Cisco and VMWare.610 According to this document, 

each company would offer cloud-based apps and other tools.611 Later, in a 2018 strategy document, 

Google emphasized the importance of first-mover advantage in the space, writing “AWS and Azure 

have had more years to gain customers, and cloud customers typically grow [in] scale over time; in 

contrast” reiterating the tendency for cloud customers to choose a single vendor as their primary cloud 

service provider.612 In a roundtable held by Subcommittee Chairman Cicilline, Mark Tracy, the CEO 

of Cloudacronomics, described these concerns:

We pull down terabytes of data, and they have to upload it to the cloud to improve 

farmers practices. The two cloud providers are AWS and Azure. Since so many 

businesses and so much value can be extracted by improving health and data, this 

concentration of cloud services is a concern.613

As seen in the figure below, IaaS prices have decreased over time, with the three dominant U.S. 

providers able to price their services at less than $30/GB RAM according to a 2018 RBC Capital 

Markets report.

614 Market participants reference economies of scale and a focus on increasing revenue 

from PaaS and SaaS offerings, as opposed to IaaS offerings, as an explanation for this trend. IaaS 

vendors benefit from economies of scale both with regards to the size of the datacenters and the ability 

to operate multiple data centers across the globe. To enter the market and reach the economies of scale 

needed to compete with the incumbents, infrastructure providers must invest significant capital and be 

able to offer competitive prices to lure customers.

610 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01777633 (on file with Comm.).

611 Id.

612 Id. at GOOG-HJC-04167638–66 (June 3, 2019).

613 Rhode Island Roundtable (Mar. 17, 2020) (statement of Mark Tracy, CEO, Cloudacronomics) (on file with Comm.).

614 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00183326 (Dec. 4, 2018) (on file with Comm.) 

(showing a 2018 RBC Capital Markets Report which analyzed the cost of IaaS across five usage scenarios: Standard, High 

Compute, High Memory, High Storage, High Input/Output (I/O) and three workload sizes, small, medium and large, to 

create 15 cases.). 
117

Average Monthly Costs Per GB RAM Across 15 Use Cases615

The “cloud” is a system of cables connected to a wide network of data centers—all 

underground, underwater, or in large industrial buildings. Building data centers in dozens of regions 

worldwide costs billions of dollars.616 Market participants described the investment as “bigger than 

building a cellular network” and only “for countries and major companies.”

617

Two additional inputs that can provide a barrier to becoming a leading infrastructure provider 

are compliance certifications and reputation. Federal Risk and Authorization Management 

Program (FedRAMP) authorization is required for any service that holds U.S. federal data.618 The 

615 Prepared by Subcomm. based Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00183326 (Dec. 4, 

2018) (on file with Comm.) (2018 RBC Capital Markets Report which analyzed the cost of IaaS across five usage 

scenarios: Standard, High Compute, High Memory, High Storage, High Input/Output (I/O) and three workload sizes, small, 

medium and large, to create 15 cases.).

616 Submission from Source 170, to H. Comm. on the Judiciary, 8 (Nov. 21, 2011) (on file with Comm.).

617 Interview with Source 144 (April 17, 2020).

618 OFF. OF MGMT. & BUDGET, EXEC. OFF. OF THE PRESIDENT, SECURITY AUTHORIZATION OF INFORMATION SYSTEMS IN 

CLOUD COMPUTING ENVIRONMENTS (2011),

https://www.fedramp.gov/assets/resources/documents/FedRAMP_Policy_Memo.pdf.
118

FedRAMP authorization process can be resource and time-intensive as vendors have to undergo a 

process of technical and security reviews and audits.619

When a customer chooses to use cloud computing, they must trust that their data will be secure 

and available to access quickly. The leading cloud infrastructure providers are major technology 

companies that handle massive amounts of data and run large technical operations before offering 

managed services. Market participants have shared with Subcommittee staff that a smaller company 

attempting to enter the IaaS market to contest these firms must convince large customers that they can 

provide a reliable service that is compliant with industry-specific regulations.620

Market participants and industry reports highlight that IaaS offerings have become 

commoditized. To compete, infrastructure providers must offer a range of PaaS and SaaS services to 

attract users and developers to their platform.621 First-party PaaS and SaaS offerings are made 

available in the infrastructure provider’s console. As of this Report, AWS, Azure, and GCP all list over 

100 first-party cloud offerings.622 Each cloud infrastructure provider has taken its own approach to 

building its platform, but all involve acquisitions, in-house software development, and the use of opensource software. Google and Azure have also relied on their company’s existing products—Microsoft 

leveraging its Office 360 Suite and Google leveraging its collection of APIs.623

In the case that a new entrant can overcome this entry barrier, it must also invest substantial 

resources to overcome network effects within the market. Infrastructure providers benefit from 

network effects—the more customers on a platform, the more third parties build services that integrate 

well with that platform leading to more services to attract customers. Amazon, Microsoft, and Google 

all have hundreds of products listed in their third-party marketplace, while Amazon lists 9,250.

624 In 

interviews with Subcommittee staff, third-party software vendors said that they had little choice but to 

integrate their products with the incumbents, most notably, AWS. 

Cloud infrastructure providers also need to ensure that the knowledge and expertise of their 

platform’s technology are available to their customers. To achieve this, cloud infrastructure providers 

launch partner networks that include consulting firms trained to help enterprise customers move to the 

619 Get Authorized: Joint Authorization Board, FEDRAMP, https://www.fedramp.gov/jab-authorization/ (last visited on 

Sept. 26, 2020).

620 Interview with Source 407 (Sept. 10, 2020).

621 Submission from Source 264, to H. Comm. on the Judiciary, 58 (Nov. 21, 2011) (on file with Comm.).

622 AWS Marketplace, AMAZON https://aws.amazon.com/marketplace (last visited on Oct. 4 2020); Find solutions to support 

innovation, MICROSOFT AZURE https://azure.microsoft.com/en-us/marketplace/ (last visited on Oct. 4, 2020); GOOGLE 

CLOUD PLATFORM, https://console.cloud.google.com/marketplace (last visited on Oct. 4, 2020).

623 Submission from Source 170, to H. Comm. on the Judiciary (Nov. 21, 2011) (on file with Comm.); Production of 

Google, to H. Comm. on the Judiciary, GOOG-HJC-02456801 (2010) (on file with Comm.).

624 AWS Marketplace, AMAZON https://aws.amazon.com/marketplace (last visited on Oct. 4, 2020).
119

public cloud, such as AWS Partner Network (APN) Consulting Partners,625 and Microsoft Solution 

Providers.626 Cloud infrastructure providers also offer trainings and exams to certify members of the 

workforce as proficient in various uses of their technology. Additionally, infrastructure providers have 

programs to support third-party software vendors working to integrate with the infrastructure 

provider’s cloud. 

Many market participants interviewed by Subcommittee staff believe that surpassing the 

incumbents in the market will be challenging because of the potential for vendor lock-in. Other 

evidence reviewed by Subcommittee staff bolsters this concern, suggesting that lock-in exists because 

switching costs for cloud computing customers are high.627

Subcommittee staff has identified several common techniques infrastructure providers use to 

initially lock-in customers, including contract terms, free tier offerings, and egress fees. The first is 

long-term contracts. In several responses to the Committee’s requests for information, third parties 

explained they have contracts lasting from 3-to-5 years with the infrastructure providers. 

Another common technique is using free tier products, where each cloud platform offers a free 

tier of services ranging from always free to trial offers.628 Market participants suggest that while the 

free tier products vary slightly among the major firms, they are relatively similar. When a customer’s 

free trial expires, it is faced with switching to another provider or starting to pay for service. Switching 

requires an investment of time and resources to adapt to the new service provider, as well as possibly 

paying egress fees to the prior vendor. As a result, customers may decline to switch at the conclusion 

of free trials. 

Whether a customer begins using cloud on free tier products or not, once they have 

substantially built and migrated to a platform, they face high switching costs in the form of fees to 

move the data, along with the technical and labor costs associated with switching the data. When a 

company moves data into the cloud from hard drives or private servers, they are often charged ingress 

fees, which are generally low or free.629 When a company, however, chooses to move data to another 

infrastructure provider, they are charged an egress fee. Egress fees vary slightly by company and 

region.

625 Partners, AMAZON, https://aws.amazon.com/partners/ (last visited on Sept. 26, 2020).

626 Solution Providers, MICROSOFT, https://www.microsoft.com/en-us/solution-providers/home (last visited on Oct. 4, 

2020).

627 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04215099 (Dec. 31, 2018) (on file with Comm.).

628 See, e.g., AWS Free Tier, AMAZON, https://aws.amazon.com/free/ (last visited on Oct. 4, 2020).

629 All Network Pricing, GOOGLE CLOUD, https://cloud.google.com/vpc/network-pricing (last visited on Oct. 4, 2020).
120

Market participants explain that egress fees are often not transparent and are sometimes 

charged even when data is not leaving the datacenter.630 One market participant said that these fees 

“can create significant financial barriers to migrating away from particular cloud storage providers.”

631

Additionally, when a customer decides to move any of its operations to a different 

infrastructure provider, it often must overcome technical design challenges. Several market 

participants spoke to the challenges of finding cloud developers that know the underlying technology 

of multiple cloud infrastructures as a barrier to both switching, either from one cloud to another, or to 

set up multi-cloud operations. As one third party describes, “businesses often have to calibrate a 

complex set of technical frameworks, settings, and customized interfaces to adapt their business to the 

potentially unique way the cloud storage provider has chosen to operate their service.”

632 For example, 

in an investor statement in 2020, Snap explained:

[T]he vast majority of our computing [runs] on Google Cloud and AWS, and our 

systems are not fully redundant on the two platforms. Any transition of the cloud 

services currently provided by either Google Cloud or AWS to the other platform or to 

another cloud provider would be difficult to implement and will cause us to incur 

significant time and expense.633

When asked about lock-in, many market participants discussed how in response to the rise of a 

few dominant platforms in the cloud market, new strategies have emerged to increase portability 

between vendors and allow customers to use multiple clouds. Market participants note, however, that 

today interoperability is a challenge, and it is unclear how cooperative dominant cloud infrastructure 

providers will be in supporting partnerships and standards to facilitate these strategies. Given the 

current trends towards concentration in the cloud infrastructure market, further scrutiny of the role 

standards play toward decreasing switching costs and enabling portability and interoperability is 

warranted.

Finally, Subcommittee staff interviewed market participants about related competition concerns 

facing third-party software vendors. Many third-party software vendors compete with first-party 

products listed in the infrastructure provider’s console. Market participants explain that these 

competitive offerings are often the first products customers see because they are displayed within the 

customer’s existing console in a format that makes it easier for users to add to their existing cloud 

630 Interview with Source 465 (May 27, 2020).

631 Submission from Source 264, to H. Comm. on the Judiciary, 6 (Nov. 21, 2011) (on file with Comm.).

632 Id. at 5.

633 Snap Inc., Annual Report (Form 10-K) 11 (Dec. 31, 2019), http://d18rn0p25nwr6d.cloudfront.net/CIK0001564408/0cfebc98-816e-44ac-8351-5067b4f88f0c.pdf. 
121

stack, seamlessly including the product in their billing and licenses and with minimal technical setup.634

As a result, it is difficult for customers to compare prices and features included in the offerings 

when they are not listed side-by-side. Although third-party vendors can sell their service directly to 

consumers through their own websites, many smaller cloud vendors use the marketplaces of the 

dominant infrastructure providers to reach customers, which require fees and are subject to competition 

concerns that are similar to other marketplaces examined by Subcommittee staff during the 

investigation. Market participants have raised concerns that cloud infrastructure providers can 

preference their own offerings, or offer these products with exceedingly steep discounts, making it 

difficult for third-party software vendors with fewer products to compete.635

Significantly, because the leading infrastructure providers have access to competitively 

significant data in the marketplace, they have insight into usage metrics regarding any managed service 

that runs on their infrastructure.

636 Market participants told the Subcommittee that they have concerns 

that this data can be used by infrastructure providers to make decisions regarding which types of 

software to acquire or replicate to offer through their first-party console.637

H. Voice Assistant

Voice assistants act as a user interface that enables exchanges between computing devices 

through a person’s voice.638 Today users can ask their electronic devices to play the morning news or 

start a conference call.639 When combined with smart speakers, voice assistants can become a gateway 

to the internet, and also be used to connect other “smart” devices, such as lighting, thermostats, 

security monitors, and even kitchen appliances.640 While voice assistants began as mobile phone apps, 

they have become integrated into other devices, including cars and homes.641

634 Getting Started, AMAZON WEB SERVICES, https://docs.aws.amazon.com/awsaccountbilling/latest/aboutv2/billinggetting-started.html (last visited on Oct. 4, 2020).

635 Submission from Source 170, to H. Comm. on the Judiciary, 7 (Oct. 18, 2019) (on file with Comm.).

636 Innovation and Entrepreneurship Hearing at 93 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC), 44–45 (response to Questions for the Record of Nate Sutton, Assoc. Gen. Counsel, Amazon.com, 

Inc.).

637 See Alistair Barr, Amazon Finds Startup Investments in the ‘Cloud,’ REUTERS (Nov. 9, 2011), 

http://www.reuters.com/article/amazon-cloud-idUSN1E7A727Q20111109.

638 Submission from Source 301, to H. Comm. on the Judiciary, Source 301-00000080 at 2 (Oct. 15, 2019) (on file with. 

Comm.). 

639 Submission from Source 918, to H. Comm. on the Judiciary, 2 (Nov. 4, 2019) (on file with. Comm.).

640 Submission from Source 918, to H. Comm. on the Judiciary, Source 918-0002029 (Nov. 4, 2019) (on file with Comm.).

641 Submission from Source 711, to H. Comm. on the Judiciary, Source 711-00000080 at 13 (Oct. 15, 2019) (on file with. 

Comm.).
122

There are two types of voice assistants on the market: general and specialized. General voice 

assistants—such as Siri, Alexa, and Google Assistant—can respond to queries and interact with a 

range of applications. Specialized voice assistants focus on a specific vertical—such as healthcare or 

banking—where there is a limited vocabulary universe and more specific responses.642 For example, 

Snips, a privacy-centric voice assistant owned by Sonos, specializes in commands for playing music on 

smart speakers.643

Today, voice assistants interact with humans by receiving specific requests and sending 

feedback through a voice response. The first step is to deliver the “wake word”—such as “hey, Siri” on 

iPhones—designed to activate the system. Once activated, a voice assistant can execute a command, 

which triggers a voice application.644

Voice Assistant Ecosystem645

Although there are multiple types of voice assistants within the ecosystem, Subcommittee staff 

focused primarily on voice assistant platform vendors and third-party hardware manufacturers, 

including smart speaker manufacturers and Internet of Things (IoT) compatible device manufacturers. 

The business model for these two groups varies. A Voice assistant platform vendors can monetize its 

platform by using its ecosystem to drive revenue to complementary lines of business such as e642 Id.

643 Thomas Ricker, Sonos buys Snips, a privacy-focused voice assistant, THE VERGE (Nov. 21, 2019), 

https://www.theverge.com/2019/11/21/20975607/sonos-buys-snips-ai-voice-assistant-privacy. 

644 Hyunji Chung, Jungheum Park & Sangjin Lee, Digital Forensic Approaches for Amazon Alexa Ecosystem, DFRWS 

(2017), https://arxiv.org/ftp/arxiv/papers/1707/1707.08696.pdf

645 Prepared by the Subcomm. based on Hyunji Chung, Jungheum Park & Sangjin Lee, Digital Forensic Approaches for 

Amazon Alexa Ecosystem, DFRWS (2017), https://arxiv.org/ftp/arxiv/papers/1707/1707.08696.pdf
123

commerce, search, or entertainment.646 It can also charge voice-application developers to be the 

recommended application for a specific command.647 As they become widely adopted, stores on voice 

assistant platforms—such as the “Alexa Skills Store”—can offer premium content and collect revenue 

share on payments.648 Third-party hardware manufacturers generate income by selling hardware, and 

in some cases, by offering subscription services such as home monitoring.649

Voice assistants have grown in popularity over recent years due to technological advancements 

in natural language processing. Although the market is nascent, market participants and industry 

experts view voice-enabled devices as an opportunity to lock consumers into information ecosystems. 

The smartphone and smart speaker are the two main portals for voice assistants. Apple and Google 

lead in the smartphone market, and Amazon leads in the smart speaker market.650 According to one 

consulting firm, of the 1.1 billion shipments of virtual assistants in 2019, Apple’s Siri (35%) has the 

highest market share globally, followed by Google Assistant (9%) and Amazon Alexa (4%).651

Although a significant share of shipments is attributed to Microsoft Cortana (22%) because of the 

popularity of Windows PCs globally, Cortana is generally not considered a voice assistant platform.652

Market participants emphasize that smart speakers represent an essential “hub” or gateway for 

smart homes and are driving voice-assistant adoption.653 Smart speakers are estimated to currently 

have 35% U.S. household penetration, which is predicted to grow to 75% by 2025.654 As of January 

2019, Amazon had a significant lead in the U.S. market at 61.1%, followed by Google at 23.8%, Apple 

at 2.7%, and Sonos at 2.2%.

655

646 Production from Google, to H. Comm. on the Judiciary, GOOG-HJC-04257931 (Mar. 9, 2017) (on file with Comm.).

647 Id.

648 Id.

649 Alison DeNisco Rayome, How to Monetize Your IoT Project, TECHREPUBLIC (June 20, 2018), 

https://www.techrepublic.com/article/6-steps-to-monetizing-your-iot-project/. 

650 Submission from Source 918, to H. Comm. on the Judiciary, Source 918-0002763 (Nov. 4, 2019) (on file with Comm.). 

651 Press Release, Futuresource Consulting, Virtual Assistants to Exceed 2.5 Billion Shipments in 2023 (Dec. 18, 2019) 

https://www.futuresource-consulting.com/press-release/consumer-electronics-press/virtual-assistants-to-exceed-25-billionshipments-in-2023/. 

652 Id. Mary Jo Foley, Microsoft CEO Nadella makes it official: Cortana is an app, not a standalone assistant, ZDNET (Jan. 

18, 2019), https://www.zdnet.com/article/microsoft-ceo-nadella-makes-it-official-cortana-is-an-app-not-a-standaloneassistant/. 

653 Production from Google, to H. Comm. on the Judiciary, GOOG-HJC-04258666 (Jan. 28, 2019) (on file with Comm.) 

(“Speakers still going to be very important. [company] cited stats that suggested that only 20% of their “smart home” 

customers are new to the category. And it’s fair to say that many/most of these existing smart home customers started with 

sound.”).

654 See generally Submission from Source 918, to H. Comm. on the Judiciary (Nov. 4, 2019) (on file with Comm.). 

655 Id. at 7.
124

A voice assistant platform vendor can expand its ecosystem by adding IoT devices and voice 

applications. Both IoT devices and voice applications can be first-party—owned by the voice assistant 

platform vendor—or third-party, if the vendor has set up services to allow for manufacturers to create 

voice assistant-enabled devices. Amazon’s Alexa ecosystem, measured in terms of compatible IoT 

devices and voice applications, is the largest of the three primary ecosystems. In 2017, voice assistants 

made their first serious moves beyond smart speakers into other product categories.656 The voice 

assistant-compatible device market is vast and includes kitchen appliances, security cameras, and even 

trash cans.657

Market participants suggest there are several barriers to entry to compete with general voice 

assistant platforms. These include overcoming the network effects early entrants have benefited from, 

including financial investment in hardware, software, and infrastructure, and the ability to sell voice 

assistant-enabled devices at a discount.

Like many platform-based businesses, the voice assistant market benefits from network effects.

The more users on a platform, the more third-party devices and applications become available, which 

attracts more users to the platform. 658 These network effects for voice assistant platforms are amplified 

by machine learning and artificial intelligence (AI). Improvements in Natural Language Processing 

(NLP) and AI are expected to improve the quality of voice assistants and contribute to wider 

adoption.659 Voice assistant technology improves at a faster rate when there are more users providing 

the voice samples needed to train AI. In testimony to the Subcommittee, Professors Maurice Stucke 

and Ariel Ezrachi describe this a “Learning-by-Doing.” As they note:

Learning–by–doing network effect is not limited to online searches, but will be present 

in any environment in which algorithms evolve and adapt based on experience, such, 

for example, the development of voice recognition or other instances based on machine 

learning.660

656 Submission from Source 918, to H. Comm. on the Judiciary, Source 918-0002024 (Nov. 4, 2019) (on file with Comm.).

657 See, e.g., Christopher Mims, All Ears: Always-On Listening Devices Could Soon Be Everywhere, WALL ST. J. (July 12, 

2018), https://www.wsj.com/articles/all-ears-always-on-listening-devices-could-soon-be-everywhere-1531411250. 

658 Submission of Source 918, to H. Comm. on the Judiciary, Source 918-0002025 at 12 (Oct. 15, 2019) (on file with 

Comm.).

659 Submission of Source 711, to H. Comm. on the Judiciary, Source 711-00000080 at 12 (Oct. 15, 2019) (on file with 

Comm.).

660 Data and Privacy Hearing at 6–7 (statement of Maurice E. Stucke, Prof. of Law, Univ. of Tennessee, and Ariel Ezrachi, 

Slaughter and May Prof. of Competition Law, Univ. of Oxford, Fellow, Pembroke Coll., Dir., Oxford Ctr. For Competition 

Law and Pol’y).
125

The scale of users generating data is arguably the most important asset in terms of AI.661 The 

incumbents have access to large data sets that—when combined with machine learning and AI—

position them to benefit from economies of scope in the smart home.662

Competing as a voice assistant platform also requires significant financial resources. A firm 

must make significant investments to design and train a voice assistant, as well as acquiring the 

physical infrastructure: hardware and cloud computing. Additionally, incumbents have also acquired 

various firms that specialize in voice recognition and natural language processing, a functionality that 

is used in their voice assistants. For example, both Apple and Amazon acquired companies to develop 

their core voice recognition technologies, and every incumbent has continually invested in AI startups

to improve their voice assistant ecosystem.663

Currently, voice assistant software is built on cloud computing infrastructure. In the case of 

Amazon Alexa and Google Assistant, the voice assistant platforms also own the underlying cloud 

infrastructure, AWS, and GCP, respectively. Market participants note that advancements in voice 

assistant ecosystems are beginning to rely on edge computing technology, which brings the 

computation and data storage closer to the device and is a technology in which the incumbent cloud 

market leaders have a head start.664

Market participants have also raised concerns about incumbent firms offering voice-enabled 

hardware—specifically hubs such as smart speakers—to both collect large amounts of personal user 

data and strengthen other lines of business. At the Subcommittee’s field hearing, Sonos CEO Patrick 

Spence explained: 

Google and Amazon have flooded the market with dramatically price-subsidized 

products. Indeed, they make no pretense of the fact that the products themselves are 

money losers and they routinely give them away at steep discounts, even for free. It is 

difficult to predict the impact that voice assistants will have on search and e-commerce, 

but voice activated speakers have the potential to dramatically alter the way that 

consumers interact with the internet. We believe that Google and Amazon have been 

willing to forgo profits in smart speakers for this reason, in addition to their ability to 

monetize the valuable household data that these products vacuum up. And if voice 

purchasing and voice search do become the next big thing, they will own the market 

because their strategy is succeeding. Those two companies now control roughly 85% of 

661 Submission of Source 918, to H. Comm. on the Judiciary, Source 918-0002763 at 12 (Oct. 15, 2019) (on file with 

Comm.).

662 Submission of Source 918, to H. Comm. on the Judiciary, 37 (Sept. 1, 2019) (on file with Comm.).

663 See, e.g., How Big Tech Is Battling To Own the $49B Voice Market, CBINSIGHTS (Feb. 13, 2019), 

https://www.cbinsights.com/research/facebook-amazon-microsoft-google-apple-voice/. 

664 FUTURE TODAY INST., 2020 TECH TRENDS REPORT (2020), https://futuretodayinstitute.com/2020-tech-trends/.
126

the U.S. smart speaker market . . . It’s not because their hardware businesses are 

profitable in and of themselves.665

As the voice assistant market expands, it may be difficult for users to switch between 

platforms. Because voice assistant platforms are not always interoperable, users would incur costs to 

purchase one or more new devices. Moreover, voice assistant technology is designed to learn its user’s 

preferences over time. These preferences range from settings like billing information and default 

services for responding to music commands, to more advanced learning like past voice commands and 

shopping history. As a voice assistant improves its “understanding” of its user, it may increase the 

costs associated with switching to another platform. As one market participant noted in a submission to 

the Subcommittee, “the user may become more dependent on that particular voice assistant and be far 

less likely to use a rival voice assistant that has not yet ‘caught up’ with the user’s preferences.”

666

The design of most voice assistants—specifically on screenless devices—amplifies the ability 

of voice assistant platforms to favor their services as a default or as a response with limited choice.667

This dynamic makes it easier for popular voice assistants to favor their first-party services. 

There is also a significant potential for misuse of data to harm competition or consumers. 

Similar to other platforms, such as cloud and operating systems, voice assistant platforms collect and 

store users’ interactions with the voice assistant.668 During the investigation, several companies shared 

concerns that voice assistant platforms would be able to use this vantage to glean competitive insights 

from third-party voice applications or smart appliances that are performing well. As a result, platforms 

could use that data to acquire competitive threats or integrate their features into the company’s product.

Privacy and data experts have also commented that the smart home ecosystem is some of the 

most sensitive data that can be collected.669 Voice assistant platforms not only record voice 

interactions, but also receive information about the skills used—“whether a light is on or off. Or, if a 

customer links Alexa to a third-party calendar skill, Alexa may receive information about the events on 

the customer’s calendar.”

670 This raises significant concerns regarding whether a person has provided 

consent to data collection. Voice assistants not only collect information on the primary user, but also 

people in their environment, including children. 

665 Competitors Hearing at 3 (statement of Patrick Spence, CEO, Sonos, Inc.). 

666 Submission of Source 711, to H. Comm. on the Judiciary, Source 711-00000080 at 20 (Oct. 15, 2019) (on file with 

Comm.).

667 Id. at 17.

668 Innovation and Entrepreneurship Hearing at 86–87 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Policy, Google LLC). 

669 See generally SHOSHANA ZUBOFF, THE AGE OF SURVEILLANCE CAPITALISM (2019).

670 Innovation and Entrepreneurship Hearing at 40 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Amazon.com, Inc.). 
127

Finally, leaders in the voice assistant ecosystem set the rules for third parties. To make a voice 

assistant enabled device, market participants must comply with voice assistant platform vendor 

specifications. As Mr. Spence of Sonos noted in his testimony before the Subcommittee:

To gain access to their platforms and integrate with their services, these companies 

issue all manner of take-it-or-leave-it demands, from early and technically detailed 

access to our product roadmaps, to proprietary business data, including sales forecasts, 

to waivers of essential contractual rights.671

The Subcommittee also heard from multiple voice assistant developers that have struggled to 

gain access to key functionality needed to build their applications, such as the unprocessed user 

commands.672 While still developing, the voice assistant market shows early signs of market 

concentration.

I. Web Browsers

A web browser is software that retrieves and displays pages from the Internet. People often use 

browsers to navigate to and spend time on websites and to search the web. Most other activities online, 

whether it is on a mobile phone or a television screen, are made possible through a browser.673

Behind every browser is a “browser engine,” also known as a layout engine or rendering 

engine. A browser engine is the central software component of a web browser, transforming content 

hosted on web servers into a graphic depiction that people can interact with. Browsers interpret control 

codes within web pages, which indicate the structure of the data, such as the beginning and end of an 

item, and the way to present it to the user, such as headings, paragraphs, lists, or embedded images. 

The browser engine takes this code to “draw the web page” on the user’s screen and noting which parts 

of it are interactive. The non-engine components of the browser typically include the menus, toolbars, 

and other user-facing features, which are layered over top of the engine.674

Browsers abide by standards to ensure that anyone can properly use features within a website 

on any browser. For example, standards such as CSS and XML help ensure that a website functions the 

same in every browser.675 Web browser standards organizations include the World Wide Web 

671 Competitors Hearing at 4 (2020) (statement of Patrick Spence, CEO, Sonos, Inc.).

672 Submission of Source 301, to H. Comm. on the Judiciary, Source 301-00000080 at 23 (Oct. 15, 2019) (on file with 

Comm.).

673 Submission from Source 385, to H. Comm. on the Judiciary, 3 (Oct. 11, 2019) (on file with. Comm.).

674 Id. at 4.

675 Standards, W3C, https://www.w3.org/standards/ (last visited on Sept. 26, 2020).
128

Consortium (W3C), Web Hypertext Application Technology Working Group (WHATWG), and 

Internet Engineering Task Force (IETF). Through these organizations, stakeholders work in 

partnership to ensure that browser engines and web pages are interoperable.676 W3C has become one of 

the most important organizations for browser standards. W3C standards undergo a rigorous review 

process prior to implementation.677

Browser vendors monetize their access to users, usually through search royalties. For example, 

whenever someone types a search query into the search bar on Firefox, Google records that action, and 

the Mozilla corporation receives a royalty.678 Browsers also bring in ad revenues. For example, Brave 

sells advertisers the option to run desktop notification ads to users who choose to see ads.679

The browser market is highly concentrated. Google’s Chrome and Apple’s Safari control 

roughly 80% of the browser market.680 As of August 2020, Chrome is the leader in the U.S. desktop

browser market with 58.6% of the market share, followed by Safari (15.8%), Edge (8.76%), Firefox 

(7.6%), and Internet Explorer (5.36%).681 On mobile devices, Safari (55.5%) and Chrome (37.4%) 

have significant leads on their rivals, such as Samsung Internet (5.01%), Firefox (0.77%), and Opera 

(0.44%).682 Additionally, the browser market has concentrated around three browser engines, Gecko, 

WebKit, and Blink, used in Firefox, Apple’s Safari, and Google’s Chrome, respectively.683

Google’s hold on the browser market extends beyond Chrome. Google releases the code base 

used to make the Chrome browser as the free, open-source project Chromium.684 Chromium is used in 

Microsoft’s Edge browser, Amazon’s Silk browser, Opera, and other browsers that are often referred 

to as “Chromium-based.”

685 Similarly, Apple extends its power by mandating that all browser 

applications on the iPhone use Apple’s browser engine, WebKit.686

676 Submission from Source 993, to H. Comm. on the Judiciary (Oct. 11, 2019) (on file with. Comm.).

677 Process for 2020, W3C, https://www.w3.org/wiki/Process2020 (last visited on Sept. 26, 2020). 

678 Innovation and Entrepreneurship Hearing at 42 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC). 

679 Expand your business with Brave Ads, BRAVE, https://brave.com/brave-ads-waitlist/ (last visited on Sept. 26, 2020).

680 U.S. Browser Market Share, STATCOUNTER https://gs.statcounter.com/browser-market-share/all/united-states-of-america

(last visited on Sept. 26, 2020).

681 U.S. Desktop Market Share, STATCOUNTER https://gs.statcounter.com/browser-market-share/desktop/united-states-ofamerica (last visited on Sept. 26, 2020).

682 U.S. Mobile Market Share, STATCOUNTER, https://gs.statcounter.com/browser-market-share/mobile/united-states-ofamerica (last visited on Sept. 26, 2020). 

683 Submission from Source 993, to H. Comm. on the Judiciary, 5 (Oct. 11, 2019) (on file with. Comm.).

684 THE CHROMIUM PROJECTS, https://www.chromium.org/.

685 Submission from Source 993, to H. Comm. on the Judiciary, 3 (Oct. 11, 2019) (on file with. Comm.).

686 Innovation and Entrepreneurship Hearing at 1–2 (response to Questions for the Record of Kyle Andeer, Vice Pres., 

Corp. Law, Apple, Inc.). 
129

Browser competition has also led to the creation of a browser extension submarket. A browser 

extension adds additional features to a web browser, including user interface modifications and adblocking. They can also provide for niche browser customization and experimentation of new 

functionality before it is implemented into the main browser functionality.687 Popular add-ons include 

ad blockers, LastPass, and Grammarly.688

Competition in this market is important to promoting innovation online. In a submission to the 

Subcommittee, a market participant explained: 

Competing browser engines push each other for innovations in raw performance in 

several respects, including faster rendering, greater reliability, and a number of other 

technical improvements; this competition is qualitatively different from, and greater 

than, competition over just the browser product.689

Browser diversity is also important for ensuring an open internet and reduces the risk that web 

developers will build sites optimized for the leading engine as opposed to web standards.690 Moreover, 

as developers work on advancing browser engine technology, they create technologies that can 

improve the overall internet ecosystem. For example, Rust is a programming language that Mozilla 

engineers developed while writing the Servo layout technology for browser engines.691 Developers use 

Rust for other applications today, including gaming, operating systems, and other new software 

applications.692 There is a general concern that without vibrant competition this form of innovation will 

suffer, discouraging the development of new browser engine technology.693

Browsers protect their dominance through default settings, which create a barrier to entry.

694

Defaults exist in both desktop and mobile markets. Although users can set different browsers more 

easily for desktop computers than on mobile devices, “settings can impact the stickiness over time,”

such as when a software update overrides a user’s preference, requiring them to take “complex steps to 

restore their browser choice.”

695 In some cases, consumers are unable to delete the preloaded browser. 

687 Interview with Source 27 (June 29, 2020).

688 Tyler Lacoma, The best Google Chrome extensions, DIGITALTRENDS (Apr. 4, 2020), 

https://www.digitaltrends.com/computing/best-google-chrome-extensions/.

689 Submission from Source 993, to H. Comm. on the Judiciary, 5 (Oct. 11, 2019) (on file with. Comm.).

690 Id.

691 Rust language, MOZILLA RESEARCH, https://research.mozilla.org/rust/ (last visited on Sept. 26, 2020).

692 Id.

693 Interview with Source 481 (July 2, 2020)

694 Submission from Source 993, to H. Comm. on the Judiciary, 10–11 (Oct. 11, 2019) (on file with. Comm.); Submission 

from Source 269, to H. Comm. on the Judiciary, 2–3 (July 23, 2019) (on file with. Comm.).

695 Submission from Source 993, to H. Comm. on the Judiciary, 10 (Oct. 11, 2019) (on file with. Comm.).
130

For example, on Apple iOS devices and Facebook’s Oculus, users are unable to delete the preloaded 

browser. Some popular mobile applications can preset webpage links to a predetermined browser, such 

as the Apple Mail App (Safari) and the Search widget on an Android device (Chrome).696

J. Digital Advertising

There are two principal forms of digital advertising: search advertising and display advertising. 

Search advertising refers to digital ads on desktop or mobile search engines, such as the Google.com 

homepage, displayed via “search ad tech” alongside search engine results. Search advertising is often 

bought and sold via real-time bidding (RTB) auctions among advertisers, where advertisers set the 

prices they are willing to pay for a specific keyword in a query.697 Display advertising refers to the 

delivery of digital ad content to ad space on websites and mobile apps, which is referred to as 

“inventory.” Like search advertising, buying and selling display ads often involves real-time 

bidding.698

Within display advertising, there are two separate “ad tech” markets that Subcommittee staff 

reviewed during the investigation: first-party and third-party. “First-party” platforms refer to 

companies such as Facebook, Twitter, and Snap, which sell ad space on their own platforms directly to 

advertisers. Google also uses first-party ad tech to sell display ads on its own properties, most notably 

YouTube. Third-party display ad tech platforms are run by intermediary vendors and facilitate the 

transaction between third-party advertisers, such as the local dry cleaner or a Fortune 500 company, 

and third-party publishers, such as The Washington Post or a blog.699 Third-party ad tech providers 

include Google, Flashtalking, Sizmek (owned by Amazon), and the Trade Desk, among others.700

Software in display ads is programmatic, meaning that specialized software automates the 

buying and selling of digital ads. Market participants explain that this automated approach provides 

greater liquidity, better return-on-investment metrics, more precise ad targeting, and lower transaction 

costs. One major drawback, however, is that this process lacks transparency.701 Google, specifically, 

“does not disclose to the publishers on the other ends of these trades what their space ultimately sold 

for and how much Google keeps as its share.”

702 As another market participant told Subcommittee 

696 Id. at 5; Submission from Source 269, to H. Comm. on the Judiciary, 2 (July 23, 2019) (on file with. Comm.).

697 Submission from Source 465, to H. Comm. on the Judiciary, 6 (June 3, 2019) (on file with Comm.). 

698 Id.

699 Id. at 5.

700 Competition & Mkts. Auth. Report at 266.

701 Dina Srinivasan, Why Google Dominates Advertising Markets, 24 STAN. TECH. L. REV. (forthcoming 2020) (manuscript 

at 7–8), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3500919

702 Id. at 8.
131

staff, Google could make the process “more transparent,” but given Google’s financial stake in 

maintaining secrecy, “there is no incentive to.”

703

The Ad-Tech Suite704

Ad exchanges refer to the “ad trafficking system that connects advertisers looking to buy 

inventory with publishers selling inventory.”

705 Sales on ad exchanges occur primarily through (1) 

open real-time bidding auctions, (2) closed real-time bidding auctions, or (3) programmatic direct 

deals.706

Sell-side software includes publisher ad servers.

707 The primary function of a publisher ad 

server is to fill ad space on a publisher’s website that is personalized to the interests of a specific 

website viewer.708 Sell-side software also includes ad networks, which aggregate ad inventory from 

many different publishers and divide that inventory based on user characteristics—such as age or 

location. Ad networks sell the pool of inventory through ad exchanges or demand-side platforms 

(DSPs).709

Buy-side software includes advertiser ad servers, software that stores, maintains, and delivers 

digital ads to the available inventory. Ad servers facilitate the programmatic process that makes 

instantaneous decisions about which ads to display on which websites to which users and helps 

executes to display the ad on that site. Ad servers collect and report data, such as ad impressions and 

703 Interview with Source 004 (Apr. 23, 2020).

704 Prepared by Subcomm. based on Dina Srinivasan, Why Google Dominates Advertising Markets, 23 STAN. TECH. L. REV. 

15 (forthcoming 2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3500919.

705 Submission from Source 465, to H. Comm. on the Judiciary, 9 (June 3, 2019) (on file with Comm.). 

706 Id.

707 Competition & Mkts. Auth. Report at 263.

708 Submission from Source 465, to H. Comm. on the Judiciary, 8 (June 3, 2019) (on file with Comm.). 

709 Id. at 9.
132

clicks, for advertisers to monitor ad performance and track conversion metrics.710 Buy-side software 

also includes demand-side platforms, software that allows advertisers to buy advertising inventory 

from a range of publishers. Demand-side platforms use data to create targeted ad audiences and engage 

in purchasing and bidding.711

The ad tech suite also includes analytics tools that allow advertisers and publishers to measure 

ad campaign efficiency, including consumers’ interactions with an ad. Similarly, data management 

platforms (DMPs) aggregate and store consumer data from various sources and process the data for 

analysis. Advertisers and publishers use data management platforms to track, partition, and target 

consumer audiences across websites.712

Over the last decade, the digital advertising market has experienced double-digit year-over-year 

growth. The market, however, has become increasingly concentrated since the advent of programmatic 

trading. In 2017, Business Insider reported that Google and Facebook accounted for 99% of year-overyear growth in U.S. digital advertising revenue.713 Today, advertisers and publishers alike have few 

options when deciding how to buy and sell online ad space.714

Market participants suggest this concentration likely exists in part due to high barriers to entry. 

Google and Facebook both have a significant lead in the market due to their significant collection of 

behavioral data online, which can be used in targeted advertising. Additionally, Google and Facebook 

do not provide access to this unique data in open data exchanges. Advertisers’ only access to this 

information is indirect—through engagement with Google and Facebook’s ad tech.715

Amazon’s advertising business is starting to obtain a portion of the U.S. year-over-year digital 

advertising revenue growth.716 Amazon has been able to enter the market because it has its own trove 

of user data—namely, competitively significant first-party data related to retail searches and purchases. 

Moreover, Amazon’s 50% penetration across U.S. households and its reach with high-income 

customers are likely to help drive its ad revenue growth.717 While Amazon can leverage its ecosystem 

to overcome some of the barriers to entry in ad tech, the recent U.K. Competition and Markets 

710 Competition & Mkts. Auth. Report at 263.

711 Submission from Source 888, to H. Comm. on the Judiciary, 8 (June 3, 2019) (on file with Comm.). 

712 Id. at 10.

713 Alex Heath, Facebook and Google Completely Dominate the Digital Ad Industry, BUSINESS INSIDER. (Apr 26, 2017), 

https://www.businessinsider.com/facebook-and-google-dominate-ad-industry-with-a-combined-99-of-growth-2017-4.

714 Dina Srinivasan, Why Google Dominates Advertising Markets, 23 STAN. TECH. L. REV. 4-5 (forthcoming 2020), 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3500919. 

715 Id. at 92.

716 Kiri Masters, What’s Driving Amazon’s $10 Billion Advertising Business, FORBES (July 26, 2019), 

https://www.forbes.com/sites/kirimasters/2019/07/26/whats-driving-amazons-10bn-advertising-business/#4cc9c84aa043.

717 Id.
133

Authority report found that, as of today, Amazon’s ad tech likely only has advantages in the retail 

sector.718

DOMINANT ONLINE PLATFORMS

A. Facebook

Overview

Founded in 2004 by Mark Zuckerberg, Eduardo Saverin, Chris Hughes, and Dustin 

Moskowitz,719 Facebook is the largest social networking platform in the world. Its business operates 

around five primary product offerings, including: (1) Facebook, a social network platform; (2) 

Instagram, a social network app for photos and videos; (3) Messenger, a cross-platform messaging app 

for Facebook users; (4) WhatsApp, a cross-platform messaging app; and (5) Oculus, a virtual reality 

gaming system.

Facebook reported in July 2020 that its platform includes 1.79 billion daily active users 

(DAUs),720 2.7 billion monthly active users (MAUs),721 and an average revenue per user (ARPU) of 

$7.05.722 Last year, Facebook’s businesses collected about $70 billion in revenue—a 27% increase 

from the prior year—earning about $24 billion in income from its operations.723 Facebook reported 

that its family of products—including Facebook, Instagram, Messenger, and WhatsApp—includes 2.47 

billion daily active people (DAP),724 3.14 billion monthly active people (MAP), and a family average 

revenue per person (ARPP) of $6.10.725

In addition to the Subcommittee’s investigation of Facebook’s monopoly power, state and 

federal antitrust authorities are investigating Facebook for potential violations of the U.S. antitrust 

laws. In July 2019, Facebook disclosed that the Federal Trade Commission (FTC) had opened an 

718 Competition & Mkts. Auth. Report at 282.

719 STEVEN LEVY, FACEBOOK: THE INSIDE STORY 65–69 (2020).

720 Facebook Inc., Quarterly Report (Form 10-Q) 29 (July 31, 2020), https://investor.fb.com/financials/sec-filingsdetails/default.aspx?FilingId=14302237. 

721 Id. at 30. 

722 Id. at 32. 

723 Id. at 35. See generally Howard A. Shelanski & J. Gregory Sidak, Antitrust Divestiture in Network Industries, 68 U. CHI.

L. REV. 1, 6 (2001) (“High profit margins might appear to be the benign and necessary recovery of legitimate investment 

returns in a Schumpeterian framework, but they might represent exploitation of customer lock-in and monopoly power 

when viewed through the lens of network economics.”). 

724 Facebook Inc., Quarterly Report (Form 10-Q) 25 (July 31, 2020), https://investor.fb.com/financials/sec-filingsdetails/default.aspx?FilingId=14302237. 

725 Id. at 35. 
134

antitrust investigation of Facebook in June 2019.726 Facebook also disclosed that in July 2019 the 

Department of Justice announced that it would begin an antitrust review of market-leading online 

platforms.727 In September 2019, New York Attorney General Letitia James announced that she joined 

with eight other attorneys general to lead a multistate investigation of Facebook, Inc.728 In October 

2019, Attorney General James reported that the investigation into Facebook grew to include 47 

attorneys general.729

Social Networking

a. Market Power

Facebook has monopoly power in the market for social networking.730 According to internal 

documents produced by Facebook to the Committee, it has high reach, time-spent, and significantly 

more users than its rivals in this market. Despite significant changes in the market—such as the advent 

of mobile devices, applications, and operating systems—Facebook has held an unassailable position in 

the social network market for nearly a decade, demonstrating its monopoly power.731

Facebook’s monopoly power is firmly entrenched and unlikely to be eroded by competitive 

pressure from new entrants or existing firms. Documents produced during the investigation by 

Facebook, including communications among its senior executives on market strategy, as well as a 

memorandum by a senior data scientist and economist at Facebook,732 support the conclusion that 

Facebook’s monopoly is insulated from competitive threats. The social network market has high entry 

barriers—including strong network effects, high switching costs, and Facebook’s significant data 

726 Facebook Inc., Quarterly Report (Form 10-Q) 42 (July 24, 2019), https://investor.fb.com/financials/sec-filingsdetails/default.aspx?FilingId=13550646. 

727 Id. at 53. 

728 Press Release, N.Y. Attorney General, AG James Investigating Facebook For Possible Antitrust Violations (Sept. 6, 

2009), https://ag.ny.gov/press-release/2019/ag-james-investigating-facebook-possible-antitrust-violations. 

729 Press Release, N.Y. Attorney General, Attorney General James Gives Update On Facebook Antitrust Investigation (Oct. 

22, 2019), https://ag.ny.gov/press-release/2019/attorney-general-james-gives-update-facebook-antitrust-investigation.

730 Facebook has argued to other antitrust enforcement bodies that limiting the product market to social networks at the 

exclusion of other markets, such as user attention, “would be artificial and would not reflect the competitive realities,” and 

that “competitive pressures to which Facebook reacts are global in nature.” See, e.g., Production of Facebook, to H. Comm. 

on the Judiciary, FB-HJC-ACAL-00012074 (2016) (White Paper on Relevant Markets and Lack of Dominance for Federal 

Cartel Office) (on file with Comm.). 

731 Fiona M. Scott Morton & David C. Dinielli, Roadmap for an Antitrust Case Against Facebook, OMIDYAR NETWORK

(June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-AgainstFacebook.pdf. 

732 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00111406 (Oct. 2018) (on file with Comm.) 

[hereinafter Cunningham Memo] (“Facebook has high reach and time-spent in most countries. User growth is tracking 

internet growth: global reach is roughly stable.”).
135

advantage—that discourage direct competition by other firms to offer new products and services.733

Facebook has also maintained and expanded its dominance through a series of acquisitions of 

companies it viewed as competitive threats, and selectively excluded competitors from using its 

platform to insulate itself from competitive pressure. Together, these factors have tipped the social 

networking market toward a monopoly.734

Several antitrust enforcement agencies have examined Facebook’s monopoly in recent years 

and reached similar conclusions. In July 2020, the United Kingdom’s Competition and Markets 

Authority (CMA) found that Facebook is dominant in the markets for social networks and digital 

display ads, and that its market power “derives in large part from strong network effects stemming 

from its large network of connected users and the limited interoperability it allows to other social 

media platforms.”

735 In July 2019, Germany’s Federal Cartel Office (Bundeskartellamt) found that 

“Facebook is the dominant company in the market for social networks,” and that in Germany’s social 

network market, “Facebook achieves a user-based market share of more than 90%.”

736 And in June 

2019, the Australian Competition & Consumer Commission (ACCC) found that “Facebook has 

substantial market power in a number of markets and that this market power is unlikely to erode in the 

short to medium terms.”

737

Facebook’s responses to the Committee’s requests for information claimed that it competes in a 

“rapidly evolving and dynamic marketplace in which competition is vigorous,” citing Twitter, 

Snapchat, Pinterest, and TikTok as examples of competition Facebook faces for “every product and 

733 Instead of competing directly with Facebook, such as Google attempted but failed to do with Google+, other social 

platforms provide niche products with social graphs that are orthogonal to Facebook’s graph. See id. at 4; FB-HJC-ACAL00111394 (“Linkedin, and Nextdoor coexist in the US with similar userbases but orthogonal graphs: Facebook connects 

friends and family, LinkedIn connects coworkers, Nextdoor connects neighbors.”).

734 See Bundeskartellamt, B6-22/16, Case Summary, Facebook, Exploitative business terms pursuant to Section 19(1) GWB 

for inadequate data processing, 8 (Feb. 15, 2019) (“The facts that competitors can be seen to exit the market and that there 

is a downward trend in the user-based market shares of the remaining competitors strongly indicate a market tipping 

process which will result in Facebook.com becoming a monopolist.”), 

https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Fallberichte/Missbrauchsaufsicht/2019/B6-22-

16.pdf?__blob=publicationFile&v=4. 

735 Competition & Mkts. Auth. Report at 26.

736 In addition to Facebook’s high market share, the Bundeskartellamt also found that Facebook has market power based on 

other measures, including its “access to competitively relevant data, economies of scale based on network effects, the 

behaviour of users who can use several different services or only one service and the power of innovation-driven 

competitive pressure were seen as relevant factors of market power.” Press Release, Bundeskartellamt, Bundeskartellamt 

prohibits Facebook from combining user data from different sources 4 (Feb. 7, 2019), 

https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Pressemitteilungen/2019/07_02_2019_Facebook_FAQs.pdf?

__blob=publicationFile&v=6. The Bundeskartellamt also noted that in terms of assessing market share by time spent on the 

network, “the Facebook group would have a combined market share far beyond the market dominance threshold pursuant 

to Section 18(4) GWB, even if YouTube, Snapchat, Twitter, WhatsApp, and Instagram were included in the relevant 

market.” Id. at 6.

737 Austl. Competition & Consumer Comm’n Report at 9; 78 (adopting a broader view on Facebook’s product market to 

include Twitter and Snapchat).
136

service” that it offers.738 According to Facebook, its users “have many choices and can leave Facebook 

if they’re not happy,”

739 allowing people to quickly abandon it. The ability of users to “explore the 

myriad other options available . . . creates strong competition for every product and service Facebook 

offers, as well as pressure to develop new products to attract and retain users.”

740

In response to other antitrust inquiries, Facebook said that it competes for users’ attention 

broadly.741 In a 2016 white paper prepared in response to an investigation by Germany’s Federal Cartel 

Office, Facebook stated that it “faces intense competition for user attention and engagement at every 

level,” listing companies as diverse as Candy Crush and Clash of the Clans—popular mobile gaming 

apps—along with YouTube, Twitter, Pinterest, Snapchat and others as competitors for users’

attention.742 Facebook similarly submitted to the ACCC that if the company does not compete 

vigorously, users will go to other “platforms, websites, apps, and other services—not just social media 

services—that compete for their attention.”

743 In an interview conducted by Subcommittee staff, a 

former employee explained that as a product manager at Facebook, “your only job is to get an extra 

minute. It’s immoral. They don’t ask where it’s coming from. They can monetize a minute of activity 

at a certain rate. So the only metric is getting another minute.”

744

Facebook describes a diverse list of other firms as competitive substitutes for Facebook, 

including Microsoft’s Bing, a search engine; Yelp, a publisher of crowd-sourced business reviews; and 

BuzzFeed, a digital news publisher.745 According to Facebook, these firms exert competitive pressure 

on Facebook in the market for users’ attention.746 Most recently, in response to an inquiry by the 

United Kingdom’s Competition and Markets Authority, Facebook calculated its market share as “time 

captured by Facebook as a percentage of total user time spent on the internet, including social media, 

dating, news and search platforms.”

747 Based on these measures, Facebook concluded that it lacks 

monopoly power.

738 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-APP0004 (Oct. 14, 2019); Innovation and 

Entrepreneurship Hearing at 1 (statement of Matt Perault, Dir. of Public Pol’y, Facebook), 

https://docs.house.gov/meetings/JU/JU05/20190716/109793/HHRG-116-JU05-Wstate-PeraultM-20190716.pdf.

739 Innovation and Entrepreneurship Hearing at 1 (response to Questions for the Record of Matt Perault, Dir. of Public 

Pol’y, Facebook).

740 Id.

741 See, e.g., Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00012074 (2016) (on file with 

Comm.).

742 Id.

743 FACEBOOK, FACEBOOK’S RESPONSE TO THE DIGITAL PLATFORMS INQUIRY FOR AUSTRALIAN COMPETITION AND 

CONSUMER COMMISSION 25 (Sept. 12, 2019), https://fbnewsroomus.files.wordpress.com/2019/09/facebook-submission-totreasury-on-digital-platforms-inquiry.pdf.

744 Interview with Former Instagram Employee (Oct. 2, 2020).

745 Id.

746 Id.

747 Competition & Mkts. Auth. Report at 121 n.152.
137

Facebook’s position that it lacks monopoly power and competes in a dynamic market is not 

supported by the documents it produced to the Committee during the investigation. Instead, 

Facebook’s internal business metrics show that Facebook wields monopoly power. In response to a 

supplemental information request by Subcommittee staff,748 Facebook produced industry updates 

prepared in the ordinary course of business by Facebook’s Market Strategy team.749 It has described 

these reports as both “internal competitive metrics” and as a “competitive survey regularly prepared for 

Facebook’s management team [that] tracks a variable set of competitors not by specific products or 

features, but by the degree of user attention and engagement that they command in terms of monthly 

active users (‘MAU’) and daily active users (‘DAU’).”

750

Facebook’s industry updates were shared internally with senior executives, including Mark 

Zuckerberg, Facebook’s CEO.751 Facebook used data collected through Onavo, a virtual private 

network (VPN) app, to provide detailed competitive insights into the usage and engagement of other 

firms.752 Facebook also relied on this data in response to inquiries by the European Commission and 

the Bundeskartellamt,753 as well as to prepare detailed internal reports on market strategy.754

i. Usage and Reach

Facebook has monopoly power in the social networking market. Based on its internal 

documents, Facebook and its family of products—Facebook, Instagram, Messenger, and WhatsApp—

control a significant share of users and high reach in the social networking market.755 Facebook’s 

family of products includes three of the seven most popular mobile apps in the United States by 

monthly active persons, reach, and percentage of daily and monthly active persons.756

748 Subcommittee staff made a supplemental request after identifying Facebook’s industry updates during the review of 

documents produced in response to the Committee’s September 2019 request for information.

749 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-000025 (Mar. 5, 2020) (on file with Comm.).

750 Id. at FB-HJC-ACAL-00012074, FB-HJC-ACAL-00012090 (2016) (on file with Comm.).

751 Id. at FB-HJC-ACAL-00054944 (Apr. 27, 2012) (on file with Comm.).

752 Although it does not include data from users of Apple’s iMessage, which is relevant for purposes of usage on WhatsApp 

and Messenger, Facebook’s documents note that iMessage’s growth is limited by the adoption of iPhones, whereas 

Facebook’s products can be used across different devices. See generally Cunningham Memo at 15.

753 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00012090 (2016) (on file with Comm.).

754 Cunningham Memo at 9 (citing data from MINT, another name used for Onavo within Facebook). 

755 Id. at 2, 16 (“Facebook has high reach and time-spent in most countries. User growth is tracking internet growth: global 

reach is roughly stable.”). 

756 Production of Facebook, to Comm. on the Judiciary, 38 (Jan. 2020) (Monthly Update for December 2019) (based on 

Facebook’s internal calibrations of App Annie data) (on file with Comm.). According to Facebook, monthly active persons 

(MAP) is “based on the activity of users who visited at least one of Facebook, Instagram, Messenger, and WhatsApp 

(collectively, our ‘Family’ of products) during the applicable period of measurement.” See Facebook Inc., Quarterly Report 

(Form 10-Q) 29 (Apr. 30, 2020), http://d18rn0p25nwr6d.cloudfront.net/CIK-0001326801/bfe31518-2e18-48fb-8d98-

5e8b07d94b2a.pdf-. 
138

As a standalone product, the Facebook app had the third highest reach of all mobile apps,757

with 200.3 million users in the United States, reaching 74% of smartphone users as of December 

2019.758 Facebook Messenger had the fourth highest reach, with 183.6 million monthly active persons, 

reaching 54.1% of U.S. smartphone users.759 Finally, Instagram had the sixth highest reach, with 119.2 

million users, reaching 35.3% of smartphone users.760 In contrast, Snapchat, the mobile app with the 

seventh highest reach, had 106.5 million users in the United States, reaching 31.4% of smartphone 

users.761

Facebook’s maintenance of these high market shares over a long time period demonstrates its

monopoly power.762 From September 2017 to September 2018, Facebook reached more than 75% of 

users internationally with at or near 100% market penetration in nine of the twenty most populous 

countries in the world.763 In the United States, Facebook alone reached more than 75% of internet users 

during this period, while Messenger and Instagram both achieved significant reach as well.764

According to a white paper prepared by a senior data scientist and economist at Facebook, the 

Facebook app has high reach in most countries, and its growth is in line with that of the Internet, 

whereas Instagram and WhatsApp are still growing “very rapidly.”

765 For Instagram, “there appear to 

be no countries in which growth has hit a ceiling.”

766

Facebook’s family of products are more immersive of users’ attention.767 According to 

Facebook’s internal market data, its users spend significantly more time on its family of products than 

757 Interview with Former Instagram Employee (Oct. 2, 2020) (“Reach is closer to market penetration [than usage and 

engagement]. It applies to the number of internet users we think are in that country, how many use a Facebook Family app 

and have taken one meaningful action. What people forget is that Facebook believes its total addressable market being 

anyone that has access to the internet.”).

758 Production of Facebook, to Comm. on the Judiciary, 38 (Jan. 2020) (Monthly Update for December 2019) (on file with 

Comm.); Production of Facebook, to Comm. on the Judiciary, 32 (Oct. 2019) (Monthly Update for September 2019) (based 

on Facebook’s internal calibrations of App Annie data) (on file with Comm.).

759 Id.

760 Id.

761 Id. 

762 See generally Fiona M. Scott Morton & David C. Dinielli, Roadmap for an Antitrust Case Against Facebook, OMIDYAR 

NETWORK 11 (June 2020).

763 Cunningham Memo at 2.

764 Id.

765 Id. at 12.

766 Id. at 16. (emphasis added).

767 Id. (“Facebook has high reach and time-spent in most countries. User growth is tracking internet growth: global reach is 

roughly stable.”).
139

on competing services. For example, social media users spent more time on Facebook (48.6 minutes) 

than on Snapchat (21 minutes) or Twitter (21.6 minutes) in 2018.768

Since at least 2012, Facebook’s documents show that Facebook believed it controlled a high 

share of the social networking market.769 In a presentation prepared for Sheryl Sandberg, Facebook’s 

Chief Operating Officer, to deliver at a large telecommunications firm, Facebook said that it controlled 

“95% of all social media” in the United States in terms of monthly minutes of use—as compared to 

Twitter, Tumblr, Myspace, and all other social media—and noted that the “industry consolidates as it 

matures.”

770

Facebook Investor Presentation771

A 2012 investor presentation prepared for Facebook described it as having an “enduring 

competitive advantage” similar to other historically dominant firms.772 According to this document, 

which was reviewed and edited by Facebook’s Chief Financial Officer to present to investors,773

Facebook had nearly 100% market penetration among 25-34 year-olds in the United States.774 It also 

768 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00086798 (Aug. 22, 2020) (Monthly Update for 

August 2018) (on file with Comm.). 

769 Id. at FB-HJC-ACAL-00057113; FB-HJC-ACAL-00049006 (Jan. 28, 2012) (on file with Comm.).

770 Id. at FB-HJC-ACAL-00057113, https://judiciary.house.gov/uploadedfiles/00057113_picture.pdf.

771 Prepared by Subcommmittee based on id.

772 Id. at FB-HJC-ACAL-00049006 (Apr. 30, 2012) (on file with Comm.).

773 Id. at FB-HJC-ACAL-00064320 (Apr. 18, 2012).

774 Id. at FB-HJC-ACAL-00049006 (Apr. 30, 2012).
140

had more than 85% penetration in certain countries.775 As noted in the presentation, “In every country 

we’ve tipped, we have maintained that penetration.”

776 This point was underscored by a suggestion in 

the presentation that within a decade, it would be doubtful that entrepreneurs could compete with 

Facebook.777

At the Subcommittee’s sixth hearing, Representative Joe Neguse (D-CO) asked Mr. Zuckerberg 

about Facebook’s monopoly power.778 As Mr. Neguse noted, based on this evidence, “most folks 

would concede Facebook was a monopoly as early as 2012.”

779 Since then, he added that Facebook’s 

strategy has been to “protect what I describe as a monopoly” by acquiring, copying, or eliminating its 

competitors.780 Mr. Zuckerberg responded by characterizing the social networking market as “a very 

large space.”

781 However, Facebook did not corroborate this claim through the evidence it produced 

during the investigation. 

Lastly, after reviewing relevant market data and documents provided during the investigation, 

the Subcommittee found that there are distinct, relevant markets for social networking and social 

media. Facebook proposes that online services with social functions, such as YouTube, are social 

networks that compete in the same product market as Facebook and its other products for user 

attention.782 For example, in a white paper submission, Facebook compares its News Feed, which 

includes a stream of posts and videos uploaded by users, as similar to the content feed that users 

encounter on YouTube.783 However, longstanding antitrust doctrine describes relevant product markets 

as those that are “reasonably interchangeable by consumers for the same purposes.”

784 Although 

YouTube is a dominant social app, it is primarily used to consume video content online. It does not 

provide the core functionality of Facebook or its family of products, such as Pages, Marketplace, or 

limited sharing within a person’s network.

775 Id.

776 Id.

777 Id. (“Imagine 10 years from now . . . [a] [l]ocal TV show asking an entrepreneur how he can hope to compete with 

Facebook.”).

778 CEO Hearing Transcript at 85 (question of Rep. Joe Neguse (D-CO), Vice Chairman, Subcomm. on Antitrust, 

Commercial and Admin. Law).

779 Id. at 86.

780 Id.

781 Id. (statement of Mark Zuckerberg, CEO, Facebook).

782 FACEBOOK, SUBMISSION TO AUSTL. COMPETITION AND CONSUMER COMM’N 13 (Sept. 12, 2019), 

https://assets.publishing.service.gov.uk/media/5e8c827ae90e070774c61fdb/Facebook_response_to_interim_report_with_co

ver_letter.pdf. 

783 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00012074 (2016) (on file with Comm.).

784 See United States v. Microsoft Corp., 253 F.3d 34, 51–52 (D.C. Cir. 2001); see also Competition & Mkts. Auth. Report 

at 117–18 (“[T]he closeness of competition between different platforms depends on the degree to which consumers 

consider them substitutes, rather than the extent to which they share common functionalities.”).
141

The United Kingdom’s Competition and Markets Authority reached a similar conclusion, finding 

that YouTube is primarily a market for consuming video content rather than a market for 

communication.785 As it noted, “consumers seem to access YouTube for particularly distinctive 

reasons . . . YouTube does not currently appear to compete closely with Facebook’s platforms, despite 

its comparable reach and levels of consumer engagement.”

786 Internal documents produced to the 

United Kingdom bolstered this finding, indicating “that the most common reasons consumers in the 

UK access YouTube are for entertainment and to view ‘how-to’ videos on the platform.”

787

ii. Barriers to Entry

Facebook’s persistently high market share is not contestable due to high barriers to entry that 

discourage competition. These barriers to entry include its strong network effects, high switching costs 

for consumers, and data advantages. 

1) Network Effects 

Facebook’s significant reach among users, and high levels of engagement, create very strong 

network effects.788

As a result, Facebook has tipped the market in its favor,789 primarily facing competitive 

pressure from within its own family of products—such as through Instagram competing with Facebook 

or WhatsApp competing with Messenger—rather than actual competition from other firms in the 

market.790 This finding is supported by Facebook’s documents and internal analysis. These include a 

785 Competition & Mkts. Auth. Report at 126 (“[T]here are particularly important differences between YouTube, which 

most consumers use for video streaming, and platforms such as those of Facebook, which focus more on consumer needs 

related to social networking.”).

786 Id. at 127.

787 Id.

788 See United States v. Microsoft Corp., 84 F. Supp. 2d 9, 20 (D.D.C. 1999) (“A positive network effect is a phenomenon 

by which the attractiveness of a product increases with the number of people using it.”). Conversely, a negative or reverse 

network effect exists when the attractiveness of a product decreases as less people use it, which can tip the market in favor

of another firm if there are low entry barriers. Dig. Competition Expert Panel Report at 35.

789 See generally Fiona M. Scott Morton & David C. Dinielli, Roadmap for an Antitrust Case Against Facebook, OMIDYAR 

NETWORK 18 (June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-CaseAgainst-Facebook.pdf. 

790 See, e.g., Cunningham Memo at 7 (“Messenger and WhatsApp clearly compete for time-spent.”). While Facebook’s 

overall penetration and network effects are high in the United States and across many other large countries, Facebook 

appears to have intermediate reach in some countries due to differing levels of adoption among users of certain ages. Id. at 

12 (“In Japan and South Korea Facebook has significantly higher penetration among youth than among elderly. The role of 

an intergenerational social network is partly filled by other apps (LINE and Kakao).”). 
142

memorandum on Facebook’s family of products prepared in October 2018 by Thomas Cunningham, a 

senior data scientist and economist,791 as well as communications among senior executives.792

Mr. Cunningham’s 2018 memorandum on “Possible End States for the Family of Apps” is an 

analysis of user trends among Facebook’s products and other competitors.793 It is based on the 

company’s Onavo data from September 2017 to September 2018.794 It was prepared for review by 

Facebook’s senior executives, including Mr. Zuckerberg and Mr. Olivan, Facebook’s Director of 

Growth.795 The Subcommittee’s staff interviewed a former senior employee at the company who 

attended meetings preparing the document for presentation to Mr. Zuckerberg and Mr. Olivan. The 

former employee noted that “this specific working group—and Tom Cunningham’s work in 

particular—was guiding Mark’s views” on the company’s growth strategy.796 The former employee 

explained the purpose of the Cunningham Memo:

The question was how do we position Facebook and Instagram to not compete with 

each other. The concern was that Instagram would hit a tipping point . . . There was 

brutal in-fighting between Instagram and Facebook at the time. It was very tense. It was 

back when Kevin Systrom was still at the company. He wanted Instagram to grow 

naturally and as widely as possible. But Mark was clearly saying “do not compete with 

us.” . . . It was collusion, but within an internal monopoly. If you own two social media 

utilities, they should not be allowed to shore each other up. It’s unclear to me why this 

should not be illegal. You can collude by acquiring competitors and forbidding 

competition.797

The Cunningham Memo characterized the network effects of Facebook, WhatsApp, and 

Messenger are “very strong.”

798 The memorandum notes that social apps have tipping points such that 

“either everyone uses them, or no-one uses them.”

799 Importantly, it distinguishes between apps with a 

791 Subcommittee staff requested the 2018 memorandum prepared by Tom Cunningham on July 1, 2020 in response to 

earlier reporting about the memorandum. See Alex Heath, Facebook Secret Research Warned of ‘Tipping Point’ Threat to 

Core App, THE INFORMATION (July 23, 2020), https://www.theinformation.com/articles/facebook-secret-research-warnedof-tipping-point-threat-to-core-app. Subcommittee staff appreciates that Facebook cooperated with this supplemental 

request. 

792 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00063222 (Feb. 27, 2012), 

https://judiciary.house.gov/uploadedfiles/0006322000063223.pdf.

793 Cunningham Memo at 1, 3.

794 During this period, Facebook referred to data derived from Onavo as MINT data. 

795 Interview with Former Instagram Employee (Oct. 2, 2020).

796 Id.

797 Id.

798 Cunningham Memo at 11. 

799 Id. at 9.
143

social graph that are used for broadcast sharing and messaging—Facebook, Instagram, Messenger, 

WhatsApp, and Snapchat—and social apps for music or video consumption, such as YouTube or 

Spotify.800 In contrast, non-social apps “can exist along a continuum of adoption.”

801

Network effects and tipping points are particularly strong in messaging apps. Because 

WhatsApp and other regional messaging apps have bimodal distribution of reach in countries—an allor-nothing reach at above 90% or below 10%—messaging tends toward consolidation and market 

tipping.802 Most countries have a single messaging app or protocol because they cannot support 

multiple messaging apps.”

803 As a result of this dynamic, there are “tradeoffs in time-spent between 

Messenger and WhatsApp,”

804 demonstrating “very strong tipping points.”805

Facebook already has high reach in many countries,806 including the United States, so a primary 

concern addressed in Mr. Cunningham’s “Possible End States” memorandum is whether cross-app 

sharing among Facebook’s family of products poses a competitive threat to its flagship product, the 

Facebook app.807 While the Cunningham Memo concluded that it is unclear whether Instagram and 

Facebook can coexist, it is much less concerned with Facebook’s user loss due to cannibalization by 

Instagram than with market tipping (i.e., Instagram tipping the market in its favor and Facebook 

rapidly losing value due to negative or reverse network effects). It notes:

The most important concern should be network effects, not within-user cannibalization. 

We have reviewed many studies which estimate cannibalization among apps for 

individual users, all of which find positive incrementality across the family: i.e. when a 

user increases their use of one app, they tend to decrease their use of other apps, but the 

800 To underscore this point, the Cunningham Memo does not characterize YouTube as a direct competitor, noting that 

YouTube would only be a danger if it “becomes more social.” Cunningham Memo at 16. 

801 Id. at 9.

802 Id. at 10, 14 (“Most countries have a single messaging app with 70%+ daily reach. The most common app is WhatsApp. 

Others include Messenger, LINE, and Kakotalk.”).

803 Id. at 3.

804 Id.

805 Id. at 12 (“WhatsApp does very well when it is the market-leader (in many Latin American countries WhatsApp has 

nearly 90% daily reach and users spend 60 minutes/day), this suggests that it would be worth a substantial investment to try 

to push WhatsApp over its tipping point in other countries.”). An exception to this trend appears to be where a messaging 

app exists as part of a social network—such as messaging services on Snapchat—but these apps operate with reduced 

reach. Another exception is in markets with high penetration by Apple’s iPhone, but this growth is limited by adoption of 

iPhones since iMessage is its native app. Id. at 15.

806 Id. at 16 (“Facebook has high reach and time-spent in most countries. User growth is tracking internet growth: global 

reach is roughly stable. DAP is showing weakness in developed countries and especially teens.”).

807 The Cunningham Memo refers to Facebook’s flagship product as “Facebook-Blue” or “Blue” as a reference to the app’s 

color. Id. at 15. There is overlap and cross-use among Facebook’s products in the United States. While 40% of Instagram 

users’ friends are also their friends on Facebook, only 12% of Facebook users’ friends are “reciprocal follows” on 

Instagram. Id. at 9.
144

total family effect is positive. This should not be surprising - it is unlikely that any of 

our apps are perfect substitutes for an individual user. However a serious concern is 

network effects: when you use an app less, that makes it less appealing to other people, 

and at certain times and places those effects could be very large.808

As a result of this dynamic, even though there may be several social apps that exist in 

an ecosystem, they are unlikely to gain traction among users once a firm has tipped the market 

in their favor or is otherwise dominant. As the study notes, while mobile phone users tend to 

use five different social maps in a month, they only use “1.5 messaging apps and 1 social app, 

out of 10 total apps per day.”

809

Facebook’s executives—including Mr. Zuckerberg—have extensively discussed the role of 

network effects and tipping points as part of the company’s acquisition strategy and overall 

competitive outlook. For example, Mr. Zuckerberg told the company’s Chief Financial Officer in 2012 

that network effects and winner-take-all markets were a motivating factor in acquiring competitive 

threats like Instagram. He said:

[T]here are network effects around social products and a finite number of different 

social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for 

others to supplant them without doing something different. It’s possible someone beats 

Instagram by building something that is better to the point that they get network 

migration, but this is harder as long as Instagram keeps running as a product . . . one 

way of looking at this is that what we’re really buying is time. Even if some new 

competitors springs[sic] up, buying Instagram now . . . will give us a year or more to 

integrate their dynamics before anyone can get close to their scale again. Within that 

time, if we incorporate the social mechanics they were using, those new products won’t 

get much traction since we’ll already have their mechanics deployed at scale.810

Mr. Zuckerberg also stressed the competitive significance of having a first-mover advantage in 

terms of network effects prior to acquiring WhatsApp.811 In the context of market strategies for 

Messenger competing with WhatsApp, Mr. Zuckerberg told the company’s growth and product 

management teams that “being first is how you build a brand and a network effect.”

812 He also told 

808 Id. at 9.

809 Id. at 6. A recent investor report similarly noted that although “many users access more than one social network per day, 

it does not appear to be at the cost of declining users or user engagements within the Facebook ecosystem.” MORNINGSTAR 

EQUITY ANALYST REPORT, FACEBOOK INC 3 (Aug. 3, 2020) (on file with Comm.).

810 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00063222 (Feb. 28, 2012), 

https://judiciary.house.gov/uploadedfiles/0006322000063223.pdf.

811 Id. at FB-HJC-ACAL-00046826–34 (Dec. 13, 2013) (on file with Comm.).

812 Id.
145

them that Facebook has “an opportunity to do this at scale, but that opportunity won’t last forever. I 

doubt we have even a year before WhatsApp starts moving in this direction.”

813

In 2012, the company described its network effects as a “flywheel” in an internal presentation 

prepared for Facebook at the direction of its Chief Financial Officer.814 This presentation also said that 

Facebook’s network effects get “stronger every day.”

815 Around that time, prominent investors 

similarly noted that the social networking market had “extreme network effects,” making it 

“increasingly hard to see a materially successful new entrant, even with all of Google’s resources.”

816

2) Switching Costs

In addition to the competitive insulation resulting from strong network effects, Facebook is also 

unlikely to face direct competition from other firms or new entrants due to the high costs for users to 

switch from Facebook to a competing social network.817

Other social network platforms are not interoperable with Facebook. Facebook users invest 

significant time building their networks on Facebook. This investment includes uploading and curating 

photos, engaging with their friends, other users, and businesses, and otherwise interacting with their 

social graph.818 To switch to another platform, Facebook users have to rebuild their social graph 

elsewhere. In the process, they lose access to their data—including photos, posts, and other content—

813 Id.

814 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00049006 (Apr. 18, 2012) (“Network effects 

make it very difficult to compete with us - In every country we’ve tipped we are still winning.”) (on file with Comm.).

815 Id.

816 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00086834–38 (Apr. 3, 2012) (Citi Summary of 

Investment Outlook) (on file with Comm.). Comscore noted in 2012 that “Facebook has proven to be a dominant global 

force in social networking that shows no immediate signs of slowing down.” According to Comscore, Facebook was the 

“third largest web property in the world . . . and accounted for approximately 3 in every 4 minutes spent on social 

networking sites and 1 in every 7 minutes spent online around the world.” Production of Facebook, to H. Comm. on the 

Judiciary, FB-HJC-ACAL-00051905 (Mar. 12, 2012) (Comscore 2012 Report) (on file with Comm.).

817 Fiona M. Scott Morton & David C. Dinielli, Roadmap for an Antitrust Case Against Facebook, OMIDYAR NETWORK 11 

(June 2020) (“A very significant reason that Facebook has market power is that a user cannot change platforms and expect 

to be able to stay in contact with her friends. Because Facebook has a near monopoly, the vast majority of the people with 

whom they want to exchange feeds are likely on Facebook already. The switching cost for any one user is therefore 

enormous.”).

818 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045349 (Feb. 15, 2014) (on file with 

Comm.). 
146

along with other elements of their social graph.819 They also have to learn how to use a new service 

and rebuild their network.820 As a result, Facebook’s users are effectively “locked in” to its platform.821

Facebook’s internal documents and communications reveal that Facebook employees recognize 

that high switching costs insulate Facebook from competition. In 2014, Facebook’s Chief Financial 

Officer told the company’s director of growth that investors like this quality about Facebook and “the 

idea is that after you have invested hours and hours in your friend graph or interest graph or follower 

graph, you are less likely to leave for a new or different service that offers similar functionality.”

822

Similarly, an internal survey prepared for Facebook’s senior management team about Google+ 

explained that “[p]eople who are big fans of G+ are having a hard time convincing their friends to 

participate because . . . switching costs would be high due to friend density on Facebook.”

823 And in 

2012, the company indicated that people’s significant time investment on Facebook building their 

identity and connections on the platform increased the company’s “stickiness.”

824

In contrast to its public statements, Facebook has not done enough to facilitate data portability 

for its consumers. Facebook offers a tool called “Download Your Information,” which provides users 

with a limited ability to download their data and upload it elsewhere. But in practice, this tool is 

unusable for switching purposes given that it allows users to do little other than move their photos 

from Facebook to Google Photos. Another barrier for switching associated with this tool is that 

Facebook’s users can only download their data in PDF or .zip format. The result is that, while 

Facebook publicly claims to support data portability,825 its users seldom leave Facebook due to the 

challenges of migrating their data. An interview with a former employee at the company reinforces this 

conclusion. As the former employee noted, this tool is behind a series of menu, explaining:

If you hide something behind more than one menu, no one sees it and they know it. 

Then they advertise features that they don’t expect anyone to find or use. They say: “It’s 

data portable, you can send it to Google drive?” But who cares? They’ve just done it to 

819 See, e.g., Nicole Nguyen, If You Created A Spotify Account With Facebook, It Is Forever Tied To Facebook, BUZZFEED

(Oct. 3, 2018), https://www.buzzfeednews.com/article/nicolenguyen/disconnect-facebook-account-from-spotify. 

820 See, e.g., Danny Crichton, Why no one really quits Google or Facebook, TECHCRUNCH (Feb. 4, 2019) (“I have 2,000 

contacts on Facebook Messenger — am I just supposed to text them all to use Signal from now on? Am I supposed to 

completely relearn a new photos app, when I am habituated to the taps required from years of practice on Instagram?”), 

https://techcrunch.com/2019/02/04/why-no-one-really-quits-google-or-facebook/; United States v. Microsoft Corp., 84 F. 

Supp. 2d 9, 15 (D.D.C. 1999) (noting that switching costs include “the effort of learning to use the new system, the cost of 

acquiring a new set of compatible applications, and the work of replacing files and documents that were associated with the 

old applications.”).

821 See generally Austl. Competition & Consumer Comm’n Report at 99; Dig. Competition Expert Panel Report at 42.

822 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045349 (Feb. 15, 2014) (on file with 

Comm.).

823 Id. at FB-HJC-ACAL-00048755–57 (Dec. 14, 2011).

824 Id. at FB-HJC-ACAL-00049006 (Apr. 18, 2012).

825 See, e.g., DATA TRANSFER PROJECT, https://datatransferproject.dev/ (last visited on Sept. 28, 2020). 
147

generate talking points. They are not allowing you to export your social graph, which is 

actually valuable.826

Leaving Facebook may create additional costs in other key respects. Switching from Facebook 

may degrade a person’s other social apps that integrate with Facebook’s Platform APIs. For example, 

Spotify users who signed up with Facebook “can’t disconnect it.”

827 To leave Facebook, they must set 

up a new account on Spotify.828 In the process, they lose access to their playlists, listening history, 

social graph of other friends on Spotify, and their other data on the app.829

People who leave Facebook may also lose access to popular features on Facebook that, due to 

its scale and network effects, are not available on other social apps (e.g., events, marketplace, and 

groups).830 For example, a church may actively maintain a Facebook page for its parishioners and not 

on other social apps. Furthermore, some Facebook users who believe they are switching from the 

company’s platform may nevertheless continue using its family of products, such as Instagram or 

WhatsApp.831 As the United Kingdom’s Competition and Markets Authority noted, this reinforces 

Facebook’s market power.832

In response to the concern about switching costs, Facebook replied that its users have 

meaningful choices and alternatives to Facebook.833 Additionally, Facebook notes that its users have 

been able to download their data since 2010.834 The company describes its users’ ability to download 

their data as a “robust portability tool.”

835 However, in March 2019, Mr. Zuckerberg explained that a 

826 Interview with Former Instagram Employee (Oct. 2, 2020).

827 SPOTIFY, Facebook Login Help, https://support.spotify.com/us/article/using-spotify-with-facebook/. 

828 Id.

829 Spotify users can manually attempt to recreate playlists or request that Spotify transfer their data, but this is not intuitive. 

Samantha Cole, How to Unlink Spotify from Your Facebook Account, VICE (Dec. 21, 2018), 

https://www.vice.com/en_us/article/wj3anm/how-to-unlink-spotify-from-your-facebook-account. 

830 See Cunningham Memo at 3.

831 See, e.g., Tiffany Hsu, For Many Facebook Users, a ‘Last Straw’ That Led Them to Quit, N.Y. TIMES (Mar. 21, 2018), 

https://www.nytimes.com/2018/03/21/technology/users-abandonfacebook.html#:~:text=In%20the%20wake%20of%20the,easy%20as%20pressing%20%E2%80%9Cdelete.%E2%80%9D

(“The Cambridge Analytica scandal led her to remove the Facebook app from her phone . . . But she is keeping the 

messaging function open for professional purposes and will continue using Instagram.”).

832 Competition & Mkts. Auth. Report at 179, 256.

833 Innovation and Entrepreneurship Hearing at 1 (response to Questions for the Record of Matt Perault, Dir. of Public 

Pol’y, Facebook).

834 Erin Egan, Charting a Way Forward, FACEBOOK 6 (Sept. 2019), https://about.fb.com/wp-content/uploads/2020/02/dataportability-privacy-white-paper.pdf. 

835 Id.
148

Facebook user’s ability to download their data is not “[t]rue data portability.”

836 Instead, he said its 

users should be able to sign in to other services in “the way people use our platform to sign into an 

app.”

837

Currently, Facebook’s users lack the ability to port their social networks to a different platform. 

To switch social networking platforms, a Facebook user can import their contacts from their mobile 

devices, such as email addresses or phone numbers, to build a network on a different platform. But 

importing contacts is not a substitute for a person’s social graph and, as the CMA concluded, this 

method is likely limited to a person’s close friends.838 In recognition of this, Javier Olivan, Facebook’s 

Director of Growth, told the company’s senior management team that information from a person’s 

address book on their mobile device is “incomplete” because people typically only store limited 

information in their contacts (e.g., a person’s first name, last name, and their phone number).839 In 

contrast, Facebook users “have a much richer profile—which creates a much richer experience (we 

have data that shows how . . . profile pictures make for better / more functional [user interfaces].”

840

3) Access to Data

Facebook has a significant data advantage in the social networking market. While data may be 

non-rivalrous—meaning users can provide the same piece of data to more than one platform—it 

creates another entry barrier, reinforcing Facebook’s monopoly power.

Subcommittee staff conducted interviews with market participants that described Facebook as 

having nearly perfect market intelligence. Facebook’s data dominance creates self-reinforcing 

advantages through two types of “feedback loops.”

841 First, by virtue of its significant number of users, 

Facebook has access to and collects more user data than its competitors.842 And second, Facebook uses 

this data to create a more targeted user experience, which in turn attracts more users and leads those 

users to spend more time on the platform.843 In contrast, smaller platforms with less access to data 

must compete by providing a different user experience with less targeting capacity. Facebook’s data 

advantage is thus compounded over time, cementing Facebook’s market position and making it even 

more difficult for new platforms to provide a competitive user experience.

836 Mark Zuckerberg, The Internet Needs New Rules, WASH. POST (Mar. 29, 2019), 

https://www.washingtonpost.com/opinions/mark-zuckerberg-the-internet-needs-new-rules-lets-start-in-these-fourareas/2019/03/29/9e6f0504-521a-11e9-a3f7-78b7525a8d5f_story.html. 

837 Id.

838 Competition & Mkts. Auth. Report at 137.

839 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045364 (Feb. 4, 2014) (on file with Comm.).

840 Id.

841 Dig. Competition Expert Panel Report at 33.

842 Competition & Mkts. Auth. Report at 143–44.

843 Id.
149

Facebook’s data advantages also provide a monetization feedback loop. Revenue generated 

through targeted advertising to existing users can be reinvested into the platform, thereby attracting more 

users. Facebook’s ability to provide targeted advertising is highly valuable to advertisers and allows 

Facebook to monetize its service. Meanwhile, smaller entrants are less attractive to advertisers since “no 

de novo entrant [has] access to anywhere near the volume or quality of data” as Facebook.844 As with its 

user feedback loop, Facebook’s monetization feedback loop creates a runaway virtuous circle that serves 

as a powerful barrier to entry.

Facebook’s data also enables it to act as a gatekeeper because Facebook can exclude other 

firms from accessing its users’ data.845 Beginning in 2010, Facebook’s Open Graph provided other 

companies with the ability to scale through its user base by interconnecting with Facebook’s platform. 

Some companies benefited immensely from this relationship, experiencing significant user growth 

from Open Graph and in-app signups through Facebook Connect, now called Facebook Login.846

Around that time, investors commented that Open Graph gave some companies “monstrous growth,”

referring to it as “steroids for startups.”

847 For example, documents produced by Facebook indicate that 

it was the top referrer of traffic to Spotify, driving 7 million people “to install Spotify in the month 

after [Facebook] launched Open Graph.”

848 At one point, nearly all of Spotify’s growth originated 

from Facebook, while Pinterest “grew to 10 million users faster than any standalone site in the history 

of the Internet.”

849

Conversely, interconnecting with the Facebook Platform also gave the company the ability to 

prioritize access to its social graph—effectively picking winners and losers online.850 These tools also 

gave Facebook advanced data insights into other companies’ growth and usage trends. For example, a 

daily report on metrics for Facebook Login included daily and monthly active users for companies 

interconnecting with Facebook, referral traffic, and daily clicks, among other metrics. As this report 

844 Fiona M. Scott Morton & David C. Dinielli, Roadmap for an Antitrust Case Against Facebook, OMIDYAR NETWORK 18

(June 2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-AgainstFacebook.pdf. 

845 See, e.g., MAURICE STUCKE & ALLEN GRUNES, BIG DATA AND COMPETITION POLICY 46 (2017).

846 Also referred to as Facebook login, Facebook Connect allowed its users to connect their Facebook identity—their 

profile, friends, and other data—to other social apps through Facebook’s APIs. The company explained in 2008 that “[w]ith 

Facebook Connect, users can bring their real identity information with them wherever they go on the Web, including: basic 

profile information, profile picture, name, friends, photos, events, groups, and more.” Dave Morin, Announcing Facebook 

Connect, FACEBOOK (Mar. 9, 2008), https://developers.facebook.com/blog/post/2008/05/09/announcing-facebook-connect/. 

847 Ben Popper, Startup steroids: Pinterest feels the burn of Facebook’s Open Graph, THE VERGE (May 3, 2012), 

https://www.theverge.com/2012/5/3/2993999/pinterest-burn-facebook-open-graph-startup-steroids. 

848 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00049471 (Script of Keynote for Mobile World 

Congress (on file with Comm.).

849 Id.

850 See, e.g., MAURICE STUCKE & ALLEN GRUNES, BIG DATA AND COMPETITION POLICY 46 (2017).
150

noted, 8.3 million distinct sites used Facebook Connect on a monthly basis in March 2012.851

Facebook was also able to exclude others from accessing this data.852 As the United Kingdom’s 

Competition and Markets Authority observed, “the inability of smaller platforms and publishers to 

access user data creates a significant barrier to entry.”

853

b. Relevant Acquisitions

i. Overview

Since its founding in 2004, Facebook has acquired at least 63 companies.854 The majority of 

these acquisitions have involved software firms, such as Instagram, WhatsApp, Face.com, Atlas, 

LiveWire, and Onavo.855 Facebook has also acquired several virtual reality and hardware companies, 

such as Oculus.856 More recently, the company has acquired several niche social apps,857 a blockchain 

platform,858 Oculus game developers,859 and a prominent GIF-making and sharing company.860

Facebook’s internal documents indicate that the company acquired firms it viewed as 

competitive threats to protect and expand its dominance in the social networking market. As discussed 

earlier in this Report, Facebook’s senior executives described the company’s mergers and acquisitions 

strategy in 2014 as a “land grab” to “shore up our position.”

861 In 2012, Mr. Zuckerberg told 

851 Production of Facebook, to H. Comm. on the Judiciary, FB_FTC_CID_00364078–147 (Mar. 24, 2012) (Email on Daily 

Metrics Report) (on file with Comm.).

852 See Stigler Report at 43.

853 Competition & Mkts. Auth. Report at 15.

854 See Aoife White, Facebook Told by U.K. Watchdog to Monitor Giphy Independence, BLOOMBERG (Aug. 10, 2020), 

https://www.bloomberg.com/news/articles/2020-08-10/facebook-told-by-u-k-watchdog-to-monitor-giphy-independence. 

855 Id.; BERKELEY, THE ACQUISITION TAKEOVER BY THE 5 TECH GIANTS,

http://people.ischool.berkeley.edu/~neha01mittal/infoviz/dashboard/ (last visited on Sept. 28, 2020).

856 See, e.g., Josh Constine, Facebook’s $2 Billion Acquisition Of Oculus Closes, Now Official, TECHCRUNCH (July 21, 

2014), https://techcrunch.com/2014/07/21/facebooks-acquisition-of-oculus-closes-now-official/. 

857 See, e.g., Jacob Kastrenakes, Facebook is shutting down a teen app it bought eight months ago, THE VERGE (July 2, 

2018), https://www.theverge.com/2018/7/2/17528896/facebook-tbh-moves-hello-shut-down-low-usage. 

858 Stan Schroeder, Facebook acquires team behind blockchain startup Chainspace, MASHABLE (Dec. 5, 2019), 

https://mashable.com/article/facebook-acquires-blockchain-team-chainspace/.

859 Dean Takahashi, Facebook acquires Lone Echo VR game maker Ready At Dawn, VENTURE BEAT (June 22, 2020), 

https://venturebeat.com/2020/06/22/facebook-acquires-lone-echo-vr-game-maker-ready-at-dawn/; Lucas Matney, Facebook 

acquires the VR game studio behind one of the Rift’s best titles, TECHCRUNCH (Feb. 25, 2020), 

https://techcrunch.com/2020/02/25/facebook-acquires-the-vr-game-studio-behind-one-of-the-rifts-best-games/. 

860 Chaim Gartenberg, Facebook is buying Giphy and integrating it with Instagram, THE VERGE (May 15, 2020), 

https://www.theverge.com/2020/5/15/21259965/facebook-giphy-gif-acquisition-buy-instagram-integration-cost. 

861 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045388 (Feb. 18, 2014), 

https://judiciary.house.gov/uploadedfiles/0004538800045389.pdf (“[W]e are going to spend 5-10% of our market cap every 

couple years to shore up our position . . . I hate the word ‘land grab’ but I think that is the best convincing argument and we 

should own that.”). Mr. Wehner is currently Facebook’s Chief Financial Officer. He replaced David Ebersman, Facebook’s 
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Facebook’s former Chief Financial Officer that the purpose of acquiring nascent competitors like 

Instagram was to neutralize competitive threats and to maintain Facebook’s position. Documents show 

that when Facebook acquired WhatsApp, Mr. Zuckerberg and other senior executives, as well as data 

scientists, viewed WhatsApp as a potential threat to Facebook Messenger, as well as an opportunity to 

further entrench Facebook’s dominance. Facebook used critical acquisitions to increase the adoption of 

its social graph and expand its reach in markets. Finally, Facebook’s serial acquisitions reflect the 

company’s interest in purchasing firms that had the potential to develop into rivals before they could 

fully mature into strong competitive threats.862

ii. Instagram

Instagram was founded in February 2010 by Kevin Systrom and Mike Krieger.863 Originally 

launched as Burbn, a location-sharing social app,864 the company released Instagram as a photosharing app for Apple iPhones in October 2010,865 and released its app in the Google Play Store on 

April 3, 2012.866

On April 9, 2012, Facebook proposed its acquisition of Instagram for approximately $1 

billion.867 Facebook formally acquired Instagram in August 2012.868 The Federal Trade Commission 

(FTC) opened an investigation into the acquisition but closed it in August 2012 without taking 

former Chief Financial Officer, in June 2014. David Cohen, Facebook CFO David Ebersman Leaving Company; David 

Wehner To Assume Post June 1, ADWEEK (Apr. 23, 2014), https://www.adweek.com/digital/cfo-david-ebersman-leavingdavid-wehner/. 

862 Austl. Competition & Consumer Comm’n Report at 81 (“While any of these acquisitions may not have amounted to a 

substantial lessening of competition, there appears to be a pattern of Facebook acquiring businesses in related markets 

which may or may not evolve into potential competitors, which has the effect of entrenching its market power.”).

863 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00087590 (July 19, 2011) (Valuation of Burbn, 

Inc. as of May 31, 2011) (on file with Comm. on the Judiciary). 

864 Id.

865 MG Siegler, Instagram Launches With The Hope Of Igniting Communication Through Images, TECHCRUNCH (Oct. 6, 

2010), https://techcrunch.com/2010/10/06/instagram-launch/. The company received $500,000 in seed funding in March 

2010 from Baseline Ventures and Andreesen Horowitz. It later received $7 million in another round of financing in 

December 2010 primarily from Benchmark Capital and Baseline Ventures. Production of Facebook, to H. Comm. on the 

Judiciary, FB-HJC-ACAL-00101426 (Dec. 5, 2011) (Instagram Financial History and Projections) (on file with Comm.). 

866 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00106124 (Apr. 13, 2012) (Instagram Chat 

Log) (on file with Comm.); see also Matt Burns, Instagram’s User Count Now at 40 Million, Saw 10 Million New Users in 

Last 10 Days, TECHCRUNCH (Apr. 13, 2012), https://techcrunch.com/2012/04/13/instagrams-user-count-now-at-40-millionsaw-10-million-new-users-in-last-10-days/. 

867 The transaction’s value was approximately $300 million in cash and roughly $700 million in shares of Facebook at the 

time of the transaction. Due to changes in the company’s value following the launch of its IPO, the final transaction value 

was worth about $300 million in cash and $460 million in Facebook stock. See Facebook Inc., Quarterly Report (Form 10-

Q) 9 (Sept. 30, 2012), https://www.sec.gov/Archives/edgar/data/1326801/000132680112000006/fb-9302012x10q.htm. 

868 Facebook Inc., Annual Report (Form 10-K) 5 (Dec. 31, 2012), 

https://www.sec.gov/Archives/edgar/data/1326801/000132680113000003/fb-12312012x10k.htm. 
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action.869 According to the FTC, “Upon further review of this matter, it now appears that no further 

action is warranted by the Commission at this time.”

870 The letter added that the FTC’s closing of the 

investigation “is not to be construed as a determination that a violation may not have occurred . . . . 

The Commission reserves the right to take such further action as the public interest may require.”

871

In the context of reports that Facebook was planning to integrate Whatsapp, Instagram, and 

Facebook Messenger,872 and concerns about the company’s motives for doing so,873 a former employee 

of Instagram explained the ease with which Facebook and Instagram came together—and could 

potentially be pulled apart. They explained: 

Why can’t Facebook fork the backend of the product? Facebook makes an odd 

argument that they use the same system. But you can just copy and paste code, make a 

copy of the system, and give it to the new company. If you can put them together, you 

can pull them apart. Facebook can always pull out the data that Instagram would not 

need. They spent the last year pushing the two products together, it just simply doesn’t 

make sense that they can’t work back to where they were in 2019. It’s not like building 

a skyscraper and then suddenly needing to knock the building down again. They can 

just roll back the changes they’ve been making over the past year and you’d have two 

different apps again. It’s not about the pipeline. It’s an intangible object. You can just 

copy and paste. Right now, they have a switch inside the app. They could just change 

something from true to false and it would work. It’s not building a skyscraper; it’s 

turning something on and off.874

According to Facebook’s internal documents, Facebook acquired Instagram to neutralize a 

nascent competitive threat. In 2012, Mark Zuckerberg wrote to several Facebook executives citing 

concerns that Instagram posed a risk to Facebook. In February 2012, he said to David Ebersman, 

Facebook’s Chief Financial Officer, that he had “been thinking about . . . how much [Facebook] should 

be willing to pay to acquire mobile app companies like Instagram . . . that are building networks that 

869 Letter from April Tabor, Acting Sec. of the Fed. Trade Comm’n, to Thomas Barnett (Aug. 22, 2012), 

https://www.ftc.gov/sites/default/files/documents/closing_letters/facebook-inc./instagraminc./120822barnettfacebookcltr.pdf.

870 Id.

871 Id.

872 See, e.g., Mike Isaac, Zuckerberg Plans to Integrate WhatsApp, Instagram and Facebook Messenger, N.Y. TIMES (Jan. 

25, 2019), https://www.nytimes.com/2019/01/25/technology/facebook-instagram-whatsapp-messenger.html?auth=loginfacebook.

873 See, e.g., Makena Kelly, Facebook’s messaging merger leaves lawmakers questioning the company’s power, THE 

VERGE (Jan. 28, 2019), https://www.theverge.com/2019/1/28/18200658/facebook-messenger-instagram-whatsapp-googlecongress-markey-blumenthal-schatz-william-barr-doj-ftc. 

874 Email from Former Instagram Employee (Oct. 4, 2020).
153

are competitive with our own.”

875 Mr. Zuckerberg told Mr. Ebersman that these “businesses are 

nascent but the networks are established, the brands are already meaningful and if they grow to a large 

scale they could be very disruptive to us.”

876

In response, Mr. Ebersman asked Mr. Zuckerberg whether the goals of the acquisition would be 

to: (1) neutralize a potential competitor; (2) acquire talent; or (3) integrate Instagram’s product with 

Facebook’s to improve its service.877 Mr. Zuckerberg replied that a purpose of the transaction would be 

to neutralize Instagram, saying that the goals of the deal were “a combination of (1) and (3).” He 

explained: 

One thing that may make (1) more reasonable here is that there are network effects 

around social products and a finite number of different social mechanics to invent. Once 

someone wins at a specific mechanic, it’s difficult for others to supplant them without 

doing something different. It’s possible someone beats Instagram by building something 

that is better to the point that they get network migration, but this is harder as long as 

Instagram keeps running as a product.878

Mr. Zuckerberg wrote that acquiring Instagram would allow Facebook to integrate the product 

to improve its service. But, he added, that “in reality we already know these companies’ social 

dynamics and will integrate them over the next 12-24 months anyway.”

879 He explained:

By a combination of (1) and (3), one way of looking at this is that what we’re really 

buying is time. Even if some new competitors springs [sic] up, buying Instagram, Path, 

Foursquare, etc [sic] now will give us a year or more to integrate their dynamics before 

anyone can get close to their scale again. Within that time, if we incorporate the social 

mechanics they were using, those new products won’t get much traction since we’ll 

already have their mechanics deployed at scale.880

In March 2012, Mr. Zuckerberg told Mike Schroepfer, Facebook’s Chief Technology 

Officer,881 that acquiring Instagram would provide the company with “[i]nsurance” for Facebook’s 

875 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00063220–23 (Feb. 27, 2012) (on file with 

Comm.).

876 Id.

877 Id.

878 Id.

879 Id.

880 Id. (emphasis added).

881 Mr. Schroepfer was Facebook’s Vice President of Engineering at the time of the Instagram acquisition. He was elevated 

to chief technology officer in March 2013. See Tomio Geron, Facebook Names Mike Schroepfer CTO, FORBES (Mar. 15, 

2013), https://www.forbes.com/sites/tomiogeron/2013/03/15/facebook-names-mike-schroepfer-cto/#1a88880b20e3. 
154

main product.882 Mr. Schroepfer agreed, responding that “not losing strategic position in photos is 

worth a lot of money.”

883 He added that the “biggest risk” would be if Facebook were to “kill”

Instagram “by not investing in the company and thereby opening a window for a new entrant.”

884

In a message to another Facebook employee on April 5, 2012, Mr. Zuckerberg said that 

“Instagram can hurt us meaningfully without becoming a huge business.”

885 In contrast, he did not 

view other smaller firms, such as Pinterest and Foursquare, as comparable competitive threats.886 As he 

noted, if these companies “become big we’ll just regret not doing them . . . Or we can buy them then, 

or build them along the way.”

887 In an all-hands meeting the following day, Mr. Zuckerberg responded 

to a question about Instagram’s rapid growth by saying that “we need to dig ourselves out of a hole.”

888 He also told employees at the company that Instagram is “growing really quickly” and that it would 

be “tough to dislodge them.”

889

Following the announcement of the transaction, Mr. Zuckerberg said internally that Facebook 

“can likely always just buy any competitive startups,” and agreed with one of the company’s senior 

engineers that Instagram was a “threat” to Facebook.890 Mr. Zuckerberg concluded that “[o]ne thing 

about startups though is you can often acquire them.”

891

At the Subcommittee’s sixth hearing, Judiciary Committee Chairman Jerrold Nadler (D-NY) 

asked Mr. Zuckerberg about his characterization of Instagram as a competitive threat prior to the 

acquisition.892 In response, Mr. Zuckerberg said that Facebook has always viewed Instagram as “both a 

882 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00063184–85 (Mar. 9, 2012), 

https://judiciary.house.gov/uploadedfiles/0006318000063197.pdf. These documents are consistent with reporting. 

Following the acquisition, Gregor Hochmuth, an Instagram engineer, was reportedly told by employees on the Facebook 

Camera team that “our job was to kill you guys.” Following the acquisition, Instagram’s employees were also reportedly 

told by Facebook’s growth team “Instagram wouldn’t get any help adding users unless they could determine, through data, 

that the product wasn’t competitive with Facebook.” SARAH FRIER, NO FILTER 90 (2020). 

883 Id. at FB-HJC-ACAL-00063180, https://judiciary.house.gov/uploadedfiles/0006318000063197.pdf. 

884 Id. at FB-HJC-ACAL-00063184–85, https://judiciary.house.gov/uploadedfiles/0006318000063197.pdf.

885 Id. at FB-HJC-ACAL-00063319, https://judiciary.house.gov/uploadedfiles/0006331600063321.pdf.

886 Id. at FB-HJC-ACAL-00063319–20 (Apr. 5, 2012), https://judiciary.house.gov/uploadedfiles/0006331600063321.pdf.

887 Id.

888 Id. at FB-HJC-ACAL-00047340 (Apr. 6, 2012) (on file with Comm.).

889 Id.

890 Id. at FB-HJC-ACAL-00067600 (Apr. 9, 2012), https://judiciary.house.gov/uploadedfiles/0006760000067601.pdf.

891 Id. at FB-HJC-ACAL-00063341 (Apr. 9, 2012), https://judiciary.house.gov/uploadedfiles/0006334000063341.pdf

892 CEO Hearing Transcript at 43 (question of Rep. Jerrold Nadler (D-NY), Chairman, H. Comm. on the Judiciary).
155

competitor and as a complement to our services.”

893 He added that at the time of the transaction, 

Instagram was a competitor in mobile photos and camera apps.894

Chairman Nadler also asked that if this “was an illegal merger at the time of the transaction, 

why shouldn’t Instagram now be broken off into a separate company?”

895 In response, Mr. Zuckerberg 

said that “with hindsight, it probably looks obvious that Instagram would have reached the scale that it 

has today.”

896 But he elaborated: 

It was not a guarantee that Instagram was going to succeed. The acquisition has done 

wildly well, largely because not just of the founders’ talent but because we invested 

heavily in building up the infrastructure and promoting it and working on security and 

working on a lot of things around this, and I think that this has been an American 

success story.897

This response, however, is not consistent with many of the documents Facebook provided to the 

Subcommittee.898

Instagram was growing significantly at the time of the transaction. In December 2011, with 

only 13 employees, Instagram already had 14 million users.899 Instagram’s internal financial history 

and projections noted that it did not plan to charge for its app or for downloading filters due to its 

“rapid user growth” and “implied network value.”

900 Instagram’s internal market projections showed 

the company growing to nearly 20 million users by January 2012 with a 22% monthly growth rate.901

By March 31, 2012, Instagram had 30.2 million users and a 17% user growth rate.902 After releasing its 

893 Id. at 44 (statement of Mark Zuckerberg, CEO, Facebook).

894 Id. (statement of Mark Zuckerberg, CEO, Facebook).

894 Id.

895 Id. at 45 (question of Rep. Jerrold Nadler (D-NY), Chairman, H. Comm. on the Judiciary).

896 Id. at 46 (statement of Mark Zuckerberg, CEO, Facebook).

897 Id. (statement of Mark Zuckerberg, CEO, Facebook).

898 Id. at 46 (statement of the Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary) (“Facebook, by Mr. Zuckerberg’s 

own admission and by the documents we have from the time, Facebook saw Instagram as a threat that could potentially 

syphon business away from Facebook. And so, rather than compete with it, Facebook bought it. This is exactly the type of 

anticompetitive acquisition that the antitrust laws were designed to prevent. This should never have happened in the first 

place. It should never have been permitted to happen, and it cannot happen again.”).

899 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00101426 (Dec. 5, 2011) (Instagram Financial 

History and Projections) (on file with Comm.).

900 Id.

901 Id. at FB-HJC-ACAL-00101473 (Dec. 5, 2011) (Instagram Budget) (on file with Comm.). 

902 Id. at FB-HJC-ACAL-0110268 (2012) (Instagram Growth and Projections).
156

app in the Google Play Store on April 3, 2012, Instagram added ten million users within ten days,903

growing to nearly 50 million users by April 30, 2012,904 and 100 million users by the time the 

acquisition closed in August 2012.905

Instagram’s growth also appeared to be sustainable. In an email between senior executives at 

both companies on April 16, 2012, Instagram’s head of business operations said that Instagram had not 

had difficulties with scaling or cloud storage availability, noting that “[s]caling has been really easy”

despite the need to “keep adding machine capacity.”

906 They also noted that user uptake on Android 

devices exceeded the company’s expectations, but did not raise concerns about their ability to scale in 

response to this demand.907

Facebook’s support of Instagram’s growth after acquiring it is overstated. Before acquiring 

Instagram, Mr. Zuckerberg said that Facebook should “invest a few more engineers in it” but let 

Instagram “run relatively independently.”

908 Prior to being acquired, Instagram’s internal projections 

showed the company gaining nearly 88 million users by January 2013,909 and that its growth trajectory 

would not be significantly affected by the transaction.910

iii. WhatsApp

1) Overview

WhatsApp was founded in February 2009 by Jan Koum and Brian Acton.911 Originally 

designed to allow users to provide temporary updates to their contacts,912 WhatsApp is a cross903 Id. at FB-HJC-ACAL-00106124 (Apr. 13, 2012) (Instagram Chat Log).

904 Id. at FB-HJC-ACAL-00106131 (Apr. 30, 2012). 

905 Facebook Inc., Annual Report (Form 10-K) 5 (Dec. 31, 2012), 

https://www.sec.gov/Archives/edgar/data/1326801/000132680113000003/fb-12312012x10k.htm. 

906 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00110279 (Apr. 16, 2012) (Instagram’s Growth 

Projections) (on file with Comm); see generally SARAH FRIER, NO FILTER (2020) (“Every hour, Instagram seemed to grow 

faster. D’Angelo eventually helped the company transition to renting server space from Amazon Web Services instead of 

buying their own.”).

907 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00110279 (Apr. 16, 2012) (Instagram’s Growth 

Projections) (on file with Comm).

908 Id. at FB-HJC-ACAL-00063184-00063185 (Mar. 9, 2012), 

https://judiciary.house.gov/uploadedfiles/0006318000063197.pdf. 

909 Id. at FB-HJC-ACAL-0110268 (2012) (Instagram’s Growth Projections) (on file with Comm).

910 Id.

911 STEVEN LEVY, FACEBOOK: THE INSIDE STORY 317–18 (2020).

912 Id. at 319.
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platform messaging and calling service.913 Unlike traditional text and multimedia messages sent over a 

cellular network at the time, WhatsApp messages and calls do not require a cellular connection, and 

are transmitted by an internet connection.914 A main distinction between Facebook Messenger and 

WhatsApp is the network that people are able to communicate with on each messaging service. A 

Facebook user can only send messages to other Facebook users on the Messenger app, whereas a 

WhatsApp user can send messages to other people based on contacts on their mobile device.915

Until 2016, WhatsApp monetized its service through subscriptions for a nominal fee after the 

first year of use.916 Around that time, WhatsApp was the only messaging app that competed using this 

business model.917 Importantly, WhatsApp’s founders strongly opposed an advertisement-based 

business model. In June 2012, they wrote that “when advertising is involved you the user are the 

product,” explaining:

Advertising isn’t just the disruption of aesthetics, the insults to your intelligence and the 

interruption of your train of thought. At every company that sells ads, a significant 

portion of their engineering team spends their day tuning data mining, writing better 

code to collect all your personal data, upgrading the servers that hold all the data and 

making sure it’s all being logged and collated and sliced and packaged and shipped 

out.918

WhatsApp also maintained robust privacy policies. In its June 2012 privacy policy, WhatsApp stated 

that it does not collect names, emails, location data, or the contents of messages sent through 

WhatsApp.919 According to its policy, “WhatsApp is currently ad-free and we hope to keep it that way 

forever.”

920

913 Letter from Reginald Brown and Jon Yarowsky to H. Comm. on the Judiciary (Oct. 14, 2019), FB-AJC-ACALAPP00003.

914 Id. Although WhatsApp originally charged a subscription fee after the first year of use, it removed fees in January 2016. 

See also WHATSAPP, Making WhatsApp free and more useful (Jan. 18, 2016), https://blog.whatsapp.com/making-whatsapp-free-and-more-useful. 

915 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00042171 (2014) (on file with Comm.). 

916 STEVEN LEVY, FACEBOOK: THE INSIDE STORY 320 (2020) (“‘We were building a communication service,’ says Acton. 

‘You pay forty bucks a month to Verizon for their service, I figured a dollar a year was enough for a messaging service.’”). 

917 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00042157 (2014) (on file with Comm.) (“To 

the best of WhatsApp’s knowledge, Threema is the only other provider that has adopted a model based on usage fees. In 

contrast to WhatsApp’s subscription model, users of Threema pay a one-time fee for a life-time service.”).

918 WHATSAPP, Why we don’t sell ads (June 18, 2012) (“Advertising has us chasing cars and clothes, working jobs we hate 

so we can buy shit we don’t need.”), https://blog.whatsapp.com/why-we-don-t-sell-ads. 

919 WHATSAPP, Privacy Notice (July 7, 2012), https://www.whatsapp.com/legal?doc=privacy-policy&version=20120707. 

920 Id.
158

2) Acquisition Review

On February 19, 2014, Facebook announced its proposed acquisition of WhatsApp for 

approximately $16 billion at the time of the announcement.921 Following the transaction, WhatsApp’s 

co-founder wrote that the company would “remain autonomous and operate independently” from 

Facebook, and that “nothing” will change for users because there “would have been no partnership 

between our two companies if we had to compromise on the core principles that will always define our 

company, our vision and our product.”

922 Mr. Zuckerberg said that “[w]e are absolutely not going to 

change plans around WhatsApp and the way it uses user data.”

923

The Federal Trade Commission opened an initial investigation into the proposed transaction on 

March 13, 2014. On April 10, 2014, the FTC’s Director of the Bureau of Consumer Protection sent a 

letter advising the companies that WhatsApp “must continue to honor” its privacy data security 

commitments to its users, and that “a failure to keep promises made about privacy constitutes a 

deceptive practice under section 5 of the FTC Act.”

924 The Commission did not initiate a full-phase 

investigation into the acquisition. 

In September 2014, the European Commission initiated a review of Facebook’s proposed 

acquisition of WhatsApp.925 At the time of the transaction, Facebook calculated that the combined 

share of Facebook Messenger and WhatsApp in February 2014 was approximately 36% of the 

European Economic Area (EEA) market.926 In a filing in support of the transaction, Facebook told the 

European Commission that multi-homing—the use of multiple apps with similar features—was a key 

characteristic of the messaging market, saying that “approximately 70% of consumers use at least two, 

and 43% use at least three, communications apps in parallel.”

927 Facebook characterized the WhatsApp 

921 The transaction included $4 billion in cash and approximately $12 billion of Facebook shares. FACEBOOK, Facebook to 

Acquire WhatsApp (Feb. 19, 2014), https://about.fb.com/news/2014/02/facebook-to-acquire-whatsapp/ (last visited on Sept. 

28, 2020). The final value of WhatsApp exceeded $21 billion due to changes in the value of Facebook’s stock during the 

transaction and due to the addition of granting $3 billion in Facebook shares following the closing of the transaction. Sarah

Frier, Facebook $22 Billion WhatsApp Deal Buys $10 Million in Sales, BLOOMBERG (Oct. 29, 2014), 

https://www.bloomberg.com/news/articles/2014-10-28/facebook-s-22-billion-whatsapp-deal-buys-10-million-in-sales. 

922 WHATSAPP, FACEBOOK (Feb. 19, 2014) (“Here’s what will change for you, our users: nothing.”), 

https://blog.whatsapp.com/facebook. 

923 Jessica Guynn, Mark Zuckerberg: WhatsApp worth even more than $19 billion, L.A. TIMES (Feb. 24, 2014), 

https://www.latimes.com/business/la-xpm-2014-feb-24-la-fi-tn-mark-zuckerberg-whatsapp-worth-even-more-than-19-

billion-20140224-story.html. 

924 Letter from Jessica Rich, Dir., Bur. of Consumer Protection of the Fed. Trade Comm’n, to Erin Egan, Chief Privacy 

Officer, Facebook & Anne Hoge, Gen. Counsel, WhatsApp 1–2 (Apr. 10, 2014), 

https://www.ftc.gov/system/files/documents/public_statements/297701/140410facebookwhatappltr.pdf. 

925 Facebook noticed the proposed transaction to the European Commission on August 29, 2014. Press Release, Eur. 

Comm’n, Mergers: Commission approves acquisition of WhatsApp by Facebook (Oct. 3, 2014), 

https://ec.europa.eu/commission/presscorner/detail/en/IP_14_1088. 

926 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00042161 (on file with Comm.).

927 Id. at FB-HJC-ACAL-00042160.
159

product market as being distinct from the social networking market because WhatsApp “does not offer 

social features,” and represented that it had “no plans to make changes to WhatsApp’s current 

strategy” after closing the proposed acquisition.928

On October 3, 2014, the European Commission approved the proposed transaction, finding that 

“Facebook Messenger and WhatsApp are not close competitors and that consumers would continue to 

have a wide choice of alternative consumer communications apps after the transaction.”

929 Although 

the European Commission noted that the messaging apps are characterized by network effects, it 

concluded that Facebook would “continue to face sufficient competition after the merger.”

930 The 

Commission acknowledged that there is overlap between social networking and messaging apps. As it 

noted, the distinction between these apps is “becoming blurred and each of these services adopts 

traditional functionalities of the other.”

931 However, the Commission concluded that social networking 

services generally provide more social features than messaging apps—such as commenting on or 

“liking” other users’ posts and photos—whereas messaging apps had more limited functionality that is 

focused on real-time communication.932

In 2016, the European Commission fined Facebook after it concluded that Facebook provided 

“incorrect or misleading information” during the Commission’s review of the transaction.933 In its 

Statement of Objections to Facebook, the Commission concluded that Facebook provided misleading 

evidence on whether the company could match its users’ accounts with those of WhatsApp’s users.934

In August 2016, WhatsApp had updated its policies to allow the linking of Facebook user identities 

with WhatsApp user phone numbers.935 As discussed below, Facebook intended to create this 

functionality at the time of the transaction.936

Documents obtained by the Subcommittee indicate that Facebook acquired WhatsApp to 

expand its dominance. Prior to acquiring WhatsApp, Facebook viewed the acquisition as providing an 

opportunity to expand its reach in countries with intermediate levels of penetration.937 Facebook’s 

928 Id. at FB-HJC-ACAL-00042173.

929 Press Release, Eur. Comm’n, Mergers: Commission approves acquisition of WhatsApp by Facebook (Oct. 3, 2014), 

https://ec.europa.eu/commission/presscorner/detail/en/IP_14_1088.

930 Id.

931 Facebook/WhatsApp Android (Case M.7217) Commission Decision No. 139/2004 [2014], para. 52, 

https://ec.europa.eu/competition/mergers/cases/decisions/m7217_20141003_20310_3962132_EN.pdf.

932 Id. at para. 54.

933 Press Release, Eur. Comm’n, Mergers: Commission fines Facebook €110 million for providing misleading information 

about WhatsApp takeover (May 18, 2017), https://ec.europa.eu/commission/presscorner/detail/en/IP_17_1369. 

934 Id.

935 Id.

936 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045364 (Feb. 4, 2014) (on file with Comm.).

937 Id.
160

internal documents at the time of the transaction reveal that WhatsApp had already tipped markets in 

its favor where it had high penetration.938

In an internal email to Facebook’s management team, Facebook Director of Growth Javier 

Olivan wrote that WhatsApp had higher levels of reach and usage than Facebook in countries that it 

had penetrated. For example, based on Facebook’s internal data, WhatsApp reached 99.9% of the 

smartphone population in Spain, or as Mr. Olivan described it, “literally everyone.”

939 By purchasing 

WhatsApp, Mr. Olivan suggested that they could “grow Facebook even further” by exposing new users 

to Facebook.940 Additionally, by bundling free services with WhatsApp and Facebook’s other services, 

the transaction could serve as another mechanism to expand Facebook’s reach among WhatsApp 

users.941 Mr. Zuckerberg responded supportively, saying that “I really agree with this analysis.”

942

In an email to David Ebersman, Facebook’s Chief Financial Officer, Mr. Olivan wrote that 

WhatsApp’s “reach amongst smartphone users is actually bigger than ours . . . we have close to 100% 

overlap, our user-base being a subset of theirs.”

943 He explained that “in markets where they do well, 

they literally reach 100% of smartphone users—which is a big part of the population.”

944 In the 

company’s internal documents describing the transaction rationale, there was a heavy emphasis on 

WhatsApp’s growth and usage—450 million users, a clear path to a billion users, and adding one 

million new users every day with no marketing—and expanding Facebook’s social graph to phones.945

Prior to the acquisition, Mr. Zuckerberg had requested a list of all mobile apps with more than 100 

million daily and monthly active users globally.946 Facebook’s data showed that WhatsApp had the 

second most daily active users and fourth most monthly active users of any freestanding mobile app.947

Finally, a week after announcing the transaction, David Wehner, then-Vice President of 

Corporate Finance and Business Planning at Facebook, said to Mr. Ebersman that “we are going to 

spend 5-10% of our market cap every couple years to shore up our position.”

948 Mr. Wehner said that 

938 See, e.g., id.

939 Id.

940 Id.

941 Id.

942 Id. at FB-HJC-ACAL-00045363.

943 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045388 (Feb. 18, 2014), 

https://judiciary.house.gov/uploadedfiles/0004538800045389.pdf. 

944 Id.

945 Id. at FB-HJC-ACAL-00045379–87 (Feb. 19, 2014) (on file with Comm.).

946 Id.

947 Id.

948 Id. at FB-HJC-ACAL-00045388 (Feb. 18, 2014), https://judiciary.house.gov/uploadedfiles/0004538800045389.pdf. 
161

“I hate the word ‘land grab’ but I think that is the best convincing argument and we should own 

that.”

949

Other documents indicate that Facebook viewed WhatsApp as a maverick competitor. In 

December 2013, Mr. Zuckerberg sent an email to Facebook’s management team on competitive issues 

facing the company. In this email, he called attention to a feature that WhatsApp had implemented on 

its platform, and warned that Facebook should move quickly: 

I want to call out two competitive near term issues we face. The first is WhatsApp 

adding a feature like this for public figures . . . If the space is going to move in this 

direction, being the leader and establishing the brand and network effects matters a lot. 

This alone should encourage us to consider this soon. . . . When the world shifts like 

this, being first is how you build a brand and network effect. We have an opportunity to 

do this at scale, but that opportunity won’t last forever. I doubt we even have a year 

before WhatsApp starts moving in this direction.950

Facebook’s documents also indicate that the company monitored WhatsApp closely to 

determine whether it was a threat to the Messenger app. Prior to consummating the merger, 

Facebook’s data scientists used Onavo data to model WhatsApp’s engagement and reach to determine 

whether it was “killing Facebook Messenger,”

951 as well as how its usage trends compared to 

Snapchat.952

c. Conduct

In addition to protecting and expanding its dominance by acquiring firms that Facebook 

identified as competitive threats over the past decade, Facebook abused its monopoly power to harm 

competition in the social networking market. Facebook used its data advantage to create superior 

market intelligence to identify nascent competitive threats and then acquire, copy, or kill these firms. 

Once dominant, Facebook selectively enforced its platform policies based on whether it perceived 

other companies as competitive threats. In doing so, it advantaged its own services while weakening 

other firms. 

i. Facebook’s Use of Non-Public Data to Identify Competitive Threats

Prior to Facebook’s acquisition of Instagram, Facebook used internal data to track the growth 

of Instagram and other popular apps. While this data was probative for companies that interconnected 

949 Id.

950 Id. at, FB-HJC-ACAL-00046826–34 (Dec. 13, 2013) (on file with Comm.).

951 Id. at FB-HJC-ACAL-00014564–74 (Mar. 27, 2014).

952 Id. at FB-HJC-ACAL-00014575. 
162

with Facebook through Open Graph, it was incomplete for studying mobile app usage trends across the 

entire mobile ecosystem. In April 2012, Facebook’s Director of Growth Javier Olivan emailed Mr. 

Zuckerberg and Facebook Chief Product Officer Chris Cox, about improving Facebook’s “competitive 

research.”

953 He said that “getting our data in great shape is going to require effort.”954 Although the 

company had made “some good progress” using data from Comscore, a data analytics and 

measurement firm, Mr. Olivan said that with a significant investment, Facebook could build its own 

custom panel for mobile data that would “allow us to get 10x better at understanding” the mobile 

ecosystem: 

I keep seeing the same suspects (instagram, pinterest, ...) [sic] both on our competitive 

radar / platform strategy as wins . . . I think having the exact data about their users [sic] 

engagement, value they derive from [Facebook] . . . would help us make more bold 

decisions on whether they are friends or foes. Back to your thread about “copying” vs. 

“innovating” we could also use this info to inspire our next moves.955

Mr. Zuckerberg responded: “Yeah, let’s do it. We can find some time periodically during my weekly 

reviews to go over this stuff.”

956

A year later, on October 14, 2013, Facebook acquired Onavo, a virtual private network (VPN), 

for $115 million and other consideration.957 In an email to Facebook’s board, Facebook’s Vice 

President and Deputy General Counsel said the purpose of the acquisition was to “enhance our 

analytics related to cross-app user engagement data, as well as user behavior and market trends, and 

also to improve advertising effectiveness through demand data and audience targeting in the long 

term.”

958 Importantly, Facebook planned to place the incoming Onavo employees, including its 

cofounder, Guy Rosen, under Facebook’s Growth team reporting to Javier Olivan.959

Facebook’s acquisition of Onavo provided the company with the ability to track potential 

competitors through non-public, real-time data about engagement, usage, and how much time people 

spend on apps. Following this acquisition, Facebook used Onavo data as an “early bird warning 

953 Id. at FB-HJC-ACAL-00068928 (Apr. 3, 2012). 

954 Id.

955 Id.

956 Id. at FB-HJC-ACAL-00068929.

957 Hayley Tsukayama, Facebook acquires Israeli start-up Onavo to bolster data compression and mobile tech, WASH.

POST (Oct. 14, 2013), https://blogs.wsj.com/digits/2013/10/14/facebook-deal-gives-it-office-in-israel/.

958 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00072168 (Oct. 9, 2013) (on file with Comm.).

959 Id.
163

system,”

960 identifying fast-growing apps that could potentially threaten Facebook’s market position or 

enable it to protect and expand its dominance. For instance, days prior to Facebook’s acquisition of 

WhatsApp in 2014, Facebook senior executives provided Mark Zuckerberg with a list of all mobile 

apps with greater than 90 million monthly active users—WhatsApp, one of the only top mobile apps 

not owned at the time by either Facebook or Google, was fourth on the list.961

In August 2018, Apple removed Onavo from its app store following reporting that Facebook was 

using the app to track users and other apps.962 An Apple spokesperson said the company intended to 

make “it explicitly clear that apps should not collect information about which other apps are installed on 

a user’s device for the purposes of analytics or advertising/marketing and must make it clear what user 

data will be collected and how it will be used.”

963 In January 2019, Apple removed Facebook’s 

functional successor to Onavo, the Facebook Research app, following reports by TechCrunch that 

Facebook paid “teenagers and adults to download the Research app and give it root access to network 

traffic in what may be a violation of Apple policy so the social network can decrypt and analyze their 

phone activity.”

964

Most recently, Facebook acquired Giphy, a platform for sharing GIFs online and through 

messaging apps, for $400 million in May 2020.965 As several reporters have noted, this transaction 

would give Facebook competitive insights into other messaging apps. One commenter said, “While 

you may successfully block trackers like the Facebook ad pixel following you around online, or even 

delete your Facebook account, the majority of us wouldn’t suspect we’re being monitored when we’re 

sending funny images to friends.”

966

960 Betsy Morris & Deepa Seetharaman, The New Copycats: How Facebook Squashes Competition From Startups, WALL 

ST. J. (Aug. 9, 2017), https://www.wsj.com/articles/the-new-copycats-how-facebook-squashes-competition-from-startups1502293444.

961 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00045412-14 (Feb. 16, 2014), 

https://judiciary.house.gov/uploadedfiles/0004541200045414.pdf. 

962 Deepa Seetharaman, Facebook Removes Data-Security App From Apple Store, WALL ST. J. (Aug. 22, 2018), 

https://www.wsj.com/articles/facebook-to-remove-data-security-app-from-apple-store-1534975340.

963 Taylor Hatmaker, Apple removed Facebook’s Onavo from the App Store for gatherine app data, TECHCRUNCH (Aug. 

22, 2018), https://techcrunch.com/2018/08/22/apple-facebook-onavo/.

964 Josh Constine, Facebook pays teens to install VPN that spies on them, TECHCRUNCH (Jan. 29, 2019), 

https://techcrunch.com/2019/01/29/facebook-project-atlas/; Josh Constine, Apple bans Facebook’s Research app that paid 

users for data, TECHCRUNCH (Jan. 30, 2019), https://techcrunch.com/2019/01/30/apple-bans-facebook-vpn/.

965 Kurt Wagner & Sarah Frier, Facebook Buys Animated Image Library Giphy for $400 Million, BLOOMBERG (May 15, 

2020), https://www.bloomberg.com/news/articles/2020-05-15/facebook-buys-animated-image-library-giphy-to-boostmessaging; see, e.g., Vivek Karuturi (@VivekxK), TWITTER (May 15, 2020, 11:43 AM),

https://twitter.com/VivekxK/status/1261321201210626048.

966 Owen Williams, How Facebook Could Use Giphy to Collect Your Data, ONEZERO (May 15, 2020), 

https://onezero.medium.com/how-facebook-could-use-giphy-to-collect-your-data-70824aa2647b.
164

ii. Facebook’s Strategy to Acquire, Copy, or Kill Competitors

Facebook’s internal documents indicate that once it identified a competitive threat, it attempted 

to buy or crush them by cloning their product features or foreclosing them from Facebook’s social 

graph. Facebook took these steps to harm competitors and insulate Facebook from competition, not 

just to grow or offer better products and services.

In a March 2012 email to other senior executives at Facebook, Mr. Zuckerberg wrote that 

cloning other apps could help Facebook move faster by “building out more of the social use cases 

ourselves and prevent our competitors from getting footholds.”

967 Other senior employees at Facebook 

agreed with this strategy. Sheryl Sandberg, Facebook’s Chief Operating Officer, said that “it is better 

to do more and move faster, especially if that means you don’t have competitors build products that 

takes some of our users.” Sam Lessin, Facebook’s Product Management Director, added, “I would love 

to be far more aggressive and nimble in copying competitors. . . Let’s ‘copy’ (aka super-set) 

Pinterest!”

968 Another senior executive responded, “I’ve been thinking about why we haven’t moved 

faster on Roger and Snap . . . I’m increasingly concerned as I watch startups siphon our graph and 

create awesome new experiences faster than we can.”

969

Prior to its acquisition of Instagram in 2012, Facebook’s senior executives had identified 

Instagram as a growing threat. Mr. Zuckerberg told employees at an internal meeting that the “bad 

news is that [Instagram is] growing really quickly, they have a lot of momentum, and it’s going to be 

tough to dislodge them.”

970 One engineer wrote in an internal company chat that “Instagram is eating 

our lunch. We should’ve owned this space but we’re already losing quite badly.”

971 In response, 

another engineer asked, “Isn’t that why we’re building an Instagram clone?” referencing Facebook’s 

development of Facebook Camera, a standalone photo app.972

During negotiations to acquire Instagram, Mr. Zuckerberg referenced Facebook’s development 

of a similar app to Kevin Systrom, Instagram’s Chief Executive Officer.973 In messages between Mr. 

Zuckerberg and Mr. Systrom, Mr. Systrom said that it was difficult to evaluate the transaction 

independently of reports that Facebook was developing a similar product. He told Mr. Zuckerberg that 

967 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00053511–16 (Mar. 30, 2012) (on file with 

Comm.).

968 Id.

969 Id. at FB-HJC-ACAL-00067549 (Apr. 3, 2012).

970 Id. at FB-HJC-ACAL-00047340 (Apr. 6, 2012).

971 Id. at FB-HJC-ACAL-00063367 (Jan. 26, 2012), https://judiciary.house.gov/uploadedfiles/0006336700063373.pdf.

972 Josh Constine, FB launches Facebook Camera—An Instagram-Style Photo Filtering, Sharing, Viewing iOS App,

TECHCRUNCH (May 24, 2012), https://techcrunch.com/2012/05/24/facebook-camera/.

973 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00091648–50 (Mar. 20, 2012) (on file with 

Comm.).
165

he “wouldn’t feel nearly as strongly [about the acquisition] if independently you weren’t building a 

mobile photos app that makes people choose which engine to use.”

974 Similarly, Mr. Zuckerberg 

suggested that refusing to enter into a partnership with Facebook, including an acquisition, would have 

consequences for Instagram, referencing the product Facebook was developing at the time:

At some point soon, you’ll need to figure out how you actually want to work with us. 

This can be an acquisition, through a close relationship with Open Graph, through an 

arms length relationship using our traditional APIs, or perhaps not at all. . . Of course, at 

the same time we’re developing our own photos strategy, so how we engage now will 

determine how much we’re partners vs. competitors down the line—and I’d like to 

make sure we decide that thoughtfully as well.975

In an earlier conversation with Matt Cohler, an Instagram investor and former senior Facebook 

adviser, Mr. Systrom asked whether Mr. Zuckerberg would “go into destroy mode if I say no” to being 

acquired, saying that the companies “have overlap in features.”

976 Mr. Cohler responded “probably”

and that Mr. Zuckerberg would “conclude that it’s best to crush [I]nstagram.”

977

Facebook’s approach towards rival social networking app Snapchat is another case study in 

how Facebook enters “destroy mode” when its market position is threatened. In 2013, as the company 

was growing rapidly, Snapchat co-founder Evan Spiegel turned down an offer from Mr. Zuckerberg to 

acquire the company for $3 billion.978 Thereafter, Instagram—owned by Facebook—introduced the 

Instagram Stories feature, which allows users to post content that is available for only 24 hours, and 

which was “nearly identical to the central feed in Snapchat, which [was] also called Stories.”

979

Less than a year after its introduction, Instagram Stories had more daily active users (200 

million) than Snapchat Stories (161 million).980 By 2018, Instagram Stories had doubled the number of 

974 Id.

975 Id.

976 Id. at FB-AJC-ACAL-0010438 (Feb. 13, 2012), https://judiciary.house.gov/uploadedfiles/0010143800101441.pdf.

977 Id.

978 Evelyn Rusli & Douglas MacMillan, Messaging Service Snapchat Spurned $3 Billion Facebook Bid, WALL ST. J. (Nov. 

13, 2013), https://www.wsj.com/articles/messaging-service-snapchat-spurned-facebook-bid-1384376628. 

979 Casey Newton, Instagram’s new stories are a near-perfect copy of Snapchat stories, THE VERGE (Aug. 2, 2016), 

https://www.theverge.com/2016/8/2/12348354/instagram-stories-announced-snapchat-kevin-systrom-interview. 

980 Kaya Yurieff, Instagram’s Snapchat clone is more popular than Snapchat, CNN BUS. (Apr. 13, 2017), 

https://money.cnn.com/2017/04/13/technology/instagram-stories-snapchat/index.html. 
166

Snapchat Stories daily users.981 When discussing Instagram’s decision to clone the Snapchat feature, 

Instagram VP of Product Kevin Weil remarked: “This is the way the tech industry works.”

982

In another example, Facebook executives approached Houseparty, a social networking app,983

about a potential acquisition. Houseparty’s founders turned down Facebook’s offer, and released the 

product they referred to as “the internet’s living room.”

984 Shortly thereafter, Facebook announced that 

its Messenger app would become a “virtual living room.”

985 Houseparty’s active user base fell by half 

between 2017 and 2018.986

At the Subcommittee’s sixth hearing, Representative Henry C. “Hank” Johnson, Jr. (D-GA) 

asked Mr. Zuckerberg about Facebook’s use of data to identify competitive threats. Rep. Johnson 

noted that “over nearly a decade, Mr. Zuckerberg, you led a sustained effort to surveil smaller 

competitors to benefit Facebook. These were steps taken to abuse data, to harm competitors, and to 

shield Facebook from competition.”

987 He asked Mr. Zuckerberg whether Facebook used Onavo data 

to purchase WhatsApp. Mr. Zuckerberg responded:

I think every company engages in research to understand what their customers are 

enjoying so they can learn and make their products better. And that’s what we were 

trying to do. That is what our analytics team was doing. And I think, in general, that 

allowed us to make our services better for people to be able to connect in a whole lot of 

different ways, which is our goal. . . . [Onavo] was one of the signals that we had about 

WhatsApp’s trajectory, but we didn’t need it. Without a doubt, it was pretty clear that 

WhatsApp was a great product.988

981 Id.

982 Josh Constine, Instagram on copying Snapchat: “This is the way the tech industry works,” TECHCRUNCH (May 16, 

2017), https://techcrunch.com/2017/05/16/to-clone-or-not-to-clone/. 

983 Betsy Morris & Deepa Seetharaman, The New Copycats: How Facebook Squashes Competition From Startups, WALL 

ST. J. (Aug. 9, 2017), https://www.wsj.com/articles/the-new-copycats-how-facebook-squashes-competition-from-startups1502293444. 

984 Id.

985 Id.

986 Mansoor Iqbal, Houseparty Revenue and Usage Statistics (2020) (June 23, 2020), 

https://www.businessofapps.com/data/houseparty-statistics/. 

987 CEO Hearing Transcript at 149–50 (question of Rep. Henry C. “Hank” Johnson, Jr. (D-GA), Chairman, Subcomm. on 

Courts & Intellectual Property, H. Comm. on the Judiciary).

988 Id. (statement of Mark Zuckerberg, CEO, Facebook).
167

iii. Facebook Weaponized Access to its Platform

Internal communications by Facebook’s senior executives and interviews with former 

employees at the company indicate that Facebook selectively enforced its platform policies based on 

whether it perceived other companies as competitive threats. 

Facebook developed the Facebook Platform to connect other applications to Facebook’s social 

graph. In an interview in 2007, Mr. Zuckerberg described the goals of the Facebook Platform as 

making “Facebook into something of an operating system so you can run full applications.”

989 A year 

later, in an email to senior executives at Facebook, Mr. Zuckerberg described Facebook Platform as 

key to the company’s long term success:

Platform is key to our strategy because we believe that there will be a lot of different 

social applications and ways that people communicate and share information, and we 

believe we can’t develop all of them ourselves. Therefore, even though it’s a challenge 

for us to get this right, it’s important for us to focus on it because the company that 

defines this social platform will be in the best position to offer the most good ways for 

people to communicate and succeed in the long term.990

Over the next few years, Facebook recognized that access to its social graph provided other 

applications with a tool for significant growth. In exchange, Facebook hosted content that kept users 

engaged on its social graph, and considered other ways to monetize this relationship, such as through 

revenue sharing or advertisements.

By 2012, however, Facebook’s senior executives realized that apps could use the Facebook 

Platform to build products that were competitive with Facebook and “siphon our users.”

991 Mike 

Vernal, Facebook’s Vice President of Product and Engineer, described this dynamic to Doug Purdy, 

Facebook’s Director of Product Management: 

When we started Facebook Platform, we were small and wanted to make sure we were 

an essential part of the fabric of the Internet. We’ve done that—we’re now the biggest 

service on earth. When we were small, apps helped drive our ubiquity. Now that we 

are big, (many) apps are looking to siphon off our users to competitive services. We 

989 David Kirkpatrick, Facebook’s plan to hook up the world, CNNMONEY (May 29, 2007), 

https://money.cnn.com/2007/05/24/technology/facebook.fortune/.

990 Production of Facebook, to H. Comm. on the Judiciary, FB_FTC_CID_00072185–88 (Feb. 14, 2008) (on file with 

Comm.).

991 Id. at FB_FTC_CID_00072020–23 (Feb. 14, 2013) (emphasis added).
168

need to be more thoughtful about what integrations we allow and we need to make sure 

that we have sustainable, long-term value exchanges.992

In another conversation between Sam Lessin, Facebook’s Director of Product Engagement, and 

other executives, Facebook’s senior employees agreed that competitive apps used Facebook Platform 

to “steal our engagement” and “could be viewed as replacing Facebook functionality,” adding that they 

planned to raise this concern with Mr. Zuckerberg.993 Mr. Lessin raised these concerns with Mr. 

Zuckerberg in October 2012. In response, Mr. Zuckerberg agreed with this conclusion:

Reading your responses, I do think you are right . . . I would be more comfortable with 

competition if I thought we knew better how to leverage our scale asset (and if scale 

weren’t becoming cheaper and cheaper to achieve every day). What I think is that we 

should effectively not be helping our competitors more / much more than how they 

could get help from elsewhere in the market. They can acquire users in ways other than 

us so obviously we shouldn’t be failing to take their money when they will just give it 

to someone else and get the same outcome. I do, however, again think that we want as 

much control here as we can get. I agree we shouldn’t help our competitors whenever 

possible. I think the right solution here is to just be a lot stricter about enforcing 

our policies and identifying companies as competitors.994

Recognizing that some social apps had grown too popular and could compete with Facebook’s family 

of products, Facebook cut off their access to Facebook’s social graph.995

In 2013, Facebook claimed that the short-form video app Vine, a video-sharing app that Twitter 

acquired in 2012, “replicated Facebook’s core News Feed functionality.”

996 In response, Facebook cut 

off Vine’s access to Facebook APIs.997 In doing so, “Facebook was able to degrade consumers’

992 Id.

993 Id. at FB_FTC_CID_0008058182 (Sept. 15, 2012).

994 Id. at FB_FTC_CID_00491746–63 (Oct. 27, 2012) (emphasis added); (Elena Botella, Facebook Earns $132.80 From 

Your Data per Year, SLATE (Nov. 15, 2019), https://slate.com/technology/2019/11/facebook-six4three-pikinis-lawsuitemails-data.html.

995 Olivia Solon & Cyrus Farivar, Mark Zuckerberg Leveraged Facebook User Data to Fight Rivals and Help Friends, 

Leaked Documents Show, NBC NEWS (Apr. 16, 2019), https://www.nbcnews.com/tech/social-media/mark-zuckerbergleveraged-facebook-user-data-fight-rivals-help-friends-n994706.

996 Innovation and Entrepreneurship Hearing at 3 (response to Questions for the Record of Matt Perault, Dir. of Public 

Pol’y, Facebook), https://docs.house.gov/meetings/JU/JU05/20190716/109793/HHRG-116-JU05-20190716-SD039.pdf.

997 Rachel Kraus, Mark Zuckerberg gave the order to kneecap Vine, emails show, MASHABLE (Dec. 5, 2018), 

https://mashable.com/article/mark-zuckerberg-helped-thwart-vine/.
169

experience of Vine and reduce the platform’s competitive threat.”

998 Twitter shut down Vine in 

2016.999

Facebook’s actions in the wake of the Cambridge Analytica scandal raise concerns about 

pretextual anticompetitive enforcement in the name of privacy. In 2019, Facebook cut off marketing 

firm Stackla’s access to its APIs “due to data scraping, which violates [Facebook’s] policies.”

1000

Damien Mahoney, the Chief Executive Officer of Stackla, denied these allegations.1001 In an interview 

with the Subcommittee, Mr. Mahoney explained the economic harm of the company’s foreclosure 

from the Facebook Platform:

What we went through with Facebook was company altering, and if not for the resolve 

of our team and board, would have destroyed it. We had to lay off half our team. We 

made huge investments in the company in the previous 12 months, having raised $4m to 

increase our sales capacity by 160% and other functions in the business, then this 

occurred. It was a critical blow that almost forced us to close the doors. We were 

approaching 75 employees and 30% growth after 8 long years of toil. Now we have 26 

employees, declining revenue and ongoing collateral damage that we continue to sink 

time and money into. While we try and stabilize, and get the company back to a position 

of growth, it’s a long way off as we continue, to this very day, deal with the aftereffects. The fact this all resulted from a single erroneous and factually incorrect news 

article, combined with zero consultation from Facebook prior to their damaging actions, 

remains baffling and completely unfair.1002

Around that time, Facebook became aware of MessageMe, a fast-growing app that used 

Facebook graph data to support its “Find Friends” feature. Recognizing that MessageMe could 

compete with Facebook Messenger, Facebook’s then-director of platform partnerships cut off the app’s 

access to Facebook’s Graph API.1003

998 Competition & Mkts. Auth. Report at at 141.

999 Casey Newton, Why Vine died, THE VERGE (Oct. 28, 2016), https://www.theverge.com/2016/10/28/13456208/why-vinedied-twitter-shutdown.

1000 Innovation and Entrepreneurship Hearing at 3 (statement of Matt Perault, Dir. of Public Pol’y, Facebook), 

https://docs.house.gov/meetings/JU/JU05/20190716/109793/HHRG-116-JU05-Wstate-PeraultM-20190716.pdf.

1001 Rob Price, Facebook is reviewing hundreds of its official ‘Facebook Marketing Partners’ over Instagram data-scraping 

issues, BUSINESS INSIDER (Aug. 23, 2019), https://www.businessinsider.com/facebook-review-all-marketing-partnersinstagram-data-scraping-2019-8.

1002 Interview with Damien Mahoney, CEO, Stackla (Apr. 14, 2020).

1003 Olivia Solon & Cyrus Farivar, Mark Zuckerberg Leveraged Facebook User Data to Fight Rivals and Help Friends, 

Leaked Documents Show, NBC NEWS (Apr. 16, 2019), https://www.nbcnews.com/tech/social-media/mark-zuckerbergleveraged-facebook-user-data-fight-rivals-help-friends-n994706.
170

In a submission to the Subcommittee, a former Facebook employee who handled platform 

management at the company said that Facebook unevenly enforced its platform policies based on the 

degree of another firm’s competition with Facebook and whether it could extract concessions from 

other firms. According to this former employee, Facebook was primarily concerned with whether a 

company was “a competitive threat,” and it “was biasing its enforcement actions against [firms] they 

saw as competitors.”

1004 In a submission to the Subcommittee, the former Facebook employee 

provided an example:

[I]n one Facebook Messages conversation involving the CEO, Mr. Zuckerberg, and 

various executives in mid-2012, Mr. Zuckerberg expressed concern about an app called 

Ark that was accessing large amounts of user data in a way that could enable showing 

user content to people who didn’t have permission to see the content. An investigation 

was conducted, and it was determined that Ark was violating Facebook’s platform 

policies regarding the use of data from friends of Facebook users. Ultimately, leadership 

decided to terminate Ark’s access to Facebook’s APIs and ban Ark from the platform 

for six months. This was a harsh punishment relative to other developers conducting 

similar activity—indeed, Mr. Zuckerberg had been informed on the thread that “tons” of 

other apps were acquiring data the same way and there was not further investigation or 

action taken against those apps. Other apps that had been accused of violating data 

policies similarly had been treated much more leniently. It seemed clear that 

leadership imposed the more severe punishment against Ark because Mr. 

Zuckerberg viewed Ark as competitive with Facebook, as Facebook was exploring 

an acquisition of Ark at the same time as it was being investigated for policy 

violations.1005

In contrast to punishing rivals, according to the former employee and other market participants 

interviewed by the Subcommittee, Facebook used “whitelists” to give preferential treatment to friends 

of the company.1006 For example, in a report published by NBC, Facebook gave Amazon extended API 

access because Amazon was spending money on advertising and partnering with Facebook on the 

launch of its Fire smartphone. Facebook’s Director of Business Development asked, “Remind me, why 

did we allow them to do this? Do we receive any cut of purchases?” In response, a Facebook employee 

who worked with Facebook’s “strategic partners” responded, “No, but Amazon is an advertiser and 

supporting this with advertisement . . . and working with us on deeper integrations for the Fire.”

1007

1004 Interview with Former Facebook Employee (Jan. 14, 2020). 

1005 Submission from Former Facebook Employee, to H. Comm. on the Judiciary, 2 (Apr. 2, 2020) (on file with Comm.).

1006 Id.

1007 Olivia Solon & Cyrus Farivar, Mark Zuckerberg Leveraged Facebook User Data to Fight Rivals and Help Friends, 

Leaked Documents Show, NBC NEWS (Apr. 16, 2019), https://www.nbcnews.com/tech/social-media/mark-zuckerbergleveraged-facebook-user-data-fight-rivals-help-friends-n994706.
171

In response to these concerns, Facebook told the Subcommittee that it “does not restrict access 

to its Platform APIs simply because an app competes with a Facebook product or service; but 

Facebook will restrict apps that violate its policies.”

1008 This is, however, inconsistent with the 

company’s internal communications and other evidence examined by the Subcommittee during the 

investigation.

Digital Advertising

a. Overview

Facebook monetizes its platform through the sales of digital advertising.1009 Facebook garnered 

over $70 billion in revenue in 2019, a nearly 27% increase from 2018.1010 It generates this revenue 

predominately from selling advertisement placements. 

Facebook has monopoly power in online advertising in the social networking market.1011

Notwithstanding Google’s dominance, Facebook also has a significant share of revenue and growth in 

online advertising with many market participants referring to them as duopolies in this broad market. 

Some market participants interviewed by the Subcommittee consider Facebook “unavoidable” or 

“must have” due to the reach and scale of its platform. In particular, some businesses consider 

Facebook’s identity product—its ability to persistently track users’ online and offline conduct to serve 

tailored ads—as a unique feature.1012 For example, at the Subcommittee’s fifth hearing, David 

Heinemeier Hansson, the Chief Technology Officer and Cofounder of Basecamp, testified that the 

nature of Facebook’s targeted advertising makes it difficult to replace, saying:

At Basecamp, we ultimately ended up swearing off the use of targeted advertisement 

based on the exploitation of personal data. Facebook’s record of protecting people’s 

privacy, and gathering their consent in the exploitation of their data for advertisement 

purposes, is atrocious, and we decided that we wanted no part of it. But choosing to opt 

out of targeted advertisement on the internet is like competing with one arm behind 

your back. It is very clear why most companies feel compelled to do this kind of 

advertisement, even if it’s a violation of their ethics. If their competitors are doing it, 

they’re at a significant disadvantage if they don’t. And the same is true for us. We have 

1008 Innovation and Entrepreneurship Hearing at 3 (response to Questions for the Record of Matt Perault, Dir. of Public 

Pol’y, Facebook).

1009 Transcript of Mark Zuckerberg’s Senate hearing, WASH. POST (Apr. 10, 2018) (“‘Senator, we run ads,’ Zuckerberg 

replied.”), https://www.washingtonpost.com/news/the-switch/wp/2018/04/10/transcript-of-mark-zuckerbergs-senatehearing.

1010 Id.

1011 Competition & Mkts. Auth. Report at 211.

1012 Competitors Hearing at 10 (statement of David Heinemeier Hansson, Chief Technology Officer and Cofounder, 

Basecamp).
172

undoubtedly given up growth to competitors because we’ve refrained from pursuing 

targeted ads.1013

Facebook’s advantages in terms of access to data and its reach contribute to its ability to earn 

higher revenue per user than other firms in the social networking market.1014 Facebook reported an 

average revenue per user (ARPU) of $7.05 worldwide and $36.49 in the United States and Canada in 

July 2020.1015 It has also averaged significant annual growth—26% on average over the past five 

years.

1016 In contrast, its closest competitor, Snap, reported in July 2020 that its ARPU “remained flat”

at $1.91 worldwide and $3.48 in North America.1017 A recent investment report underscored this point, 

noting that Facebook enjoys a significant economic moat illustrated by the inability of Snap and other 

firms to meaningfully challenge its dominance.1018 As a result, entry or success by other firms is 

unlikely:

With more users and usage time than any other social network, Facebook provides the 

largest audience and the most valuable data for social network online advertising. 

Facebook’s ad revenue per user is growing, demonstrating the value that advertisers see 

in working with the firm . . . Facebook has also expanded its user base in the growing 

mobile market, which positively affected the network effect as it became more valuable 

to advertisers, and resulted in more ad revenue growth. The main drivers behind growth 

in online advertising have been growths in the mobile ad market and the video ad 

format. Most Facebook users are now accessing Facebook and its apps via mobile 

devices.1019

Facebook’s internal documents reinforce this finding. In a presentation prepared to deliver to 

investors ahead of the company’s initial public offering, Facebook characterized its advertising product 

as having a significant advantage over the industry average in accuracy and narrowly targeted 

campaigns due to its reach, engagement, and using people’s “real identity—people as their real 

1013 Id.

1014 Competition & Mkts. Auth. Report at 211.

1015 FACEBOOK, FACEBOOK Q2 2020 RESULTS (July 31, 2020), 

https://s21.q4cdn.com/399680738/files/doc_financials/2020/q2/Q2-2020-FB-Earnings-Presentation.pdf.

1016 MORNINGSTAR EQUITY ANALYST REPORT, FACEBOOK INC 2 (Aug. 3, 2020) (“The value of such data and advertisers’ 

willingness to use it is demonstrated by the 26% average annual growth of Facebook’s average ad revenue per user, or 

ARPU, during the past five years, which we view as indicative of the price that advertisers pay Facebook for ad placement. 

During the same period, Facebook’s monthly average users have grown 12% annually.”) (on file with Comm.).

1017 Snap, Inc., Quarterly Report (Form 10-Q) 25, 27 (June 30, 2020), https://d18rn0p25nwr6d.cloudfront.net/CIK0001564408/9aacfdca-55a1-4928-9a31-c2462d2386c0.pdf.

1018 MORNINGSTAR EQUITY ANALYST REPORT, FACEBOOK INC 1–2 (Aug. 3, 2020) (on file with Comm.).

1019 Id.
173

selves.”

1020 In comparison to television broadcasters, the company noted that in the United States, 

“everyday on Facebook is like the season finale of American idol—the most popular show on TV—

times two.”

1021

These findings are also consistent with those of Australian,1022 British,1023 French,1024 and 

German antitrust authorities, which conducted an extensive examination of Facebook’s market power 

in the social networking market and in digital advertising. For example, the United Kingdom’s 

Competition and Markets Authority (CMA) found in July 2020 that Facebook and Instagram generated 

over half of display advertising revenues in 2019” in the United Kingdom, which it found to be a 

relevant market.1025 In contrast to other firms in the same market, Facebook’s lead was significantly 

larger than its closes competitor, YouTube, which “earned between 5 and 10%.”

1026 In June 2019, the 

Australian Competition and Consumer Commission (ACCC) found that Facebook has “substantial 

market power in the supply of display advertising in Australia.”

1027 Similar to the CMA’s findings, the 

ACCC concluded that the share of the display advertising market controlled by Facebook and 

Instagram is significant—more than half—and growing, while the rest of the market is highly 

fragmented.1028

b. Relevant Acquisitions

On February 27, 2013, Facebook executed an agreement to purchase Atlas, an advertiser-side 

platform to manage and measure ad performance, from Microsoft for $100 million.1029At the time of 

the transaction, Atlas captured data to track conversions—when a specific action is taken in response 

to an ad, such as making a purchase—through clicks and impressions.1030 In other words, if someone 

saw a BestBuy ad, Atlas enabled serving the ad, recording the user seeing the ad via a browser 

identifier, and recorded the impression as well as if the person clicked on the ad. Later, if the same user 

1020 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00054106. (Apr. 9, 2012) (on file with 

Comm.).

1021 Id.

1022 Competition & Mkts. Auth. Report at 9.

1023 Id. at 11–12, 211.

1024 FRENCH AUTORITÉ DE LA CONCURRENCE & BUNDESKARTELLAMT, COMPETITION LAW AND DATA (2016), 

https://www.bundeskartellamt.de/SharedDocs/Publikation/DE/Berichte/Big%20Data%20Papier.pdf;jsessionid=D86CD9D1

3899F2590F84E82092187858.2_cid362?__blob=publicationFile&v=2.

1025 Competition & Mkts. Auth. Report at 10.

1026 Id.

1027 Austl. Competition & Consumer Comm’n Report at 97.

1028 Id.

1029 Production of Facebook, to H. Comm. on the Judiciary, FB-HJC-ACAL-00043659 (Mar. 2013) (on file with Comm.). 

1030 Id.
174

bought the item from BestBuy.com, Atlas recognized the user through their browser and would record 

the conversion if the user purchased the item advertised. 

Prior to the acquisition, Amin Zoufonoun, Facebook’s Vice President for Corporate 

Development, described the “primary thesis” of the acquisition to Sherly Sandberg as giving Facebook 

“immediate scale to retarget, provide premium insights, do look-alike modeling, prove and measure 

efficacy of [Facebook] as a marketing medium, [and] enhance custom audiences and associated 

revenue.”

1031 Facebook’s primary strategic rationale for integrating Atlas into its ad product was to 

improve its ability to measure ad performance and use identity-based targeting through Facebook 

Identity—its unique identifier for Facebook users across all browsers and devices—to serve highly 

targeted ads.1032 Facebook described the value of Facebook Identity as its ability to “target people

across browsers and devices” and to “activate offline data to enrich online targeting,” among other 

features.1033 The company believed that its “unique data” and “unique reach and engagement (across 

devices and platforms)” would boost its value to advertisers.1034

Facebook also noted in its summary of the deal at the time of the transaction that the major 

opportunities of the transaction were (1) to become the “buy-side desktop tool that media planners fire 

up first thing in the day;” and (2) to acquire “a deep installed base of pixels which we can immediately 

turn on to power conversion tracking and attribution of ads across offerings.”

1035

Absent the transaction, Facebook raised concerns that Google’s “lead in this market may 

become insurmountable” and limit Facebook’s ads in other ways.1036 The company also raised 

concerns that Facebook’s Custom Audiences tool would not be able “to scale beyond click-oriented 

advertisers.”

1037 Among other potential risks of the deal, such as rebuilding the product on Facebook’s 

ad stack, the company identified “[m]anaging perceptions around privacy” as an area of concern.1038

1031 Id. at FB-HJC-ACAL-00043509 (Oct. 18, 2012) (internal punctuation omitted).

1032 Id. at FB-HJC-ACAL-00043660.

1033 Id. at FB-HJC-ACAL-00043680 (emphasis in original).

1034 Id. at FB-HJC-ACAL-00043705.

1035 Id. at FB-HJC-ACAL-00043710.

1036 Id. at FB-HJC-ACAL-00043660.

1037 Id. at FB-HJC-ACAL-00043697.

1038 Id. at FB-HJC-ACAL-00043658.
175

B. Google

Overview

Google was launched in 1998 as a general online search engine.1039 Founded by Larry Page and 

Sergey Brin, the corporation got its start by serving users web results in response to online queries. 

Google’s key innovation was its PageRank algorithm, which ranked the relevance of a webpage by 

assessing how many other webpages linked to it.1040 In contrast with the technology used by rival 

search engines, PageRank enabled Google to improve the quality of its search results even as the web 

rapidly grew. While Google had entered a crowded field, by 2000 it had become the world’s largest 

search engine.1041 Later that year Google launched AdWords, an online advertising service that let 

businesses purchase keywords advertising to appear on Google’s search results page—an offering that 

would evolve to became the heart of Google’s business model.1042

Today Google is ubiquitous across the digital economy, serving as the infrastructure for core 

products and services online. It has grown and maintained its search engine dominance, such that 

“Googling” something is now synonymous with online search itself. The company is now also the 

largest provider of digital advertising, a leading web browser, a dominant mobile operating system, 

and a major provider of digital mapping, email, cloud computing, and voice assistant services, 

alongside dozens of other offerings. Nine of Google’s products—Android, Chrome, Gmail, Google 

Search, Google Drive, Google Maps, Google Photos, Google Play Store, and YouTube—have more 

than a billion users each.1043 Each of these services provides Google with a trove of user data, 

reinforcing its dominance across markets and driving greater monetization through online ads. 

In several markets, Google established its position through acquisition, buying up successful 

technologies that other businesses had developed. In a span of 20 years, Google purchased well over 

260 companies—a figure that likely understates the full breadth of Google’s acquisitions, given that 

many of the firm’s purchases have gone unreported.1044 Documents collected by the Subcommittee 

1039 Google Inc., Registration Statement (Form S-1) 1 (Apr. 29, 2004), 

https://www.sec.gov/Archives/edgar/data/1288776/000119312504073639/ds1.htm. 

1040 Id. at 65 (“PageRank is a query-independent technique for determining the importance of web pages by looking at the 

link structure of the web.”).

1041 Press Release, Google Launches World’s Largest Search Engine, Google (June 26, 2000), 

http://googlepress.blogspot.com/2000/06/google-launches-worlds-largest-search.html (stating that Google had indexed over 

1 billion webpages).

1042 Press Release, Google Launches Self-Service Advertising Program, Google (Oct. 23, 2000), 

http://googlepress.blogspot.com/2000/10/google-launches-self-service.html. 

1043 Harry McCracken, How Google Photos joined the billion-user club, FAST CO. (July 24, 2019), 

https://www.fastcompany.com/90380618/how-google-photos-joined-the-billion-user-club. 

1044 See infra Appendix; Leena Rao, Google Spent Nearly $2 Billion on 79 Acquisitions in 2011, TECHCRUNCH (Jan. 27, 

2012), https://techcrunch.com/2012/01/27/google-spent-nearly-2-billion-on-79-acquisitions-in-2011/ (“As of Q3, Google 
176

reveal that executives recognized as early as 2006 that Google’s “tremendous cash resources” could be 

deployed to help execute Google’s “strategic plan.”

1045

Google is now one of the world’s largest corporations. For 2019, Google reported total 

revenues of $160.7 billion—up 45% from 2017—and more than $33 billion in net income.1046

Although Google has diversified its offerings, it generates the vast majority of its money through 

digital ads, which accounted for over 83% of Google’s revenues in 2019.1047 Search advertising, in 

particular, is critical to Google, accounting for approximately 61% of its total sales.1048 In recent 

months Google reported a drop in ad revenue due to pandemic-related cuts in spending, though the 

company partly made up for the decline through revenue growth in Google Cloud, Google Play, and 

YouTube.1049 Google has enjoyed strong and steady profits, with profit margins greater than 20% for 

nine out of the last 10 years, close to three times larger than the average for a U.S. firm.1050 Financial 

analysts predict that Google is well positioned to maintain its dominance, noting that “Alphabet has 

established unusually deep competitive moats around its business.”

1051

In 2015 Google underwent a reorganization, introducing Alphabet as a parent company under 

which Google would reside as a wholly owned subsidiary.1052 Alphabet also houses the company’s 

non-search ventures, such as Calico, the biotech company focused on longevity, and Waymo, which 

develops self-driving cars.1053 In December 2019, Page and Brin stepped down from their management 

had spent over $1.4 billion on 55 acquisitions for the year. Google ended 2011 spending $1.9 billion (including cash and 

stock) on completing 79 acquisitions during the entirety of the year.”).

1045 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04232284 at 2 (Sept. 25, 2006) (on file with Comm.) 

(stating that Google viewed transactions as falling into three categories: (1) bolt-on; (2) outside existing efforts; and (3) 

around existing efforts).

1046 Alphabet Inc., Annual Report (Form 10-K) 26–30 (Feb. 3., 2020), 

https://www.sec.gov/Archives/edgar/data/1652044/000165204420000008/goog10-k2019.htm. 

1047 Id. at 30.

1048 Id.

1049 Alphabet Inc., Quarterly Report (Form 10-Q) (June 30, 2020) 

https://abc.xyz/investor/static/pdf/20200731_alphabet_10Q.pdf?cache=f16f989; Alphabet Q2 Earnings Call (July 30, 

2020), https://abc.xyz/investor/static/pdf/2020_Q2_Earnings_Transcript.pdf?cache=6bfce23. 

1050 Alphabet Inc., Quarterly Report (Form 10-K) (2009–2019)

1051 Marc S.F. Mahaney, Digging For Buried Treasure – The Google Maps Opportunity, ROYAL BANK OF CANADA 2 (Sept. 

23, 2019) (on file with Comm.). 

1052 Letter from Larry Page, CEO, Alphabet, and Sundar Pichai, CEO, Google (2015), https://abc.xyz/investor/foundersletters/2015/index.html#2015-larry-alphabet-letter.

1053 Id.
177

roles at Alphabet, though they remain on the board and together control approximately 51.3% of the 

voting power.1054 Sundar Pichai now serves as the CEO of both Google and Alphabet.1055

For years Google has been the subject of antitrust investigations and enforcement actions 

around the world. From 2011 to 2013, the Federal Trade Commission investigated Google’s role in 

search and advertising markets, culminating in a staff recommendation to file a complaint against 

Google—although the Commission ultimately decided not to do so. At various points over the last 

decade, Mississippi, Missouri, and Texas have each separately investigated Google for antitrust 

violations, and, in September 2019, attorneys general from 50 U.S. states and territories announced 

that they were opening a fresh antitrust inquiry into the search and advertising giant.1056 The 

Department of Justice has also been investigating Google since the summer of 2019, and recent news 

reports state that a lawsuit may be imminent.1057 These ongoing U.S. investigations follow multiple 

antitrust inquiries worldwide, as well as antitrust-related penalties levied on Google by the European 

Commission, France, India, and Russia.1058

Search

a. Market Power

Google overwhelmingly dominates the market for general online search. Publicly available data 

suggest the firm captures over 87% of U.S. search and over 92% of queries worldwide.1059 Despite 

1054 Alphabet Inc., Quarterly Report (Form 10-Q) 60 (June 30, 2020) 

https://abc.xyz/investor/static/pdf/20200731_alphabet_10Q.pdf?cache=f16f989 (“The concentration of our stock ownership 

limits our stockholders’ ability to influence corporate matters... Through their stock ownership, Larry and Sergey have 

significant influence over all matters requiring stockholder approval, including the election of directors and significant 

corporate transactions, such as a merger or other sale of our company or our assets, for the foreseeable future.”).

1055 Letter from Larry Page, CEO, Alphabet, and Sundar Pichai, CEO, Google (2015), https://abc.xyz/investor/foundersletters/2015/index.html#2015-larry-alphabet-letter.

1056 Tony Romm, 50 US states and territories announce broad antitrust investigation of Google, WASH. POST (Sept. 9, 

2019), https://www.washingtonpost.com/technology/2019/09/09/states-us-territories-announce-broad-antitrustinvestigation-google/.

1057 Alphabet Inc., Annual Report (Form 10-Q) (July 30, 2020), 

https://abc.xyz/investor/static/pdf/20200731_alphabet_10Q.pdf?cache=f16f989; Leah Nylen, Trump administration to 

launch antitrust suit against Google as soon as next week, POLITICO (Oct. 2, 2020), 

https://www.politico.com/news/2020/10/02/trump-doj-google-antitrust-lawsuit-425617.

1058 Aditya Kalra and Aditi Shah, Exclusive: Google faces antitrust case in India over payments app – sources, REUTERS

(May 27, 2020), https://www.reuters.com/article/us-india-google-antitrust-exclusive/exclusive-google-faces-antitrust-casein-india-over-pagos-app-sources-idUSKBN2331G3; Thomas Grove, Russia Fines Google $6.75 Million in Antitrust Case, 

WALL ST. J. (Aug. 11, 2016), https://www.wsj.com/articles/russia-fines-google-6-75-million-in-antitrust-case-1470920410; 

Charles Riley and Ivana Kottasová, Europe hits Google with a third, $1.7 billion antitrust fine, CNN (Mar. 20, 2019), 

https://www.cnn.com/2019/03/20/tech/google-eu-antitrust/index.html; Natasha Lomas, France slaps Google with $166M 

antitrust fine for opaque and inconsistent ad rules, TECHCRUNCH (Dec. 20, 2019)

https://techcrunch.com/2019/12/20/france-slaps-google-with-166m-antitrust-fine-for-opaque-and-inconsistent-ad-rules/. 

1059 Search Engine Market Share Worldwide, STATCOUNTER, https://gs.statcounter.com/search-engine-market-share (last 

visited Sept. 29, 2020).
178

notable changes in the market—such as the switch from desktop to mobile—Google has maintained

this dominance for more than a decade, a period during which its lead over its most significant 

competitors has only increased.1060 Over that time, Google benefited from economies of scale and the 

self-reinforcing advantages of data, as well as from aggressive business tactics that Google wielded at 

key moments to thwart competition. The combined result is that Google now enjoys durable monopoly 

power in the market for general online search.

Several factors render Google’s power in online search generally immune to competition or 

threat of entry. General online search strongly favors scale due to (1) the high fixed costs of servers 

needed for crawling and indexing the entire web, and (2) the self-reinforcing advantages of click-andquery data, which let a search engine constantly improve the relevance of search results. Even an 

upstart that was able to secure the necessary capital to invest heavily in computing infrastructure would 

find itself at a considerable disadvantage given that Google’s search algorithm has been refined 

through trillions upon trillions of queries.1061 Meanwhile, steps that website owners take to block nonGoogle crawlers have rendered the task of creating an independent comprehensive index extremely 

challenging, if not effectively impossible.

Even search engines that choose to syndicate their search results rather than create their own 

index and algorithm face major obstacles. This is primarily because Google—through both integration 

and contractual agreements—has established itself as the default search provider on 87% of desktop 

browsers and the vast majority of mobile devices. Specifically, Google used its search dominance to 

promote the use of its Chrome browser on laptops, personal computers, and workstations, which sets 

Google Search as its default. For mobile devices, Google imposed a set of restrictive contractual terms 

effectively requiring manufacturers of devices that used its Android operating system to pre-install 

both Chrome and Google Search. Additionally, Google pays Apple an undisclosed amount, estimated 

1060 Enforcers and courts have held that Google dominates the market for online search in various cases stretching back over 

a decade. See, e.g., Press Release, U.S. Dep’t of Justice, Yahoo! Inc. and Google Inc. Abandon Their Advertising 

Agreement (Nov. 5, 2008), https://www.justice.gov/archive/opa/pr/2008/November/08-at-981.html (“The Department’s 

investigation revealed that Internet search advertising and Internet search syndication are each relevant antitrust markets 

and that Google is by far the largest provider of such services, with shares of more than 70 percent in both markets.”); Press 

Release, U.S. Dep’t of Justice, Statement of the Department of Justice Antitrust Division on Its Decision to Close Its 

Investigation of the Internet Search and Paid Search Advertising Agreement Between Microsoft Corporation and Yahoo! 

Inc. (Feb. 18, 2010), https://www.justice.gov/opa/pr/statement-department-justice-antitrust-division-its-decision-close-itsinvestigation-internet (“The proposed transaction will combine the back-end search and paid search advertising technology 

of both parties. U.S. market participants express support for the transaction and believe that combining the parties’ 

technology would be likely to increase competition by creating a more viable competitive alternative to Google, the firm 

that now dominates these markets.”); Author’s Guild v. Google, No. 05 Civ. 8136 (DC), 2011 WL 986049, *12 (S.D.N.Y. 

Mar. 22, 2011) (recognizing “Google’s market power in the online search market”).

1061 See Innovation and Entrepreneurship Hearing at 1 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC) (“Google Search responds to trillions of user queries from around the world every year.”); see also

MAURICE E. STUCKE & ALLEN P. GRUNES, BIG DATA AND COMPETITION POLICY 12.10 (2016) (“Entry barriers into the 

search engine market are already high. Microsoft reportedly invested in 2010 ‘more than $4.5 billion into developing its 

algorithm and building the physical capacity necessary to operate Bing.”). 
179

to be $12 billion per year, to secure the search default across iOS devices.1062 In general, users tend to 

stick with the default presented.1063 Moreover, Google takes steps to hamper and dissuade even those 

users that do attempt to switch search engines on Chrome.1064 With these factors combined, Google’s 

conduct significantly impedes other search providers from reaching users at scale—and further 

expands and entrenches Google’s dominance.

In submissions to the Committee, Google states that Google Search “operates in a highly 

competitive environment,” facing a “vast array of competitors” in general online search, including 

Bing, DuckDuckGo, and Yahoo!.1065 Google also claims that for any given search query, Google 

competes against a “wide range of companies,” including Amazon, eBay, Kayak, and Yelp.1066 Google 

argues that this broader set of competitors means that public estimates of its share of general online 

search “do not capture the full extent of Google’s competition in search.”

1067

Despite these statements, Google failed to provide the Subcommittee with contemporary 

market share data that would corroborate its claims. In response to the Committee’s written request for 

market share data, combined with several follow-ups from Subcommittee staff, Google stated that the 

company “doesn’t maintain information in the normal course of business about market share in its 

products.”

1068 After the Subcommittee identified communications where Google executives had 

discussed regularly tracking search market share data and further developing internal tools for doing 

so, Google told the Subcommittee that this data is either no longer collected or no longer used for 

examining site traffic.1069 It added, “[W]hile Google may have examined certain ‘shares’ of usage, 

1062 Lisa Marie Segarra, Google to Pay Apple $12 Billion to Remain Safari’s Default Search Engine in 2019: Report, 

FORTUNE (Sept. 29, 2018), https://fortune.com/2018/09/29/google-apple-safari-search-engine/.

1063 Competition & Mkts. Auth. Report at 194.

1064 See, e.g., Submission from Source 481 to H. Comm. on the Judiciary (Jan. 30, 2020) (on file with Comm.). 

1065 Production of Google, to H. Comm. on the Judiciary, A-11 (Nov. 22, 2019) (on file with Comm.).

1066 Id.; see also Innovation and Entrepreneurship Hearing at 6 (statement of Adam Cohen, Dir. of Econ. Pol’y, Google 

LLC). Although the specialized search providers that Google lists as competitors may, in some instances, compete with 

Google for queries, “[t]he competition between Google and vertical search engines” is “to some extent asymmetrical. From 

a user’s point of view, a generalist search engine that fully covers a given vertical can be a complete substitute for the 

vertical search engine, while the reverse is not generally true. Consequently, Google imposes more significant competitive 

constraints on a vertical search engine than vice versa.” See Submission from Source 209, to H. Comm. on the Judiciary, 

Source 209-0000540 (Feb. 17, 2011) (on file with Comm.).

1067 Production of Google, to H. Comm. on the Judiciary, A-11 (Nov. 22, 2019) (on file with Comm.). In certain regards, 

Google’s argument echoes the claim Microsoft made when it contested the district court’s decision to exclude 

“middleware” from its definition of the relevant market. The court found that although it was true that middleware could 

“usurp the operating system’s platform function and might eventually take over other operating system functions,” it was 

also true that no middleware product “could now, or would soon, expose enough APIs to serve as a platform for popular 

applications, much less take over all operating system functions.” United States v. Microsoft Corp., 253 F.3d 34, 53-54 

(D.C.C. 2001). Similarly, although certain vertical search providers could under certain circumstances “usurp” the 

horizontal provider’s platform function, no vertical provider does or would soon serve this function. 

1068 Meeting with Google (Feb. 10, 2020). 

1069 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01967913 (Jan. 27, 2007) (on file with Comm.) 

(“Each quarter we gather comprehensive search and market share data even though we NOT share it with the board 
180

clicks, queries, or traffic in limited and incomplete data sets over time, we do not believe any of this 

constitutes ‘market share’ analysis.”

1070

Market share information that Google did provide from over a decade ago reveals that Google 

viewed itself as a leader in general search as early as 2007. One slide deck tracking search query 

volume and revenues stated that “[c]ontinued leadership in search underpins the whole business.”

1071

In 2009, a top executive circulated market share analysis documenting that Google captured 71.5% of 

general search in the United States, followed by Yahoo with 17%, and Bing with 7.5%.1072 And in 

2010, one Google employee observed, “Google leads competitors. This is our bread-and-butter. Our 

long-tail precision is why users continue to come to Google. Users may try the bells and whistles of 

Bing and other competitors, but Google still produces the best results.”

1073 Noting that Bing was 

“making clear, significant progress” on “bringing the two search engines closer to parity,” the 

employee stated it was “critical to redouble our efforts to maintain our lead.”

1074

The Subcommittee has not seen any compelling evidence to suggest that Google’s dominance 

over the last decade has diminished; to the contrary, there is compelling evidence that Google has only 

strengthened and solidified what was already a leading market position. For example, in 2009,

Microsoft and Yahoo!—Google’s closest competitors—entered an agreement to integrate their search 

platforms, an effort to team up to tackle Google’s dominance.1075 A decade later, the two collectively 

have a lower share of the general search market than they did at the time of their deal, whereas 

Google’s share has increased.1076 As of 2016, Google employees were calculating that Bing had 

suffered a 30% year-over-year decline in query volume and that Bing’s revenue per million 

impressions (RPM) was “70-77% lower” than Google’s own U.S. search RPM.1077 More recently, the 

United Kingdom’s Competition and Markets Authority found that Google’s index of the web is 

anymore. I am pleased to say that we’ve finally turned the corner on getting decent data of our own rather than 

ComScore....Next steps include further work on internal sources such as the toolbar and AFC referrals which we believe 

will give us more data to model and help us adjust for the biases of external sources.”); GOOG-HJC-01529590 (Oct. 11, 

2011) (listing “internal US search share metrics” for Q2 2011); Email from Google to Committee Staff (Apr. 16, 2020) (on 

file with Comm.).

1070 Email from Google to Staff of the H. Comm. on the Judiciary (Apr. 16, 2020) (on file with Comm.).

1071 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04231168 at 2 (on file with Comm.).

1072 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01207063 (Oct. 27, 2009) (on file with Comm.) 

(attachment to email from Marissa Mayer).

1073 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-03815864 (Apr. 23, 2010) (on file with Comm.).

1074 Id.

1075 Submission from Source 209, to H. Comm. on the Judiciary, Source 209-0000346 at 351–52 (Aug. 24, 2009) (on file 

with Comm.).

1076 Search Engine Market Share Worldwide, STATCOUNTER, https://gs.statcounter.com/search-engine-market-share (last 

visited Sept. 29, 2020).

1077 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04259758–59 (Apr. 20, 2016) (on file with Comm.).
181

anywhere from three to five times the size of Bing’s.1078 Furthermore, the fact that no new general 

search entrant over the last decade has ever accounted for more than 1% of all U.S. searches in any 

given year further confirms that Google’s monopoly power is durable and its lead insurmountable.1079

Google’s claim that it “operates in a highly competitive environment” is also at odds with the 

lived reality of market participants. Numerous companies—spanning major public corporations, small 

businesses, and upstart entrepreneurs—told the Subcommittee that they overwhelmingly depend on 

Google for traffic and that no alternate search engine even remotely approaches serving as a substitute. 

For example, J&J Smith, a printer repair shop based in Rhode Island, stated, “Google is our 

lifeblood.”

1080 Foundem, a UK-based comparison shopping search provider, has noted that Google’s 

“overwhelming global dominance” of horizontal search creates for most websites an “uncomfortable 

but unavoidable reliance on Google.”

1081 Many other companies described their dependence on Google 

in similar terms.

Furthermore, some of the same specialized search providers that Google identifies as 

competitors stated that their own businesses heavily rely on Google, in some cases for up to 80% of 

traffic on both desktop and mobile devices.1082 One specialized search provider wrote that Google’s 

business practices “have a very material effect on [our] business, but due to Google’s monopoly power 

in search, there is nowhere else for [us] to turn for additional search traffic. The company is beholden 

to how Google decides to structure its search results page and algorithm.”

1083 Another told the 

Subcommittee, “From [our] perspective, there are no adequate substitutes for Google,”

1084 and, 

“[T]hanks to its monopoly in general internet search, Google has become the gatekeeper for vertical 

search rivals.”

1085 One specialized search provider said that 97.6% of its traffic comes from Google; 

another said that Google accounted for such an outsized share of traffic that “we don’t even track nonGoogle sources.”

1086

At the Subcommittee’s field hearing in January 2020, David Heinemeier Hansson, chief 

technology officer and co-founder of Basecamp, testified that Google increasingly functions as “the 

1078 Competition & Mkts. Auth. Report at 89.

1079 Submission from Source 115, to H. Comm. on the Judiciary, 6 (Oct. 22, 2019) (on file with Comm.).

1080 Interview with J&J Smith (Aug. 24, 2020).

1081 Submission from Foundem, to H. Comm. on the Judiciary, 4 (Jan. 21, 2018) (on file with Comm.). 

1082 Submission from Source 564, to H. Comm. on the Judiciary, 5 (Nov. 13, 2019) (on file with Comm.); Submission from 

Source 3, to H. Comm. on the Judiciary, 34 (Nov. 22, 2019) (on file with Comm.).

1083 Submission from Source 887, to H. Comm. on the Judiciary, 4 (Oct. 28, 2019) (on file with Comm.).

1084 Submission from Source 626, to H. Comm. on the Judiciary, 2 (Oct. 15, 2019) (on file with Comm.).

1085 Submission from Source 972, to H. Comm. on the Judiciary, 10 (Dec. 9, 2019) (on file with Comm.).

1086 Interview with Source 147 (June 26, 2019).
182

front door of the internet.”

1087 He noted, “[Google is] the start page for millions. It’s a form of 

navigation around the internet. People these days rarely bother to remember the specific internet 

address of a company they want to do business with, they just google it.”

1088 Commenting on the stark 

asymmetry in the general search market, Hansson stated that Yahoo, Bing, and DuckDuckGo all 

“could drop [Basecamp] from their listings tomorrow and we’d barely notice,” but “[w]e lose our 

listing in Google and we may go out of business.”

1089

Google obtained default placement across the mobile and desktop ecosystem through both 

integration and contractual arrangements. Through owning Android, the world’s dominant mobile 

operating system, Google was able to ensure that Google Search remained dominant even as mobile 

replaced desktop as the critical entry point to the Internet. As discussed elsewhere in the Report, 

documents submitted to the Subcommittee show that, at certain key moments, Google conditioned access 

to the Google Play Store on exclusively pre-installing Google Search, a requirement that gave Google a 

significant advantage over competing search engines. Through revenue-sharing agreements amounting 

to billions of dollars in annual payments, Google also established default positions on Apple’s Safari 

browser (on both desktop and mobile) and on Mozilla’s Firefox.1090

In public statements, Google has downplayed the significance of default placement, claiming that 

“competition is just a click away.”

1091 However, Google’s internal documents show that, at a time when 

Google was still jostling for search market share, Google executives closely tracked search defaults on 

Microsoft’s Internet Explorer and expressed concern that non-Google defaults could impede Google 

Search.1092 In an internal presentation about Internet Explorer’s default search selection, Google 

recommended that users be given an initial opportunity to select a search engine and that browsers 

minimize the steps required to change the default search provider.1093 These discussions, as well as the 

steep sums Google pays Apple and various browsers for default search placement, further highlight the 

competitive significance of default positions.

1087 Competitors Hearing at 3 (statement of David Heinemeier Hansson, Chief Technology Officer and Cofounder, 

Basecamp).

1088 Id.

1089 Id.

1090 Innovation and Entrepreneurship Hearing at 12 (response to Questions for the record by Kyle Andeer, Vice President, 

Corporate Law, Apple, Inc.).

1091 See, e.g., Adam Kovacevich, Google’s approach to competition, GOOGLE PUBLIC POL’Y BLOG (May 8, 2009), 

https://publicpolicy.googleblog.com/2009/05/googles-approach-to-competition.html. 

1092 See, e.g., Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01196214 (May 3, 2005) (on file with 

Comm.).

1093 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01680749 (2006) (on file with Comm.) (identifying 

several recommendations, including “Fewest clicks required to change default, which promotes search innovation by 

facilitating the user’s ability to switch.”).
183

Independent search engines told the Subcommittee that the lack of defaults available to them 

creates significant business challenges. DuckDuckGo said this lack of options compelled it to invest in 

browser technology, including the creation of its own browser for Android and iOS and various browser 

extensions.1094 It noted, however, that “the same default placement challenges exist in the browser 

market, just one level up – with the device makers requiring millions or billions of dollars to become a 

default browser on a device.”

1095

Lastly, the Subcommittee’s findings are consistent with conclusions reached by several 

enforcement bodies that recently have investigated Google’s market dominance. For example, in July 

2020 the United Kingdom’s Competition and Markets Authority found that “Google has significant 

market power in the general search sector,” a position maintained through “three key barriers to entry: 

economies of scale in developing a web index; access to click-and-query data at scale; and Google’s 

extensive default positions.”

1096 In July 2019, the Australian Competition and Consumer Commission 

(ACCC) found that Google has “substantial market power in supplying general search services,” and 

that it is “likely to retain its dominant share of the market at least in the short- to medium-term.”

1097

And in two separate enforcement actions in 2017 and 2018, the European Commission found that 

Google possessed market power in the market for online general search.1098 While each of these 

enforcers focused on their respective national and regional markets, Google has failed to identify any 

factors that would compel the Subcommittee to reach a different conclusion for the U.S. market.

b. Conduct

i. Google Leverages Dominance Through Data Misappropriation and Self-Preferencing

When Google launched in 1998, the search listings it delivered were “ten blue links,” or a set of 

organic results that guided users off Google’s webpage to locate relevant information. In the years 

since, Google, as well as Bing, has evolved to displaying blue links alongside a variety of Google’s 

own content as well as “information boxes” that list responses directly on the search results page. 

1094 Innovation and Entrepreneurship Hearing at 5 (statement of Megan Gray, Gen. Counsel and Pol’y Advocate, 

DuckDuckGo). 

1095 Id. at 5. 

1096 Competition & Mkts. Auth. Report at 73.

1097 Austl. Competition & Consumer Comm’n Report at 58.

1098 Google Search (Shopping) (Case AT.39740) Comm’n Decision of 27/6/2017 [2017], para. 271, 

https://ec.europa.eu/competition/antitrust/cases/dec_docs/39740/39740_14996_3.pdf [hereinafter Google Search 

(Shopping) Comm’n Decision] (“The Commission concludes that Google holds a dominant position in each national 

market for general search services since 2008, apart from in the Czech Republic, where Google holds a dominant position 

since 2011.”); Google Android (Case AT.40099) Comm’n Decision of 18/7/2018 [2018], paras. 439, 

https://ec.europa.eu/competition/antitrust/cases/dec_docs/40099/40099_9993_3.pdf [hereinafter “Google Android Comm’n 

Decision”] (“[T]he Commission concludes that Google holds a dominant position in the following relevant markets since 

2011: . . . (3) each national market for general search services in the EEA.”).
184

While this model may, in certain instances, provide users with direct information more quickly, 

documents collected by the Subcommittee show that Google built some of these features through 

aggressive tactics that exploited its search dominance. Google’s conduct helped maintain its monopoly 

in online search and search advertising while dissuading investment in nascent competitors, 

undermining innovation, and harming users and businesses alike.

According to internal documents, Google executives recognized as early as 2005 that 

specialized—or “vertical”—search engines could pose a threat to Google’s long-term dominance. That 

year one program manager wrote: 

[W]hat is the real threat if we don’t execute on verticals? 

(a) loss of traffic from google.com because folks search elsewhere for some queries

(b) related revenue loss for high spend verticals like travel

(c) missing [opportunity] if someone else creates the platform to build verticals

(d) if one of our big competitors builds a constellation of high quality verticals, we are hurt 

badly1099

Google’s apprehension about vertical search providers persisted. For example, a 2006 strategy 

memo identifying challenges asked, “How do we deal with the problem of ‘proliferating 

verticals?’”

1100 Another message noted, “Vertical search is of tremendous strategic importance to 

Google. Otherwise, the risk is that Google is the go-to place for finding information only in the cases 

where there is sufficiently low monetization potential that no niche vertical search competitor has filled 

the space with a better alternative.”

1101 In short, Google executives feared that vertical search providers 

would build direct relationships with users, thereby bypassing Google Search and diverting traffic, 

valuable data, and ad revenue. While vertical search providers were complements to Google in the 

short term, Google recognized their potential for disintermediating Google and therefore viewed them 

as a major competitive threat. The fact that several of these verticals specialized in commercial queries 

that were among the most valuable for Google further raised the stakes.1102

Documents show that Google developed a multi-pronged strategy to thwart the threat. Two of 

these tactics included: (1) misappropriating third-party content, and (2) privileging Google’s own 

services while demoting those of third parties. Through these practices, Google exploited its 

dominance to weaken potential rivals and boost its search advertising revenue.

1099 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04137557 (Nov. 29, 2005) (on file with Comm.).

1100 Id. at GOOG-HJC-01099230 (Oct. 20, 2006).

1101 Id. at GOOG-HJC-03815865. (Apr. 23, 2010).

1102 Id. at GOOG-HJC-04276684–87 (Sept. 21, 2012).
185

1) Misappropriating Third-Party Content

In the years following 2005, Google invested in building out its own vertical services. 

Documents reveal that Google partly did so through lifting content directly from third-party providers 

to bootstrap Google’s own vertical services. In the process, Google leveraged its search dominance—

demanding that third parties permit Google to take their content, or else be removed from Google’s 

search results entirely.

For example, after identifying local search as a “particularly important” vertical to develop, 

Google built Google Local, which licensed content from local providers, including Yelp.1103 In 2010 

Google rolled out a service directly competing with Yelp, even as Google continued to license Yelp’s 

content—prompting Yelp’s CEO to request that Google immediately remove Yelp’s proprietary 

content from Google’s own service.1104 At a time when Google Local was failing to gain momentum, 

Google told Yelp that the only way to have its content removed from Google’s competing product was 

to be removed from Google’s general results entirely.1105 Yelp relied so heavily on Google for user 

traffic that the company could not afford to be delisted—a fact that Google likely knew.1106 In short, 

Google weaponized its search dominance, demanding that Yelp surrender valuable content to Google’s 

competing product or else risk heavy losses in traffic and revenue. 

Evidence gathered by the Subcommittee identifies additional instances in which Google has 

intercepted traffic from third-party websites by forcibly scraping their content and placing it directly on 

Google’s own site. For example, a submission from entrepreneur Brian Warner described how he built 

a database from scratch and developed it into a sustainable and growing business—only to watch 

1103 Id. at GOOG-HJC-03665122–26 (Apr. 24, 2007) (internal Google discussion noting the strength of Yelp’s local 

product) (“[T]here is nothing else ‘yelp like’ in our current lineup,” and also noting that “[Yelp’s CEO] just contacted the 

account manager here and asked that their contract be revised so that they could cancel it immediately if we launch reviews, 

that doesn’t mean that they would do it, but clearly this is a big deal to them.”). 

1104 Id. at GOOG-HJC-03249494 (Aug. 10, 2010) (“Given that this App directly competes with the Yelp App and offers 

little value to Yelp we cannot allow Google to continue leveraging our content in this way. We’ve communicated to Patrick 

and Carter that your team needs to remove our content within the next week. Since you already communicated to me that it 

would be un-Googley to not remove our content when requested, I’m confident your team will do the right thing.”).

1105 See, e.g., id. at GOOG-HJC-03255279 (Oct. 28, 2010) (“[I] want to tell you that my feelings are really hurt by the ‘local 

is a failure’ stuff that Nikesh has been lobbing around”); GOOG-HJC-03790807–08 (Apr. 24, 2007) (“[W]e are still 

waiting to be removed from Places (while remaining in organic and local merge results), which you initially agreed to (but 

more recently pulled away from).”); GOOG-HJC-01234494–96 (Aug. 10, 2011) (“I was surprised to find that by opting out 

of Google’s local product, Yelp was automatically opted out of portions of Google’s search results. Carter Maslan and John 

Hanke last year said they couldn’t/wouldn’t remove Yelp content from Google’s local product because local was powered 

by the same index as web search, sounds like this was never really the case.”); see id. (“To be able to reference Yelp’s 

content in the parts of search results we discussed, our local service needs to be at least aware of the existence of Yelp 

pages. Since we stopped using any crawled Yelp pages for our local services in response to your request, this currently isn’t 

possible. That said, I think that the approach we discussed, with Google making limited use of Yelp data in the ways you 

described, is a constructive way to get a comprehensive view for our users.”). 

1106 See, e.g., id. at GOOG-HJC-03664462 (Apr. 23, 2007) (“78% of their uniques come from google. if they are acquired, i 

[sic] would assume that they wouldn’t turn us off.”).
186

Google lift his content and sink his traffic.1107 Warner, the founder of Celebrity Net Worth, told the 

Subcommittee that in 2012 the content he had initially developed as a side-project had such high 

demand that Warner was able to quit his day job and hire 12 staff members. In 2014 Google contacted 

Warner to ask if he would provide Google with an API that would display his webpage’s content in an 

“answer box” that would appear directly on Google’s search results page. Warner declined, observing 

that handing over his company’s “most valuable asset” would “cause a catastrophic drop in traffic.”

1108

Within two years, Google began populating its answer boxes with Celebrity Net Worth’s content 

anyway—displaying net worth results for each of the 25,000+ celebrities from Warner’s database 

directly on Google’s search results page.1109

Combined with changes that pushed Warner’s webpage from the top of organic listings to the 

middle of the second page, Google’s scraping caused traffic to Celebrity Net Worth to drop by 50% 

overnight.1110 Warner wrote, “With the flip of a switch, Google turned our original content into its own 

content. And with that move, Google would keep the searcher within its walled garden indefinitely. 

That is far more valuable to Google than taking a small cut of our AdSense revenue.”

1111 Today 

Celebrity Net Worth’s traffic is down 80% from 2014, and—due to the resulting drop in revenue—

Warner has had to lay off half of his staff.1112

In a submission to the Subcommittee, lyrics site Genius described similar misappropriation by 

Google. Genius noted that it has invested “a decade and millions of dollars” developing a lyrics 

repository that relies on user-generated content as well as partnerships with songwriters.1113 For years, 

however, Google has copied lyrics from Genius’s website and displayed them in information boxes 

that it places at the top of its search results page.1114 Although Genius shared with Google evidence 

showing that the platform was scraping lyrics directly from Genius, Google for two years “did nothing 

to address the issue.”

1115 It was only after the Wall Street Journal published Genius’s claims that 

Google responded, taking steps to remove the evidence that Google had copied the lyrics but leaving 

the lyrics in place.1116 Google later announced that it would attribute lyrics placed in the information 

box to the underlying content provider. “This would be encouraging,” Genius wrote, “except for the 

1107 See generally Innovation and Entrepreneurship Hearing (statement of Brian Warner, Founder, Celeb. Net Worth). 

1108 Id. at 4.

1109 Id. Because Warner had added several conjured celebrities to his site to gauge whether Google was scraping his content 

or lifting it from elsewhere, he was able to determine that Google was sourcing its answers directly from Celebrity Net 

Worth.

1110 Id. at 5.

1111 Id. 

1112 Id. 

1113 Innovation and Entrepreneurship Hearing at 1 (statement from Ben Gross, Chief Strategy Officer, Genius).

1114 Id. at 2.

1115 Id.

1116 Id.
187

fact that all of the lyrics we flagged for Google as featuring our watermark—and thus clearly copied 

from Genius—are currently attributed to another company.”

1117

At the Subcommittee’s hearing on July 29, 2020, multiple members questioned Mr. Pichai 

about Google’s misappropriation of third-party content. Subcommittee Chairman David Cicilline (DRI) recounted Google’s scraping of Celebrity Net Worth, asking, “[W]hy does Google steal content 

from honest businesses?”

1118 Mr. Pichai responded that he “disagree[d] with that categorization.”

Representative Ken Buck (R-CO) followed up by noting that Genius seemed to have collected clear 

evidence of Google’s misappropriation:

When Genius suspected this corporate theft was occurring, the company incorporated a 

digital watermark in its lyrics that spelled out red-handed in Morse code. Google’s lyric 

boxes contained the watermark showing that your company stole what you couldn’t or 

didn’t want to produce yourself. After Google executives stated that they were 

investigating this problematic behavior, Genius created another experiment to determine 

the scope of the misappropriation. It turns out that, out of 271 songs where the 

watermark was applied, 43 percent showed clear evidence of matching. Your company, 

which advertises itself as a doorway to freedom, took advantage of this small company, 

all but extinguishing Genius’ freedom to compete.”

1119

Mr. Pichai responded that Google “license[s] content from other companies,” and that this issue 

was “a dispute between Genius and other companies in terms of where the source of the content is.”

1120

In its response to Questions for the Record from the Subcommittee, Google also stated that it now 

gives webpage owners the ability to exclude certain content from appearing in information boxes on 

Google’s search results page.1121 However, multiple webpage publishers stated that, in practice, this 

option fails to mitigate the harm given that Google will continue to source and display content from 

others, thereby still intercepting traffic and displacing organic listings. One publisher described 

Google’s claim to give webpage owners more control as “an empty offering.”

1122

In an interview with Subcommittee staff, one webpage owner stated that he felt deceived by 

Google’s decision to use its crawling advantages to misappropriate third-party content. The webpage 

owner said: 

1117 Id. 

1118 CEO Hearing Transcript at 36 (question of Rep. David N. Cicilline (D-RI), Chairman, Subcomm. on Antitrust, 

Commercial and Admin Law). 

1119 Id. at 48–49 (Rep. Ken Buck (R-CO), Member, Subcomm. on Antitrust, Commercial and Admin. Law).

1120 Id. at 49.

1121 Innovation and Entrepreneurship Hearing at 8 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC) (Sept. 13, 2019).

1122 Interview with Source 489 (Sept. 19, 2020).
188

A major violation occurred when Google used robotic information scraped by its 

crawler to create content of its own which is displayed in the search result page. We 

never would have created sitemaps for Google if those were the terms. Google wouldn’t 

have had sitemaps from every website on earth feeding it content if those were the 

terms from the beginning. They would have been forced to create a new system in order 

to convince sites to comply or a new search service would have been born that had 

different options.1123

Google’s practice of misappropriating third-party content to bootstrap its own rival search 

services and to keep users on Google’s own webpage is further evidence of its monopoly power and an 

example of how Google has abused that power. Google seized value from third-party businesses 

without their consent. These businesses had no effective choice but to allow Google’s misappropriation 

to continue, given Google’s search dominance. In this way, Google leveraged its search dominance to 

misappropriate third-party content, free-riding on others’ investments and innovations.

2) Self-Preferencing

Evidence shows that once Google built out its vertical offerings, it introduced various changes 

that had the effect of privileging Google’s own inferior services while demoting competitors’

offerings. This conduct has undermined the vertical search providers that Google viewed as a threat. It 

has also boosted Google’s ad revenue by keeping users on Google’s domains for longer and by 

compelling demoted firms to pay Google more ad fees to reach users.

In 2007 Google introduced “Universal Search,” which presented users with search results that 

integrated Google’s various specialized search services, including Google Images, Google Local, and 

Google News.1124 Universal Search was designed to improve users’ search experience, as well as to 

increase traffic to Google’s own offerings—even when those offerings weren’t the best or most 

relevant for users.1125 Google’s documents suggest that shortly after launching Universal Search, traffic 

to Google’s own vertical services increased.1126 Even early in its conception, Google executives were 

1123 Id.

1124 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01230600 (Dec. 8, 2004) (on file with Comm.) 

(“Googlers have long argued for some type of ‘universal’ search that integrates all of Google’s indices, including those that

contain different media, like Images, and those that contain structured data, like Local and Froogle”); GOOG-HJC03815864–65 (Apr. 23, 2010) (noting that universal search marked a shift to “increase our ability to provide new types of 

media in search results”).

1125 Id. at GOOG-HJC-02734893 (Dec. 15, 2006) (introducing Universal Search to help solve the problem that “Google 

search user experience has been internally and externally perceived as stagnant for the last 7 years”).

1126 Id. at GOOG-HJC-03804474 (May 23, 2007) (on file with Comm.) (noting “large increases in absolute coverage for all 

five purposes,” including a 4.5% increase in News and 4% increase in Local Search”).
189

exploring how Universal Search could be used to show a “results page promo” to “bootstrap traffic” to 

Google’s other products.1127

When Google launched Universal Search, it gave prominent placement to Google’s vertical 

content over superior, more relevant competitors’ products. Google’s documents show that Google 

adjusted its search algorithm to automatically elevate the ranking of some of Google’s services above 

those offered by rivals.1128 These perks are generally not available to competing verticals, placing them 

at an instant disadvantage.1129 Given that the likelihood that a user will click on a listing sharply 

declines with each drop in placement, traffic to rivals demoted by Google has fallen significantly.1130

The effect is magnified on mobile search, where the small screen means fewer results are displayed on 

the first page of results.1131

In a submission to the Subcommittee, one vertical search provider described the practical 

effects of Google’s discriminatory treatment:

When the Local OneBox appears on the page, links to [the company’s] website with 

highly relevant [results] get pushed down the page into the lower section for organic 

search results. This demotion puts [the company] at a competitive disadvantage relative 

to Google’s local search results and jeopardizes the health of [our] business—and this 

problem is further exacerbated in the growing mobile context where links to [our] 

website may be pushed off the small screen or the first page of search results altogether. 

In evaluating options to reduce this harm, [the company] has reached out to Google to 

explore whether [we] or [our] providers’ listings on [our] website could be included in 

Google’s local search results, but Google has either refused outright or taken no steps to 

allow such inclusion.1132

1127 Id. at GOOG-HJC-01230599 (Dec. 8, 2004) (on file with Comm). (“Including some of Urs ideas around promoting the 

Labs property on the Google.com results pages for some subset of users (“New! Try your search on the next version of 

Google”). Urs main concern was that Lab gets limited traffic, and the set of users is not representative of Google’s user 

base. He didn’t mind the idea of a Labs launch in principle, but he suggested we show a results page promo for some small 

percentage of users to bootstrap traffic to the property with a more diverse set of users.”).

1128 See, e.g., id. at GOOG-HJC-01081099 (Oct. 11, 2007) (“We added a “cooccurring sites” signal to bias ourselves 

towards triggering when a local-oriented aggregator site (i.e. Citysearch) shows up in the web results.”).

1129 Submission from Source 564, to H. Comm. on the Judiciary, 9 (Nov. 13, 2020) (on file with Comm.).

1130 Matt Southern, Over 25% of People Click the First Google Search Result, SEARCHENGINEJOURNAL (July 14, 2020) 

https://www.searchenginejournal.com/google-first-page-clicks/374516/#close. 

1131 Why Page 2 of Google Search Results Is the Best Place to Hide a Dead Body, DIG. SYNOPSIS (Oct. 29, 2019) 

https://digitalsynopsis.com/tools/google-serp-design/ (stating that the first organic result on the first search engine results 

page receives around 32.5% of overall click-based traffic, the second result receives around 17.6%, and the seventh 

receives 3.5%).

1132 Submission from Source 887, to H. Comm. on the Judiciary, 4 (Oct. 28, 2019) (on file with Comm.).
190

A submission from another vertical search provider stated that once Google began 

automatically placing its own competing service at the top of its search results page, the vertical 

provider’s organic search traffic fell by approximately 20%.1133 The vertical provider observed that 

Google’s service is worse for users—showing higher prices and fewer choices than Google’s 

competitors.1134 However, Google continues to give its service top placement, occupying close to 

100% of the above-the-fold mobile search results page and around 25% of desktop.1135

Additional market participants echoed the view that Google’s self-preferencing comes at the 

expense of users. One search provider stated that Google prohibits it from displaying live prices on 

Google’s results page, even as Google’s own competing service is permitted to do so. Stating that there 

was no pro-competitive justification for this differential treatment, the firm also noted that Google’s 

limits on rival vertical search providers likely prevent consumers from seeing the cheapest or bestvalued prices.1136

In addition to placing its vertical offerings at the top of the search results page, Google has also 

actively demoted certain rivals through imposing algorithmic penalties. For example, in 2007 and in 

2011, Google launched an algorithm that demoted sites that Google considered “low quality.”

1137

Among the websites especially hit were comparison shopping providers, which enable users to 

compare product offers from multiple merchant websites.1138 In a submission to the Subcommittee, one 

publisher stated that Google’s algorithmic penalty caused search leads and revenues to its website to 

fall by 85%.1139 Kelkoo, previously a leading comparison shopping site, explained that Google’s 

demotion set off a “cyclic trend” whereby a reduction in traffic leads to fewer consumers, which leads 

to fewer listings and less revenue, which leads to reduced investment—which, in turn, contributes to a 

further decline in traffic, a “network effect in reverse.”

1140

1133 Submission from Source 925, to H. Comm on the Judiciary, 11 (Nov. 4, 2019) (on file with Comm.).

1134 Id.

1135 Id. at 9.

1136 Submission from Source 3, to H. Comm. on the Judiciary, 32 (Oct. 29, 2019) (on file with Comm.).

1137 Amit Singhal & Matt Cutts, Finding more high-quality sites in search, GOOGLE: OFFICIAL BLOG (Feb. 24, 2011), 

https://googleblog.blogspot.com/2011/02/finding-more-high-quality-sites-in.html (defining “low-quality sites” as those that 

are “low-value add for users, copy content from other websites or sites that are just not very useful” and defining “highquality sites” as “sites with original content and information such as research, in-depth reports, thoughtful analysis and so 

on”).

1138 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC- 00090248-49 (Jan 27, 2011) (on file with Comm.).

1139 Submission from Kelkoo, to H. Comm. on the Judiciary, Kelkoo-0032 at 6 (Nov. 4, 2019) (on file with Comm.).

1140 Submission from Kelkoo, to H. Comm. on the Judiciary, Kelkoo-0006 at 6 (Nov. 4, 2019) (on file with Comm.); 

Kelkoo-0044 at 19 (Nov. 4, 2019).
191

In external messaging, Google justified the algorithmic penalties it imposed on third-party sites 

as a response to users’ desire to see less “low quality” sites in their search results.1141 However, Google 

did not subject its own vertical sites to the same algorithmic demotion, even though Google’s vertical 

services aggregated and copied content from around the web—just like the third-party sites that 

Google had demoted.1142 Indeed, Google’s documents reveal that employees knew Google’s own 

vertical sites would likely fit the demotion criteria that Google applied to other sites. When one 

employee suggested that Google index its comparison shopping site, Froogle, another responded that it 

was unlikely Froogle would get crawled “without special treatment,” noting, “We’d probably have to 

provide a lot of special treatment to this content in order to have it be crawled, indexed, and rank 

well.”

1143

Despite the fact that Google’s own comparison shopping service was of such low quality that 

Google’s product team couldn’t even get it indexed, Google continued to give Froogle top placement 

on its search results page, listing its results in the OneBox, a display box that Google populates with 

information on its search results page.1144 Bill Brougher, a product manager, acknowledged that 

Google was privileging low-quality content, writing:

Our algorithms specifically look for pages like [Froogle’s] to either demote or remove 

from our index, and there are active projects to improve the integration into web search. 

The bigger problem these projects have is to improve their own result quality. For 

instance with Froogle, the onebox trigger is now very good and relevant, but the three 

results we show from Froogle in that onebox generally rate very low in our search 

quality evaluation. It is often the same with Local.1145

Another Google team member replied: “Yes, you’re right that the Onebox result items often stink.”

1146

A few years later, a Google employee again acknowledged that if Google ranked its own content 

according to the same criteria that it applied to competitors, “it will never rank.”

1147

1141 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-00632668 (on file with Comm.).

1142 Id. at GOOG-HJC-02507422 (Apr. 4, 2006) (on file with Comm.) (“Keep in mind that, as we discussed, most of the 

information that is on pages that we create is aggregated from various sources, and those sources often have that material 

online already. Because of this, the search quality team has some concerns as to if/when this Google-created content will be 

indexed. And once it is indexed, it is unlikely to appear high in the search results.”).

1143 Id.

1144 Id.

1145 Id.; see also GOOG-HJC-03201904 (Mar. 22, 2006) (on file with Comm.) (“Generally we like to have the destination 

page in the index, not the aggregated pages. So if our local pages are lists of links to other pages, its [sic] more important 

that we have the other pages in the index. In addition, our pages would probably not rank well because of this.”).

1146 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-02507420 (Apr. 5, 2006) (on file with Comm.).

1147 Id. at GOOG-HJC-01069289 (May 6, 2009) (on file with Comm.) (“From a principal perspective it would be good if 

we could actually just crawl our product pages and then have the rank organically. Problem is that today if we crawl it will 

never rank.”).
192

In an interview with Subcommittee staff, one vertical site stated that Google had not only 

demoted the firm but had at least one instance removed it from Google’s index entirely.1148 The search 

provider stated that after Google purchased its rival, Google demoted the provider in search rankings 

while vaulting those of its rival.1149 The search provider observed that Google’s demotions sometimes 

followed favorable press that highlighted the search provider’s popularity with users. “There was an 

article that came out in the press that painted [us] in a positive light and quoted an executive noting 

that [we are] the top result when a user searches [for a particular search term]. The next day, Google 

de-indexed [us] for [that search term].”

1150

In July, the Wall Street Journal reported that Google also gives preferential treatment to 

YouTube.1151 Tests conducted by the Journal found that searching Google for videos delivered 

YouTube in results much more prominently than competing video providers, even when competitor 

videos had more engagement. Reflecting interviews with those familiar with the matter, the piece 

stated that Google engineers:

[M]ade changes that effectively preference YouTube over other video sources. Google 

executives in recent years made decisions to prioritize YouTube on the first page of 

search results, in part to drive traffic to YouTube rather than to competitors, and also to 

give YouTube more leverage in business deals with content providers seeking traffic for 

their videos.”

1152

In response to Questions for the Record from Subcommittee Chairman David Cicilline (D-RI),

the company denied that Google Search is designed to favor YouTube. Although Google stated that it 

disagreed with the methodology used by the Journal, Google did not provide the Subcommittee with 

any data or internal reports that would support its claim.1153

Numerous market participants noted that Google’s favoring of its own sites and demoting those 

of third parties has effectively increased their cost of distribution. Since demoted sites can generally 

only recover traffic through advertising on Google, the platform “essentially requires competitors to 

pay for their websites to appear above Google’s own links,” according to one market participant.1154

1148 Interview with Source 147 (June 2019).

1149 Id.

1150 Id.

1151 Sam Schechner, Kristen Grind & John West, Searching for Video? Google Pushes YouTube Over Rivals, WALL ST. J.

(July 14, 2020), https://www.wsj.com/articles/google-steers-users-to-youtube-over-rivals-11594745232. 

1152 Id.

1153 Innovation and Entrepreneurship Hearing at 13 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC).

1154 Submission from Source 3, to H. Comm. on the Judiciary, 32 (Oct. 29, 2019) (on file with Comm.).
193

Another business recalled that in 2016 Google demoted one of its vertical offerings, citing a policy of 

diversifying content.1155 The firm stated that once it was penalized in organic rankings, it “could not 

get an appropriate customer service response for months” and ultimately “had to increase [marketing 

spend on Google] to regain lost traffic—a win-win for Google but a loss for [our business] and its 

users.”

1156

Meanwhile, Google’s own competing vertical “is always listed at the top” of search results.1157

The incident highlights how demoting rivals can enrich Google in two ways: first, through diverting 

greater traffic and business to its own products; and second, through earning ad revenues from the 

penalized sites that are subsequently scrambling to recover their search placement. When demoting 

firms that Google views as actual or potential competitive threats, Google is effectively raising rivals’

costs.

Another firm noted that demoted vertical providers that go on to buy ads on Google not only 

feed revenue to a potential or actual competitor in specialized search, but also risk handing Google 

more commercially sensitive information. The market participant wrote:

Google thus deceptively siphons internet traffic away from its vertical competitors in 

online travel and forces them to pay more for [search engine monetization] and [] Ads 

in order to get meaningful placement on Google’s [search engine results page]. 

Importantly, Google also requires its vertical competitors to provide their inventory feed 

to populate the ads, allowing Google to appropriate vertical service providers’ valuable 

inventory data.1158

A significant number of the website publishers that the Subcommittee interviewed noted the 

outsized effect that a single algorithmic change by Google can have on their business. Brian Warner, 

Celebrity Net Worth founder, stated, “All website owners live in constant fear of Google’s algorithm 

updates. Without explanation or recourse, Google can deliver a fatal blow to a website’s search 

ranking visibility.”

1159 Foundem, the UK-based comparison shopping site, wrote, “An unjustified 

Google search penalty, whether imposed anticompetitively or in error, has the power to cause grave 

and irreparable harm to virtually any online business.”

1160

1155 Submission from Source 972, to H. Comm. on the Judiciary, 9 (Dec. 9, 2019) (on file with Comm.).

1156 Id.

1157 Id.

1158 Submission from Source 115, to H. Comm. on the Judiciary, 16 (Oct. 22, 2019) (on file with Comm.).

1159 Submission from Celebrity Net Worth, to H. Comm. on the Judiciary, 10 (Oct. 14, 2019) (on file with Comm.). 

1160 Submission from Foundem, to H. Comm. on the Judiciary, 42 (Oct. 22, 2019) (on file with Comm.). Foundem was the 

lead complainant in the European Commission’s antitrust investigation and case on Google Shopping. 
194

3) Threatening Innovation and the Open Internet

Through misappropriating third-party content and giving preferential treatment to its own 

vertical sites, Google abused its gatekeeper power over online search to coerce vertical websites to 

surrender valuable data and to leverage its search dominance into adjacent markets. Google’s conduct 

both thwarted competition and diminished the incentive of vertical providers to invest in new and 

innovative offerings. 

In an interview with the Subcommittee, one market participant observed that Google’s conduct 

has sapped investment, as “investors don’t want to invest in companies that are producing content that 

relies on Google traffic,” resulting in “less capital invested in companies reliant on traffic from 

Google.”

1161 The website noted that Google’s business practices have also skewed the website’s own 

investment decisions, leading it to allocate the vast majority of its revenue to creating “news-like 

temporary content” rather than “evergreen content.”

1162 It added, “If we could trust that Google was 

not engaging in unfair search practices, we would be producing different content.”

1163

A vertical provider, meanwhile, said that Google’s conduct had held the firm’s growth “at bay”

and risks reducing innovation over the long term, as providers whose growth is capped by Google may 

be more reluctant to invest and expand.1164 It added:

Competitors are not the only ones who have a reduced incentive to innovate as a result 

of Google’s conduct. The anticompetitive effects reduce Google’s own incentives to 

improve the quality of its services, because it does not need to compete on the merits 

with rival services.1165

To illustrate this point, Yelp offers a contrast between its own efforts to maintain high-quality user 

reviews and Google’s efforts. It states that of the approximately 150 million user reviews submitted to 

Yelp since 2005, Yelp has displayed only 72% of them to users, while flagging 21% as “not 

recommended.”

1166 Yelp cites investment research noting that Google, by contrast, does not invest in 

curating its reviews: “25% of Google’s reviews have zero characters and are simply Netflix-style oneclick star ratings from which the user can derive few, if any, insights about the trustworthiness of the 

submission.”

1167

1161 Interview with Source 507 (July 10, 2019).

1162 Id.

1163 Id.

1164 Submission from Source 564, to H. Comm. on the Judiciary, 4 (Nov. 13, 2019) (on file with Comm.).

1165 Id.

1166 PIPERJAFFRAY, INTRODUCING REVIEW GROWTH FOR YELP VS. GOOGLE PLUS, (Apr. 16, 2014) (on file with Comm.). 

1167 Id.
195

Several market participants told the Subcommittee that Google’s business practices in online 

search have already foreclosed opportunity. In a submission, Celebrity Net Worth founder Brian 

Warner wrote: 

It is my view that Google has removed essentially all of the oxygen from the open 

internet ecosystem. There is no longer any incentive or even basic opportunity to 

innovate as I did back in 2008. If someone came to me with an idea for a website or a 

web service today, I would tell them to run. Run as far away from the web as possible. 

Launch a lawn care business or a dog grooming business—something Google can’t take 

away as soon as he or she is thriving.1168

More broadly, market participants expressed concern that Google has evolved from a 

“turnstile” to the rest of the web to a “walled garden” that increasingly keeps users within its sites.1169

Many observers have noted that when Google filed its initial public offering, Google co-founder Larry 

Page identified the company’s mission as the following: “We want you to come to Google and quickly 

find what you want...We want you to get you out of Google and to the right place as fast as 

possible.”

1170 In recent years, however, studies have shown that more than half of all queries on 

Google either terminate on Google or result in a click to Google’s own properties—a share that is 

growing over time.1171 In July, The Markup published results showing that Google allocated 41% of 

the first search results page on mobile devices to Google’s own content.”

1172

On several occasions over the course of the investigation, Subcommittee Chairman David 

Cicilline (D-RI) asked Google about this trend.1173 At the Subcommittee’s July 16, 2019 hearing, 

Google’s Director of Economic Policy, Adam Cohen, stated that Google’s goal is “to provide users 

information as quickly and efficiently as possible,” adding that he was “not familiar” with studies 

1168 Innovation and Entrepreneurship Hearing at 6 (statement from Brian Warner, Founder, Celeb. Net Worth).

1169 See, e.g., Submission from Source 972, to H. Comm. on the Judiciary, 9 (Dec. 9, 2019) (on file with Comm.). (“As 

opposed to cataloguing the internet and sending travelers to the most relevant websites, Google is instead creating a walled 

garden, using its place at the top of the internet funnel to ensure that the majority of users transact on Google’s own pages

and products.”).

1170 Google Inc., Registration Statement, (Form S-1) B-6 (2004), 

https://www.sec.gov/Archives/edgar/data/1288776/000119312504139655/ds1a.htm . 

1171 Rand Fishkin, Less Than Half of All Google Searches Now Result in a Click, SPARKTORO (Aug. 13, 2019), 

https://sparktoro.com/blog/less-than-half-of-google-searches-now-result-in-a-click/. 

1172 Adrianne Jeffries & Leon Yin, Google’s Top Search Result? Surprise! It’s Google, THE MARKUP (July 28, 2020), 

https://themarkup.org/google-the-giant/2020/07/28/google-search-results-prioritize-google-products-over-competitors. 

1173 See, e.g., Innovation and Entrepreneurship Hearing at 38–40 (response to Questions for the Record of Adam Cohen, 

Dir. of Econ. Pol’y, Google LLC); CEO Hearing Transcript at 1 (response to Questions for the Record from Sundar Pichai, 

CEO, Alphabet Inc.).
196

showing that a majority of queries now terminate on Google.1174 In its July 26, 2019 response to a 

follow-up letter from Chairman Cicilline, Google wrote that it strives to “give users the most relevant, 

highest quality information as quickly as possible,” a goal that Google claims is “[c]onsistent with Mr. 

Page’s comments in 2004.”

1175 When asked whether it was true that less than 50% of all searches on 

Google resulted in clicks to non-Google websites, Google responded that it “has long sent large 

amounts of traffic to other sites.”

1176 In response to the Subcommittee’s request for query metrics that 

would document the underlying trends, however, Google did not produce the relevant data.1177

Several enforcement bodies have examined these business practices. Between 2011 and 2013, 

the Federal Trade Commission pursued an inquiry into Google’s data misappropriation and selfpreferencing, among other conduct. Staff at the Bureau of Competition concluded that “the natural and 

probable effect” of Google’s misappropriation was “to diminish the incentives of vertical websites to 

invest in, and to develop, new and innovative content.”

1178 On Google’s self-preferencing, staff 

concluded that Google’s conduct had “resulted in anticompetitive effects,”

1179 but that Google had 

offered “strong procompetitive justifications.”

1180 In 2017, the European Commission concluded that 

Google’s self-preferencing in comparison shopping services constituted an illegal abuse of dominance 

and ordered Google to implement a remedy of “equal treatment.”

1181 The European Commission stated 

that Google had not “provided verifiable evidence to prove that its conduct is indispensable” to any 

procompetitive effects.1182

1174 Innovation and Entrepreneurship Hearing at 38–40 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC) , https://docs.house.gov/meetings/JU/JU05/20190716/109793/HHRG-116-JU05-20190716-

SD030.pdf; Innovation and Entrepreneurship Hearing at 42 (Adam Cohen, Dir. of Econ. Pol’y, Google LLC).

1175 Letter from Kent Walker, Senior Vice Pres., Global Affairs & Chief Legal Officer, Google, to Hon. David N. Cicillin 

(D-RI), Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 1 (July 26, 

2019).

1176 Id. at 2.

1177 In a September 2020 response to Chairman Cicilline on this same question, Google disputed Fishkin’s analysis of the 

data. Google wrote “The fact that a user does not click on a link on a Google Search results page does not mean that the 

user has been “kept” on Google properties. Searches on Google may result in zero website clicks for many reasons, which 

is not discernable without directly asking the user why they did not click a link.” CEO Hearing at A-2 (response to 

Questions for the Record of Sundar Pichai, CEO, Alphabet Inc.).

1178 FED. TRADE COMM’N, THE FTC REPORT ON GOOGLE’S BUSINESS PRACTICES iii (Aug. 8, 2012), in WALL ST. J. (Mar. 

24, 2015), http://graphics.wsj.com/google-ftc-report/. 

1179 Id. at 80.

1180 Id. at 86.

1181 Google Search (Shopping) Comm’n Decision at para. 671.

1182 Summary of Google Search (Shopping) Comm’n Decision at O.J. C 9/13, para. 26 (Dec. 1, 2018), https://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018XC0112(01)&from=EN. 
197

ii. Google Increased Prices for Market Access and Degraded Search Quality

In 2000, Google launched AdWords, which allowed advertisers to pay for keyword-based ads 

that would appear to the right of Google’s search results.1183 In the years since, Google has changed the 

display of the ads on its search engine results page in several ways, most notably by (1) increasing the 

number of ads placed above organic search results, and (2) blurring the distinction between how ads 

and organic listings are presented on Google’s search results page. These changes have effectively 

raised the price that businesses must pay to access users through Google. Market participants told the 

Subcommittee that Google’s conduct has undermined competition, misled consumers, and degraded 

the overall quality of Google’s search results—all while enabling Google to further exploit its 

monopoly over general online search.

Google’s clear dominance in online search also gives it significant control over the search 

advertising market. Publicly available data suggests Google captured around 73% of the search 

advertising market in 2019.1184 Submissions from market participants show that many firms spend the 

vast majority of their ad budgets on Google. For example, one major vertical provider spent

significantly more than half of its total ad spend on Google each year from 2016 to 2019, with the 

second top provider receiving less than 15%.1185 Public reporting suggests that, as of 2019, Google had 

increased the price of search ads by about 5% per year, exceeding the U.S. inflation rate at that time of 

1.6%.1186

Several market participants told Subcommittee staff that their ad spend on Google has 

increased in large part because Google has made it more difficult for businesses to obtain organic 

traffic. Partly this follows from Google’s preferencing of its own products, which compels demoted 

firms to pay Google for ad placement as a way to regain visibility. Another notable factor has been 

Google’s decision to increase the number of ads posted above organic search results. 

Prior to 2016, Google’s design of its search results page placed 8 ads to the right of organic 

search listings and 3 ads above them.1187 Google’s internal communications show that, as of 2011, the 

1183 Press Release, Google, Google Launches Self-Service Advertising Program (Oct. 23, 2000), 

http://googlepress.blogspot.com/2000/10/google-launches-self-service.html. 

1184 Submission from Source 115, to H. Comm. on the Judiciary, 6 (Oct. 22, 2019) (on file with Comm.) (citing Megan 

Graham, Amazon Is Eating into Google’s Most Important Business: Search Advertising, CNBC (Oct. 15, 2019), 

https://www.cnbc.com/2019/10/15/amazon-is-eating-into-googles-dominance-in-search-ads.html).

1185 Submission from Source 3, to H. Comm. on the Judiciary, 8 (Oct. 29, 2019) (on file with Comm.).

1186 Alistair Barr & Garrit De Vynck, Airlines, Hotels and Other Brands Are Tired of Paying Google for Their Own Names, 

BLOOMBERG (Mar. 9, 2019); see also Mark Irvine, Average Cost per Click by Country: Where in the World Are the Highest 

CPCs?, WORDSTREAM BLOG (Nov. 8, 2018) https://www.wordstream.com/blog/ws/2015/07/06/average-cost-per-click

(showing that the cost-per-click that Google charges search advertisers in the United States is notably higher than the rate it 

charges in countries where Google faces more competition).

1187 Dr. Peter J. Meyers, Four Ads on Top: The Wait Is Over, MOZ (Feb. 19, 2016), https://moz.com/blog/four-ads-on-topthe-wait-is-over. 
198

rate of user engagement with right-hand side ads was declining.1188 Since Google made money from 

search ads only when users clicked on them, less user engagement meant those ads were becoming less 

valuable to Google. In February 2011, Sridhar Ramaswamy, senior vice president of ads at Google, 

noted that “users are no longer looking at the [right-hand side ads],” and stated that Google either 

needed to “retrain people to look there by putting really good stuff there,” or “live with the fact that 

users are going to stop looking there.”

1189 By August 2011, a team at Google known as “Project 

Manhattan” was working on a redesign of Google’s desktop search results page that focused on 

reducing or eliminating right-hand side ads.1190

In 2016, Google rolled out the redesigned page, which eliminated the right-hand side ads while 

adding a fourth ad above organic listings and 3 at the bottom of the page.1191 The practical effect of 

adding a fourth ad at the top of the search results page was to push organic listings further down, 

requiring users to scroll down further before reaching a non-paid result. According to Bloomberg, 

when Google tested the addition of a fourth ad, some employees objected on the grounds that the 

fourth ad would be of lower quality than the first organic result, but Google altered the search results 

page anyway.1192

Google’s decision to monetize a fourth ad at the expense of an organic listing fits a broader 

pattern of steps taken by Google to rank search results based on what is best for Google, rather than 

what is best for search users—be it preferencing its own vertical sites or allocating more space for ads. 

Several market participants noted that Google could afford to make these changes only once it had 

achieved a dominant position in the market for general search and search advertising.1193 Now that 

Google is “unconstrained by competitors,” one market participant noted, it “consistently reserves the 

top of the [search engine results page] for its own vertical products or advertisements paid for through 

search engine marketing, pushing its rivals’ organic results to the bottom, regardless of how relevant or 

useful they might be.”

1194

1188 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-02981172–73 (Aug. 12, 2011) (on file with Comm.) 

(“RHS CTR has been steadily dropping over time to today’s level...For the best ads on the RHS, some indication that CTR 

is lower than quality would suggest it should be”); GOOG-HJC-02983169–93 (Aug. 12, 2011) (stating that RHS is 16.5% 

of search revenue, 26% of queries have a RHS ad, and “Opportunity is accelerating due to declining RhsCTR”).

1189 Id. at GOOG-HJC-02983830 (Feb. 16, 2011).

1190 Id. at GOOG-HJC-00482674–76 (Aug. 18, 2011).

1191 Matt McGee, Confirmed: Google To Stop Showing Ads On Right Side Of Desktop Search Results Worldwide, Search 

Engine Land (Feb. 19, 2016), https://searchengineland.com/google-no-ads-right-side-of-desktop-search-results-242997. 

1192 Gerrit De Vynck, Google Search Upgrades Make It Harder for Websites to Win Traffic, BLOOMBERG (July 13, 2020) 

https://www.bloomberg.com/news/articles/2020-07-13/how-google-search-changes-make-it-more-expensive-to-win-traffic. 

1193 See, e.g., Submission from Source 972, to H. Comm. on the Judiciary, 14 (Dec. 9, 2019) (on file with Comm.); 

Submission from Source 115, to H. Comm. on the Judiciary, 10 (Oct. 22, 2019) (on file with Comm.); Submission from 

Source 3, to H. Comm. on the Judiciary, 34 (Oct. 29, 2019) (on file with Comm.); Competitors Hearing at 3 (statement of 

David Heinemeier Hansson, Chief Technology Officer and Cofounder, Basecamp).

1194 Submission from Source 972, to H. Comm. on the Judiciary,14 (Dec. 9, 2019) (on file with Comm.).
199

Internal data shown by one market participant to the Subcommittee demonstrates that “organic 

search listings have been pushed down over time, and ‘click-throughs’ (clicking to visit a site) on the 

first organic results have decreased by two-thirds over the past 3 years.”

1195 The market participant’s 

analysis also shows that the first organic listing on mobile now appears on the bottom of the third 

search results screen, which “effectively forces advertising customers to bid for a paid advertisement 

listing if they want their service or product to meaningfully reach consumers in a mobile search.”

1196

Google Search on Desktop Ad Placement1197

1195 Submission from Source 3, to H. Comm. on the Judiciary, 33 (Oct. 29, 2019) (on file with Comm.).

1196 Id.

1197 Prepared by the Subcomm. 
200

Google Search on Mobile Phone1198

1198 Prepared by the Subcomm.
201

Google Search on Desktop1199

1199 Prepared by the Subcomm.
202

Google Search on Mobile Phone1200

One result of these changes is that users click less on organic search results. As Google has 

reduced the share of top real estate that it devotes to organic listings, studies show that organic clickthrough as a share of all click-through plus zero-click searches has fallen.1201 According to an analysis 

by Rand Fishkin, the trend is especially pronounced in mobile, where organic click-through rates fell 

by more than 30% between January 2016 and June 2019, while paid click-through rates over that same 

period more than tripled.1202

For businesses that depend on Google to reach users, these trends amount to a toll hike, as 

traffic that firms could previously draw through organic listings is now increasingly pay-for-play. 

Instead of competing for users by offering high-quality webpages and services that should lead to 

1200 Prepared by the Subcomm.

1201 Rand Fishkin, Less than Half of Google Searches Now Result in a Click, SPARKTORO (Aug. 13, 2019) 

https://sparktoro.com/blog/less-than-half-of-google-searches-now-result-in-a-click/. 

1202 Id. (showing organic fell from 41.1% in January 2016 to 26.68% in June 2019, a period over which paid click-through 

rates increased from 3.29% to 11.38%.).
203

better organic search listings, these businesses must now compete for users based on how much money 

they pay Google. Several market participants analogized Google to a gatekeeper that is extorting users 

for access to its critical distribution channel. 

At the Subcommittee’s January 2020 field hearing in Colorado, David Heinemeier Hansson, 

chief technology officer and co-founder of Basecamp, testified that Google’s decision to increase the 

number of ads listed above organic search results has hurt search users.

1203 Expanding on his criticism, 

Hansson stated that Google’s decision to sell ad placement against a company’s brand names is 

another way that Google extracts revenue from dependent businesses. 

Hansson said, “Google uses this monopoly to extort businesses like ours to pay for the privilege 

that consumers who search for our trademarked brand name can find us because if we don’t they will 

sell our brand name as misdirection to our competitors.”

1204 He noted that while Google purports to 

recognize trademark law by prohibiting the use of trademark terms in ad copy, Google “puts the onus 

of enforcement on victims and does nothing to stop repeat offenders, unless, of course, the trademark 

terms are belonging to Google itself.”

1205 Hansson added, “You will find no competitor ads for any of 

Google’s own important properties.”

1206

Basecamp’s Ad1207

Other market participants generally echoed these views in submissions to the Subcommittee. 

One wrote that Google “effectively forces its advertising customers to pay for the ability to reach 

1203 Competitors Hearing Transcript at 62 (statement of David Heinemeier Hansson, Chief Technology Officer and 

Cofounder, Basecamp) (“Today, if a consumer goes to Google on their mobile device and search [sic] for Basecamp, the 

first thing that they will find is whoever bought that trademark term, which is usually one of our competitors. Ergo, 

consumers are not finding what they are looking for . . . . They are being presented with an ad and that is the tollbooth that 

[Google is] erecting.”).

1204 Id. at 23.

1205 Id.

1206 Id.

1207 Jason Fried (@jasonfried), TWITTER (Sep. 3, 2019, 4:39 PM), 

https://twitter.com/jasonfried/status/1168986962704982016?lang=en.
204

consumers who are searching specifically for the customer’s brand.”

1208 The business added, “Facing 

no remotely comparable advertising and search engine alternative, Google has the ability to charge 

potentially inflated prices for its advertising services by forcing customers to increase their bids in 

order to receive a more favorable position.”

1209

A second factor that several third parties cited as contributing to both higher ad prices and the 

degradation of search for users is Google’s effort over the years to blur the distinction between organic 

listings and paid ads. 

Google’s Ad Shading and Labeling: 2007–20131210

The diagram above depicts Google’s practice between 2007 and 2013 of labeling its paid ads 

with a shaded background. As shown below, in 2013, Google abandoned the shaded background and 

instead inserted a small yellow square that states “Ad.” Since 2016, Google has made various changes 

that make ads more subtle, culminating in a label that renders the overall appearance of paid ads much 

more similar to organic listings. Market participants have noted that Google also neglects to label some 

1208 Submission from Source 3, to H. Comm. on the Judiciary, 32 (Oct. 29, 2019) (on file with Comm.).

1209 Id.

1210 Ginny Marvin, A Visual History of Google Ad Labeling in Search Results, SEARCH ENGINE LAND, (Jan. 28, 2020). 

https://searchengineland.com/search-ad-labeling-history-google-bing-254332.
205

paid ads entirely, particularly those that appear in Google’s vertical search offerings, such as listings 

for hotels that appear alongside maps.1211

Google’s Ad Shading and Labeling: 2013–20191212

The natural result of Google’s decision to blur the distinction between paid ads and organic 

listings is that users click on more ads and less organic search results. This misleading practice has 

likely contributed to the growth of paid click-through rates on Google. One study found that over 59% 

of consumers were not aware of the difference between organic results and paid ads on Google, and 

about 34% of those who did recognize paid ads said they would deliberately avoid clicking on 

them.1213 The Federal Trade Commission has recognized that search engines that fail to “prominently 

1211 Google Hotel Ads, https://ads.google.com/hotels/ (offering paid listings to hotels, but neglecting to designate these 

listings as “ads” on the search results page).

1212 Ginny Marvin, A Visual History of Google Ad Labeling in Search Results, SEARCH ENGINE LAND, (Jan. 28, 2020). 

https://searchengineland.com/search-ad-labeling-history-google-bing-254332. 

1213 Mark Jones, Two-thirds of people don’t know the difference between Google paid and organic search results, 

MARKETING TECH NEWS (Sept. 6, 2018) https://marketingtechnews.net/news/2018/sep/06/two-thirds-people-dont-knowdifference-between-google-paid-and-organic-search-results/. 
206

distinguish” paid ads from organic listings could be liable for deceiving consumers under Section 5 of 

the FTC Act.1214

Making ads less conspicuous makes it more likely that users will unwittingly click on them. 

Market participants note that, like Google’s decision to increase the number and prominence of paid 

ads, Google’s decision to blur the distinction between paid listings and organic results deceives 

consumers and compels businesses to purchase ads from Google in order to be located by users.1215

In submissions and interviews with Subcommittee staff, businesses noted that higher 

advertising costs come at the expense of investments in innovation and consumer benefits.1216 One 

vertical search provider stated:

If the search market were fair, the internet would have four times more content on it, 

dramatically improving the web for consumers. Google’s gatekeeper power allows it to 

show more advertisements for search queries with higher commercial intent. . . . The 

harm to consumers is not necessarily a lack of content, but a lack of quality content 

(requiring money to produce).1217

At the Subcommittee’s January 2020 field hearing, Hansson testified that Google’s conduct, 

which harms business customers and users alike, is enabled by its dominance: 

Google’s monopoly on internet search must be broken up for the sake of a fair 

marketplace. Google would never be able to get away with such a user-hostile design as 

showing a full-page ad for something other than what you were searching for, if it had 

real competition. They would never have been able to establish their monopoly if this 

had been the design from the get-go. These are the monopoly spoils of complete 

domination.1218

At the Subcommittee’s sixth hearing, Subcommittee Chairman David Cicilline (D-RI) noted 

that Google’s search results page now features more ads and more of Google’s own sites and asked

1214 Letter from Mary K. Engle, Assoc. Dir. for Advert. Practices, Fed. Trade Comm’n (June 24, 2013), 

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-consumer-protection-staff-updates-agencys-guidancesearch-engine-industryon-need-distinguish/130625searchenginegeneralletter.pdf.

1215 Submission from Source 115, to H. Comm. on the Judiciary, 10-12 (Oct 22, 2019) (on file with Comm.); Submission 

from Source 972, to H. Comm. on the Judiciary, 21 (Dec. 9, 2019) (on file with Comm.); Submission from Source 3, to H. 

Comm. on the Judiciary (Oct. 29, 2019) (on file with Comm.).

1216 Submission from Source 3, to H. Comm. on the Judiciary 32 (Oct. 29, 2019) (on file with Comm.).

1217 Interview with Source 507 (July 10, 2019).

1218 Competitors Hearing at 7 (statement of David Heinemeier Hansson, Chief Technology Officer and Cofounder, 

Basecamp).
207

Google CEO Sundar Pichai whether this trend highlights a misalignment of Google’s incentives.1219

He asked, “Isn’t there a fundamental conflict of interest between serving users who want to access the 

best and most relevant information and Google’s business model, which incentivizes Google to sell ads 

and keep users on Google’s own sites?”

1220 In response, Mr. Pichai stated that Google has “always 

focused on providing users the most relevant information,” and stated that Google shows ads “only for 

a small subset of queries where the intent from users is highly commercial.”

1221 However, Mr. Pichai 

did not explain why the percentage of queries for which Google shows ads would implicate whether or 

not Google’s business model compromises the integrity of its search results. Google also failed to 

produce data that would enable the Subcommittee to make an independent assessment of Pichai’s 

assertion.

Digital Advertisements

a. Overview and Dominance

Google makes the vast majority of its revenue by selling advertising placement across the 

internet. In 2019, Google’s ad revenue accounted for approximately 83.3% of Alphabet’s overall 

sales.1222 Google is a prominent player in both search advertising and digital display advertising, and it 

captures over 50% of the market across the ad tech stack, or the set of intermediaries that advertisers 

and publishers must use to buy, sell, and place ads. Specifically, Google runs the leading ad exchange, 

while also running buy-side and sell-side intermediary platforms trade on the exchange.1223

Internationally, antitrust enforcers are currently investigating Google’s dominance in digital 

advertising, including the United Kingdom’s Competition and Markets Authority (CMA),1224 and the 

Australian Competition and Consumer Commission (ACCC).1225 In July 2020, the CMA concluded 

1219 CEO Hearing Transcript at 37 (question of Rep. David N. Cicilline (D-RI), Chairman, Subcomm. on Antitrust, 

Commercial and Admin. Law); Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01099375 (Mar. 30, 

2012) (on file with Comm.); Sergey Brin & Larry Page, The Anatomy of a Large-Scale Hypertextual Search Engine, 

http://infolab.stanford.edu/~backrub/google.html (expressing reservations about an ad-based business model, noting that 

“the goals of the advertising business model do not always correspond to providing quality search to users,” and given the 

conflicting motives that a search engine might face between serving users the most relevant information and selling more 

ads, arguing that “advertising funded search engines will be inherently biased towards the advertisers and away from the 

needs of the consumers.”). 

1220 CEO Hearing Transcript at 37 (question of Rep. David N. Cicilline (D-RI), Chairman, Subcomm. on Antitrust, 

Commercial and Admin. Law).

1221 Id. (statement of Sundar Pichai, CEO, Alphabet Inc.); Production of Google, to H. Comm. on the Judiciary, GOOGHJC-01099375 (Mar. 30, 2012) (on file with Comm.).

1222 Alphabet Inc., Annual Report (Form 10-K) 10 (Feb. 3, 2020), 

https://www.sec.gov/Archives/edgar/data/1652044/000165204420000008/goog10-k2019.htm. 

1223 Commission and Mks Auth. Report at 10.

1224 Id.

1225 See generally Austl. Competition & Consumer Comm’n Report.
208

that Google has “significant market power” in search advertising and its market power had enabled it 

to charge prices 30-40% higher than those set by Bing.1226 In September 2020, the Senate Judiciary 

Committee held a hearing on the effects of Google’s dominance in digital ads, where members 

expressed bipartisan concern that Google’s market power across the ad tech stack was enabling 

anticompetitive conduct and harming publishers and advertisers alike.1227 Lastly, public reports note 

that both the Justice Department and several state attorney generals are investigating Google’s market 

power and conduct in digital ads, with reports that a lawsuit may be imminent.1228 In light of the 

extensive attention already given to this issue, a comprehensive examination of the digital advertising 

market is beyond the scope of this Report.

Market participants and Google’s documents suggest that Google is likely to maintain its lead 

in search and display advertising due to high entry barriers. Most critically, as other sections of this 

Report found, Google can mine its ecosystem—including Search, Chrome, Android, and Maps—to 

combine a unique set of user data points and build troves of online behavioral data that drive its ad 

business. Furthermore, its dominance across markets increasingly enables Google to set the terms of 

commerce. One third party described:

Google is now not only a seller and broker of digital advertising across the Internet, but 

they now also control significant portions of the web browsers, operating systems, and 

platforms upon which these digital ads are delivered. This gives Google the ability to 

single-handedly shift an entire ecosystem in nearly any direction they decide, based 

simply on their scale. Google can then use its dominance to demand a higher share of ad 

revenues from buyers and sellers, and there is little leverage available to counteract this 

position in a negotiation.1229

One key factor that market participants and industry experts cite when accounting for why 

Google is likely to maintain its dominance in digital ads is its conflict of interest. With a sizable share 

in the ad exchange market, ad intermediary market, and as a leading supplier of ad space, Google 

simultaneously acts on behalf of publishers and advertisers, while also trading for itself—a set of 

conflicting interests that market participants say enable Google to favor itself and create significant 

information asymmetries from which Google benefits.1230 At the Subcommittee’s sixth hearing, 

1226 Competition & Mks Auth. Report at 211.

1227 Stacking the Tech: Has Google Harmed Competition in Online Advertising? Hearing Before S. Subcomm. on Antitrust 

and Consumer Rights of the S. Comm. on the Judiciary, 116th Cong. (2019). 

1228 Sara Forden and David McLaughlin, DOJ Scrutinizes Google Advertising, Search in Antitrust Probe, BLOOMBERG

(Aug. 8, 2019), https://www.bloomberg.com/news/articles/2019-08-08/doj-scrutinizes-google-advertising-search-inantitrust-probe. 

1229 Submission from Source 688, to H. Comm. on the Judiciary, 2 (Oct. 24, 2019) (on file with Comm.).

1230 Dina Srinivasan, Why Google Dominates Advertising Markets, 24 STAN. TECH. L. REV. 10-11 (forthcoming 2020) (on 

file with Comm.).
209

Representative Pramila Jayapal (D-WA) questioned Google CEO Sundar Pichai about this conflict of 

interest:

So [Google is] running the marketplace, it’s acting on the buy side, and it’s acting on 

the sell side at the same time, which is a major conflict of interest. It allows you to set 

rates very low as a buyer of ad space from newspapers, depriving them of their ad 

revenue, and then also to sell high to small businesses who are very dependent on 

advertising on your platform. It sounds a bit like a stock market, except, unlike a stock 

market, there’s no regulation on your ad exchange market.1231

Mr. Pichai responded by citing the sums that Google has paid to publishers, describing it as a “lowmargin business” for Google that it pursues “because we want to help support publishers.”

1232

Google’s overall margins have averaged over 20% for nine of the last ten years.1233

b. Merger Activity

Google came to control a sizable market share across the ad tech stack through acquisitions. 

Google acquired DoubleClick in 2007 for $3.1 billion.1234 At the time of the acquisition, The New York 

Times described DoubleClick as a “Nasdaq-like exchange for online ads,” and Google’s own early 

description of DoubleClick describes it as “a stock exchange,” such as “the NYSE.”

1235 Google 

purchased DoubleClick to enter the display advertising market, a segment that Google’s internal 

documented calculated at around $4.3 billion in 2006—and an area where Google at the time noted it 

“has no meaningful presence.”

1236 A presentation from July 2006 included a slide titled “Build a SelfReinforcing Online Ads Ecosystem,” which noted that acquiring DoubleClick or Atlas could create 

these “self-reinforcing benefits” for Google’s ecosystem.1237 The slide asked, “[I]s there some 

framework we have to demonstrate the synergies/inter-relationships from owning all these pieces?”

1238

Nine months later, Google announced its bid to buy DoubleClick.

When reviewing the deal, the Federal Trade Commission assessed both horizontal and nonhorizontal theories of harm and noted that, prior to announcing the acquisition, Google had been 

1231 CEO Hearing Transcript at 169 (Rep. Pramila Jayapal, Member, Subcomm. on Antitrust, Commercial and Admin Law).

1232 Id. at 170.

1233 Data compiled by Cong. Research Serv. (on file with Comm.).

1234 Louise Story & Miguel Helft, Google Buys DoubleClick for $3.1 Billion, N.Y. TIMES (Apr. 14, 2007), 

https://www.nytimes.com/2007/04/14/technology/14DoubleClick.html. 

1235 Id. See also The DoubleClick Ad Exchange, GOOGLE, 

https://static.googleusercontent.com/media/www.google.com/en//adexchange/AdExchangeOverview.pdf.

1236 Submission from Google, to H. Comm. on the Judiciary, GOOG-HJC-04189346 (July 26, 2006) (on file with Comm.).

1237 Id. at GOOG-HJC-04189347.

1238 Id.
210

planning to enter the market and compete against DoubleClick directly.1239 Ultimately the Commission 

concluded that the display advertising market was highly competitive, and therefore the loss of 

Google’s potential entry would not be competitively significant.1240 Examining the potential effects of 

the deal on privacy, the FTC said it found no evidence that competition between Google and 

DoubleClick affected their respective privacy policies.1241 In December 2007, the FTC approved the 

acquisition.1242

In 2010, Google acquired AdMob, the leading mobile ad network at the time. In the FTC’s 

approval of the merger, it stated that “the combination of the two leading mobile advertising networks 

raised serious antitrust issues,” but that these concerns were “overshadowed by recent developments in 

the market, most notably a move by Apple Computer Inc. – the maker of the iPhone – to launch its 

own competing mobile ad network.”

1243 The Commission’s assumption that Apple would continue to 

build its presence in the mobile ad market prompted it to approve the deal.1244 In the coming years, 

however, Apple’s product never fully took off and in 2016, Apple abandoned the effort completely.1245

In 2011 Google also acquired AdMeld, a leading supply-side platform.1246 The Justice 

Department’s Antitrust Division investigated the acquisition and concluded that the deal was “unlikely 

to cause consumer harm.”

1247

c. Conduct

i. Combination of Data

When Google purchased DoubleClick, it told Congress and the FTC that it would not combine 

the data collected on internet users via DoubleClick with the data collected throughout Google’s 

1239 Press Release, Fed. Trade Comm’n, Federal Trade Commission Closes Google/DoubleClick Investigation (Dec. 20, 

2007), https://www.ftc.gov/news-events/press-releases/2007/12/federal-trade-commission-closes-googledoubleclickinvestigation. 

1240 Id. 

1241 Id. 

1242 Id.

1243 Press Release, FTC Closes its Investigation of Google AdMob Deal, Fed. Trade Comm’n (May 21, 2010), 

https://www.ftc.gov/news-events/press-releases/2010/05/ftc-closes-its-investigation-google-admob-deal. 

1244 Id.

1245 About the iAd App Network Shutdown, APPLE DEVELOPER (Dec. 31, 2016), https://developer.apple.com/support/iad/

(last visited on Oct. 4, 2020).

1246 Press Release, Fed. Trade Comm’n, FTC Closes its Investigation of Google AdMob Deal (May 21, 2010), 

https://www.ftc.gov/news-events/press-releases/2010/05/ftc-closes-its-investigation-google-admob-deal. 

1247 Press Release, U.S. Dep’t of Justice, Statement of the Department of Justice’s Antitrust Division on Its Decision to 

Close Its Investigation of Google Inc.’s Acquisition of Admeld Inc. (Dec. 2, 2011) 

https://www.justice.gov/opa/pr/statement-department-justices-antitrust-division-its-decision-close-its-investigation-google.
211

ecosystem.1248 In 2016, however, Google reversed this commitment, and subsequently combined 

DoubleClick data with personal information collected through other Google services—effectively 

combining information from a user’s personal identity with their location on Google Maps, 

information from Gmail, and their search history, along with information from numerous other Google 

products. At the Subcommittee’s sixth hearing, Representative Val Demings (D-FL) asked Mr. Pichai 

about his direct involvement in the decision to renege on Google’s commitment to lawmakers: 

When Google proposed the merger[,] alarm bells were raised about the access to data 

Google would have, specifically the ability to connect to users’ personal identity with 

their browsing activity. Google, however, committed to Congress and to the antitrust 

enforcers that the deal would not reduce user privacy. Google’s chief legal adviser 

testified before the Senate Antitrust Subcommittee that Google wouldn’t be able to 

merge this data even if it wanted to, given contractual restrictions. But in June of 2016, 

Google went ahead and merged its data anyway, effectively destroying anonymity on 

the internet . . . Did you sign off on this decision to combine the sets of data with—that 

Google had told Congress would be kept separate? 1249

Sundar Pichai confirmed that he approved the deal, claiming that “Today [we] make it very 

easy for users to be in control of their data.”

1250 Rep. Demings also noted that at the time of the 

transaction, DoubleClick executives had noted that Google’s founders were concerned that 

combining the data in this way—through a cross-site cookie—would lead to a privacy backlash. She 

stated:

So, in 2007, Google’s founders feared making this change because they knew it would 

upset their users, but in 2016, Google didn’t seem to care. Mr. Pichai, isn’t it true that 

what changed between 2007 and 2016 is that Google gained enormous market power.

So. While Google had to care about user privacy in 2007. It no longer had to in 2016?

Would you agree that what changed was Google gained enormous market power?1251

She closed by noting she was concerned that Google’s “bait-and-switch” was “part of a broader 

pattern where Google buys up companies for the purposes of surveilling Americans, and because of 

1248 Dina Srinivasan, Why Google Dominates Advertising Markets, 24 STAN. TECH. L. REV. 24 (forthcoming 2020) (on file 

with Comm.).

1249 CEO Hearing Transcript at 73-74 (Rep. Val Demings (D-FL), Member, Subcomm. on Antitrust, Commercial and 

Admin Law).

1250 Id. at 75.

1251 Id. at 74–75
212

Google’s dominance users have no choice but to surrender.”

1252 In recent months, Google’s reversal on 

this commitment has become salient for enforcers now assessing Google’s bid to purchase FitBit.1253

ii. Other Areas of Concern

While a comprehensive examination of this market is beyond the scope of this Report, the 

Subcommittee heard from numerous market participants about a set of alleged practices by Google that 

invite investigation. These include:

• Depriving advertisers and publishers of key market and pricing information and 

maintaining market opacity;

• Leveraging its market power in search advertising to compel advertisers to use Google’s 

products in the display market;

• Leveraging control over YouTube to foreclose competition in digital video ad serving, 

in part by excluding rival ad servers from having access to YouTube;

• Inhibiting interoperability between Google’s ad platforms and non-Google ad 

platforms; and

• Using its search dominance to impose standards like AMP that, by further depriving 

publishers of user data, benefit Google’s ad business.

Android and Google Play Store

a. Android

i. Overview

Android is a dominant mobile operating system, running on approximately 75% of the world’s 

mobile devices.1254 In the United States, the only alternative to Android is Apple’s iOS. Android 

1252 Id. at 75.

1253 CEO Hearing at 32 (response to Questions for the Record of Sundar Pichai, CEO, Alphabet Inc.), 

https://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-116-JU05-20200729-QFR051-U1.pdf. 

1254 Felix Richter, The Smartphone Market: The Smartphone Duopoly, STATISTA (July 27, 2020), 

https://www.statista.com/chart/3268/smartphone-os-market-share/ (citing Mobile Operating System Market Share 

Worldwide, STATCOUNTER GLOBALSTATS).
213

captures about 47% of the U.S. mobile operating system market, and Apple captures about 52% of 

it.1255

Google acquired Android in July 2005 for an estimated $50 million.1256 Since then, Google has 

purchased a set of technologies to strengthen its mobile ecosystem, including both software and 

hardware.1257 Notably, Google purchased Motorola Mobility in 2011 for $12.5 billion, the largest 

acquisition in Google’s history.1258

Google describes Android as “a free, open-source mobile operating system” that is available to 

anyone to download and modify on a royalty-free basis.1259 Indeed, Android is unique in that Google 

does not generally monetize its operating system by selling proprietary hardware or demanding 

licensing fees. In practice, however, smartphone manufacturers that seek to use Android must sign 

Google’s licensing agreements, as Google limits the functionality of non-licensed usage. Only through 

Google’s licensing agreements can smartphone manufacturers access Google’s proprietary apps, such 

as Gmail, YouTube, Chrome, Google Maps, and Google Play Store.1260 In return, Google requires that 

certain apps must be pre-installed and must receive prominent placement on mobile devices.1261 Device 

manufacturers must also enter an agreement that prevents them from customizing Android,1262 and 

1255 S. O’Dea, Market share of mobile operating systems in the United States from January 2012 to December 2019, 

STATISTA (Feb. 27, 2020), https://www.statista.com/statistics/272700/market-share-held-by-mobile-operating-systems-inthe-us-since-2009/, (citing Mobile Operating System Market Share in United States Of America, STATCOUNTER 

GLOBALSTATS).

1256 Farhad Manjoo, A Murky Road Ahead for Android, Despite Market Dominance, N.Y. TIMES (May 27, 2015), 

https://www.nytimes.com/2015/05/28/technology/personaltech/a-murky-road-ahead-for-android-despite-marketdominance.html. 

1257 See infra Appendix.

1258 Google Buys Motorola Mobility For $12.5B, Says “Android Will Stay Open,” TECHCRUNCH (Aug. 15, 2011), 

https://techcrunch.com/2011/08/15/breaking-google-buys-motorola-for-12-5-billion/ (reporting that Google purchased 

Motorola primarily to protect the Android ecosystem from patent litigation). In 2014, Google sold Motorola to Lenovo. 

Facts about Google’s acquisition of Motorola, GOOGLE, https://www.google.com/press/motorola/) (lasted visited Oct. 4, 

2020).

1259 Production of Google, to H. Comm. on the Judiciary, A-6 (Nov. 22, 2019) (on file with Comm.) Android is managed by 

the Open Handset Alliance, a group of more than eighty hardware, software, and mobile network operators, including 

Samsung, LG, HTC, and Lenovo. See Members, OPEN HANDSET ALLIANCE, 

https://www.openhandsetalliance.com/oha_members.html (last visited Oct. 4, 2020); Licenses, ANDROID OPEN SOURCE 

PROJECT, https://source.android.com/setup/start/licenses (last visited Oct. 4, 2020) (stating that the Android source code is 

freely available for use under an open-source license).

1260 See Google Android Comm’n Decision at paras. 160–63.

1261 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-02393308 (Mar. 11, 2011) (on file with Comm.) 

(The Mobile Application Distribution Agreement (MADA) is an agreement that specifies which apps Google requires 

hardware manufactures to pre-install and where on the phone the apps should be placed.).

1262 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-02393318 (Feb. 25, 2011) (Google’s 

Antifragmentation Agreement (“AFA”)).
214

from building an Android fork that would make the version of Android running on a device 

incompatible with apps built for the Android ecosystem.1263

The Subcommittee’s investigation revealed that Google has used Android to entrench and 

extend its dominance in a host of ways that undermine competition. These include: (1) using 

contractual restrictions and exclusivity provisions to extend Google’s search monopoly from desktop 

to mobile and to favor its own applications; and (2) devising Android Lockbox, a covert effort to track 

real-time data on the usage and engagement of third-party apps, some of which were Google’s 

competitors. Additionally, Google’s Play Store now functions as a gatekeeper, which Google is 

increasingly using to hike fees and favor its own apps. Overall, Android’s business practices reveal 

how Google has maintained its search dominance through relying on various contractual restrictions 

that blocked competition and through exploiting information asymmetries, rather than by competing on 

the merits.

ii. Using Contracts to Extend Google’s Search Monopoly and Self-Preference

Early communications within Google show that it began investing in the mobile ecosystem 

because it recognized that the rise of smartphone usage threatened to disintermediate Google Search. 

Since losing its monopoly on search would mean losing its valuable trove of user data, maintaining 

dominance over search access points was paramount.

To maintain its search dominance, Google invested in Android, which it recognized it could use 

to extend its search dominance onto mobile devices.1264 Google required that any smartphone 

manufacturer seeking to license Android preinstall Google Search and Google Play Store, alongside a 

host of other rotating apps selected by Google.1265 Google also offered mobile device manufacturers 

revenue-share agreements, under which smartphone manufacturers would receive a cut of the search 

advertising revenue that Google made from the use of Google’s apps on their devices,1266 as well as a 

cut of Play Store revenues.1267 In return, however, manufacturers had to not only carry Google’s apps, 

but also ensure that Google Search was the default and exclusive search app pre-installed on the 

manufacturers’ devices. For example, one revenue share agreement reviewed by the Subcommittee 

stated that hardware manufacturers shall not “pre-install, install, or incorporate on any Covered Device 

1263 Id.; Google Android Comm’n Decision at paras. 170–71; see also Device compatibility overview, ANDROID 

DEVELOPERS, https://developer.android.com/guide/practices/compatibility (last visited Oct. 4, 2020). In 2017, Google 

released an alternative to its Antifragmentation Agreement called the Android Compatibility Commitment (ACC), which 

“would permit OEMs to manufacture incompatible Android devices for a third party that are marketed under a third-party 

brand.” Google Android Comm’n Decision at paras. 170–71.

1264 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04216470 (May 2009) (on file with Comm.).

1265 Id. at GOOG-HJC-02393308 (Mar. 11, 2011) (on file with Comm.) (The Mobile Application Distribution Agreement).

1266 Id. at GOOG-HJC-00660371 (Apr. 11, 2011).

1267 Id. at GOOG-HJC-04216470 (May 2009).
215

any application which is the same or substantially similar to a Google Search Client or the Google 

Search Services.”

1268

Documents show that Google executives knew that conditioning access to Android and to 

Google’s suite of apps on the prominent placement of Google Search would disrupt existing 

partnerships between mobile network operators and rival search engines. For example, a 2009 slide 

deck stated that “[p]artners may have deals in place with other search providers,” and noted that “TMobile and AT&T have closed deals with Yahoo...Verizon has tight relationship with MSFT re: 

search...Expect MSFT & Yahoo to aggressively pursue ‘pre-load’ deals on Android phones.”

1269

Google’s strategy of licensing Android for free to hardware partners and conditioning access to 

Google’s must-have apps on favorable treatment for Google Search enabled Google to box out rivals 

in mobile search and other markets. Google’s strategy was successful. These agreements, which were 

reached with the leading smartphone providers, solidified Google Search as the default search option 

on a majority of the world’s smartphones.

As Android gained market share, its demands grew and hardened. The European Commission 

found that between 2009 and 2014, Google increased the number of pre-installed Google apps that it 

required from 12 to 30.1270 Documents submitted to the Subcommittee also show that instructions to 

heavily push Google Search were coming from the company’s top management. Summarizing a

meeting with Sundar Pichai, then-Vice President of Product Development, Director of Engineering for 

Android Patrick Brady recalled, “His main feedback was . . . Search is sacred, must be front and 

center.”

1271 He added, “Our proposal covers that through more prescriptive search placement 

requirements.”

1272

Google’s licensing agreement gave Google the right to amend the list of apps it required device 

manufacturers to pre-install.1273 Documents show that market participants expressed frustration at 

Google’s ability to set the terms and also change them routinely. Explaining the situation, Mr. Brady 

wrote, “Some OEMs . . . do not like the idea of signing up to undefined requirements, but most of our 

partners are somewhat used to this as the [c]ompatibility requirements evolve with each release, and 

our [Google Mobile Services] suite expands (incl. mandatory apps) over time.”

1274 When one hardware 

manufacturer attempted to secure additional rights, Google pushed back. In 2014, John Lagerling, 

Senior Director of Android Global Partnerships, responded to such an effort:

1268 Id. at GOOG-HJC-00660364 (Apr. 11, 2011).

1269 Id. at GOOG-HJC-04217467 (May 2009) (on file with Comm.).

1270 Google Android Comm’n Decision at para. 182.

1271 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-00050146 (May 23, 2013) (on file with Comm.).

1272 Id.

1273 See Google Android Comm’n Decision at para. 183.

1274 Id. at GOOG-HJC-00050145 (May 23, 2013).
216

In your redlines on [the contract], you are suggesting [OEM] approves any new 

additions to GMS. This has never been the case in our past history[,] and I think it is the 

wrong message for [OEM] to send Google. We just spent some hours explaining . . .

that one of the main reasons we do Android is in order to secure distribution of Google 

services.1275

Other smartphone manufacturers also attempted to resist Google’s terms, noting that the 

requirements were crowding out placement for other apps while also taking up significant memory. 

For example, in 2014 one hardware manufacturer requested that Google “reduce the number of 

preloaded apps on the device . . . so that we don’t clutter our products with apps that may not be 

necessary for the majority of users and we give them as much space as possible,” adding that this 

would also “help us deal with complaints from governments, NGOs and end users.”

1276 Forwarding the 

email to others at Google, Mr. Langerling noted that the manufacturer’s grievance was “not about 

clutter but about system memory,” adding that “[u]sers have been complaining to [the device maker] 

that [it] sells them a 16Gb phone and delivers something that only has 7-8Gb free.”

1277

Despite complaints that Android’s pre-install conditions favored Google’s products at the 

expense of user experience, Google maintained its requirements. Interviews with market participants 

suggest that Google’s ability to set the terms of commerce hurt mobile device manufacturers as well as 

third-party developers, both of which had their own apps they were seeking to distribute. In a 

submission to the Subcommittee, one third party recalled being informed by a device manufacturer 

“that it could not provide home screen placement for our preloaded app due in part to contractual 

agreements to preload [Google’s competing app].”

1278

Market participants noted that pre-installation on devices can be critical for successful 

distribution. One developer explained that “integration into the initial device setup,” in particular, can 

“meaningfully drive the acquisition of new users.”

1279 Google’s documents show that it recognized the 

importance of pre-installation, with one internal presentation stating that “activation and defaults are a 

known issue that we should explore, as OEM/carrier pre-installed apps are among the most used.”

1280

Documents also show that Google uses its leverage to push hardware manufacturers to 

privilege Google’s products over the manufacturers’ products. Discussing the agenda for an upcoming 

1275 Id. at GOOG-HJC-04300658 (Jan. 21, 2014).

1276 Id. at GOOG-HJC-04308614 (Jan. 17, 2014). 

1277 Id.

1278 Submission from Source 104, to H. Comm. on the Judiciary, Source 104--00000439 (Jan. 18, 2019) (on file with 

Comm.).

1279 Id. at Source 104-00000437 (Jan. 8, 2019).

1280 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04200778 (May 25, 2017) (on file with Comm.). 
217

meeting with a hardware manufacturer, one Google manager noted that the manufacturer should 

discourage the use of its email client for Gmail accounts, stating, “They should use Gmail native 

app.”

1281 In a separate discussion in 2016, Google employees explained how Android Pay, a 

predecessor to Google Pay, would be given preferential treatment over the manufacturer’s own mobile 

payment app.1282 Recent reporting that Google is pressuring Samsung to promote Google apps over 

those offered by Samsung is consistent with the company’s past conduct.1283

Lastly, Google appears to use its licensing agreements to deter mobile device manufacturers 

from collaborating with alternative mobile operating system providers. In 2012, for example, Acer, a 

hardware manufacturer, and Alibaba had planned to release a variant of Android, called Aliyun OS.1284

Reporting suggests that Google threatened to terminate its partnership with Acer in retaliation, leading 

Acer to cancel the launch of devices running on the Aliyun OS.1285 Google also requires hardware 

partners to agree that they will not run unsanctioned versions of Android on other hardware products, 

with the understanding that any manufacturer who violates this condition risks losing access to the 

Google Play Store and other popular apps across all of the manufacturer’s devices.1286

After investigating Google’s licensing agreements, the European Commission concluded in 

2018 that Google’s conduct had illegally benefited Google’s own services while blocking the rise of 

rival operating systems.1287 Although Google argued that users were free to download other apps and 

that Google’s own apps were superior, the Commission determined that “users who find search and 

1281 Id. at GOOG-HJC-04204875 (Jan. 18, 2014).

1282 Id. at GOOG-HJC-04299009 (Feb. 4, 2016) (discussing how the manufacture’s mobile payment app would be placed 

inside of an apps folder while Google’s mobile payment app would be placed more prominently outside the folder of 

Google apps).

1283 See, e.g., Mark Bergen & Sohee Kim, Google in Talks to Take Over More Search Tasks on Samsung Phones, 

BLOOMBERG (July 28, 2020), https://www.bloomberg.com/news/articles/2020-07-29/google-in-talks-to-take-over-moresearch-tasks-on-samsung-phones; Paresh Dave & Hyunjoo Jin, Samsung weighs dropping Bixby as Google dangles new 

mobile apps deal, REUTERS (July 29, 2020), https://www.reuters.com/article/us-google-samsung/samsung-weighsdropping-bixby-as-google-dangles-new-mobile-apps-deal-idUSKCN24U0TF. 

1284 See, e.g., Dieter Bohn, Google explains why it stopped Acer’s Aliyun smartphone launch (updated), THE VERGE (Sept. 

14, 2012), https://www.theverge.com/2012/9/14/3335204/google-statement-acer-smartphone-launch-aliyun-android; Roger 

Cheng, Alibaba: Google forced Acer to drop our new mobile OS, CNET (Sept. 13, 2012), 

https://www.cnet.com/news/alibaba-google-forced-acer-to-drop-our-new-mobile-os/; T.C. Sottek, Acer cancels phone 

launch with Alibaba, allegedly in response to threats from Google, THE VERGE (Sept. 13, 2012), 

https://www.theverge.com/2012/9/13/3328690/acer-google-alibaba-phone.

1285 Id.

1286 See e.g., Janko Roettgers, How Google kneecapped Amazon’s smart TV efforts, PROTOCOL (Mar. 11, 2020), 

https://www.protocol.com/google-android-amazon-fire-tv; James Brumley, Google Just Made Sure It’s Going to Win the 

Smart TV War, MOTLEY FOOL (Mar. 20, 2020) https://www.fool.com/investing/2020/03/20/google-just-made-sure-itsgoing-to-win-the-smart-t.aspx. 

1287 Press Release, Eur. Comm’n, Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android 

mobile devices to strengthen dominance of Google’s search engine (July 18, 2018), 

https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581. 
218

browser apps pre-installed on their devices are likely to stick to these apps.”

1288 Responding to 

Google’s claims that its tying agreements were necessary in order for Google to be able to monetize its 

investment in Android, the European Commission stated:

Google achieves billions of dollars in annual revenues with the Google Play Store 

alone, it collects a lot of data that is valuable to Google’s search and advertising 

business from Android devices, and it would still have benefitted from a significant 

stream of revenue from search advertising without the restrictions.1289

iii. Accessing Real-Time Market Data

The Subcommittee’s investigation also revealed that Android gives Google unparalleled access 

to data on its users and developers. This includes information that Google can monetize through its ad 

business, as well as strategic intelligence that lets Google track emerging competitors and general 

business trends. 

Android’s dominance in the mobile operating system market enables it to extensively surveil its 

users. This surveillance is partly enabled through Google’s technology. In key ways Google also uses 

its dominance and its integration across markets to increase the number of touchpoints from which it is 

constantly mining user data. 

Google’s documents show that it has used its leverage over hardware manufacturers to demand 

that they structure their devices in ways that facilitate Google’s data collection efforts. Google’s 

agreements with device manufacturers, for example, require that manufacturers configure a “Client 

ID,” which is a unique alphanumeric code incorporated in the smartphone that enables Google to 

combine metrics tracked via the hardware with all the other data Google collects on users.

1290

Additionally, Google’s own documents also show that it has asked device manufacturers to use a 

Google Account as their identifier rather than a non-Google account—a way of ensuring that Google 

can capture a broader picture of its users.

1291 On the Play Store, meanwhile, Google does not permit 

users to download apps unless they have a Google Account, further funneling users into the Google 

ecosystem.1292 Combined with location data, which Android also extensively collects, Google can 

build sophisticated user profiles reflecting a person’s demographic, where they are, and where they go, 

as well as which apps they use at what time and for how long.1293 These intimate user profiles, 

1288 Id.

1289 Id.

1290 Google Android Comm’n Decision at para. 187.

1291 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04204875 (Jan. 18, 2014) (on file with Comm.). 

1292 Innovation and Entrepreneurship Hearing at 76 (response to Questions for the Record of Adam Cohen, Dir. Of Econ 

Pol’y, Google LLC).

1293 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04198806-855
219

spanning billions of people, are a key source of Google’s advantage in its ad business. In this way, 

Android’s location data feeds into Google’s dominance in ads. 

Documents and information reviewed by Subcommittee staff also show that Google has used

Android to closely monitor competing apps, data that amounts to near-perfect market intelligence. 

Since at least 2012, Google has collected installation metrics for third-party apps, 1294 which it 

combined with data analyzing search queries.1295 These early documents outline the early stages of 

Google’s “Lockbox,” a project to collate data that provided Google with a range of competitor insights 

and market intelligence, ranging from an understanding of how installation of the Amazon app 

corresponded to a trend in Amazon shopping queries1296 to a close tracking of trends relating to Candy 

Crush and Angry Birds.1297

While Lockbox began as a way to collect data on the installation of apps, Google quickly 

realized it could harness it to yield other insights as well. One document from 2013 identified a list of 

additional data points that the company desired, including “[m]ore signals (including uninstalls and 

device app mapping)” and “reliable and long term app usage data,” for which the document noted 

Google Play Services could help.1298 In short, Google began seeking out ways to collect specific usage 

data that enabled Google to track not just which apps a user has, but also how frequently they use the 

apps and for how long. 

Documents obtained by the Subcommittee suggest that by 2015, Google’s Lockbox data had 

succeeded in tracking more than just install rates.1299 Google’s internal reports show that Google was 

tracking in real-time the average number of days users were active on any particular app,1300 as well as 

their “total time spent” in first- and third-party apps.1301 Google subsequently used this data to 

benchmark the company’s first-party apps against third-party apps, suggesting that Google was using 

Lockbox data to assess the relative strengths and weaknesses of its own offerings.1302 Google’s 

documents show how Lockbox furnishes Google with near-perfect market intelligence, which Google 

(Jan. 13, 2017) (on file with Comm.). 

1294 Id. at GOOG-HJC-00055102 (Nov. 2013).

1295 Id. at GOOG-HJC-02598471 (June 6, 2010).

1296 Id. at GOOG-HJC-00055102 (Nov. 2013).

1297 Id.

1298 Id.

1299 Alex Heath, Nick Bastone & Amir Efrati, Internal Google Program Taps Data on Rival Android Apps, THE INFO. (July 

23, 2020), https://www.theinformation.com/articles/internal-google-program-taps-data-on-rival-android-apps. 

1300 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04198806–55 (Jan. 13, 2017) (on file with Comm.).

1301 Id. at GOOG-HJC-04198814 (Jan. 13, 2017).

1302 Id. at GOOG-HJC-04198812. (Jan. 13, 2017).
220

has used to inform strategic moves and potential business transactions.1303 Recent reporting by The 

Information documented how YouTube employees used Lockbox data to track TikTok usage in India 

as Google was developing and planning its own rival to TikTok.1304

During the Subcommittee’s sixth hearing, Representative Joe Neguse (D-CO) asked Mr. Pichai 

about allegations that Google had used Android to surveil rival apps and develop competing 

products.1305 Mr. Pichai responded, “Congressman, because we try to understand what’s going on in 

[the] market and we are aware of, you know, popularity of apps,” adding, “But, in general, the primary 

use for that data is to improve the health of Android.”

1306

In follow-up questions to Mr. Pichai, Google was asked to identify all acquisitions or 

product decisions that had been informed by data from Android Lockbox. Google’s answer was 

not responsive to the question.1307

b. Play Store

The Play Store is the dominant app store on Android devices. Early documents reviewed by the 

Subcommittee show that Google chose for a single app store to control software distribution on the 

Android ecosystem, with one executive noting that “we would strongly prefer to have one Market that 

everyone focuses on.”

1308

Because Google’s Play Store is the primary way that users install applications on Android 

devices, the Play Store effectively functions as a gatekeeper for software distribution on a majority of 

the world’s mobile devices. The Subcommittee’s investigation reveals that Google uses this gatekeeper 

power in several key ways.

First, Google uses its Play Store gatekeeper power to charge high fees to mobile developers. 

Amazon, Spotify, Netflix, Epic Games, and Tinder have all expressed public concerns about Google’s 

app store fees, along with Apple.1309 As a lawsuit recently filed by Epic Games stated, “Google has 

thus installed itself as an unavoidable middleman for app developers who wish to reach Android users 

and vice versa. Google uses this monopoly power to impose a tax that siphons monopoly profits for 

1303 Id. at GOOG-HJC-04199726. (Jan. 13, 2017).

1304 Alex Heath, Nick Bastone & Amir Efrati, Internal Google Program Taps Data on Rival Android Apps, THE INFO. (July 

23, 2020), https://www.theinformation.com/articles/internal-google-program-taps-data-on-rival-android-apps. 

1305 Jon Porter, Google reportedly keeps tabs on usage of rival Android apps to develop competitors, THE VERGE (July 24, 

2020), https://www.theverge.com/2020/7/24/21336946/google-android-lockbox-data-rival-apps-antitrust-scrutiny. 

1306 CEO Hearing Transcript at 196 (statement of Sundar Pichai, CEO, Alphabet Inc.).

1307 CEO Hearing at A-10 (response to Questions for the Record of Sundar Pichai, CEO, Alphabet Inc.).

1308 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04218465 (Nov. 26, 2009) (on file with Comm.).

1309 See infra Section V.
221

itself every time an app developer transacts with a consumer for the sale of an app or in-app digital 

content.”

1310

Although Google doesn’t block off all alternative channels for accessing apps—allowing, for 

example, both some app stores and side-loading—in practice, these options do not provide meaningful 

alternatives to the Google Play Store. In contrast, the dual dominance of the Play Store and the 

Android ecosystem enables Google to exert control and engage in conduct that harms competition by 

exploiting, excluding, and discriminating against rivals. 

Google charges developers of paid apps a 30% commission for downloads from the Play 

Store.1311 Google also charges developers a 30% fee for in-app purchases.1312 According to documents 

obtained by the Subcommittee, from 2011 to 2015, revenue from the Play Store accounted for 85% of 

Google’s total revenue from the Android operating system, hardware sales, and the Play Store.”

1313

Third-party apps can also avoid the Play Store’s commissions and fees by directing consumers 

to sideload the app, that is, to install the app using a browser, outside of an app store. Rival app stores 

that are not pre-installed on the device, such as the Amazon Appstore, must be sideloaded. Although 

sideloading is technically an option for rival app stores and app developers, market participants 

explained that Google goes out of its way to make side-loading difficult. Epic’s recent lawsuit against 

Google alleges:

Google ensures that the Android process is technically complex, confusing and 

threatening, filled with dire warnings that scare most consumers into abandoning the 

lengthy process. For example, depending on the version of Android running on a mobile 

device, downloading and installing Fortnite on an Android device could take as many 

as 16 steps or more, including requiring the user to make changes to the device’s default 

settings and manually granting various permissions while being warned that doing so is 

dangerous.1314

Additionally, Epic’s complaint notes that when it attempted to work with LG, another Android 

device manufacturer, LG told Epic that it had a contract with Google “to block side downloading off 

1310 Complaint for Injunctive Relief at 2, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671 (N. D. Cal. Aug. 13, 2020).

1311 Play Console Help: Service Fees, GOOGLE, https://support.google.com/googleplay/androiddeveloper/answer/112622?hl=en (last visited Oct. 4, 2020).

1312 Transaction fees for merchants, GOOGLE PAYMENTS HELP CENTER, 

https://support.google.com/paymentscenter/answer/7159343?hl=en#:~:text=The%20transaction%20fee%20for%20all,distri

bution%20partner%20and%20operating%20fees (last visited Oct. 4, 2020). 

1313 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04217474 (on file with Comm.). 

1314 Complaint for Injunctive Relief at 7, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671 (N.D. Cal. Aug. 13, 2020).
222

Google Play Store this year.”

1315 If a user is able to install the competing app store, Google blocks 

them “from offering basic functions, such as automatic updating of apps in the background, which is 

available for apps downloaded from the Google Play Store.”

1316

The Play Store’s dominance over app distribution on Android devices has enabled Google to 

begin to require the use of its in-app payment system (IAP). As a result, Google has become the 

middleman between app developers and their customers. This was not always the case. Market 

participants explain that Google has changed its stance and re-interpreted policies over time to require 

more app developers to use Google Pay. Beginning in 2014, for example, Google designated specific 

categories of applications—including mobile games—that would be required to use Google Play InApp Billing.1317 Recently, however, several market participants have informed the Subcommittee that 

Google has begun insisting that a broader category of apps will be required to use Google IAP 

exclusively, no longer allowing the option of a third-party payment processor.1318

In interviews with Subcommittee staff, developers state that one way Google exercises its 

gatekeeper power over third-party app developers is through its arbitrary and unaccountable 

enforcement of Play Store policies. One developer that spoke with the Subcommittee described 

Google’s Play Store policies as an “opaque system [that] threatens the ability of app developers to 

develop and compete in the market for consumers, who should ultimately determine which apps they 

use.”

1319 Another developer explained, “When apps allegedly violate Google Play Store standards, 

Google does not ever explain how, other than to quote the policy above and attach pictures of the 

allegedly violating image. When the imagery does not fit the above definitions, app publishers such as 

[third party] are put in a position of having to guess how to apply these standards.”

1320

Developers also alleged that Google uses control over the Play Store to protect the dominance 

of its own services and stifle rivals. For example, Callsome, a mobile app that provided productive 

follow-up to phone calls or text messages, such as prompting a calendar entry or a reminder to text 

back, has sued Google and claimed it was banned from the Google Play store for “Ad Policy”

violations only to later learn that a “fundamentally identical product” was able to stay and thrive in the 

1315 Id. at 28.

1316 Id. at 7.

1317 Innovation and Entrepreneurship Hearing at 85 (response to Questions for the Record of Adam Cohen, Dir. Of Econ 

Pol’y, Google LLC).

1318 Submission from Source 736, to H. Comm. on the Judiciary (Sept. 25, 2020) (on file with Comm.).

1319 Submission from Source 62 to H. Comm. on the Judiciary, 1 (July 31, 2020) (on file with Comm.)

1320 Submission from Source 685, to H. Comm. on the Judiciary, 8 (Oct. 15, 2019) (on file with Comm.).
223

Play Store.1321 Callsome believes it was banned because of its partnership with StartApp, which—at 

the time—was widely considered a nascent but rising rival to Google in the Russian search market.1322

Subcommittee staff also spoke with several market participants that said Google has abused its 

control of the Play Store by using rule violations as a pretext for retaliatory conduct. For example, one 

third party described how soon after it ceased using Google’s AdMob, an in-app ads monetization 

tool,1323 Google began sending the third-party notifications of policy violations related to content the 

third party had included in its app for years.1324

In response to questions from the Subcommittee, Google stated that it “only suspends apps 

from the Google Play Store if it finds the app in violation of Google Play Program Policies . . . or in 

violation of the Developer Distribution Agreement.”

1325 Google also stated that it gives developers 

opportunities to address what they may view as incorrect enforcement decisions of Play Store policies, 

adding that a “developer can easily contact the Policy Support Team (Appeals) in order to challenge 

the enforcement decision or receive additional clarification on the infraction.”

1326

App developers, in contrast, said that challenging a Play Store decision was like navigating a 

black box. One third party explained that it “tried for over a month through several channels to get a 

full explanation from Google of the problem and resolve it amicably. Google responded with silence, 

then roadblocks and runarounds.”

1327 However, one third party told the Subcommittee:

When apps allegedly violate Google Play Store standards, Google does not ever explain 

how, other than to quote the policy above and attach pictures of the allegedly violating 

image. When the imagery does not fit the above definitions, app publishers such as 

[third party] are put in a position of having to guess how to apply these standards.1328

In theory, one way that app developers could avoid Google’s commissions and fees would be to 

negotiate with a mobile device manufacturer to have the app pre-installed on the device. In practice, 

however, Google’s restrictive contracts with smartphone manufacturers have strictly limited—if not 

excluded—third-party apps from being pre-installed. In this way, Google’s licensing agreements not 

1321 Submission from Callsome, to H. Comm. on the Judiciary, 3 (Apr. 28, 2020) (on file with Comm.).

1322 Id. at 7.

1323 Google AdMob, GOOGLE, https://admob.google.com/home/ (last visited Oct. 4 2020).

1324 Submission from Source 685, to H. Comm. on the Judiciary (on file with Comm.).

1325 Innovation and Entrepreneurship Hearing at 83 (response to Questions for the Record of Adam Cohen, Dir. Of Econ 

Pol’y, Google LLC).

1326 Id. at 84.

1327 Submission from Callsome, to H. Comm. on the Judiciary, 5 (Apr. 28, 2020) (on file with Comm.).

1328 Submission from Source 685, to H. Comm. on the Judiciary, 12 (Oct. 15, 2019) (on file with Comm.).
224

only preclude the vast majority of third-party apps from being pre-installed, but they also funnel those 

apps into the Google Play Store, subject to Google’s commissions and arbitrarily enforced policies.

Chrome

a. Overview

Google launched its web browser, Google Chrome, in 2008.1329 Chrome makes a significant 

portion of its underlying code base available through the open-source Chromium Project,1330 which has 

been used to build a series of “chromium-based” browsers such as Microsoft Edge and Opera.1331 In 

2010, Google introduced the Chrome web store, which enables users to access and install browser 

extensions, such as Easy Ad Blocker, Grammarly, and Netflix Party.1332

Prior to Chrome’s launch, Internet Explorer, Firefox, and Safari were the most popular 

browsers. Firefox leaned heavily on a partnership with Google Search, which documents show enabled 

Google to closely track Firefox’s growth.1333

Chrome initially set itself apart by offering an address bar that also functioned as a Google 

search bar, and by enabling users to sign in to the browser, offering a faster browsing experience 

compared to other browsers.1334 Chrome was also integrated with other Google products. By signing in

to the browser, Chrome automatically signed users into Gmail, YouTube, and additional Google 

services when users visited those sites, while also allowing users to sync their bookmarks, passwords, 

and other browser settings.1335 While automatic sign-in provided a more streamlined user experience, it 

also helped Google build more detailed user profiles by connecting activity data to the user’s Google 

Account.1336

1329 Google Chrome: A New Take on the Browser, GOOGLE PRESS (Sept. 2, 2008), 

http://googlepress.blogspot.com/2008/09/google-chrome-new-take-on-browser_02.html. 

1330 THE CHROMIUM PROJECTS, https://www.chromium.org/Home (last visited on Oct. 4, 2020).

1331 Catalin Cimpanu, All the Chromium-based browsers, ZDNET (Jan. 29, 2019), https://www.zdnet.com/pictures/all-thechromium-based-browsers/4/. 

1332 An update on Chrome, the Web Store and Chrome OS, CHROME BLOG (Dec. 7, 2010), 

https://chrome.googleblog.com/2010/12/update-on-chrome-web-store-and-chrome.html. 

1333 Submission from Google, to H. Comm. on the Judiciary, GOOG-HJC-00125917-29, GOOG-HJC-00125937 (April 25, 

2005) (on file with Comm.). 

1334 Trefis Team, Great Speculations, Rising Chrome Use Means Search Advertising Growth for Google, FORBES (Aug. 23, 

2012) https://www.forbes.com/sites/greatspeculations/2012/08/23/rising-chrome-use-means-search-advertising-growth-forgoogle/#579c604f2d66; MG Siegler, Here It Is: Google’s Kick-Ass Chrome Speed Test Video, TECHCRUNCH (May 5, 2010) 

https://techcrunch.com/2010/05/05/google-chrome-video-test/. 

1335 Turn sync on and off in Chrome, GOOGLE CHROME HELP,

https://support.google.com/chrome/answer/185277?co=GENIE.Platform%3DDesktop&hl=en (last visited on Oct. 4, 2020).

1336 Google Privacy Policy, GOOGLE PRIVACY AND TERMS, https://policies.google.com/privacy (last visited on Oct. 4, 2020) 

(“When you’re signed in, we also collect information that we store with your Google Account.”).
225

In a 2019 presentation to the Justice Department’s Antitrust Division, Google explained that it 

had launched Chrome as a defensive move to protect users’ access to Google’s products.1337 Internally, 

however, Google frequently referred to Chrome as part of Google’s growth strategy. For example, in 

2010 one of Google’s strategy documents listed Chrome as a driver of “significant value,”

1338 and Eric 

Schmidt gave a company-wide speech stating that the rise of cloud computing meant that the 

browser—the primary way users access cloud—would be increasingly critical to Google’s success.1339

Perhaps most critically, Chrome serves as a way for Google to control the entry points for its 

core markets: online search and online advertising.1340 Chrome uses Google Search as its default 

search engine, a default setting that market participants say Google makes it difficult to change.1341

Chrome also provides Google with another source of user data that the company can feed into its ad 

business to offer behavioral ads.1342

b. Market Power

Chrome became a leading web browser as early as 2012.1343 In the U.S. market, Chrome 

captures an estimated 59% of desktop browser usage and 37% of mobile browser usage,1344 while 

capturing an estimated 66% of overall browser usage worldwide.1345

1337 Submission from Google, to H. Comm. on the Judiciary, GOOG-HJC-04214204 (Sept. 17, 2019) (on file with Comm.) 

(“Alternatives to IE (Firefox, Opera, Safari) proved unattractive: Google initially partnered with Mozilla, but Firefox had 

technical limitations and faced uncertain prospects, Apple launched Safari for Windows in 2007. If Firefox was displaced 

by Safari, Apple could further constrain user access to Google.”). 

1338 Submission from Google, to H. Comm. on the Judiciary, GOOG-HJC-00005661 (on file with Comm.).

1339 Submission from Google, to H. Comm. on the Judiciary, GOOG-HJC-00086891 (Jan. 24, 2011).

1340 Competition & Mkts Auth. Report at 18–19.

1341 Submission from Source 534, to H. Comm. on the Judiciary, 3 (Oct. 14, 2019) (on file with Comm.).

1342 Google Privacy Policy, GOOGLE PRIVACY AND TERMS, https://policies.google.com/privacy (last visited on Sept. 29, 

2020) (“We collect information to provide better services to all our users . . . which ads you’ll find most useful . . . 

which YouTube videos you might like.”); CEO Hearing Transcript at 73 (Sundar Pichai, CEO, Alphabet Inc.). At the 

Subcommittee’s sixth hearing, Committee Chairman Jerrold Nadler (D-NY) asked Google CEO Sundar Pichai to explain 

how Google uses data on browsing activity, asking “Does Google use that data for its own purposes, either in advertising or 

to develop and refine its algorithms?” Mr. Pichai responded that Google uses data “to improve our products and services for 

our users.” Id.

1343 Id; Trefis Team, Great Speculations, Rising Chrome Use Means Search Advertising Growth for Google, FORBES, (Aug. 

23, 2012) https://www.forbes.com/sites/greatspeculations/2012/08/23/rising-chrome-use-means-search-advertising-growthfor-google/#579c604f2d66. (observing that Google captured 67% of desktop searches across all browsers and 95% of 

shares conducted on Chrome, noting “This large discrepancy in search market share, depending on which browser is used, 

is one of the reasons why we think that the Chrome browser has helped increase Google’s revenues.”).

1344 Desktop Browser Market Share in the United States, STATCOUNTER, https://gs.statcounter.com/browser-marketshare/desktop/united-states-of-america.; Mobile Browser Market Share in the United States, STATCOUNTER, 

https://gs.statcounter.com/browser-market-share/mobile/united-states-of-america

1345 Browser Market Share, STATCOUNTER, https://gs.statcounter.com/browser-market-share/all/united-states-of-america.
226

Several factors suggest that Google is likely to maintain its lead in the browser market. First, 

Google has established Chrome as the default browser on the majority of Android devices, which make 

up around 75% of smartphones globally.1346 While Google does allow users to change default browsers 

on Android, in practice users rarely do. As the United Kingdom’s Competition and Markets Authority 

recently found, even platforms that do provide users with options often end up using “defaults and 

choice architecture that make it difficult for consumers to exercise this choice.”

1347

Second, Chrome is likely to remain dominant because it benefits from network effects. Web 

developers design and build for the Chrome browser because it has the most users, and users, in turn, 

are drawn to Chrome because webpages work well on it. And third, Chrome is likely to maintain its 

lead because Google can leverage the popularity of its apps to favor Chrome. Specifically, Google’s 

documents show that the company has focused on designing Chrome features to provide a better 

experience of apps like YouTube and Search, advantages that other browsers lack.

c. Conduct

Google used its search engine dominance and control over the Android operating system to 

grow its share of the web browser market and favor its other lines of business. Reciprocally, Chrome’s 

dominance in the browser market gives it significant gatekeeper power over managing and monitoring 

users’ browsing activity—power Google can wield to shape outcomes across markets for search, 

mobile operating systems, and digital advertising. These advantages across markets feed back into and 

reinforce one another, advantages that standalone browsers lack.

i. Exploiting Information Asymmetries

Even before it developed Chrome, Google’s search business and popular web-based 

applications gave it unique insights into the browser market. Because Google.com is accessible 

through all browsers, Google Search usage data includes data on the browser where the search query 

began. Documents show that Google used search origination trends as early as 2004 to track Firefox’s 

growth—and Internet Explorer’s decline—in the browser market. 1348 Google’s collection of Google 

Apps has also enabled it to monitor browser growth and performance. For example, in 2009 a Chrome 

team member explained:

I’ve looked at the Gmail numbers a little—enough to know that we have per-browser 

breakdowns of performance already. In the Gmail case, it’s quite clear which browsers 

1346Mobile operating systems’ market share worldwide from January 2012 to July 2020, STATISTA (July 2020), 

https://www.statista.com/statistics/272698/global-market-share-held-by-mobile-operating-systems-since-2009/.

1347 Competition & Mkts Auth. Report at 149.

1348 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-00126978–35 (November 2004) (on file with 

Comm.).
227

are faster. There are a zillion numbers we collect, including Gmail startup times. I am 

confident that the other Google Apps teams also have numbers. We could pull together 

a collection of 2-3 stats from each app, normalize the scores somehow, and produce a 

number.1349

This data from Google’s adjacent lines of business helped the Chrome team track their 

performance against competitors. Most of Chrome’s competitors then and now lack access to 

this type of data at Google’s scale.

ii. Favoring Google’s Products in Adjacent Markets

Through design choices and default settings, Google can use its dominance in any one market 

to favor its other lines of business. For example, when Chrome launched in 2008, Google Search was 

already the most popular search engine in the world.1350 Shortly after releasing Chrome, Google began 

promoting the browser in the top corner of the Google.com homepage. The display was referred to 

internally as the “Google Chrome Promotion,” and it was frequently discussed by Google’s Chrome 

team within the company.1351 Internet Explorer users that visited Google’s home page would see the 

Google Chrome installation button in the top-right corner, as shown below:

Google Chrome Promotion on Google.com Homepage1352

1349 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04214714 (Jan. 4. 2009) (on file with Comm.).

1350 Danny Sullivan, Search Market Share 2008: Google Grew, Yahoo & Microsoft Dropped & Stabilized, SEARCH ENGINE

LAND (Jan. 26, 2009), https://searchengineland.com/search-market-share-2008-google-grew-yahoo-microsoft-droppedstabilized-16310. 

1351 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01465906 (Apr. 22, 2009) (on file with Comm.) 

(“We’ve been experimenting with some novel homepage promos for Chrome in preparation for the IE8 autoupgrade [sic]. 

Using 0.1% experiments, we found a few that performed very well. The promo on the homepage right now should be 

running for IE users only.”); Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01164689 (Apr. 23, 2009) 

(on file with Comm.).

1352 Christopher Williams, Google Chrome takes second place from Firefox, THE TELEGRAPH (Dec. 2, 2011), 

https://www.telegraph.co.uk/technology/news/8930759/Google-Chrome-takes-second-place-from-Firefox.html.
228

At the time, several Google employees expressed concerns internally that this promotion 

strategy was unfairly harnessing Google’s search dominance to boost Chrome. In an email among 

Chrome employees in 2009, one employee wrote, “I find the very, very high-profile promotion of 

Google Chrome on Google.com quite frankly, startling.”

1353 Senior executives at the company pushed 

to continue this strategy. For example, in 2009, Sundar Pichai, then-Vice President of Product 

Development, encouraged the Chrome team to “promote through Google.com” and to push users to set 

Chrome as their default browser.1354

This strategy drove significant growth to Chrome. In 2009, Director of Product Management 

Brian Rakowski informed his team that the promotion was “performing exceptionally well” and was 

“driving tremendous number of downloads.”

1355 When Google halted the promotion, Chrome’s growth 

rate dropped. In 2011, Chrome employees noted that “organic growth slowed a bit because our 

homepage promo was down for a couple of weeks.”

1356

Market participants view this behavior as an example of how Chrome does not compete on the 

merits. One firm stated, “Google has abused its dominant position in the search space to build up 

another dominant position in the browser space.”

1357 In response to questions about this use of 

Google’s search page, Google told the Subcommittee that these “promotional campaigns on 

Google.com on Internet Explorer have been run for over a decade.”

1358

Google has reinforced its market power in the browser market through its dominance in the 

mobile operating system market. Chrome is preinstalled on every mobile device that runs Google’s 

Android operating system, and Android powers approximately 75% of the world’s mobile devices. 

Beginning in 2014, Google mandated that Chrome be pre-installed and prominently placed on all 

certified Android devices that had entered a Mobile Application Distribution Agreement (MADA), 

which grants smartphone manufacturers access to Google’s Play Store and other proprietary Google 

applications.1359 During negotiations with Android manufacturers for revenue share agreements, 

meanwhile, Google required that Chrome be set as the default browser.1360

1353 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01465903 (Apr. 22, 2009) (on file with Comm.) (“I 

find the very, very high profile promotion of Google Chrome on Google.com quite frankly, startling.”).

1354 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04214743 (Apr. 03, 2009) (on file with Comm.).

1355 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-01465906 (Apr. 22, 2009) (on file with Comm.).

1356 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04195391 (Mar. 4, 2011) (“[O]rganic growth slowed 

a bit because our homepage promo was down for a couple of weeks due to a change in the HPP system. It’s back up 

now.”).

1357 Submission from Source 534, to H. Comm. on the Judiciary, 2 (Oct. 14, 2019) (on file with Comm.).

1358 CEO Hearing at A-12 (response to Questions for the Record by Sundar Pichai, Chief Executive Officer, Google).

1359 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-02393308 (Mar. 1, 2011) (on file with Comm.). 

1360 See generally Press Release, Eur. Comm’n, Antitrust: Commission Fines Google €4.34 Billion For Illegal Practices 

Regarding Android Mobile Devices To Strengthen Dominance Of Google’s Search Engine (July 17, 2018), 

https://europa.eu/rapid/press-release_IP-18-4581_en.htm. 
229

For the remaining portion of the global mobile phone market—Apple iOS—Google uses the 

popularity of its mobile applications to promote Chrome installations. Although Apple does not permit 

Chrome to be set as the default browser on an iPhone, Google provides users the option to use Chrome 

whenever a user selects a link within a Google application, such as Gmail or YouTube.1361

While Apple requires that Safari also be included as a choice,1362 Google does not allow any 

other browser to be listed. If the user has not previously installed the Chrome browser, then the menu 

displays a “Get” button that prompts the user to install Google’s browser.1363

Similarly, Google privileges its own line of businesses by setting Google Search as the default 

in Chrome. Although users can change this setting, the process is not intuitive and involves multiple 

steps, including: 

1. At the top right, click More Settings.

2. Under “Search engine,” click Manage search engines.

3. Find “Other search engines.”

• Add: To the right of “Other search engines,” click Add. Fill out the text 

fields and click Add.

• Set as default: To the right of the search engine, click 

More Make default.

• Edit: To the right of the search engine, click More Edit.

• Delete: To the right of the search engine, click More Remove 

from list.

1364

One third party told the Subcommittee that in some cases, Google prompts users to change their 

default search engine back to Google Search even after they have switched: 

After a user installs the extension, Chrome is showing continuous warning prompts 

which ask users to restore their search settings back to Google. In user tests, we observe 

that most people are very confused about this prompt and often click “restore settings”

even though they actually want to keep using [our search engine]. In many Chrome 

versions the button “restore settings” is even highlighted which makes it highly likely 

that users will click this button and thereby completely remove [our search engine] from 

1361 Submission from Source 269, to H. Comm on the Judiciary, 3 (July 23, 2019) (on file with Comm.).

1362 Id.

1363 Id.

1364 Set your default search engine, GOOGLE CHROME HELP,

https://support.google.com/chrome/answer/95426?co=GENIE.Platform%3DDesktop&hl=en (last visited Oct. 2, 2020).
230

their computers. We believe that we have already lost millions of users because of this 

prompt.1365

iii. Unilaterally Setting Standards

By virtue of its dominance in the browser market, Google can effectively set standards for the 

industry in two ways.

First, changes to Chrome’s functionality create de facto standards. Market participants must 

adhere to these standards or risk their technology no longer being compatible with most websites.

Market participants explain that Google will often build features quickly without using the standardsetting process or giving smaller browsers time to implement new features. Once web developers start 

building to these specifications, however, smaller browsers are under pressure to quickly implement 

these changes, often with little notice.1366 If smaller browsers cannot keep up, users are flooded with 

“[b]rowser not supported” messages on webpages that have already been built to Chrome’s 

specifications.1367 Several market participants told the Subcommittee that they felt “bullied” by this 

process.1368

Second, Google has an outsized role in the formal stakeholder standards-making processes. As 

explained earlier in this Report, the World Wide Web Consortium (W3C) is one of the leading 

standards organizations in the browser market. Its stated mission is to be “open and collectively 

empowering.”

1369 Other market participants believe that Google is significantly overrepresented in the 

W3C web platform incubator community group (WICG). They note that Google’s employees comprise 

106 members, more than eight times the number of employees from Microsoft, the next largest 

stakeholder represented. Most companies, meanwhile, have only one representative.1370 One market 

participant said:

Though standards bodies like the W3C give the impression of being a place where 

browser vendors collaborate to improve the web platform; in reality Google’s monopoly 

position and aggressive rate of shipping non-standard features frequently reduce 

standards bodies to codifying web features and decisions Google has already made.1371

1365 Submission from Source 534, to H. Comm. on the Judiciary, 3 (Oct. 14, 2019) (on file with Comm.).

1366 Submission from Source 269, to H. Comm. on the Judiciary, (Jan. 2020) (on file with Comm.).

1367 Martin Brinkmann, The new Skype for Web does not work in Firefox or Opera, GHACKS.NET (Mar. 08, 2019), 

https://www.ghacks.net/2019/03/08/the-new-skype-for-web-does-not-work-in-firefox-or-opera/. 

1368 Interview with Source 482 (July 2, 2020).

1369 W3C Mission, W3C https://www.w3.org/Consortium/mission (last visited on Oct. 4, 2020).

1370 Submission from Source 269, to H. Comm. on the Judiciary, 4 (July 23, 2019) (on file with Comm.).

1371 Submission from Source 269, to H. Comm. on the Judiciary, (Apr. 1, 2020) (on file with Comm.).
231

Recent events underscore how Google’s ad-based business model can prompt questions about 

whether the standards Google chooses to introduce are ultimately designed primarily to serve Google’s 

interests. In January 2020, Google announced that it plans to phase out third-party cookies in Chrome 

within two years.1372 Unlike other browsers that have limited cross-site tracking, Google’s decision 

appears to be motivated by “trying to cut down on tracking without kneecapping revenue for 

websites.”

1373

Several observers have noted that this change would have the likely effect of reinforcing 

Google’s power and harming rivals, shifting more advertisers toward Google.1374 In particular, market 

participants are concerned that while Google phases out third-party cookies needed by other digital 

advertising companies, Google can still rely on data collected throughout its ecosystem. 

During the Subcommittee’s sixth hearing, Representative Kelly Armstrong (R-ND) asked Mr. 

Pichai, “[D]o you have other ways of collecting it [data] through Gmail or consumer facing 

platforms?”

1375 Mr. Pichai responded, “[T]o the extent on the services where we provide ads and if 

users have consented to ads personalization, yes, we do have data.”

1376

Maps

a. Overview

Google dominates the market for digital maps with over a billion users.1377 Between Google 

Maps and Waze—which Google also owns—the corporation captures an estimated 80% of the 

navigation app market.1378 Financial analysts have described navigation maps as a “utility” that people 

1372 Sarah Sluis, Google Chrome Will Drop Third-Party Cookies in 2 Years, AD EXCHANGER (Jan. 14, 2020), 

https://www.adexchanger.com/online-advertising/google-chrome-will-drop-third-party-cookies-in-2-years/. 

1373 Dieter Bohn, Google to ‘phase out’ Third-party cookies in Chrome, but not for two years, THE VERGE (Jan. 14, 2020),

https://www.theverge.com/2020/1/14/21064698/google-third-party-cookies-chrome-two-years-privacy-safari-firefox. 

1374 Nick Bastone, In Ironic Twist, Google’s Pro-Privacy Move Boosted U.S. Antitrust Probe, THE INFORMATION (Sept. 18, 

2020), https://www.theinformation.com/articles/in-ironic-twist-googles-pro-privacy-move-boosted-u-s-antitrust-probe. 

1375 CEO Hearing Unofficial Transcript at 125 (question of Rep. Kelly Armstrong (R-ND), Member, Subcomm. on 

Antitrust, Commercial & Admin. Law).

1376 Id. (Sundar Pichai, CEO, Alphabet Inc.).

1377 Ethan Russell, 9 things to know about Google’s maps data: Beyond the Map, Google Cloud (Sept. 30, 2019), 

https://cloud.google.com/blog/products/maps-platform/9-things-know-about-googles-maps-data-beyond-map. 

1378 MARC S.F. MAHANEY, ROYAL BANK OF CANADA CAP. MKTS., ALPHABET INC.: DIGGING FOR BURIED TREASURE – THE 

GOOGLE MAPS OPPORTUNITY 5 (Sept. 23, 2019) (on file with Comm.).
232

cannot do without,1379 and one bank estimated that if Google Maps were a standalone product, its 

market capitalization would hit $61.5 billion.1380

Google Maps can be traced to a series of acquisitions. In September 2003, Google Labs 

launched “Search by Location,” a feature that sought to filter search results based on a user’s 

geographic location.1381 Because Google lacked mapping data, however, the feature stalled.1382 In 

October 2004, a few months after Google’s IPO, Google acquired Where 2 Technologies, an 

Australian startup that created web-based dynamic maps.1383 Google soon followed this acquisition 

with two additional purchases: Keyhole, a firm that used satellite images and aerial photos to create 

digital-mapping software, and ZipDash, a provider of real-time traffic information captured through 

GPS.1384 In February 2005, Google launched Google Maps.1385

The following year, Google introduced Google Maps API, which enabled developers to use and 

build on top of its digital maps.1386 In 2008, it launched “Ground Truth,” a project devoted to 

assembling and refining underlying mapping data and images.1387 This effort included Google Street 

View Cars, which drove around the country—and, eventually, the world—taking pictures of the 

surrounding buildings and landscapes, and delivering Google structured data that it could use to create 

digital maps.1388 As part of Project Ground Truth, Google also obtained mapping information from 

satellite and aerial imagery, as well as from public databases.1389

1379 Id.

1380 ROSS SANDLER, BARCLAYS, ALPHABET INC., STEADY COMPOUNDER, WITH PLENTY OF INNOVATION AHEAD 20 (Mar. 

28, 2017) (on file with Comm.).

1381 Scarlett Pruitt, Google Test Drives New Search Tool, PC WORLD (Sept. 23, 2003), 

https://www.pcworld.com/article/112604/article.html. 

1382 Google Maps, ACQUIRED (Aug. 26, 2019), https://www.acquired.fm/episodes/google-maps. 

1383 Id.

1384 Google Acquires Keyhole, WALL ST. J.: NEWS ROUNDUP (Oct. 27, 2004); Michael Bazeley, Google acquires traffic info 

start-up ZipDash, VENTUREBEAT (Mar. 30, 2005) https://venturebeat.com/2005/03/30/google-acquires-traffic-info-start-upzipdash/#:~:text=According%20to%20the%20company’s%20web,the%20GPS%20in%20their%20phones.

1385 Elizabeth Reid, A look back at 15 years of mapping the world, THE KEYWORD (Feb. 6, 2020), 

https://blog.google/products/maps/look-back-15-years-mapping-world/. 

1386 Id.

1387 Frederic Lardinois, Google’s Ground Truth Initiative for Building More Accurate Maps Now Covers 50 Countries, 

TECHCRUNCH (Sept. 3, 2014), https://techcrunch.com/2014/09/03/googles-ground-truth-initiative-for-building-moreaccurate-maps-now-covers-50-countries/. 

1388 Greg Miller, The Huge, Unseen Operation Behind the Accuracy of Google Maps, WIRED (Dec. 8, 2014), 

https://www.wired.com/2014/12/google-maps-ground-truth/ (As of December 2014, Google’s “Street View cars ha[d] 

driven over 7 million miles, including 99 percent of the public roads in the U.S.”).

1389 Id.
233

A 2008 budget request for Ground Truth stated that the goal of the project was “long term 

independence from Tele Atlas and Navteq,” two sources of mapping data that Google had been using 

at the time and that were owned by TomTom and Nokia, respectively.1390 The presentation stated that 

achieving independence would take several years and requested a 5- to 7-year renewal of the Tele 

Atlas contract to help Google bridge “between now and completion of Google Truth initiatives.”

1391

Although Google Maps was not generating revenues, Google was investing in it heavily. Google’s 

documents show that from 2008 to 2009, the company spent $32 million on the Street View program 

and $88.7 million on Ground Truth overall.1392 When Google launched Google Maps in 2005, 

MapQuest had been the “king of Internet-based maps and driving directions,” with Yahoo gearing up 

to heavily compete.1393 By 2008, Google’s internal documents show that Google was “#1 in Maps 

usage” as well as at the top in capturing online local search.1394

In 2009, Google introduced Google Maps for Mobile, a navigation service featuring turn-byturn directions, live traffic updates, and automatic rerouting.1395 Whereas market leaders TomTom and 

Garmin sold navigation services through subscriptions, Google was offering its service for free1396—a 

fact widely seen as disfavoring the incumbents, whose stock prices fell upon Google’s 

announcement.1397 As one analyst noted at the time, “If it’s free and a good service, why would you 

pay for something you can get for free?”

1398

As smartphones overtook personal navigation devices, Google Maps further eclipsed TomTom 

and Garmin.1399 When asked in 2015 what had accounted for TomTom’s decline, its CEO cited two 

factors: the 2008 economic crisis and the fact that “Google began offering navigation for free.”

1400

1390 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-03386002 (Dec. 6, 2007) (on file with Comm.). 

1391 Id.

1392 Id. at GOOG-HJC-04211018 (Oct. 17, 2010). 

1393 Chris Gaither, Overtaking MapQuest a Challenge for Yahoo, L.A. TIMES (Jan. 10, 2005), 

https://www.latimes.com/archives/la-xpm-2005-jan-10-fi-maps10-story.html.

1394 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-03610422 (Oct. 28, 2008) (on file with Comm.).

1395 Announcing Google Maps Navigation for Android 2.0, GOOGLE OFFICIAL BLOG (Oct. 28, 2009), 

https://googleblog.blogspot.com/2009/10/announcing-google-maps-navigation-for.html.

1396 Jenna Wortham & Miguel Helft, Hurting Rivals, Google Unveils Free Phones GPS, N.Y. TIMES (Oct. 28, 2009), 

https://www.nytimes.com/2009/10/29/technology/companies/29gps.html.

1397 Arik Hesseldahl, Garmin, TomTom Slash Prices Amid Google Threat, BLOOMBERG (Dec. 8, 2009), 

https://www.bloomberg.com/news/articles/2009-12-08/garmin-tomtom-slash-prices-amid-google-threat (stating that upon 

Google’s announcement, Garmin stock dropped around 16% and TomTom stock fell by around 29%).

1398 Jenna Wortham & Miguel Helft, Hurting Rivals, Google Unveils Free Phones GPS, N.Y. Times (Oct. 28, 2009), 

https://www.nytimes.com/2009/10/29/technology/companies/29gps.html (internal quotation marks omitted). 

1399 Kevin J. O’Brien, Smartphone Sales Taking Toll on G.P.S. Devices, N.Y. TIMES (Nov. 14, 2010), 

https://www.nytimes.com/2010/11/15/technology/15iht-navigate.html. 

1400 Charles Arthur, Navigating decline: what happened to TomTom?, THE GUARDIAN (July 21, 2015), 

https://www.theguardian.com/business/2015/jul/21/navigating-decline-what-happened-to-tomtom-satnav. 
234

Some market participants at the time questioned whether Google was using its search 

dominance to give Google Maps a boost. In 2009, one publisher noted that “61% of visits to Google 

Maps came directly from Google,” giving it an advantage over MapQuest.1401 The publisher wrote, 

“As long as Google dominates search, MapQuest will face a tough battle for visits.”

1402 A few years 

later, Consumer Watchdog wrote a letter to the Antitrust Division noting that Google “was able to 

muscle its way to dominance by unfairly favoring its own service ahead of such competitors as 

Mapquest in its online search results.”

1403

In 2013, Google purchased Waze, an Israeli crowd-sourced mapping provider, for $1.3 

billion.1404 The acquisition solidified Google’s dominance in turn-by-turn navigation, eliminating its 

only meaningful competitive threat. 

While Google captured the navigation market by offering Google Maps for free, even as it 

generated no revenue, Google now monetizes both Waze and Google Maps through selling ads. In 

2013 Google introduced a limited form of maps advertising, and in recent years it has expanded the 

program, allowing local businesses to purchase advertising on maps to maximize foot traffic.1405

Research by Google shows that 76% of users who search for locations nearby end up visiting a related 

business within a day and that 28% of those searches ultimately lead to a purchase.1406 This high 

conversion rate leads analysts to believe that Google Maps alone could help drive between $1.9 billion 

and $3.7 billion of incremental revenue by 2021.1407 Commenting on the value of Google Maps to the 

Google ecosystem, one analyst noted: 

[Google Maps’] user base has been impressive for years, crossing 1B a few years ago, 

but monetization is just getting started ... Maps is the closest thing to a platform that 

Google has at the application layer, with three stakeholders in the ecosystem: 1) users; 

1401 Experian Marketing Services, Google Maps Edges Closer to Mapquest, EXPERIAN BLOG (Feb. 11, 2009), 

http://www.experian.com/blogs/marketing-forward/2009/02/11/google-maps-edges-closer-to-mapquest/.

1402 Id. 

1403 Letter from John M. Simpson, Privacy Project Dir., Consumer Watchdog, to William J. Baer, U.S. Dep’t of Justice, 

Ass’t Att’y Gen., Antitrust Division (June 12, 2013), 

https://www.consumerwatchdog.org/resources/cltrdojwaze061213.pdf. 

1404 Brian McClendon, Google Maps and Waze, outsmarting traffic together, GOOGLE BLOG (June 11, 2013), 

https://googleblog.blogspot.com/2013/06/google-maps-and-waze-outsmarting.html; Vindu Goel, Google Expands Its 

Boundaries, Buying Waze for $1 Billion, N.Y. TIMES (June 11, 2013), https://bits.blogs.nytimes.com/2013/06/11/googleexpands-its-boundaries-buying-waze-for-1-billion/. 

1405 MARC S.F. MAHANEY, ROYAL BANK OF CANADA CAP. MKTS., ALPHABET INC.: DIGGING FOR BURIED TREASURE – THE 

GOOGLE MAPS OPPORTUNITY 10–11 (Sept. 23, 2019) (on file with Comm.).

1406 How Mobile Search Connects Users to Stores, THINK WITH GOOGLE (May 2016), 

https://www.thinkwithgoogle.com/marketing-strategies/app-and-mobile/mobile-search-trends-consumers-to-stores/. 

1407 See, e.g., MARC S.F. MAHANEY, ROYAL BANK OF CANADA CAP. MKTS., ALPHABET INC.: DIGGING FOR BURIED 

TREASURE – THE GOOGLE MAPS OPPORTUNITY 20 (Sept. 23, 2019) (on file with Comm.).
235

2) publishers; and 3) advertisers. The importance of Maps to mobile, including both the 

advertising and transportation-on-demand spaces, is one of the biggest potential markets 

Google is servicing in the future.1408

b. Market Power

Google Maps is the dominant provider of mapping data and turn-by-turn navigation services. 

The company declined to provide the Committee with information about the market share captured by 

Google Maps.1409 According to a third-party estimate, however, Google Maps combined with Waze 

captures 81% of the market for turn-by-turn navigation services.1410 One market participant, 

meanwhile, estimated that Google Maps API captures over 90% of the business-to-business market.1411

Several developers stated that Google Maps introduced greater licensing restrictions as it 

gained a stronger market position. One noted that Google’s control over what now serves as a key 

mapping technology has allowed Google to call all the shots.1412“We license Google Maps and it’s 

essentially a contract of adhesion. It’s full of restrictions and we aren’t able to negotiate any changes,”

the developer said.1413 The developer added that they have explored switching to alternative mapping 

providers, but that no other provider has the same geographic depth and coverage as Google Maps. 

“Other providers still value us and want to know how they can accommodate us,” they said. “With 

Google, we just have to comply with all their restrictions.”

1414

Several factors suggest that Google Maps is well-positioned to maintain its dominance. The 

high fixed costs of creating mapping data pose a significant barrier to entry. Apple, which recently 

built its mapping database from the ground up, told the Subcommittee that the effort required billions 

1408 ROSS SANDLER, BARCLAYS, ALPHABET INC., STEADY COMPOUNDER, WITH PLENTY OF INNOVATION AHEAD 20 (Mar. 

28, 2017) (on file with Comm.).

1409 Production of Google, to H. Comm. on the Judiciary, A-4 (Nov. 22, 2019) (on file with Comm.) (“Google Maps has a 

number of features, including maps, turn-by-turn navigation and directions, Street View, and information on local 

businesses (such as restaurants and services)and travel destinations (such as hotels and tourist spots) that are also offered by 

competitors. These competitors include Apple Maps, Bing Maps, TomTom, Yelp, TripAdvisor, Angie’s List, and Facebook 

. . . . All of these competitors are widely used, with some having a strong presence on key platforms: for example, one 

report from 2015 estimated that iPhone users use Apple Maps three times more than Google Maps. However, we are not 

aware of any public market share estimates that reflect the frequency of multi-homing among users or that account for 

competitors like TripAdvisor, OpenTable, Yelp, or directory apps such as Yellow Pages that overlap with many of the 

features of Google Maps, which would reflect the full range of robust competition in maps that drives Google to continually 

invest and innovate in the Google Maps product.”).

1410 MARC S.F. MAHANEY, ROYAL BANK OF CANADA CAP. MKTS., ALPHABET INC.: DIGGING FOR BURIED TREASURE – THE 

GOOGLE MAPS OPPORTUNITY 4 (Sept. 23, 2019) (on file with Comm.).

1411 Submission from Source 564, to H. Comm. on the Judiciary, 2 (Nov. 13, 2019) (on file with Comm.).

1412 Interview with Source 703 (June 22, 2020).

1413 Id.

1414 Id.
236

of dollars.1415 Google, moreover, also benefits from an enormous lead in the tracking and processing of 

location data, as well as from the prevalence of tracking-enabled Android devices.1416 Commenting on 

its monetization potential, an analyst recently wrote that Google Maps has “reasonably sustainable 

moats.”

1417

Certain businesses have made public disclosures about their reliance on Google Maps. For 

example, in 2019, Uber disclosed that it relies on Google Maps for “the mapping function that is 

critical to the functionality” of its platform.1418 It added, “We do not believe that an alternative 

mapping solution exists that can provide the global functionality that we require to offer our platform 

in all of the markets in which we operate.”

1419 Uber disclosed that between January 1, 2016 and 

December 31, 2018, the company paid Google $58 million for use of Google Maps.1420

In a submission to the Subcommittee, one market participant who uses Google Maps to power 

its reservation system, website, and mobile app, stated that there are no alternatives to using Google 

Maps. It wrote, “Local businesses are most likely to use Google’s tools to index their websites because 

Google controls the search engine space, which has the ability to deliver—or restrict—whether these 

websites appear in corresponding links in consumer search results.”

1421 The market participant added 

that this dependence reinforces Google’s market power, as it “provides Google with another 

opportunity to monetize companies’ supply chains and leverage its pricing power over companies that 

need to promote their businesses and/or purchase ad space to grow.”

1422 This business predicted that 

“the data advantages that Google incorporates into its tools will only grow with time, making it 

impossible for a new player to ever achieve the scale, user base, or database necessary to compete.”

1423

c. Merger Activity

Google has made several acquisitions related to digital mapping: Where2Technologies (2004); 

Keyhole (2004); Skybox (2011); and Waze (2013). Of these acquisitions, only Waze—for which 

1415 Innovation and Entrepreneurship Hearing at 6 (response to Questions for the record from Kyle Andeer, Vice Pres., 

Corp. Law).

1416 MARC S.F. MAHANEY, ROYAL BANK OF CANADA CAP. MKTS., ALPHABET INC.: DIGGING FOR BURIED TREASURE – THE 

GOOGLE MAPS OPPORTUNITY 10–11 (Sept. 23, 2019) (on file with Comm.).

1417 Id. at 1.

1418 Uber Technologies, Inc., Registration Statement (Form S-1) 46 (Apr. 11, 2019), 

https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm.

1419 Id. It is unclear whether Uber pays Google for the underlying maps data or for the place search function, both of which 

are part of “Google Maps Core Services.”

1420 Id. at 254.

1421 Submission from Source 333, to H. Comm. on the Judiciary, 5 (Oct. 21, 2019) (on file with Comm.).

1422 Id.

1423 Id.
237

Google paid $1.1 billion—was subject to an antitrust investigation. Although Google did not originally 

report the Waze transaction, both the Federal Trade Commission and the United Kingdom’s Office of 

Fair Trading (OFT) reviewed the deal.1424 Both enforcers initially approved the transaction but have 

since revisited the decision. In 2019 the OFT commissioned a study reviewing its past merger cases, 

including Google/Waze, and the FTC is reportedly examining the Waze deal as part of its broader 

review of previous tech mergers.1425

Materials that the FTC produced to the Subcommittee suggest that the Commission’s analysis 

of the Google/Waze deal was limited. A document from the FTC shows that the agency focused on 

assessing the quality of Waze’s data and concluded that its maps were “not a Google maps 

replacement.”

1426 It is unclear if or how closely the agency considered that Google was acquiring Waze 

not for its mapping features (which Google’s own documents had suggested were inferior to 

Google’s), but in order to eliminate an independent source of mapping data.1427

In acquiring Waze, Google bought out one of the few companies in the world making navigable 

maps while also providing turn-by-turn navigation service.

1428 Founded in Israel, Waze had entered the 

U.S. market by initially relying on public domain public data, which it refined through input from 

drivers.1429 Waze’s model has relied on user-generated maps, whereby drivers using Waze’s app feed 

real-time data back into the app, and volunteer “editors” proactively fine-tune the maps by fixing street 

names, adding businesses, and making other updates. Waze’s documents reveal that through 2012 the 

firm had prioritized achieving growth and attracting users over earning revenue, although it had begun 

to monetize its navigation app through location-based advertising.1430

Internal Waze presentations stated that its crowd-sourced data was one of the company’s 

defining features. One presentation stated, “The DNA of the company is of a social network, and user 

generated, we are merely the stage, and not the performers.”

1431 In a 2013 document, Waze identified 

its two main competitive advantages: first, the fact that Waze was a real-time map with fresh data, 

1424 Mark Bergen & Ben Brody, Google’s Waze Deal Is a Likely Target in FTC Antitrust Sweep, BLOOMBERG (Feb. 14, 

2020), https://www.bloomberg.com/news/articles/2020-02-14/google-s-waze-deal-is-a-likely-target-in-new-ftc-antitrustsweep.

1425 Id.

1427 Id.

1428 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04208423 (June 2013) (on file with Comm.)

1429 Id. at GOOG-HJC-04211080 (Jul 24, 2013) (citing the U.S. Census Bureau’s TIGER mapping data as one source).

1430 Id. at GOOG-HJC-04208066 (June 2013) (on file with Comm.) (Waze was “earning $250k in revenue in January 2013 

and less than $1 million in revenue in 2012”).

1431 Id. at GOOG-HJC-04208423 (June 2013).
238

accounting for updates such as car accidents and road closures; and, second, that its business involved 

“zero cost.”

1432

Google’s documents reveal that by 2012, Google Maps was the top provider of digital maps in 

desktop, mobile, and API,1433 and it was closely tracking Waze’s fast growth. One Google presentation 

in 2012 noted that Waze was the most-downloaded app in the navigation category, and that it was 

seeing a 30% increase in daily downloads and averaging around 100,000 downloads a day.1434 Google 

also honed in on the fact that Waze was the only other mapping provider that was vertically integrated 

across the full stack, spanning the provider, application, map, traffic, and search layers.1435

In an internal presentation, Google identified several strategic rationales for acquiring 

Waze.1436 These included obtaining a “highly-engaged community of map contributors and expertise”

in order to “nurture/grow communities,” which Google said it struggled with; achieving a “scalable 

solution” for maintaining a fresh map with “real-time incident data”; using Waze as a “sandbox” to 

“test map/navigation features”; and acquiring a “highly-talented team” with “deep experience in 

maps.”

1437 Google also ranked Waze poorly on several metrics, including the accuracy of its results in 

smaller cities and its limited map search capabilities.1438 Commenting on Waze’s mapping tiles, 

Google wrote, “[D]ata is missing and rendering is overly simple and missing detail.”

1439 Meanwhile, 

Google described Waze’s future financial projections as “highly speculative,”

1440 and noted that its 

purchase price of just under $1 billion was “expensive for a company with < $1 million in 2012 

revenue.”

1441

In its correspondence with the FTC, Google stated that “there is no shortage of full-featured 

navigation alternatives for users,” which it said reflected the “low (and continually decreasing) barriers 

to entry.”

1442 Google emphasized Waze’s entry, in particular, focusing on how Waze “spent far less 

than $20 million for all purposes in the two years preceding its US launch” and noting that it was able 

to enter the market using only public domain data.1443

1432 Id.

1433 Id. at GOOG-HJC-04208281 (May 2012).

1434 Id. at GOOG-HJC-04208072 (Nov. 2012).

1435 Id. at GOOG-HJC-04209632. (Nov. 2012).

1436 Id. at GOOG-HJC-04208127 (May 2013)

1437 Id.

1438 Id. at GOOG-HJC-04208140 (May 2013).

1439 Id.

1440 Id. at GOOG-HJC-04213996 (June 2013).

1441 Id. at GOOG-HJC-04208047. (June 2013).

1442 Id. at GOOG-HJC-04211046 (July 24, 2013).

1443 Id. at.GOOG-HJC-04211080 (July 24, 2013).
239

In contrast, market participants viewed Google and Waze as close competitors in a “highly 

concentrated” market for navigable digital map databases and turn-by-turn navigation applications. 

Prior to the transaction, Waze had observed that it and Google were “the only vertically integrated 

stacks.”

1444 One market participant told antitrust enforcers that it viewed Waze as “Google’s closest 

competitor for real-time, updated [turn-by-turn] navigation services” and that Waze “was the digitalmap competitor with the best opportunity to overcome Google’s significant data and funding 

advantage.”

1445

Market participants cited a few reasons the transaction would undermine competition. First, 

they noted that barriers to entry in the market for turn-by-turn navigation providers were high and that 

it would be difficult for new firms to enter. One market participant stated, “Navigable digital map 

databases contain far more information than maps and addresses. For example, Google’s database 

includes a range of other information, including traffic, conditions and rerouting information, interior 

and exterior photographs, reviews, commentary from Google+ friends.”

1446 And Waze, in particular, 

had a unique crowd-sourced model that would be difficult for other firms to replicate. Although Waze 

had secured a “first-mover advantage” and acquired a “critical mass of users,” the group of selfselected volunteers who edited Waze’s maps were “unlikely to fill such a role (without payment) for 

more than one set of mapping data.”

1447 The market participant added, “Once those editors provide the 

benefit of their input into Waze they create a powerful map that passive Waze users will turn to as well 

given the lack of other real-time-updated maps of comparable quality. As a result, passive Waze users 

likely will have no incentive to multi-home.”

1448

Second, market participants pointed to the fact that Waze was the only firm meaningfully 

positioned to dislodge Google Maps because it—like Google—lacked financial pressures. One 

entrepreneur noted, “Google and Waze do not care how much it costs to keep the maps up-to-date. 

Google because it has a lot of money, and Waze because it relies on the community.”

1449 One market 

participant stated:

The acquisition would effectively lead to the elimination of Waze as a market 

disrupting force that would otherwise be capable of challenging the model adopted by 

1444 Id. at GOOG-HJC-04208696.

1445 Submission from Source 26, to H. Comm. on the Judiciary, Source 26-000622 (Sept. 21, 2013) (on file with Comm.).

1446 Id.; Interview with Source 572 (Sept. 24, 2020).

1447 Interview with Source 572 (Sept. 24, 2020).

1448 Id.

1449 Id.
240

Google’s dominant Google Maps. In essence, Google’s acquisition of Waze is 

defensive - seeking to remove a disruptive force from the market.

1450

Several market participants and advocates who opposed the deal noted that Waze’s own CEO, 

Noam Bardin, had recently stated that Waze was “the only reasonable competition” to Google Maps, 

which would suggest that Google may have been pursuing the acquisition in efforts to quash its most 

significant competitor.1451

And third, market participants argued that the acquisition would give Google both the incentive 

and ability to foreclose rivals, including those apps that offer mobile navigation and social networking 

services. Seeking to mitigate this concern, Google’s letter to the FTC emphasized the “numerous 

providers who license mapping, traffic, and incident” data for use in mobile apps.1452

Today, the Google Maps and Waze teams remain separate. Analysts have reported that Google 

has used Waze as a tool to “test and iterate on monetizing Navigation without disrupting its much 

larger Google Maps asset.”

1453 One market participant stated, “Google has used Waze as an ads guinea 

pig,”

1454 noting that Waze has released efficacy reports of location-tailored ads, information that seems 

to have informed Google Maps’ recent expansion of advertising.1455

Since completing the Waze acquisition, Google has reportedly come to capture 81% of the 

market for navigation mapping services.1456 Despite Google’s claims that entry barriers were low and 

alternate offerings abundant, no meaningful competitor has emerged since Google acquired Waze. 

Based on the materials the FTC provided to the Subcommittee, it is unclear whether the Commission 

fully assessed the barriers to entry. It instead appears the FTC primarily took a static view—focusing 

on the existing quality of Waze’s maps—rather than assessing the dynamic effects of the acquisition.

1450 Interview with Source 572 (Sept. 24, 2020).

1451 Letter from John M. Simpson, Privacy Project Dir., Consumer Watchdog, to William J. Baer, Ass’t Att’y Gen., U.S. 

Dep’t of Justice, Antitrust Div. (June 12, 2013), https://www.consumerwatchdog.org/resources/cltrdojwaze061213.pdf. 

1452 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04211030 (July 24, 2013) (on file with Comm.).

1453 MARC S.F. MAHANEY, ROYAL BANK OF CANADA CAP. MKTS., ALPHABET INC.: DIGGING FOR BURIED TREASURE – THE 

GOOGLE MAPS OPPORTUNITY 14 (Sept. 23, 2019) (on file with Comm.).

1454 Interview with Source 572 (Sept. 24, 2020).

1455 Id.

1456 MARC S.F. MAHANEY, ROYAL BANK OF CANADA CAP. MKTS., ALPHABET INC.: DIGGING FOR BURIED TREASURE – THE 

GOOGLE MAPS OPPORTUNITY 5 (Sept. 23, 2019) (on file with Comm.).
241

d. Conduct

i. Raising Prices

For years, Google offered a free tier of the Maps API, incentivizing developers to build their 

apps with Google Maps. In 2018, however, Google Maps introduced a single “pay-as-you-go” pricing 

plan for the core mapping APIs.1457 This shift dramatically reduced the number of free Maps API calls 

a firm could make—from 25,000 per day to around 930 per day.1458 Developers stated that the change 

amounted to a price increase of 1,400%.1459

In a submission to the Subcommittee, one market participant said that Google instituted this 

price hike after “gaining dominance.”

1460 Since becoming a Google Maps customer, the market 

participant’s costs “have increased over 20x” and “there are no viable alternatives.”

1461 Another 

developer stated that the 2018 pricing change “took our bill from $90/month in October to 

$20,000/month in December.”

1462 The developer stated that it was able to subsequently reduce its bill 

through making a change that enabled the location-retrieval function to occur directly on a user’s 

device—a change that gave Google a “greater ability to identify and track” the device user.1463

Several developers expressed their frustrations publicly, noting that Google’s decision to hike 

prices so sharply, and without giving developers significant notice, underscored its power to set the 

terms of commerce. One developer stated:

I understand that Google wants to make this into a line of business. But it feels like 

they’re taking advantage of us. They know that they’re the best, and that no one else is 

even close. Instead of just giving us Maps for free or very cheap, in exchange for 

collecting all our usage data, they now feel they need to charge really high prices.1464

1457 Jagmeet Singh, Google Maps API Price Hike is Threatening the Future of Some Companies, GADGETS 360 (Aug. 28, 

2018), https://gadgets.ndtv.com/apps/features/google-maps-apis-new-pricing-impact-1907242.

1458 Id.

1459 Ishveena Singh, Insane, shocking, outrageous: Developers react to changes in Google Maps API, GEO AWESOMENESS 

(May 3, 2018), https://geoawesomeness.com/developers-up-in-arms-over-google-maps-api-insane-price-hike/ (“The 

Standard (no access to customer support) and Premium plans are being merged into one pay-as-you-go pricing plan. And 

the new fee structure is not pretty. Google is raising its prices by more than 1,400%. Obviously, no direct comparison 

figures of old and new prices have been provided by Google, but that’s the average surge that is being reported by 

developers.”).

1460 Submission from Source 564, to H. Comm. on the Judiciary, 2 (Nov. 13, 2019) (on file with Comm.).

1461 Id. at 4.

1462 Submission from Source 685, to H. Comm. on the Judiciary, 4 (Oct. 15, 2019) (on file with Comm.).

1463 Id. 

1464 Jagmeet Singh, Google Maps API Price Hike is Threatening the Future of Some Companies, GADGETS 360 (Aug. 28, 

2018), https://gadgets.ndtv.com/apps/features/google-maps-apis-new-pricing-impact-1907242.
242

In effect, Google makes market participants pay twice to access Google Maps—first by giving Google 

their valuable usage data and then again by paying Google’s volume-based fees for API calls.

ii. Tying

Business-facing mapping products usually consist of a core set of features to provide greater 

mapping functionality. For example, the “Google Maps Platform” offers developers traffic data and 

places data (also known as place search) as well as map data.1465 Some developers choose to mix and 

match, using map data from one firm but placing data from another. Google, however, prohibits 

developers from using any part of its mapping tools alongside any non-Google mapping features. Until 

April 2020, Google’s Maps Platform Terms of Service included the following provision:

(e) No Use With Non-Google Maps. Customer will not use the Google Maps Core 

Services in a Customer Application that contains a non-Google map. For example, 

Customer will not (i) display Places listings on a non-Google map, or (ii) display 

Street View imagery and non-Google maps in the same Customer Application.1466

In April 2020, Google amended the language slightly:

(e) No Use With Non-Google Maps. To avoid quality issues and/or brand confusion, 

Customer will not use the Google Maps Core Services with or near a non-Google 

Map in a Customer Application. For example, Customer will not (i) display or use 

Places content on a non-Google map, (ii) display Street View imagery and nonGoogle maps on the same screen, or (iii) link a Google Map to non-Google Maps 

content or a non-Google map.1467

Both versions of this provision prohibit developers from using any component of the Google 

Maps Core Service with mapping services provided by non-Google firms. The April 2020 change to 

the terms of service is even more restrictive: it prohibits developers from even displaying any 

component of Google Maps “near” any other map. In practice, Google’s contractual provision has led 

several major companies to switch entirely to Google’s ecosystem, even in cases where they preferred 

mapping services from a non-Google provider, such as Mapbox.

1465 Google Maps Platform Terms of Service, 21. Definitions, GOOGLE, https://cloud.google.com/maps-platform/terms (last 

visited on Oct. 3, 2020) (“‘Google Maps Content’ means any content provided through the Service (whether created by 

Google or its third-party licensors), including map and terrain data, imagery, traffic data, and places data (including 

business listings).”).

1466 Id. at 3.2.2(e).

1467 Id.
243

Through interviews with market participants, the Subcommittee learned that Google now 

enforces this provision aggressively. According to one firm, Google closely tracks and pressures 

developers who use Google’s place data in conjunction with mapping data from a non-Google firm, 

effectively forcing them to choose whether they will use all of Google’s mapping services or none of 

them.1468 One firm described Google’s coercive tactics, stating, “It’s a bigger player putting a gun to 

our head saying ‘switch or else.’”

1469

Because Google’s monopoly in online search has furnished it with a trove of data, as well as a 

robust index, its place search feature is also seen by many market participants effectively as a musthave. One market participant that has lost business partnerships due to Google’s coercive restrictions 

stated that Google is “using access to its dominant search products as leverage to intimidate businesses 

out of working with other map providers.”

1470 He noted that Google’s conduct now threatens his firm’s 

survival, saying, “This is existential for us.”

1471

Google was asked to identify and justify any limits it places on the ability of app developers 

who use the Google Maps Platform to use non-Google mapping services.1472 Google responded that it 

does “restrict developers from incorporating Google Maps Core Services into an application that uses a 

non-Google map” in order to “prevent brand confusion and other negative user experiences.”

1473 As 

described above, Google subsequently changed its terms of service to mirror its response to the 

Subcommittee’s question. However, developers and mapping providers questioned Google’s rationale, 

noting that developers were the ones best positioned to determine whether combining mapping 

services from multiple providers created a “negative user experience.” One provider added, “The 

developers we partner with are extremely sophisticated. They’re not confused.”

1474

Google has also used its dominance in mapping to acquire cloud computing customers for its 

Google Cloud Platform (GCP). Specifically, in 2018, Google implemented a change requiring all API 

calls to use a valid API key, which must be linked to a Google Cloud Platform account. All keyless 

calls to the Maps JavaScript API and Street View API trigger low-resolution maps that are 

watermarked with “for development purposes only.”

1475 Developers who do not have a Google Cloud 

account, and therefore do not have an API key, are effectively locked out of Google Maps. Even if an 

1468 Interview with Source 572 (Sept. 24, 2020).

1469 Interview with Source 157 (Sept. 25, 2020).

1470 Interview with Source 572 (Sept. 24, 2020).

1471 Id.

1472 Innovation and Entrepreneurship Hearing at 29 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC).

1473 Id.

1474 Interview with Source 572 (Sept. 24, 2020).

1475 Guide for Existing Users, GOOGLE CLOUD, https://cloud.google.com/maps-platform/user-guide (last visited Oct. 3, 

2020).
244

application is built on a non-Google cloud platform, developers are forced to use GCP for the Maps 

API portion of their app.1476 By one estimate, revenue from Google Cloud Platform has more than 

tripled since 2017, the year before Google began tying access to Google Maps to Google Cloud 

Platform.1477

iii. Self-Preferencing through Contractual Restrictions

Some developers told the Subcommittee that Google uses its control over digital mapping to 

favor its own products in other lines of business. Since Google provides mapping services but also 

offers non-mapping products that use mapping as an input, Google can selectively degrade access for 

third parties that rely on its mapping product to disfavor them as competitors to its non-mapping 

products. For example, market participants noted that Google has added various restrictions to the 

license agreement for Google Maps API—restrictions that apply to third-party developers but not to 

Google’s own competing products.

One example is unequal rights to map caching. Map caching occurs when a server stores copies 

of map images that it can speedily distribute when next recalled. Without caching, a map is drawn each 

time it is requested, a much slower process.1478 Although previous versions of the Google Maps API 

agreement permitted caching by developers, the recent versions prohibit caching of maps with limited 

exceptions.

1479 Third-party apps built on Google Maps API can no longer store a map cache. Market 

participants note, however, that Google’s own products built on Google Maps—ranging from its local 

search service to its hotel finder—face no similar restrictions, enabling them to load faster than those 

run by third parties. 

Commenting on the asymmetry, one market participant stated that Google’s decision to deny 

third parties caching “denigrates the service that our maps can provide compared to Google’s.”

1480

They added, “[T]hat’s why we can’t create an app that provides directions as well as Google or we 

can’t update a user’s location as quickly as Google.”

1481

1476 Daria Bulatovych, Mapbox as a Worthy Alternative to Google Maps Price Hike, YALANTIS, 

https://yalantis.com/blog/mapbox-maps-ready-mobile-apps/.

1477 Larry Dignan, Top cloud providers in 2020: AWS, Microsoft Azure, and Google Cloud, hybrid, SaaS players, ZDNET

(Oct. 1, 2020), https://www.zdnet.com/article/the-top-cloud-providers-of-2020-aws-microsoft-azure-google-cloud-hybridsaas/.

1478 WHAT IS MAP CACHING?, ARCGIS ENTERPRISE, https://enterprise.arcgis.com/en/server/latest/publishservices/linux/what-is-map-caching-.htm (last visited Oct. 3, 2020).

1479 Places API Policies, Google Maps Platform, GOOGLE, https://developers.google.com/places/web-service/policies (last 

visited Oct. 3, 2020) (stating “that you must not pre-fetch, index, store, or cache any Content except under the limited 

conditions stated in the terms.”).

1480 Interview with Source 521 (June 22, 2020).

1481 Id.
245

iv. Strategic Platform Mismanagement

Although Google’s responses to the Subcommittees’ questions about its conduct regarding 

Google Maps emphasized “quality” and “user experience,”

1482 public reporting has documented that 

Google Maps’ listings are “overrun with millions of false business addresses and fake names.”

1483 A 

fake listing can occur when a business creates a fake listing or when a fraudulent business hijacks the 

name of a legitimate business on Google Maps, diverting user calls or visits from the legitimate 

business to a fraudulent one. A survey of experts conducted by the Wall Street Journal estimated that 

Google Maps hosts around 11 million falsely listed businesses on any given day.1484 The same experts 

stated that “a majority” of the listings on Google Maps for businesses such as “contractors, 

electricians, towing and car repair services, movers and lawyers,” as well as others, are not actually 

located at the location given by Google Maps.1485

These fake listings endanger consumer safety, giving rise to situations where users of Google 

Maps have unknowingly requested home repairs and other services from fraudulent providers, 

ultimately, paying inflated prices for shoddy work.1486 The fraudulent listings also disadvantage 

legitimate businesses, both those whose listings have been hijacked as well as those whose own listings 

appear below those of sham businesses. Marketers have weaponized this problem to demand ransom 

payments from businesses under the threat of wiping out their listings through a flood of fake 

businesses. When the listing of one auto junkyard fell from the first to the second page of Google 

Maps results, the owner’s income fell by half and pushed him to the edge of closing shop entirely.1487

Legitimate businesses hurt by fake listings say that contacting Google to report the situation 

generally fails to resolve the problem. In practice, the only way legitimate businesses can shield 

themselves from fake listings is to buy ads from Google. Ad prices for categories that are most 

susceptible to ad fraud have increased more than 50% over the last two years.1488

1482 Innovation and Entrepreneurship Hearing at 8 (response to Questions for the Record of Adam Cohen, Dir. of Econ. 

Pol’y, Google LLC) (Sept. 13, 2019).

1483 Rob Copeland & Katherine Bindley, Millions of Business Listings on Google Maps Are Fake—and Google Profits, 

WALL ST. J. (June 20, 2019), https://www.wsj.com/articles/google-maps-littered-with-fake-business-listings-harmingconsumers-and-competitors-11561042283. 

1484 Id.

1485 Id.

1486 Id. (reporting that a 67-year-old-woman contacted a local home repair service she found through Google, only to be 

serviced by a man who was pretending to be from the company she had hired. The man charged almost twice the cost of 

previous repairs and demanded a personal check or cash. The woman told the Wall Street Journal, “I’m at my house by 

myself with this guy. He could have knocked me over dead.”).

1487 Id.

1488 Id.
246

The Subcommittee asked Google about this practice on several occasions. At the 

Subcommittee’s July 16, 2019 hearing, Congresswoman Lucy McBath (D-GA) asked Adam Cohen, 

Google’s director of economic policy, what steps Google was taking to identify and remove fraudulent 

listings on Google Maps.1489 She added, “Is it a lack of competition in online search that allows Google 

to be so complacent by addressing this problem head on?”

1490 Mr. Cohen responded that he was “not 

familiar” with the relevant facts.1491 In response to a follow-up letter sent by Chairman Cicilline, 

Google wrote that it has “no evidence” that the number of fake listings on Google Maps is around 10 

million.1492 Google stated that, as of July 2019, it had taken down more than 3 million fake business 

profiles and that it has “implemented strict policies and created tools that enable people to flag false 

content.”

1493

Both digital advertisement experts and individuals engaging in fraudulent activity believe that 

Google has turned a blind eye to the problem. According to the Wall Street Journal, one ad specialist 

who was invited by Google to help root out the problem left after concluding that Google “has 

obviously chosen not to solve the problem.”

1494 A business owner who helps facilitate the fake listings 

says his activity leaves a “huge footprint” and yet Google is “just letting it happen.” He added, “I know 

Google knows.”

1495

Cloud

Google Cloud Platform (GCP) is Google’s suite of public cloud computing services that first 

launched in 2008.1496 Today, Google Cloud is Alphabet’s fastest-growing line of business, with 

revenues in Q1 2020 hitting $2.78 billion, up 52% from $1.83 billion in Q1 2019.1497 Documents 

1489 Innovation and Entrepreneurship Hearing at 67 (question of Rep Lucy McBath (D-GA), Member, Subcomm. on 

Antitrust, Commercial and Admin. Law).

1490 Id.

1491 Id. (statement of Adam Cohen, Dir. of Econ. Pol’y, Google LLC).

1492 Letter from Kent Walker, Senior Vice Pres., Global Affairs and Legal Officer, Google to the Hon. David N. Cicilline, 

Chairman, Subcomm. on Antitrust, Commercial and Admin. Law (July 26, 2019), 

https://judiciary.house.gov/sites/democrats.judiciary.house.gov/files/documents/07.26.19%20-%20google%20response.pdf.

1493 Id.

1494 Rob Copeland & Katherine Bindley, Millions of Business Listings on Google Maps Are Fake—and Google Profits, 

WALL ST. J. (June 20, 2019), https://www.wsj.com/articles/google-maps-littered-with-fake-business-listings-harmingconsumers-and-competitors-11561042283 (internal quotation marks omitted).

1495 Id. (internal quotation marks omitted).

1496 Michael Arrington. Google Jumps Head First Into Web Services With Google App Engine, TECHCRUNCH (Apr.8, 

2008). https://techcrunch.com/2008/04/07/google-jumps-head-first-into-web-services-with-google-app-engine/ (reporting 

that GCP’s first public cloud offering, App Engine, launched as a private preview for developers in April 2008).

1497 Benjamin Pimentel, Google just reported cloud revenue for the first time ever, showing that it’s growing fast but 

nowhere close to Amazon Web Services. BUS. INSIDER (Feb 3, 2020). https://www.businessinsider.com/google-cloudrevenue-first-time-thomas-kurian-2020-2. 
247

provided to the Subcommittee make clear that the cloud market is a priority for the company.1498 GCP 

is the third largest provider of IaaS services in the United States and has a year-over-year growth rate 

twice that of Amazon Web Services—the current market leader.1499 Today, GCP boasts long term 

contracts with data-intensive companies such as SNAP, Spotify and TikTok.1500

Subcommittee staff reviewed internal documents that outline Google’s plans to invest 

significantly in acquisitions.1501 To date, these acquisitions include Orbitera,1502 Cask Data, Velostrata, 

and Elastifile, among others.

1503 Most recently, Google purchased Looker for $2.6 billion to “add a new 

analytics tool for Google Cloud’s customers.”

1504 In some instances, Google acquired firms that were 

multi-cloud solutions but, after acquisition, Google made them compatible only with Google’s cloud 

infrastructure, at times integrating them into first-party PaaS and SaaS offerings only available through

the Google Cloud Portal.1505

According to interviews with market participants and Google’s internal documents, Google 

employs two strategies that raise concerns about potential anticompetitive conduct. First, Google 

appears to leverage its dominant business lines, including popular APIs such as Google Search and 

Maps, along with machine learning services, to attract customers to its platform through discounts and 

free tier services.1506 For example, according to internal strategy documents, in 2018, Google 

1498 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04266215 (on file with Comm.).

1499 GCP’s position in the cloud market is explained in the cloud computing market overview section. See infra Section IV. 

1500 Snap Inc., Annual Report (Form 10-K) 11 (Feb 4, 2020) (indicating that Snap had committed to spend $2.0 billion with 

Google Cloud over five years beginning January 2017); Kevin McLaughlin and Amir Efrati, TikTok Agreed to Buy More 

Than $800 Million in Cloud Services From Google, THE INFO. (July 14, 2020), 

https://www.theinformation.com/articles/tiktok-agreed-to-buy-more-than-800-million-in-cloud-services-from-google

(reporting that TikTok signed a three-year agreement with GCP in 2019, with a minimum commitment of $800 million 

over the time-period).

1501 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04266215 (on file with Comm.).

1502 Nan Boden, Orbitera joins the Google Cloud Platform team, GOOGLE (Aug. 8, 2016), 

https://cloud.google.com/blog/products/gcp/orbitera-joins-the-google-cloud-platform-team (noting that GCP leveraged 

Orbitera technology to offer automated test drives and lead management, custom pricing and billing, cloud cost visibility 

and control, self-serve onboarding to be fully integrated into the GCP console).

1503 Ingrid Lunden, Google acquires Cask Data to beef up its tools for building and running big data analytics, 

TECHCRUNCH (May 16, 2018), https://techcrunch.com/2018/05/16/google-acquires-cask-data-to-beef-up-its-tools-forbuilding-and-running-big-data-analytics/. 

1504 Lauren Feiner & Jordan Novet, Google cloud boss Thomas Kurian makes his first big move -- buys Looker for $2.6 

billion, CNBC (June 6, 2019), https://www.cnbc.com/2019/06/06/google-buys-cloud-company-looker-for-2point6-

billion.html. 

1505 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04167298–381. (July 2, 2019) (on file with Comm.). 

See also, Donna Goodison, Google Cloud’s New Alooma Migration Service Won’t Accept New AWS, Microsoft Azure 

Customers, CRN (Feb 20, 2019) https://www.crn.com/news/cloud/google-cloud-s-new-alooma-migration-service-won-taccept-new-aws-microsoft-azure-customers. 

1506 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-02456801 (on file with Comm.). See also, GOOGHJC-04214427 (Aug 4, 2016). 
248

“launched a program with the Play team to provide GCP credits to game developers based on their 

Play Store spend, to increase focus on Play and incentivize migration to GCP.”

1507 By harnessing 

Google’s advantages in existing markets, GCP is undermining competition on the merits.

Second, Google’s documents suggest the company is considering bundling its popular machine 

learning service with other services that Google is seeking to promote. One recent Google cloud 

pricing strategy document explains, “the question that we need to think about is whether we use our 

entry point with Big Query to get a customer to use all the services such as Data Proc, Data Flow, as a 

suite and give them a price break on the Analytics Suite because it will be much harder for them to 

migrate away from us if they use all the other services.”

1508 The document goes on to describe potential 

discounts and ultimately a plan to have “a pricing model that makes it advantageous for customers to 

put 80% of their workload on GCP.”

1509 As described elsewhere in this Report, absent interventions, 

the barriers to entry and network effects in this market mean there is a high potential for single-homing 

and an overall concentrated market.1510 As Google grows in this space, regulators and enforcers should 

be watchful for potential anticompetitive conduct.

C. Amazon

Overview

Amazon.com, Inc. was founded in 1994 as an online bookseller.1511 Today, it is one of the 

largest companies in the world. Based in Seattle, Amazon is estimated to be the second-largest private 

employer in the United States, with over 500,000 employees.1512 The company operates across a wide 

range of direct-to-consumer and business-to-business markets, including e-commerce, consumer 

electronics, television and film production, groceries, cloud services, book publishing, and logistics. 

Amazon went public in 1997 but did not post its first full-year profit until 2003.1513 This is partly 

because Amazon’s business strategy has generally focused on long-term growth over short-term 

1507 Id. at GOOG-HJC-04266213 (May 23, 2018) (on file with Comm.).

1508 Id. at GOOG-HJC-04215099 (December 31, 2018).

1509 Id.

1510 See infra Section IV. 

1511 Amazon.com, Inc., Annual Report (Form 10-K) 3 (Jan. 31, 2020), http://d18rn0p25nwr6d.cloudfront.net/CIK0001018724/4d39f579-19d8-4119-b087-ee618abf82d6.pdf.

1512 Press Release, Amazon, Amazon.com Announces Second Quarter Results 2 (July 30, 2020), 

https://s2.q4cdn.com/299287126/files/doc_financials/2020/q2/Q2-2020-Amazon-Earnings-Release.pdf; Charles Duhigg, Is 

Amazon Unstoppable?, THE NEW YORKER (Oct. 21, 2019), https://www.newyorker.com/magazine/2019/10/21/is-amazonunstoppable.

1513 Amazon.com, Inc., Annual Report (Form 10-K) 83‒84 (Mar. 9, 2005), 

https://www.annualreports.com/HostedData/AnnualReportArchive/a/NASDAQ_AMZN_2004.pdf; Saul Hansell, Amazon 

Reports First Full-Year Profit, N.Y. TIMES (Jan. 28, 2004), https://www.nytimes.com/2004/01/28/business/technologyamazon-reports-first-full-year-profit.html.
249

profits.1514 Amazon is currently one of the most valuable companies in the world, and its CEO, Jeff 

Bezos, is reported to be the wealthiest person in the world.1515

Amazon’s Annual Revenue, Operating Expenses, and Profits1516

Amazon reports financial information for three business segments: North America, 

International, and Amazon Web Services (AWS), Amazon’s cloud services business.1517 Despite the 

fact that Amazon is already so large that it dominates several important industries, it continues to 

report strong and steady growth—as well as increasing profits. For 2019, Amazon reported total 

revenue of about $280 billion, up 20% from the previous year, and a net income of over $11 billion.1518

AWS’s revenue increased by 37% in 2019 to $35 billion.1519 Retail operations continue to be the 

platform’s largest source of revenue, but AWS is a key source of its overall profits.1520 In 2019, 

1514 See, e.g., CEO Hearing at 3 (statement of Jeff Bezos, CEO, Amazon.com, Inc.) (“As I have said since my first 

shareholder letter in 1997, we make decisions based on the long-term value we create . . .”); Production of Amazon, to H. 

Comm. on the Judiciary, AMAZON-HJC-00035545 (July 14, 2010) (on file with Comm.) (“Membership programs are 

created with a long-term, company-wide perspective with the goal of increasing loyalty and cross-category shopping 

behavior. The programs do not optimize for short-term gain or profitability in a single category.”). 

1515 See, e.g., Annie Palmer, Jeff Bezos is Now Worth More than $200 Billion, CNBC (Aug. 26, 2020), 

https://www.cnbc.com/2020/08/26/amazon-ceo-jeff-bezos-worth-more-than-200-billion.html. 

1516 Prepared by Subcomm. based on Amazon.com, Inc., Annual Reports (Form 10-K) (1997–2019).

1517 Amazon.com, Inc., Annual Report (Form 10-K) 3 (Jan. 31, 2020), http://d18rn0p25nwr6d.cloudfront.net/CIK0001018724/4d39f579-19d8-4119-b087-ee618abf82d6.pdf.

1518 Id. at 18.

1519 Id. at 24.

1520 Id. at 3; see also Nathan Reiff, How Amazon Makes Money, INVESTOPEDIA (Aug. 12, 2020), 

https://www.investopedia.com/how-amazon-makes-money-4587523 (“Retail remains Amazon’s primary source of revenue, 

with online and physical stores accounting for the biggest share.”).
250

Amazon’s cloud business contributed over 60% of Amazon’s total operating income, despite 

accounting for only 12.5% of its total revenue.1521

Sales on Amazon.com fall into one of two categories. First-party sales are those where Amazon 

retails its own private-label products or sources products wholesale from a vendor or manufacturer. 

Third-party sales, in contrast, refer to sales by independent merchants who sell through the Amazon 

Marketplace. When a consumer visits Amazon.com, Amazon’s private-label products, such as 

AmazonBasics or its Kindle E-Readers, are listed for sale alongside independent merchants’ offers. 

One of the unique features of Amazon’s e-commerce site is its fast and free shipping on an 

extremely broad selection of products. Amazon Prime Members can choose from over 100 million 

items that are available for free two-day delivery in the continental United States. Walmart, by 

contrast, has only single-digit millions of products eligible for free two-day shipping.1522 In response to 

questions from the Subcommittee, Amazon represented that it offers approximately 158,000 privatelabel products across 45 in-house brands, not including some additional private-label products sold 

through Amazon Fresh.1523 Amazon also hosts 2.3 million active third-party sellers from around the 

world,1524 about 45 times more than the 52,000 third-party sellers that Walmart hosts on its 

marketplace.1525 A recent survey estimated that about 37% of Amazon’s third-party sellers, 

representing over 850,000 sellers, rely on Amazon as their sole source of income.1526

Amazon does not limit the number of sellers that can offer the same product for sale on 

its platform. Because of this, the same product may be sold by multiple sellers, as well as by 

Amazon. Each time a consumer clicks on a product, Amazon chooses a single seller from all 

the vendors offering that product to display as the featured offer in the “Buy Box.”

1527 In its 

response to questions from the Subcommittee, Amazon stated that the featured merchant 

1521 Amazon.com, Inc., Annual Report (Form 10-K) 24‒25 (Jan. 31, 2020), http://d18rn0p25nwr6d.cloudfront.net/CIK0001018724/4d39f579-19d8-4119-b087-ee618abf82d6.pdf. 

1522 J.P. MORGAN, RETAIL VS. AMAZON: LIFE IN A POST COVID-19 WORLD (2020),

https://markets.jpmorgan.com/research/email/-lbk68f4/Alp1kP9tQUPS29jlzW_bOg/GPS-3397412-0.

1523 Innovation and Entrepreneurship Hearing at 3 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).

1524 Number of Sellers on Amazon Marketplace, MARKETPLACE PULSE, 

https://www.marketplacepulse.com/amazon/number-of-sellers (last visited Sept. 25, 2020); see also CEO Hearing at 5 

(statement of Jeff Bezos, CEO, Amazon.com, Inc.) (“There are now 1.7 million small and medium-sized businesses around 

the world selling in Amazon’s stores.”).

1525 Number of Sellers on Amazon Marketplace, MARKETPLACE PULSE, 

https://www.marketplacepulse.com/amazon/number-of-sellers (last visited on Oct. 5, 2020).

1526 JUNGLESCOUT, THE STATE OF THE AMAZON SELLER 2020 4 (2020), https://www.junglescout.com/wpcontent/uploads/2020/02/State-of-the-Seller-Survey.pdf.

1527 Innovation and Entrepreneurship Hearing at 2 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).
251

algorithm, also commonly referred to as the Buy Box algorithm, is designed to predict the offer 

that consumers would choose after comparing all the available offers in detail.1528

The Amazon Buy Box Playbook, a well-known guide for sellers, explains this in lay terms:

When a shopper lands on a product detail page, Amazon chooses one seller whose 

details appear in the Buy Box—the white box on the right hand side of the page. When 

a customer clicks on the “Add to Cart” button, the sale goes to the seller in this box.1529

Industry experts estimate that about 80% of Amazon sales go through the Buy Box, and the 

percentage is even higher for mobile purchases.1530 In response to a question from the Subcommittee, 

Amazon provided only high-level information about how it chooses which offer will win the Buy Box, 

stating that the algorithm considers criteria such as price, delivery speed and cost, Prime eligibility, and 

seller performance.1531 Despite the importance of winning the Buy Box to sellers on its platform, only 

Amazon knows exactly how its featured merchant algorithm works.

As Amazon’s e-commerce business has grown, it has also developed a significant logistics 

business providing fulfillment and delivery services to third-party sellers through its Fulfillment by 

Amazon (FBA) program. Nearly 85% of the top 10,000 Amazon Marketplace sellers reportedly rely on 

this program to fulfill and deliver their orders.1532 Third-party sellers that use FBA keep their inventory 

in Amazon’s fulfillment centers.1533 After a consumer places an order online, Amazon does the 

picking, packing, and shipping, and provides customer service to complete the order.1534 The figure 

below explains the different types of sellers on Amazon.com and the various modes of delivery and 

fulfillment they use.

1528 Id.

1529 FEEDVISOR, THE AMAZON BUY BOX PLAYBOOK FOR SELLERS AND RETAILERS 4 (2020).

1530 Id. at 5.

1531 CEO Hearing at 3 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

1532 FBA Usage Among Amazon Marketplace Sellers, MARKETPLACE PULSE,

https://www.marketplacepulse.com/amazon/fulfillment-by-amazon-fba (last visited Oct. 5, 2020).

1533 Fulfillment by Amazon, AMAZON, https://sell.amazon.com/fulfillment-by-amazon.html (last visited Sept. 28, 2020).

1534 Id.
252

Types of Sellers on Amazon and Shipping Options1535

Amazon generates a significant amount of revenue from the fees that it charges third-party 

sellers. According to a recent SEC filing, net sales for services provided to third-party sellers increased 

from $23 billion in the first six months of 2019 to $32 billion over the same period in 2020—an 

increase of 39%.1536 For the ability to sell a product on the platform, a seller might pay the company a 

monthly subscription fee, a high-volume listing fee, a referral fee on each item sold, and a closing fee 

on each item sold.1537 Amazon charges additional fees for fulfillment and delivery services, as well as 

for advertising.1538

AWS, the company’s cloud services business, offers digital infrastructure services to 

businesses that require increased computing infrastructure, such as increased capacity for servers to 

host or store data. Amazon is the dominant provider of infrastructure as a service. AWS accounts for 

close to half of all global spending on cloud infrastructure services, and the business has three times 

1535 Prepared by the Subcomm. based on Amazon 1P vs. 3P: What Are the Differences?, FEEDVISOR,

https://feedvisor.com/university/amazon-1p-vs-3p/ (last visited Sept. 24, 2020).

1536 Amazon.com, Inc., Quarterly Report (Form 10-Q) 18 (July 31, 2020), http://d18rn0p25nwr6d.cloudfront.net/CIK0001018724/a77b5839-99b8-4851-8f37-0b012f9292b9.pdf.

1537 Selling on Amazon Fee Schedule, AMAZON SELLER CENTRAL, 

https://sellercentral.amazon.com/gp/help/external/200336920 (last visited Sept. 25, 2020). 

1538 Pricing Overview, AMAZON SELLER CENTRAL (2020), https://sell.amazon.com/pricing.html (last visited Sept. 25, 

2020); see also Production of Amazon, to H. Comm. on the Judiciary, 12 (Oct. 14, 2019) (on file with Comm.) (noting that 

advertising revenue is not included in seller services).
253

the market share of Microsoft, its closest competitor.1539 Cloud services are an essential and 

increasingly expensive line item for many companies. Given AWS’s role as a dominant cloud 

provider, some of Amazon’s competitors in other business lines often end up dependent on the 

platform. For example, Netflix, a competitor of Amazon Prime Video, paid AWS $500 million in 2018 

to store its streaming video library.1540

While the pandemic has harmed many businesses, Amazon has experienced a surge in sales.1541

The company’s operating profit of $5.8 billion during the second quarter of 2020 significantly 

outperformed the -$1.5 billion to +$1.5 billion projection that Amazon had issued to investors.1542 One 

analyst described the magnitude of Amazon’s recent sales growth outperformance as a “paradigmshifting update.”

1543 In October 2020, Amazon’s stock price was about $3,000, giving it a market 

valuation of about $1.5 trillion1544—greater than that of Walmart, Target, Salesforce, IBM, eBay, and 

Etsy combined.1545 The company is consistently one of the highest-priced stocks on Wall Street,1546

which is a clear indication investors expect Amazon to maintain and expand its market power.

The Subcommittee initiated its investigation of Amazon’s market power and its role as a 

gatekeeper for digital markets in June 2019. Before and concurrent with the Subcommittee’s 

investigation, many international and U.S. enforcement authorities also opened antitrust investigations 

1539 Press Release, Gartner, Gartner Says Worldwide IaaS Public Cloud Services Market Grew 31.3% in 2018 (July 29, 

2019), https://www.gartner.com/en/newsroom/press-releases/2019-07-29-gartner-says-worldwide-iaas-public-cloudservices-market-grew-31point3-percent-in-2018; see also Letter from David Zapolsky, Gen. Counsel, Amazon.com, Inc., to 

Hon. David N. Cicilline (D-RI), Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of H. Comm. on the 

Judiciary at 6 (July 26, 2019) (on file with Comm.).

1540 Kevin McLaughlin, Amazon’s Cloud King: Inside the World of Andy Jassy, THE INFO. (Jan. 23, 2019), 

https://www.theinformation.com/articles/amazons-cloud-king-inside-the-world-of-andy-jassy. 

1541 See, e.g., Alana Semeuls, Many Companies Won’t Survive the Pandemic. Amazon Will Emerge Stronger Than Ever, 

TIME (July 28, 2020), https://time.com/5870826/amazon-coronavirus-jeff-bezos-congress/ (“Consumer spending on 

Amazon between May and July was up 60% from the same time frame last year.”).

1542 MORNINGSTAR EQUITY ANALYST REPORT, AMAZON.COM INC. 6 (Aug. 27, 2020) (on file with Comm.); Press Release, 

Amazon, Amazon.com Announces First Quarter Results (Apr. 30, 2020), 

https://s2.q4cdn.com/299287126/files/doc_financials/2020/Q1/AMZN-Q1-2020-Earnings-Release.pdf.

1543 MORNINGSTAR EQUITY ANALYST REPORT, AMAZON.COM INC. 6 (Aug. 27, 2020) (on file with Comm.).

1544 Amazon.com, Inc. Common Stock (AMZN), NASDAQ https://www.nasdaq.com/market-activity/stocks/amzn (last visited 

Oct. 3, 2020).

1545 See Walmart, Inc. Common Stock (WMT), NASDAQ https://www.nasdaq.com/market-activity/stocks/wmt (last visited 

Oct. 5, 2020) ($398 billion); Target Corp. Common Stock (TGT), NASDAQ https://www.nasdaq.com/marketactivity/stocks/tgt (last visited Oct. 5, 2020) ($79.6 billion); Salesforce.com Inc. Common Stock (CRM), NASDAQ

https://www.nasdaq.com/market-activity/stocks/crm (last visited Oct. 5, 2020) ($225.5 billion); Int’l Bus. Machines Corp. 

Common Stock (IBM), NASDAQ https://www.nasdaq.com/market-activity/stocks/ibm (last visited Oct. 5, 2020) ($107 

billion); eBay, Inc. Common Stock (EBAY), NASDAQ https://www.nasdaq.com/market-activity/stocks/ebay (last visited Oct. 

5, 2020) ($36.2 billion); Etsy, Inc. Common Stock (ETSY), NASDAQ https://www.nasdaq.com/market-activity/stocks/etsy

(last visited Oct. 3, 2020) ($16.7 billion). 

1546 See, e.g., Gabe Alpert, Top 5 Highest Priced Stocks in America, INVESTOPEDIA (May 19, 2020), 

https://www.investopedia.com/financial-edge/0711/the-highest-priced-stocks-in-america.aspx. 
254

into Amazon’s business practices. Some of these investigations have led to Amazon making policy 

changes.1547 The European Commission began its in-depth antitrust investigation of Amazon on July 

17, 2019.1548 According to Executive Vice President Margrethe Vestager, the European Commission’s 

investigation “focuses on the use by Amazon of accumulated, competitively sensitive information 

about marketplace sellers, their products and transactions on the Amazon marketplace, which may 

inform Amazon’s retail business decisions.”

1549 In the United States, the Federal Trade Commission 

(FTC) is investigating Amazon’s past acquisition activity.1550 The FTC is also reportedly investigating 

Amazon’s treatment of third-party sellers and its cloud services business.1551 Additionally, Amazon 

reportedly faces antitrust scrutiny by state attorneys general offices in California, Washington, and 

New York.1552

During the course of the investigation, Amazon displayed a lack of candor to the Subcommittee 

in response to questions about its business practices. As Chairman Nadler, Subcommittee Chairman 

Cicilline, and Ranking Member Sensenbrenner, along with other members of the Committee, wrote to 

Mr. Bezos in a bipartisan letter in May of this year, the Subcommittee was troubled that some of the

“statements Amazon made to the Committee about the company’s business practices appear to be 

1547 See, e.g., Data and Privacy Hearing at 3 (statement of Margrethe Vestager, Eur. Comm’r for Competition), 

https://docs.house.gov/meetings/JU/JU05/20191018/110098/HHRG-116-JU05-20191018-SD002.pdf (“[I]n 2017 we 

accepted commitments from Amazon not to introduce or enforce what are sometimes called ‘most-favoured nation’ clauses 

in the e-books market.”); Press Release, Bundeskartellamt, Bundeskartellamt obtains far-reaching improvements in the 

terms of business for sellers on Amazon’s online marketplaces (July 17, 2019), 

https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2019/17_07_2019_Amazon.html (“In 

response to the competition concerns expressed by the Bundeskartellamt, Amazon is amending its terms of business for 

sellers on Amazon’s online marketplaces.”); Amazon online retailer: investigation into anti-competitive practices, 

COMPETITION & MKTS. AUTH. (Oct. 1, 2013), https://www.gov.uk/cma-cases/amazon-online-retailer-investigation-intoanti-competitive-practices (“In light of [Amazon’s] decision to remove the price parity policy and subsequent steps to 

implement that decision . . . the [Office of Fair Trading] has decided to close its investigation on administrative priority 

grounds.”). 

1548 Press Release, Eur. Comm’n, Antitrust: Commission Opens Investigation into Possible Anti-competitive Conduct of 

Amazon (July 17, 2019), https://ec.europa.eu/commission/presscorner/detail/en/IP_19_4291.

1549 CEO Hearing at 4 (statement of Margrethe Vestager, Eur. Comm’r for Competition).

1550 Press Release, Fed. Trade Comm’n, FTC to Examine Past Acquisitions by Large Technology Companies (Feb. 11, 

2020), https://www.ftc.gov/news-events/press-releases/2020/02/ftc-examine-past-acquisitions-large-technology-companies.

1551 Jason Del Rey, Amazon May Soon Face an Antitrust Probe. Here are 3 Questions the FTC is Asking About It., VOX:

RECODE (June 4, 2019), https://www.vox.com/recode/2019/6/4/18651694/amazon-ftc-antitrust-investigation-prime; Dina 

Bass, David McLaughlin & Naomi Nix, Amazon Faces Widening U.S. Antitrust Scrutiny in Cloud Business, BLOOMBERG

(Dec. 4, 2019), https://www.bloomberg.com/news/articles/2019-12-04/amazon-faces-widening-u-s-antitrust-scrutiny-incloud-business.

1552 Tyler Sonnemaker, Amazon is Reportedly Facing a New Antitrust Investigation into its Online Marketplace Led by the 

FTC and Attorneys General in New York and California, BUS. INSIDER (Aug. 3, 2020), 

https://www.businessinsider.com/amazon-antitrust-probe-ftc-new-york-california-online-marketplace-2020-8; Karen Weise 

& David McCabe, Amazon Said to Be Under Scrutiny in 2 States for Abuse of Power, N.Y. TIMES (June 12, 2020), 

https://www.nytimes.com/2020/06/12/technology/state-inquiry-antitrust-amazon.html. 
255

misleading, and possibly criminally false or perjurious.”1553 In light of this concern, Subcommittee staff 

views Amazon’s other claims and representations with a degree of skepticism in instances where they 

conflict with credible sources, such as investigative reporting, interviews with market participants, or 

other evidence uncovered by Subcommittee staff during the investigation.

Amazon.com

a. Market Power

Amazon has significant and durable market power in the U.S. online retail market.1554 The 

company’s actual share of U.S. e-commerce is unknown outside of Amazon because it does not report 

the gross merchandise volume of third-party sales made on its marketplace. A frequently cited analysis 

by market research company eMarketer estimates that Amazon’s share in this market is 38.7%.1555

eMarketer’s estimate, however, is likely understated because its definition of e-commerce is overly 

broad. For example, under eMarketer’s approach to e-commerce, the Auto and Parts category includes 

online sales of cars.1556 In contrast, marketing analytics company Jumpshot estimates that Amazon 

captures an average of 74% of digital transactions across a wide range of product categories.1557 The 

Jumpshot analysis may overstate Amazon’s share because it calculates market share as a percentage of 

transactions made on well-known market participants’ websites, like Amazon, Walmart, and Target, 

but excludes small, online retailers.1558 Based on the information Subcommittee staff gathered during 

its investigation, estimates that place Amazon’s share of U.S. e-commerce at about 50% or higher are 

more credible than lower estimates of 30-40%.1559

1553 Bipartisan Letter from the Chairman, Ranking Member, and Members of H. Comm. on the Judiciary to Jeff Bezos, 

CEO, Amazon.com, Inc. (May 1, 2020), https://judiciary.house.gov/uploadedfiles/2020-05-

01_letter_to_amazon_ceo_bezos.pdf. 

1554 See generally Dig. Competition Expert Panel Report at 30 (finding that recent financial indicators suggest Amazon’s 

“dominan[ce] in a meaningfully distinct sector of online retail” will endure and that “investors are expecting it to retain its 

dominant position, and to earn significantly higher profits in future”); Stigler Report at 78 (“[T]he evidence thus far does 

suggest that current digital platforms face very little threat of entry . . . . [T]he key players in this industry remained the 

same over the last two technology waves, staying dominant through the shift to mobile and the rise of AI. In the past, 

dominant business found it difficult to navigate innovation or disruption waves. By contrast, Facebook, Google, Amazon, 

Apple, and even Microsoft were able to ride these waves without significant impact on market share or profit margins.”).

1555 ANDREW LIPSMAN, TOP 10 US ECOMMERCE COMPANIES 2020, EMARKETER (Mar. 10, 2020), 

https://www.emarketer.com/content/top-10-us-ecommerce-companies-2020.

1556 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00206583 (2019) (on file with Comm.) 

(eMarketer Inc. – Global Ecommerce 2019 Report).

1557 See Kimberly Collins, Google + Amazon: Data on Market Share, Trends, Searches from Jumpshot, SEARCH ENGINE 

WATCH (Aug. 1, 2019), https://www.searchenginewatch.com/2019/08/01/amazon-google-market-share/.

1558 See id.

1559 See Submission from Source 11, to H. Comm. on the Judiciary, 2 (Oct. 14, 2019) (on file with Comm.) (“Amazon has 

amassed at least a 50% share of the ecommerce market and continues to expand, both its market share and the breadth of its 

offerings.”); PYMNTS.COM, WALMART VS. AMAZON, WHOLE PAYCHECK TRACKER: BATTLE FOR THE DIGITAL FIRST 

CONSUMER 6 (2020), https://securecdn.pymnts.com/wp-content/uploads/2020/09/Amazon-Walmart-Whole-Paycheck092020.pdf (estimating Amazon’s market share at 51.2% in Q1 2020 and 44.4% in Q2 2020, but noting U.S. e-commerce
256

In a number of key product categories, ranging from household essentials to sports, fitness and 

outdoors, Amazon is reported to account for well over 50% of online sales.1560 The platform also has 

significant market power over the entire book industry, including sales, distribution, and publishing. In 

the U.S. market, Amazon accounts for over half of all print book sales and over 80% of e-book 

sales.1561

Amazon is the dominant online marketplace. It reportedly controls about 65% to 70% of all 

U.S. online marketplace sales.1562 The platform’s market power is at its height in its dealings with 

third-party sellers, as well as many of its suppliers, which Amazon refers to as vendors. Increasingly, 

Amazon is also gaining market power in certain business-to-business (B2B) online markets through 

Amazon Business, its B2B marketplace.1563

In response to the Committee’s requests for information, Amazon claims that “estimates of 

total retail share are the most appropriate and relevant method of estimating” Amazon’s market 

share.1564 This approach is inconsistent with evidence gathered by Subcommittee staff, conventional 

antitrust analysis of relevant product markets, and common sense. In a recent investigation, for 

example, the FTC concluded that a “relevant market may be divided by channel of sale, resulting in 

increased by 44% over the same period, and that “[f]or Amazon to drop only 7 percent in total eCommerce share with that 

kind of overall increase is actually quite an achievement.”).

1560 See, e.g., Kimberly Collins, Google + Amazon: Data on Market Share, Trends, Searches from Jumpshot, SEARCH 

ENGINE WATCH (Aug. 1, 2019), https://www.searchenginewatch.com/2019/08/01/amazon-google-market-share/; see also

J.P. MORGAN REPORT: RETAIL VS. AMAZON: LIFE IN A POST COVID-19 WORLD 13 (Amazon’s market share of online sales 

of Books & Magazines is 75%).

1561 See, e.g., Ben Evans, What’s Amazon market share?, BENEDICT EVANS https://www.benevans.com/benedictevans/2019/12/amazons-marketshare19#:~:text=Amazon%20has%2050%25%20or%20more,it%20has%20over%2050%25 (“Amazon has 50% or more of 

the US print book market”); Submission from Source 17, to H. Comm. on the Judiciary, 33 (Nov. 14, 2019) (on file with 

Comm.) (“Amazon accounts for roughly 83 percent of all e-book sales, about 90 percent of online print sales, and about 90 

percent of digital audiobook sales.”); Dig. Competition Expert Panel Report at 30 (“In the e-book market, Amazon was 

reported in February 2017 to account for around 88% of total annual unit sales.”). 

1562 Submission from Top Shelf Brands, to H. Comm. on the Judiciary, 26 (Oct. 26, 2019) (on file with Comm.) (citing 

DIGITAL COMMERCE 360, 2019 ONLINE MARKETPLACES REPORT).

1563 See MARKETPLACE PULSE, MARKETPLACES YEAR IN REVIEW 48 (2019), 

https://cdn.marketplacepulse.com/misc/marketplaces-year-in-review-2019.pdf (“Amazon’s ‘business-to-business’, or B2B, 

marketplace is gaining market share faster than its retail operation.”); Phone Interview with Nat’l Ass’n of WholesalerDistributors (Sept. 3, 2020); STACY MITCHELL & OLIVIA LAVECCHIA, REPORT: AMAZON’S NEXT FRONTIER: YOUR CITY’S 

PURCHASING 4 (2018), https://ilsr.org/amazon-and-local-government-purchasing/ (“Amazon is leveraging its growing 

relationship with local governments to induce more businesses to join its Marketplace.”).

1564 Production of Amazon, to H. Comm. on the Judiciary, 3 (Oct. 14, 2019).
257

separate markets for brick-and-mortar sales and online sales.”1565 Illustrating the extent of Amazon’s 

overly broad approach to identifying the relevant market and its top competitors, in response to the 

Committee’s request for “A list of the Company’s top ten competitors,” Amazon identified 1,700 

companies, including Eero (a company Amazon owns), a discount surgical supply distributor, and a 

beef jerky company.1566

Amazon also included single-category companies in response to the Committee’s request for a 

list of Amazon’s top ten competitors. Yet documents produced by Amazon suggest that even in its 

early days it did not view such retailers as direct competitors. For instance, a recap of an Amazon 

marketing presentation identified one of its key points as: “No direct competitors, closest competitors 

would be what you refer to as category driven i.e. Best Buy, Barnes and Noble...etc.”1567

Regardless of the precise boundaries of e-commerce or online marketplaces, the sum of 

evidence that Subcommittee staff examined demonstrates that Amazon functions as a gatekeeper for ecommerce. Amazon is the most-visited website in the world for e-commerce and shopping.1568 In a 

submission to the Committee, an e-commerce market participant said that “many of the 64% of 

American households that have Prime memberships are effectively locked into Amazon for their 

online shopping.”1569 Meanwhile, recent market analysis suggests that over 60% of all online product 

searches in the U.S. begin on Amazon.com.1570

1565 See Complaint at 4, In the Matter of Edgewell Personal Care Co.& Harry’s Inc., No. 9390 (F.T.C. Feb. 2, 2020), 

https://www.ftc.gov/system/files/documents/cases/public_p3_complaint_-_edgewell-harrys.pdf. 

1566 See Production of Amazon, to H. Comm. on the Judiciary, 17 (Oct. 14, 2019) (on file with Comm.).

1567 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-0059575 (Nov. 22, 2010) (on file with Comm.). 

1568 SIMILARWEB, WORLDWIDE E-COMMERCE AND SHOPPING CATEGORY PERFORMANCE (July 2020), 

https://pro.similarweb.com/#/industry/overview/E-commerce_and_Shopping/999/1m/?webSource=Total (Amazon had 2.6 

billion visits in July 2020 compared to 940.8 million visits for eBay). 

1569 Submission from Source 11, to H. Comm. on the Judiciary, 5 (Oct. 14, 2019) (on file with Comm.).

1570 Lucy Koch, Looking for a New Product? You Probably Searched Amazon, EMARKETER (Mar. 31, 2019), 

https://www.emarketer.com/content/looking-for-a-new-product-you-probably-searched-amazon (citing FEEDVISOR, THE 

2019 AMAZON CONSUMER BEHAVIOR REPORT 14 (2019)); see also WUNDERMAN THOMPSON, THE FUTURE SHOPPER 

REPORT 2020 11 (2020), 

https://insights.wundermanthompsoncommerce.com/hubfs/@UK/Landing%20Pages/2020/The%20Future%20Shopper%20

2020/WTC%20-%20The%20Future%20Shopper%20Report%202020.pdf?hsCtaTracking=24d37c38-db5d-4797-bd6c2ea35127ad21%7C70cdff40-3236-48fb-a2ec-c4b298453df9).
258

At the Subcommittee’s hearing on innovation and entrepreneurship, Stacy Mitchell, the CoDirector of the Institute for Local Self-Reliance, described one independent retailer’s attempt to 

survive in e-commerce independent of Amazon:

As its customers moved online, so too did the company. Gazelle Sports built a robust ecommerce site. With scores of enthusiastic reviews on Google and Yelp, the site came 

right up in online searches, yielding a brisk stream of customers and sales. 

But, in 2014, sales began to decline. The problem was that many people in Michigan 

and across the country were no longer starting their online shopping on a search engine, 

where they might find Gazelle Sports. Instead, they were going straight to Amazon. By 

2016, the share of online shoppers bypassing search engines and beginning their 

product search on Amazon had grown to 55 percent. With sales flagging and staff 

reductions underway, the owner of Gazelle Sports . . . made what seemed like a 

necessary decision: Gazelle Sports would join Amazon Marketplace, becoming a thirdparty seller on the digital giant’s platform. “If the customer is on Amazon, as a small 

business you have to say, ‘That is where I have to go,’” he explained. “Otherwise, we 

are going to close our doors.”1571

Interviews with sellers, as well as documents that Subcommittee staff reviewed, make clear that 

Amazon has monopoly power over most third-party sellers and many of its suppliers.1572 Numerous 

sellers told Subcommittee staff in interviews that they cannot turn to alternative marketplaces, 

regardless of how much Amazon may increase their costs of doing business or how badly they are 

treated. David Barnett, the CEO and Founder of PopSockets, a former third-party seller and current 

Amazon supplier, testified about Amazon’s coercive tactics at one of the Subcommittee’s hearings:

I suspect that Amazon is accustomed to behaving this way because most brands cannot 

afford to leave Amazon. They evidently have no choice but to endure tactics that would 

be rejected out of hand in any ordinary relationship whereby the two parties enter into 

the relationship by preference rather than necessity.1573

Sellers feel forced to be on Amazon because that is where the buyers are.1574 At the 

Subcommittee’s sixth hearing, Representative Lucy McBath (D-GA) noted that the evidence the 

1571 Innovation and Entrepreneurship Hearing at 3–4 (statement of Stacy Mitchell, Co-Director, Inst. for Local SelfReliance).

1572 See, e.g., Submission from Top Shelf Brands, to H. Comm. on the Judiciary, 49 (Oct. 26, 2019) (“98% of all of Top 

Shelf’s transaction has taken place on Amazon’s platform.”); see also Dig. Competition Expert Panel Report at 30 

(“Regardless of the view on dominance over a particular defined market, it is clear that for thousands of smaller 

independent online sellers in particular, Amazon’s marketplace is a strategically important gateway to consumers.”).

1573 Competitors Hearing at 3 (statement of David Barnett, CEO and Founder, Popsockets LLC).

1574 Submission from Source 11, to H. Comm. on the Judiciary, 5 (Oct. 14, 2019) (on file with Comm.).
259

Subcommittee collected is at odds with how Amazon describes its relationship with third-party sellers. 

She asked Mr. Bezos:

[Y]ou referred to third party sellers today as “Amazon’s partners” and that your success 

depends on their success. But, over the past year, we’ve heard a completely different 

story. As part of this investigation, we’ve interviewed many small businesses, and they 

use the words like “bullying,” “fear,” and “panic” to describe their relationship with 

Amazon. . . . . You said that sellers have many other attractive options to reach 

customers, but that’s not at all what we found in our investigation . . . . If Amazon 

didn’t have monopoly power over these sellers, do you think they would choose to stay 

in a relationship that is characterized by bullying, fear, and panic?”1575

Mr. Bezos responded that “there are a lot of options” for sellers, and that “[t]here are more and more 

every day.”1576 This claim is inconsistent with the Subcommittee’s investigative record. In a 

submission to the Committee, the Online Merchants Guild, a trade association for small and mediumsized online sellers, said that its members who try to diversify sales across multiple platforms often 

report that they are unable to generate many sales outside of Amazon.1577

An important limit on a seller’s ability to switch from selling on Amazon to selling on its own 

site or a competing platform is that Amazon generally forbids sellers from contacting their 

customers.1578 The packaging and even the order confirmation email for third-party sales feature the 

Amazon brand prominently and do not reference the seller. A typical Amazon customer is unaware of 

the source of the sale.1579 According to the Online Merchants Guild, “Many Amazon sellers use 

1575 CEO Hearing Unofficial Transcript at 88–89 (question of Rep. Lucy McBath, Member, Subcomm. On Antitrust, 

Commercial and Admin. Law).

1576 Id. at 91 (statement of Jeff Bezos, CEO, Amazon.com, Inc.).

1577 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, OMG-000005 (Oct. 23, 2019) (on file with 

Comm.) (“Members who sell across multiple platforms often report the amount of revenue generated outside of Amazon 

including their own eCommerce site, is insignificant, with over 90% of their sales being generated on the platform.”); see 

also Submission from Top Shelf Brands, to H. Comm. on the Judiciary, 60–61 (Oct. 26, 2019) (explaining that it has “no 

viable alternatives” to Amazon, where 98% of its transactions have taken place on Amazon’s platform, eBay accounts for 

1% of its income, and Walmart accounts for less than 1%). 

1578 Selling Polices and Seller Code of Conduct, AMAZON SELLER CENTRAL, 

https://sellercentral.amazon.com/gp/help/external/G1801?language=en_US&ref=efph_G1801_cont_200386250 (last visited 

Sept. 28, 2020); see also Submission from Source 100, to H. Comm. on the Judiciary (Sept. 26, 2020) (raising concerns that 

Amazon permits itself to contact customers about negative reviews for Amazon branded products, while third-party sellers 

are largely barred from customer engagement).

1579 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, OMG-000005 (Oct. 23, 2019) (on file with 

Comm.); see also Submission from Source 11, to H. Comm. on the Judiciary, 3 (Oct. 14, 2019) (on file with Comm.) 

(explaining that “[w]henever an order is shipped through [Fulfillment by Amazon], even if the purchase is made through 

another marketplace, it is likely to arrive in an Amazon-branded box, creating confusion” for customers).
260

websites such as Shopify to try and establish their own eCommerce presence, but without the ability to 

market to their supposed core customer base, their Amazon customers, it’s pretty futile.”1580

Subcommittee staff heard from several market participants that Amazon also has significant 

market power over suppliers. For example, third-party sellers told Subcommittee staff that Amazon 

frequently ignores manufacturer policies that bind sellers.1581 For example, brand manufacturers may 

establish minimum advertised pricing guidelines (MAP) to prevent online retailers from freeriding off 

brick-and-mortar stores’ investments in product display or expertise—such as how to fit a running 

shoe. Amazon’s leverage over suppliers gives it the ability to “break” minimum advertised pricing 

rules and undercut competing sellers on price. In contrast, third-party sellers must abide by the rules. 

As a former third-party seller explained, “Given Amazon’s immense clout, we believe that suppliers 

have no realistic threat to stop selling on Amazon in response to Amazon ‘breaking’ MAP.”1582

Amazon’s internal documents suggest that it does not fear any consequences for failing to comply with 

most vendor policies.1583

Another way that Amazon leverages its market power is to force certain brand manufacturers 

that would prefer to be third-party sellers into being wholesalers. A discussion among Amazon 

executives suggests that certain brands may only be allowed to have a wholesale relationship with 

Amazon even if the brand would prefer to be a third-party seller. In 2016, Sebastian Gunningham, then 

senior vice president of Amazon Marketplace, commented on a list of proposed seller tenets, “I would 

add that there are x,000 suppliers around the world that do not get this choice... I am talking about the 

apple, nikes and p&g, etc... We don’t want to open that door, relationship has to be reseller.”1584

Consistent with this stance, Popsockets CEO and Founder David Barnett testified that Amazon 

attempted to force him into maintaining a wholesale relationship with Amazon Retail despite his 

preference to be a third-party seller or make sales on the marketplace through an authorized 

distributor.1585 A former Amazon employee confirmed that it was not uncommon for Amazon to use its 

brand standards policy to shut down a brand’s third-party seller account and force brands into an 

exclusive wholesaler relationship.1586

1580 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, OMG-000006 (Oct. 23, 2019) (on file with 

Comm.).

1581 See, e.g., Phone Interview with Source 84 (Mar. 4, 2020).

1582 Submission from Source 48, to H. Comm. on the Judiciary, 8 (Nov. 8, 2019) (on file with Comm.).

1583 See, e.g., Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00151722 (Feb. 9, 2009) (on file with 

Comm.) (“[P]lease audit that we are price matching . . . any diapers.com pricing. If this puts us in the soup with P&G on 

their pampers map price, so be it.”); AMAZON-HJC-00206714 (Mar. 8, 2018) (“Why did Walmart break MAP and we 

didn’t?”).

1584 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00190108 (June 6, 2016) (on file with Comm.).

1585 Competitors Hearing at 3 (statement of David Barnett, CEO and Founder, Popsockets LLC).

1586 Submission from Source 91, to H. Comm. on the Judiciary (Sept. 22, 2020) (on file with Comm.).
261

Amazon also enjoys significant market power over online consumers. Amazon uses Prime and 

its other membership programs to lock consumers into the Amazon ecosystem. According to an 

internal analysis, Amazon was willing to pay a credit card company a significant sum in 2013 for 

signing up new Prime members under the assumption that each new member would contribute $527 to 

Amazon’s gross merchandise sales and $46 of gross profit.1587 Amazon estimated that the deal had a 

five-year net present value of $17 million, assuming that it delivered 100,000 paid Prime members.1588

Once Prime members pay the upfront annual membership fee, they are likely to concentrate 

their online purchases with Amazon.1589 According to a recent survey, Prime members spend an 

average of $1,400 annually on Amazon, versus $600 for non-members.1590 As one market participant 

observed, “Prime members will continue to use Amazon and not switch to competing platforms, 

despite higher prices and lower-quality items on Amazon compared to other marketplaces, and despite 

recent increases in the price of a Prime membership.”1591

Other retailers are unable to match Amazon on its ability to provide free and fast delivery for 

such a large volume and inventory of products. Even Walmart, with its extensive national distribution 

network, does not come close to matching Amazon on this measure.1592 Amazon currently offers Prime 

members free, next-day delivery on over 10 million items anywhere in the continental United 

States.1593 Walmart, by contrast, has only about 200,000 products eligible for two-day shipping in 

select markets.1594

1587 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00199845 (Oct. 23, 2013) (on file with 

Comm.).

1588 Id.

1589 See Submission from Source 11, to H. Comm. on the Judiciary, 3 (Oct. 14, 2019) (on file with Comm.) (“Amazon has 

been quite frank about the reality that once consumers invest in Prime, they do most of their online shopping on Amazon in 

order to gain value from the investment in shipping, whereas they might otherwise multisource.”).

1590 Tonya Garcia, Amazon Prime membership exceeds 100 million, MARKETWATCH (Jan. 17, 2019), 

https://www.marketwatch.com/story/amazon-prime-membership-exceeds-100-million-2019-01-17; see also Q1 2020 

Earnings Call, Brian Olsavsky, Sr. Vice Pres. and Chief Fin. Officer, Amazon.com, Inc. (Apr 30, 2020, 5:30 PM) (“We see 

our Prime customers are shopping more often and they have larger basket sizes.”).

1591 Submission from Source 11, to H. Comm. on the Judiciary, 3 (Oct. 14, 2019) (on file with Comm.).

1592 See J.P. MORGAN, RETAIL VS. AMAZON: LIFE IN A POST COVID-19 WORLD (2020),

https://markets.jpmorgan.com/research/email/-lbk68f4/Alp1kP9tQUPS29jlzW_bOg/GPS-3397412-0 (“We believe there 

are no comparable unlimited free shipping offerings available at scale, with Amazon’s large and growing infrastructure 

investments serving as a significant barrier to entry.”)

1593 Prime ̧ AMAZON, https://www.amazon.com/b?ie=UTF8&node=15247183011 (last visited Sept. 28, 2020) (“Free OneDay Delivery . . . Available coast-to-coast on more than 10 million items with no minimum purchase.”).

1594 Press Release, Marc Lore, Pres. and CEO, Walmart eCommerce US, Free NextDay Delivery Without a Membership 

Fee (May 14, 2019), https://corporate.walmart.com/newsroom/2019/05/14/free-nextday-delivery-without-a-membershipfee; Walmart Help Center: NextDay Delivery, https://www.walmart.com/help/article/nextdaydelivery/fd3f1c5cf0ec4682abca8c83f5f0e977 (last visited Sept. 28, 2020) (“Currently, NextDay Delivery is only available 

in select markets.”). 
262

Amazon’s market power is durable and unlikely to erode in the foreseeable future. There are 

several factors that make successful entry or expansion by a challenger to Amazon unlikely. Barriers to 

entry include: (1) network effects, which make it difficult for another marketplace to achieve a 

comparable number of buyers and sellers; (2) switching costs associated with consumers shopping 

outside of the Amazon ecosystem; and (3) the steep costs of building a logistics network comparable in 

size and scope to Amazon’s massive international footprint in fulfillment and delivery. Amazon’s 

internal documents recognize that entry into online commerce “require[s] significant incremental 

investments in brand development, inventory, and marketing/customer acquisition.”1595 Further, 

Amazon expanded its market power by avoiding taxes, extracting state subsidies, and engaging in 

anticompetitive conduct—tactics that have given the company an unfair advantage over actual and 

potential competitors. 

As the COVID-19 pandemic pushes more American shoppers online, Amazon’s market power 

has grown. Evidence shows that Amazon is willing to use its increased market power in e-commerce 

during this crisis to exert pressure on suppliers and favor its own first-party products over those sold by 

third-party sellers. Amazon initially responded to the sudden surge in sales by refusing to accept or 

deliver non-essential supplies from its third-party sellers—a stance that would seem reasonable except 

that Amazon continued to ship its own non-essential products while restricting third-party sellers’ 

ability to use alternative distribution channels to continue selling through Prime.1596 As for suppliers, 

Subcommittee staff heard concerns that the platform used its power as a large buyer to pressure 

suppliers into prioritizing Amazon over other retail customers such as independent grocers.1597

Meanwhile, numerous reports suggest that Amazon is in talks to convert real estate in vacated malls 

into additional Amazon distribution centers, further highlighting how it will continue to amass further 

scale even as its brick-and-mortar counterparts crater.1598

1595 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00154659 (Nov. 23, 2010) (on file with 

Comm.). 

1596 Ron Knox & Shaoul Sussman, How Amazon Used the Pandemic to Amass More Monopoly Power, THE NATION (June 

26, 2020), https://www.thenation.com/article/politics/amazon-bezos-pandemic-monopoly/.

1597 Phone Interview with Nat’l Grocers Ass’n (May 28, 2020) (raising concerns that Amazon and some Big Box retailers 

may have used their buyer power over suppliers during the pandemic to secure inventory at the expense of smaller 

businesses); Letter from Int’l Bhd. Of Teamsters, Commc’n Workers of America, United Food & Commercial Workers 

Int’l Union & Change to Win to Comm’rs of the Fed. Trade Comm’n, at 6 (July 23, 2020) (stating that if seller reports are 

true, “Amazon’s hold over sellers effectively took food from the shelves of neighborhood grocery stores . . . and moved it 

to Amazon’s own warehouses, where it earned fees for Amazon.”); see also Renee Dudley, The Amazon Lockdown: How 

an Unforgiving Algorithm Drives Suppliers to Favor the E-Commerce Giant Over Other Retailers, PROPUBLICA (Apr. 26, 

2020), https://www.propublica.org/article/the-amazon-lockdown-how-an-unforgiving-algorithm-drives-suppliers-to-favorthe-e-commerce-giant-over-other-retailers. 

1598 Esther Fung & Sebastian Herrera, Amazon and Mall Operator Look at Turning Sears, J.C. Penney Stores Into 

Fulfillment Centers, WALL ST. J. (Aug. 9, 2017), https://www.wsj.com/articles/amazon-and-giant-mall-operator-look-atturning-sears-j-c-penney-stores-into-fulfillment-centers-11596992863.
263

b. Merger Activity

Amazon’s acquisition strategy has primarily focused on purchasing its competitors and 

companies that operate in adjacent markets, providing access to additional valuable customer data. 

This strategy has effectively protected and expanded Amazon’s market power in e-commerce and 

helped Amazon extend that power to other markets.

Over the past two decades, Amazon has acquired at least 100 companies.1599 It has been 

particularly aggressive over the past few years, making deals that are bigger and more ambitious 

relative to its historical approach.1600 In 2017, the company made its largest acquisition to date by 

purchasing Whole Foods for $13.7 billion.1601 Amazon’s other large purchases include Ring, which it 

bought for $1.2 billion in 2018; PillPack, which it bought for $1 billion in 2018; and Zappos, which it 

bought for $1.2 billion in 2009.1602 Over the years, Amazon has acquired an assortment of highly 

recognizable companies, including IMDB.com, which it bought in 1998; Audible, which it bought in 

2008; Goodreads, which it bought in 2013; and Twitch, which it bought in 2014.1603

Amazon’s acquisition strategy has led to fewer choices for consumers in terms of differentiated 

online retail channels, as well as reduced competitive pressure in terms of price and quality. 

Additionally, Amazon’s expansion into a diverse array of business lines—from brick-and-mortar 

supermarkets to home security—has reinforced its significant stockpile of consumer data. With more 

data about online and offline consumer behavior, Amazon’s acquisitions set in motion a selfreinforcing cycle, creating an ever-widening gap between the platform and its competitors. As one 

former Amazon employee told Subcommittee staff, “Amazon is first and foremost a data company, 

they just happen to use it to sell stuff.”

1604

1599 See infra Appendix.

1600 Infographic: Amazon’s Biggest Acquisitions, CB INSIGHTS (June 19, 2019), 

https://www.cbinsights.com/research/amazon-biggest-acquisitions-infographic/. 

1601 Id.

1602 Id.

1603 Amazon Acquisitions, MICROACQUIRE, https://acquiredby.co/amazon-acquisitions/ (last visited Oct. 3, 2020).

1604 Interview with Source 91 (May 8, 2020); see also Submission from Artist Rights Alliance, to H. Comm. on the 

Judiciary, 2 (July 31, 2019) (on file with Comm.) (“With respect to the music world, at the heart of this problem lies a 

simple, economic truth – companies like . . . Amazon are not music businesses. They are advertising platforms and data 

machines. As our then-President, Melvin Gibbs, told the New York Times back in 2017, ‘None of these companies that are 

supposedly in the music business are actually in the music business. They are in the data-aggregation business. They’re in 

the ad-selling business. The value of music means nothing to them.’”).
264

Over its history, Amazon has acquired a number of its rivals.1605 A decade ago, Amazon 

acquired two of its direct competitors: Zappos and Quidsi.1606 Documents reviewed by Subcommittee 

staff show that Amazon viewed both online retailers as competitive threats prior to acquiring them. 

Amazon’s 2009 acquisition of Zappos, an online shoe-retailer, marked the company’s first $1 

billion-plus purchase.1607 Acquiring Zappos provided Amazon with two important advantages. First, it 

enabled Amazon to add significant selection to its category of shoes and other fashion-related items at 

a time when expanding its selection was critical to the company’s success.1608 The added selection 

included access to “hold-out” brands, which had previously refused to sell on Amazon.com or 

Amazon’s other online retail store Endless.com.1609 Second, Zappos’ unique approach to customer 

service, marked by “a deeply felt connection with customers,” added an emotional and psychological 

element to Amazon’s relationship with consumers.1610 An Amazon internal planning document from 

2008 referred to Zappos as one of Endless’s “primary competitors,” and notes that “Zappos offers the 

largest selection of brands and styles and carries all of our top holdouts including Nike, Merrell, Keen, 

Cole Haan and Michael Kors.”

1611

About a year later, Amazon acquired Quidsi, the parent company of Diapers.com and 

Soap.com, for about $540 million.1612 Prior to buying it, Amazon identified Diapers.com as its “largest 

and fastest growing competitor in the on-line diaper and baby care space,”

1613 and its “#1 short term 

1605 See Stigler Report at 75 n.152 (“The number of potential competitors purchased by the tech giants is large. For 

example, Amazon has purchased Zappos, Fabric, CDNow, Quorus, Audible, Goodreads, and Quidsi”); TIM WU, THE 

CURSE OF BIGNESS: ANTITRUST IN THE NEW GILDED AGE 124 (Columbia Global Reports ed., 2018) (“Amazon acquired 

would-be competitors like Zappos, Diapers.com, and Soap.com.”).

1606 Amazon Closes Zappos Deal, Ends Up Paying $1.2 Billion, TECHCRUNCH (Nov. 2, 2009), 

https://techcrunch.com/2009/11/02/amazon-closes-zappos-deal-ends-up-paying-1-2-billion/; Confirmed: Amazon Spends 

$545 Million on Diapers.com Parent Quidsi, TECHCRUNCH (Nov. 8, 2010, 9:04 AM), 

https://techcrunch.com/2010/11/08/confirmed-amazon-spends-545-million-on-diapers-com-parent-quidsi/.

1607 Eric Engleman, Amazon and Zappos, Six Months Later: How They’re Fitting Together, PUGET SOUND BUS. J. (May 21, 

2010), https://www.bizjournals.com/seattle/blog/techflash/2010/05/amazon_and_zappos_how_theyre_fitting_together.html.

1608 Bill Taylor, Amazon and Zappos: A Savvy Deal, HARV. BUS. REV. (July 23, 2009), https://hbr.org/2009/07/a-savvydeal-from-amazon-to-za. 

1609 Alistair Barr, Amazon to Close Fashion Website endless.com, REUTERS: INDUS., MATERIALS AND UTILS. (Sept. 18, 

2012), https://www.reuters.com/article/amazon-endless/amazon-to-close-fashion-website-endless-comidUSL1E8KINKD20120918 (quoting an Amazon spokesman who stated that Amazon shut down Endless.com as an 

independent site in 2012 and incorporated it into Amazon’s main website, Amazon.com, “in order to focus on the Amazon 

Fashion experience”). 

1610 Bill Taylor, Amazon and Zappos: A Savvy Deal, HARV. BUS. REV. (July 23, 2009), https://hbr.org/2009/07/a-savvydeal-from-amazon-to-za.

1611 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00170649 (Sept. 23, 2008) (on file with 

Comm.). 

1612 Claire Cain Miller, Amazon Has a Reported Deal to Buy Parent of Diapers.com, N.Y. TIMES (Nov. 7, 2010), 

https://www.nytimes.com/2010/11/08/technology/08amazon.html. 

1613 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00142833 (May 12, 2009) (on file with 

Comm.). 
265

competitor.”

1614 Amazon’s internal documents said that Diapers.com “keep[s] the pressure on pricing 

on us” and provided extremely high customer service levels, which—prior to the merger—had forced 

Amazon to up its game.1615 Amazon executives took swift and predatory action in response to this 

competitive threat. As Representative Mary Gay Scanlon (D-PA) summarized at the Subcommittee’s 

sixth hearing, Amazon’s internal documents “show that Amazon employees began strategizing about 

ways to weaken this company, and, in 2010, Amazon hatched a plot to go after Diapers.com and take it 

out.”

1616 Specifically, Amazon’s documents show that the firm entered into an aggressive price war, in 

which Amazon was willing to bleed over $200 million in losses on diapers in one month.1617

Addressing Mr. Bezos, Representative Scanlon added, “Your own documents make clear that the price 

war against Diapers.com worked, and within a few months it was struggling, and so then Amazon 

bought it.”

1618

In 2017, Amazon shut down Diapers.com, citing profitability issues, though some industry 

experts questioned the legitimacy of this rationale.1619 In shutting down the company, Amazon 

eliminated a differentiated online retailer that consumers loved1620—reducing the number of online 

options for consumers in the diaper and baby care markets. Further, it eliminated a potential competitor 

in other verticals such as household goods, toys, and pets.1621

1614 Id. at AMAZON-HJC-00151722 (Feb. 9, 2009). 

1615 Id. at AMAZON-HJC-00151722–24 (Feb. 9, 2009). 

1616 CEO Hearing Transcript at 81–82 (question of Rep. Mary Gay Scanlon (D-PA), Vice Chair, H. Comm. on the 

Judiciary).

1617 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00057007 (Apr. 5. 2010) (on file with Comm.). 

1618 CEO Hearing Transcript at 82-83 (question of Rep. Mary Gay Scanlon (D-PA), Vice Chair, H. Comm. on the 

Judiciary).

1619 See, e.g., Jason Del Rey, Why Amazon’s Explanation for Shutting Down Diapers.com and Quidsi Stunned Employees, 

VOX: RECODE (Apr. 2, 2017), https://www.vox.com/2017/4/2/15153844/amazon-quidsi-shutdown-explanation-profits.

1620 See, e.g., Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00034097 (Nov. 8, 2010) (on file with 

Comm.) (email from Diapers.com founder Vinit Bharara forwarding a customer testimonial in the form of a poem titled 

“An Ode to Diapers.com,” beginning, “Oh how do I love thee, my Diapers.com?” and ending with “Don’t ever leave me, 

my Diapers.com”).

1621 Id. at AMAZON-HJC-00154656 (noting that “[a]lthough Quidsi is still primarily an online baby care specialty retailer, 

it has recently begun selling new items such as household goods and personal-care products with the launch of Soap.com . . 

. . In the future, management intends to launch additional vertical shopping categories such as beauty, toys and pets.”); 

AMAZON-HJC-00132026 (June 8, 2010) (email from Doug Herrington, Vice President of Consumables, to Jeff Bezos 

stating, “While we find no evidence that alice.com has gotten traction with vendors or customers, and can’t see an 

economic model for them that pencils out, soap.com feels like a more credible threat”).
266

More recently, Amazon acquired Whole Foods, a strategic move to acquire both a 

competitor,1622 and a new source of customer data.1623 Amazon purchased Whole Foods at around 

$13.7 billion, more than 10 times the cost of its second-most expensive acquisition.1624 In addition to 

bolstering its position in the grocery market, Amazon’s purchase of Whole Foods expanded its 

touchpoints with Prime members and gave it access to a unique set of customer information.1625

Specifically, the deal enabled Amazon to monitor and compile data on how the same person shops 

both online and in person, data that is particularly useful for targeted advertising and promotional 

campaigns.1626

While the deal was under review by the FTC, then-Ranking Member Cicilline raised concerns 

that “the proposed acquisition w[ould] result in additional consolidation in the retail sector, erode 

American jobs through increased automation, and threaten local communities through diminished 

economic opportunity for hardworking Americans.”

1627 Amazon’s acquisition of Whole Foods has 

added to the platform’s market power in retail by increasing its buyer power over suppliers,1628 adding 

to the platform’s capabilities in online grocery, and expanding the company’s brick-and-mortar retail 

footprint. In addition, it appears that concerns about diminished economic opportunities may have been 

well-founded as Amazon reportedly plans to implement cashier-less technology across all of its Whole 

Foods stores.1629

1622 Id. at AMAZON-HJC-00172932 (June 22, 2017) (showing analysis that for Amazon Fresh customers who don’t do 

100% shopping on Amazon Fresh, Whole Foods is consistently among the top 5 stand-alone national chains where Amazon 

Fresh customers do their grocery shopping).

1623 Lauren Hirsch, A year after Amazon announced its acquisition of Whole Foods, here’s where we stand, CNBC (June 

15, 2018), https://www.cnbc.com/2018/06/15/a-year-after-amazon-announced-whole-foods-deal-heres-where-westand.html.

1624 Infographic: Amazon’s Biggest Acquisition, CBINSIGHTS (June 19, 2019), 

https://www.cbinsights.com/research/amazon-biggest-acquisitions-infographic/.

1625 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00172090 (June 22, 2017) (on file with Comm.) 

(“[A] survey said about 45% of WFM customers are Prime; and about 20% of Prime members shop at [Whole Foods 

Market].”); Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00173652 (June 23, 2017) (on file with 

Comm.) (“Based on our survey results, we estimate that approximately 46% of Prime members have shopped at a [Whole 

Foods] store in the last four weeks.”). 

1626 Lauren Hirsch, A Year After Amazon Announced Its Acquisition of Whole Foods, Here’s Where We Stand, CNBC (June 

15, 2018), https://www.cnbc.com/2018/06/15/a-year-after-amazon-announced-whole-foods-deal-heres-where-westand.html. 

1627 Letter from Hon. David Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. 

on the Judiciary to Hon. Bob Goodlatte, Chairman, H. Comm. on the Judiciary, Hon. Tom Marino, Chairman, Subcomm. 

on Regulatory Reform, Commercial and Antitrust Law, 3 (July 13, 2017), 

https://cicilline.house.gov/sites/cicilline.house.gov/files/images/Amazon_Whole_Foods_Acquistion.pdf. 

1628 See, e.g., Interview with Source 153 (May 11, 2020); Interview with Nat’l Grocers Ass’n (May 28, 2020). 

1629 Taylor Lyles, Amazon Go’s Cashierless Tech May Come to Whole Foods As Soon As Next Year, THE VERGE (Aug. 24, 

2020), https://www.theverge.com/2020/8/24/21399607/amazon-cashierless-go-technology-whole-foods-2021-rumor. 
267

In recent years, Amazon has also made several significant acquisitions of home security 

companies, further expanding its reach and visibility into Americans’ homes. An Amazon executive 

described the company’s in-home strategy by noting, “Two senses matter – eyes and ears.”

1630 In 2017, 

Amazon paid $90 million to acquire Blink, a home security camera company whose technology and 

energy-efficient chips could be used by Amazon in its Echo Speakers and other products.1631 In 2018, 

Amazon spent $1.2 billion to acquire Ring, a home-security system spanning cameras, doorbells, and 

floodlights.1632 Ring’s “eyes and ears” add significant value to Amazon’s smart home, allowing 

customers to virtually interact with Amazon delivery personnel and instruct them on where to drop off 

Amazon packages.1633 Amazon’s significant investments in the Internet of Things ecosystem and its 

strategy, centered on Amazon’s voice assistant, Alexa, are discussed in other parts of this Report.

Other notable acquisitions include Kiva Systems in 2012, which provided Amazon with a 

robotics company that accelerated its ability to streamline picking, packing, and shipping e-commerce 

products;1634 and PillPack in 2018, which equips Amazon with an online pharmacy and marks its entry 

into the pharmaceutical market.1635

Amazon’s acquisition of Kiva gave it power over an important input for competitors. When 

Amazon bought the robotics company, Kiva was supplying technology to a large number of retailers, 

including Gap, Staples, and Walgreens.1636 Many of these customers had invested a sunk cost of $4 

million to $6 million per warehouse in order to make use of Kiva’s technologies.1637 Kiva had 

promised to keep shipping its technology to non-Amazon customers—regardless of whether they 

competed with Amazon—but in 2015, Amazon rebranded the company as Amazon Robotics and 

1630 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00170877 (Oct. 11, 2017) (on file with 

Comm.).

1631 Jeffrey Dastin, Amazon Quietly Dropped $90 Million on a Camera Startup Last Year to Acquire its Unique Chip 

Technology, BUS. INSIDER (Feb. 12, 2018, 8:54 AM), https://www.businessinsider.com/amazon-blink-camera-makeracquisition-2018-2. 

1632 Dennis Green, Amazon’s $1 Billion Acquisition of the Door Camera Startup Ring is the Company Doing What It Does 

Best – and it Should Terrify Every Other Retailer, BUS. INSIDER (Mar. 3, 2018), https://www.businessinsider.com/whyamazon-acquired-ring-2018-3. 

1633 Id.

1634 Leena Rao, Amazon Acquires Robot-Coordinated Order Fulfillment Company Kiva Systems For $775 Million In Cash, 

TECHCRUNCH (Mar. 19, 2012), https://techcrunch.com/2012/03/19/amazon-acquires-online-fulfillment-company-kivasystems-for-775-million-in-cash/.

1635 Christina Farr, The Inside Story of Why Amazon Bought PillPack in its Effort to Crack the $500 Billion Prescription 

Market, CNBC (May 13, 2019), https://www.cnbc.com/2019/05/10/why-amazon-bought-pillpack-for-753-million-andwhat-happens-next.html. 

1636 Evelyn M. Rusli, Amazon.com to Acquire Manufacturer of Robotics, N.Y. TIMES: DEALBOOK (Mar. 19, 2012), 

https://dealbook.nytimes.com/2012/03/19/amazon-com-buys-kiva-systems-for-775-million/.

1637 Mick Mountz, Kiva the Disrupter, HARV. BUS. REV. (Dec. 2012), https://hbr.org/2012/12/kiva-the-disrupter.
268

announced it would stop servicing other firms.1638 Amazon stated that retailers seeking to use Kiva’s 

robots would need to use Amazon Services to fulfill orders with Amazon’s technology in Amazon’s 

warehouses.1639

Documents Subcommittee staff reviewed relating to the PillPack deal, meanwhile, give insight 

into how Amazon views some acquisitions as opportunities to collect additional customer data and to 

cross-sell across its different business lines. One Amazon executive summarized a potential upside of 

the PillPack deal, asking, “Is there a cross-selling opportunity with amazon.com based on known 

maladies from prescriptions? Or is this prohibited by privacy law? My understanding is there is a 

number of different ways we could cross-sell customers in both directions (Rx<>non-Rx).”

1640 Though 

it is unclear whether and the extent to which Amazon implemented this strategy, the exchange reveals 

how Amazon assesses potential acquisitions and the cross-business opportunities they create, 

suggesting that the firm views its vast operations in a highly integrated manner.

The FTC investigated several of these transactions, including Amazon’s acquisition of Quidsi, 

the parent company of Diapers.com,1641 and Whole Foods.1642 The agency declined, however, to 

challenge any of them as a violation of antitrust law despite (1) strong evidence, in some cases, of 

direct head-to-head competition on price and quality between the merging firms; and (2) evidence that 

many of these mergers would enable Amazon to expand or entrench its market power, particularly in 

e-commerce. For most, if not all, of the acquisitions discussed in this Report, the FTC had advance 

notice of the deals but did not attempt to block any of them. 

In addition to eliminating competitive threats, Amazon’s acquisition strategy has expanded and 

protected the company’s dominance. The company’s significant expansion into new markets, paired 

with Amazon’s wealth of data from its retail business, has fueled the platform’s increasing market 

power. Amazon Associate General Counsel Nate Sutton testified at the Subcommittee’s hearing last 

July that “Amazon is proud to be a company of builders and we have built our company from within, 

not through acquisitions.”

1643 But the evidence examined during the investigation demonstrates that 

1638 Adam Putz, M&A flashback: Amazon announces $775M Kiva Systems acquisition, PITCHBOOK (Mar. 19, 2018), 

https://pitchbook.com/news/articles/ma-flashback-amazon-announces-775m-kiva-systems-acquisition.

1639 Id.

1640 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00172665 (May 23, 2018) (on file with 

Comm.).

1641 Letter from April Tabor, Acting Sec. of the Fed. Trade Comm’n, to Thomas Barnett (Aug. 22, 2012), 

https://www.ftc.gov/sites/default/files/documents/closing_letters/amazon.com-inc./quidsi-inc./110323amazonlubek.pdf.

1642 Press Release, Federal Trade Comm’n, Statement of Federal Trade Commission’s Acting Director of the Bureau of 

Competition on the Agency’s Review of Amazon.com, Inc.’s Acquisition of Whole Foods Market Inc. (Aug. 23, 2017), 

https://www.ftc.gov/news-events/press-releases/2017/08/statement-federal-trade-commissions-acting-director-bureau.

1643 Innovation and Entrepreneurship Hearing Transcript at 39 (statement of Nate Sutton, Assoc. Gen. Counsel, 

Competition, Amazon.com, Inc.).
269

Amazon’s acquisitions—including acquisitions of its direct competitors—have been key to Amazon’s 

attainment, maintenance, and expansion of market power.

c. Conduct

i. Treatment of Third-Party Sellers

1) Bullying

While Amazon has referred to third-party sellers on its Marketplace as “partners,” and 

“customers,”

1644 numerous small and medium-sized businesses told the Subcommittee that Amazon 

routinely bullies and mistreats them. The Online Merchants Guild, a trade association representing the 

interests of sellers engaged in online commerce, stated that they “have seen Amazon use their position 

of strength to take advantage of sellers.”

1645

Underlying Amazon’s public-facing rhetoric is the reality that it views many of the sellers on 

its platform as competitors. In its internal documents, Amazon refers to third-party sellers as “internal 

competitors.”

1646 At the Subcommittee’s sixth hearing, Subcommittee Chairman Cicilline asked Mr. 

Jeff Bezos about Amazon’s apparent doublespeak.1647 In response, Mr. Bezos conceded, “[I]t wouldn’t 

surprise me. In some ways, we are competing.”

1648

Over the course of the investigation, the Subcommittee heard from numerous sellers who 

described abusive tactics or mistreatment by Amazon in a variety of circumstances. For example, at the 

Subcommittee’s fifth hearing, CEO and Founder of PopSockets David Barnett testified about 

Amazon’s bullying tactics, which he said were enabled by “the asymmetry in power between Amazon 

and its partners.”

1649 He stated that after the two companies decided on a minimum price at which 

Amazon would sell PopSockets, Amazon sold the products for a lower price and then demanded that 

1644 See, e.g., CEO Hearing at 44 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.) (“Amazon 

makes significant investments to support Amazon’s selling partners.”); CEO Hearing at 41 (response to Questions for the 

Record of Jeff Bezos, CEO, Amazon.com, Inc.) (“Amazon recognizes that third-party sellers are our customers too, and 

their trust is critical to Amazon’s success.”).

1645 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 3 (Oct. 29, 2019) (on file with Comm.).

1646 See, e.g., Production from Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00206715 (Mar. 8, 2016) (on file 

with Comm.) (describing change to manual Pricing Rules when Amazon offer is competing with “internal 3P competitor” 

offers); AMAZON-HJC-00038917 (Sept. 2009) (describing proposal on “how to treat FBA sellers differently from other 

Buy Box (BB) eligible 3P sellers when we’re matching internal competitors for non-media categories.”); AMAZON-HJC00142724 (defining Amazon’s “Standard Price Matching Policy,” and conditions when “Internal competitors (3P 

merchants) are matched” on price”).

1647 CEO Hearing Transcript at 93 (question of Rep. Cicilline (D-RI), Chairman, Subcomm. on Antitrust, Commercial and 

Admin. Law).

1648 Id. (statement of Jeff Bezos, CEO, Amazon, Inc.)

1649 Competitors Hearing at 5 (statement of David Barnett, CEO and Founder, Popsockets LLC), 
270

PopSockets pay for the lost margin.1650 As a result, PopSockets decided to end its relationship with 

Amazon Retail.1651 When PopSockets communicated this intent to Amazon, its response was, “No, you 

are not leaving the relationship.”

1652 PopSockets did sever its relationship with Amazon Retail for a 

period of time, but reestablished it about a year later.1653 Mr. Barnett estimates that in 2019 his 

company incurred losses of $10 million in revenue from when he stopped selling to Amazon Retail and 

Amazon blocked one of his authorized distributors from selling on the marketplace.1654

Subcommittee staff learned about numerous other instances of Amazon employing strong-arm 

tactics in negotiations. A company that conducts business with multiple divisions of Amazon described 

how the platform leveraged its dominance in e-commerce to force acceptance of certain terms and 

conditions during negotiations over a different part of its business.1655 According to this company, 

Amazon knows the power they have as a retailer. In the midst of negotiations, the platform repeatedly 

referenced its power to destock the company’s products on Amazon.com as a “bargaining chip to force 

terms” unrelated to retail distribution on the company.1656 The company added, “Amazon know[s] they 

have a lot of power [in retail e-commerce] and they are not afraid to use it to get terms they want in 

other markets.”

1657

Book publishers described a similar asymmetric power dynamic with Amazon. According to 

one publisher, “Amazon has used retaliation . . . to coerce publishers to accept contractual terms that 

impose substantial penalties for promoting competition” with Amazon’s rivals.1658 The publisher added 

that the platform’s retaliatory conduct shows “Amazon’s ability and willingness to leverage its market 

power to prevent publishers from working effectively with rival e-book retailers and, thereby, maintain 

and enhance its dominance in e-book distribution.”

1659 Amazon’s retaliatory tactics against publishers 

include removing the “buy” button, which blocks a customer’s ability to purchase a publisher’s current 

titles;1660 and removing the “pre-order” button, which eliminates the ability for a consumer to pre-order 

1650 Id. at 22 (statement of David Barnett, CEO and Founder, Popsockets LLC).

1651 Id.

1652 Id. at 23.

1653 Id. at 3–4 (statement of David Barnett, CEO and Founder, Popsockets LLC).

1654 Id. at 4 (statement of David Barnett, CEO and Founder, Popsockets LLC).

1655 Interview with Source 148 (Aug. 26, 2020).

1656 Id.

1657 Id.

1658 Submission from Source 17, to H. Comm. on the Judiciary, 13 (Nov. 14, 2019) (on file with Comm.).

1659 Id. at 3 (Sept. 22, 2020) (on file with Comm.).

1660 See, e.g., David Streitfeld, Amazon Pulls Thousands of E-Books in Dispute, N.Y TIMES: Bits (Feb. 22, 2012), 

https://bits.blogs.nytimes.com/2012/02/22/amazon-pulls-thousands-of-e-books-in-dispute/?hpw.
271

a publishers’ forthcoming titles.1661 Another form of retaliation that Amazon reportedly engaged in was 

showing publishers’ titles as out of stock or with delayed shipping times.1662 According to credible 

reports, Amazon used these tactics in its public battle with Hachette Book Group in 2014 over e-book 

pricing,1663 and has used them or threatened to use them in more recent negotiations.1664 Publishers, 

authors, and booksellers have “significant fear” because of Amazon’s dominance.1665

Amazon can treat sellers in this manner because it knows that sellers have no other realistic 

alternatives to the platform. As Mr. Barnett noted in his testimony:

When there is bullying by an extremely successful company with all these partners that 

continue to do business with it, one has to ask how is it that such a successful business 

maintains partnerships with so many companies while bullying them. It is because of 

the power asymmetry . . . that companies tolerate this.1666

A recent complaint filed against Amazon described the situation as follows, “From the thirdparty retailers’ perspective, Amazon Marketplace is like Hotel California, a lovely place to start or 

expand an online retail business, but check out from Amazon Marketplace and you can quickly find 

your business in bankruptcy.”

1667 Additional comments from sellers that Subcommittee staff 

interviewed include, “We’re stuck. We don’t have a choice but to sell through Amazon,”

1668 and, 

referring to Amazon, “They’ve never been a great partner, but you have to work with them.”

1669

As Stacy Mitchell, Co-Director of the Institute for Local Self-Reliance, noted during the 

Subcommittee’s hearing on Innovation and Entrepreneurship, “Among the most egregious examples of 

Amazon’s arbitrary treatment of sellers are its abrupt suspensions of their accounts, frequently made 

without explanation.”

1670 Once Amazon suspends a seller’s account or delists its products, the business 

is left with largely ineffective remedies as they watch their sales disappear. Sellers shared with 

Subcommittee staff that communications to Amazon’s Seller Support Central generally prompt 

1661 See, e.g., Polly Mosendz, Amazon Blocks Pre-orders Of Hachette Books, THE ATLANTIC (May 23, 2014), 

https://www.theatlantic.com/business/archive/2014/05/amazon-blacklists-hachette-books/371545/. 

1662 See, e.g., David Streitfeld, Writers Feel an Amazon-Hachette Spat, N.Y. TIMES (May 9, 2014), 

https://www.nytimes.com/2014/05/10/technology/writers-feel-an-amazon-hachette-spat.html. 

1663 Id.

1664 See Interview with Source 155 (Sept. 29, 2020); Submission from Source 17, to H. Comm. on the Judiciary, 13–18 

(Nov. 14, 2019) (on file with Comm.).

1665 Interview with Ass’n of American Publishers, The Authors Guild & American Booksellers Ass’n (Aug. 26, 2020).

1666 Competitors Hearing at 23 (statement of David Barnett, CEO and Founder, Popsockets LLC).

1667 Class Action Complaint at 20, Frame-Wilson v. Amazon.com, Inc., No. 20-cv-00424 (W.D. Wash. Mar. 9, 2020).

1668 Interview with Source 150 (July 11, 2020).

1669 Interview with Source 151 (July 2, 2020).

1670 Innovation and Entrepreneurship Hearing at 9 (statement of Stacy Mitchell, Co-Director, Inst. for Local Self Reliance). 
272

automated, unhelpful responses, which may be entirely unrelated to the specific case, question, or 

concern raised by the seller.1671

The founder of an infant product sold on Amazon told Subcommittee staff that after her 

products were mistakenly delisted, “[i]t would take weeks of repeated calls—at least 10 or 15 contacts 

with Seller Support—before somebody inside would determine that it was a mistake and error,” and 

take action to fix the problem.1672 She stated that this happened at least six times, and that in each 

instance her listings would be down for two to three weeks at a time.1673 Describing how Amazon’s 

mistakes can threaten a new business’s survival, this small-business owner said: 

When you’re a new company and Amazon suddenly delists you, it creates fear in the 

customer. “Where did it go? Is there something wrong with the product? What 

happened?” If a customer searched and it’s no longer there, they’re unlikely to ever 

come back and buy it . . . You’ve probably lost that customer for good.1674

In another example, a third-party bookseller told Subcommittee staff that Amazon delisted 99% 

of his business’s inventory in September 2019.1675 The bookseller requested that Amazon return its 

products, which were stored in Amazon’s warehouses.1676 As of July 2020, Amazon had only returned 

a small fraction of the bookseller’s inventory and continued to charge him storage fees.1677 Amazon 

blocked the bookseller both from selling its products on its marketplace and retrieving its inventory, 

precluding the seller from trying to recover some of his losses by making sales through another, albeit 

lesser, channel. At the Subcommittee’s sixth hearing, Representative McBath presented the 

bookseller’s story to Mr. Bezos, who responded that this treatment is “not the systematic approach that 

[Amazon] take[s].”

1678 However, evidence Subcommittee staff collected through extensive seller 

interviews shows that Amazon’s poor treatment of sellers is far from an isolated incident—a fact 

1671 Interview with Source 125 (Jan. 9, 2020); see also Submission from Joel Hellmann, to H. Comm. on the Judiciary (July 

31, 2019) (on file with Comm.) (responding to automated messaged, “If you were a person and not a robot you would have 

read that I already tried this and it failed.”).

1672 Interview with Source 149 (July 22, 2020).

1673 Id.

1674 Id.

1675 Interview with Source 125 (July 7, 2020).

1676 Id.

1677 Id.

1678 CEO Hearing Transcript at 89 (statement of Jeff Bezos, CEO, Amazon.com, Inc.).
273

supported both by public posts on Amazon’s Seller Central forum,1679 as well as pleas for help 

routinely sent directly to Mr. Bezos.1680

Because of the severe financial repercussions associated with suspension or delisting, many 

Amazon third-party sellers live in fear of the company.1681 For sellers, Amazon functions as a “quasistate,” and many “[s]ellers are more worried about a case being opened on Amazon than in actual 

court.”

1682 This is because Amazon’s internal dispute resolution system is characterized by uncertainty, 

unresponsiveness, and opaque decision-making processes. 

Additionally, the sellers interviewed by Subcommittee staff generally indicated that Amazon’s 

customer service and treatment towards them have declined significantly in recent years. One business 

owner, who has been selling on Amazon for over a decade, told Subcommittee staff that in the past, a 

seller could get meaningful assistance by talking to an Amazon representative over the phone.1683 He 

said, “I used to think that Amazon was a partner,” but, now, “I don’t think they care about the third 

party seller . . . . They treat us as a commodity.”

1684 Internal Amazon documents suggest that the 

company’s hyper-focus on a cost-cutting strategy to adopt automated processes for nearly 

everything—which Amazon refers to as “HOTW” or “Hands off the wheel”

1685—combined with the 

platform’s monopoly power over sellers may be to blame for Amazon’s atrocious levels of customer 

service for sellers.

1679 See, e.g., iNOVATECH_MEDICAL, Inventory being held hostage by Amazon for 3 months, AMAZON SERVICES 

SELLER FORUMS (Apr. 8, 2020, 10:30 PM), https://sellercentral.amazon.com/forums/t/inventory-being-held-hostage-byamazon-for-3-months/607892. 

1680 See Josh Dzieza, Prime and Punishment: Dirty Dealing in the $175 Billion Amazon Marketplace, THE VERGE (Dec. 19, 

2018), https://www.theverge.com/2018/12/19/18140799/amazon-marketplace-scams-seller-court-appeal-reinstatement

(“Emailing the richest man in the world is actually the standard method of escalating an Amazon seller appeal. It’s called a 

Jeff Bomb, or . . . a Jeff Letter.”); Interview with Chris McCabe, Founder, ecommerceChris LLC (Dec. 30, 2019) (“Out of 

desperation, some sellers try to email Jeff Bezos directly.”); Submission from Source 125, to H. Comm. on the Judiciary 

(Jan. 27, 2020) (on file with Comm.); Submission from Source 150, to H. Comm. on the Judiciary (Aug. 16, 2017) (on file 

with Comm.).

1681 See, e.g., Submission from Source 125, to H. Comm. on the Judiciary (July 17, 2020) (on file with Comm.) (“My 

pregnant wife had to visit the ER due to increased anxiety and fear for the future . . . . Due to Amazon’s stature, influence, 

and bullying nature, we are afraid of retaliation.”); Interview with Source 154 (July 2, 2019) (“[Amazon] know[s] that small 

sellers have no power and no ability to avoid them,” because “they are the powerhouse giant in the transaction and they 

could crush us.”). See also Submission from Nat’l Ass’n of Wholesaler-Distributors, to H. Comm. on the Judiciary, 3 (July 

22, 2020) (on file with Comm.) (“Small businesses that depend upon Amazon for access to their markets, including many 

of our members, fear retribution by Amazon if they speak up.”).

1682 Josh Dzieza, Prime and Punishment: Dirty Dealing in the $175 Billion Amazon Marketplace, THE VERGE (Dec. 19, 

2018), https://www.theverge.com/2018/12/19/18140799/amazon-marketplace-scams-seller-court-appeal-reinstatement.

1683 Interview with Source 152 (Sept. 18, 2020).

1684 Id.

1685 See, e.g., Production from Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00227277 (on file with Comm.) 

(“The implementation of Hands Off the Wheel in [Site Merchandising] will mean that through automation . . . there is less 

work for humans. . . . Project Tiger combines all Hands off the Wheel (HOTW) programs and Amazon spans of control 

guidelines.”); AMAZON-HJC-00227278 (Apr. 27, 2017) (“We are pursuing three tracks to drive Productivity savings: 1) 

FCF initiatives; 2) HOTW; and 3) Defect Reduction & Catalog Improvement.”). 
274

Amazon has recently monetized the degradation of its seller services, rolling out a program 

where sellers can pay an extra fee for a dedicated account representative. Sellers are supposed to pay 

for representatives to help them solve the very problems that Amazon created in the first place. Many 

sellers say, however, that even with paid Amazon account managers they are often unable to get their 

issues resolved. One seller told Subcommittee staff, “It [i]s a problem that an algorithm can make a 

decision that just shuts off my income stream and there’s nothing I can do to get it back . . . . The only 

thing I can do to get it back is pay $6,000 a month for a dedicated rep and even then, it doesn’t always 

work.”

1686

The last resort for sellers facing these circumstances is the “Jeff Bomb,” or “Jeff Letter,” in 

which a seller sends an email to Mr. Bezos to plead their case.1687 As the Online Merchants Guild 

explained in its submission, “a ‘Jeff Letter’ is almost like a Writ of Certiorari within Amazon’s internal 

kangaroo court system.”

1688 But by the time this point is reached, “a seller could be locked out of their 

account, or denied funds, for weeks, losing hundreds of thousands of dollars even if the mistake was 

Amazon’s.”

1689 Because of the large volume of sellers who reach this point of last resort, sending a 

“Jeff Letter” is not a realistic avenue for most sellers to get their issues addressed.

2) Forced Arbitration

All of Amazon’s third-party sellers and most of its vendors are subject to a pre-dispute, binding 

(“forced”) arbitration clause,1690 requiring them to sign away the right to their day in court if a dispute 

with Amazon arises. Subcommittee staff heard from sellers who said that if it were not for Amazon’s 

market power over them, they would not agree to this term.1691 As noted by the Online Merchants 

Guild, “Through arbitration, Amazon knows it holds all the cards, and in many ways has the final say 

1686 Interview with Source 149 (July 22, 2020). See also Submission from Source 100, to H. Comm. on the Judiciary 

(identifying one concern with Amazon’s treatment of sellers as, “Pay or Die - Forcing sellers to pay for their support 

services to correct Amazon’s wrong doings”). 

1687 Josh Dzieza, Prime and Punishment: Dirty Dealing in the $175 Billion Amazon Marketplace, THE VERGE (Dec. 19, 

2018), https://www.theverge.com/2018/12/19/18140799/amazon-marketplace-scams-seller-court-appeal-reinstatement

(“Emailing the richest man in the world is actually the standard method of escalating an Amazon seller appeal. It’s called a 

Jeff Bomb, or . . . a Jeff Letter.”). See also Interview with Chris McCabe, Founder, ecommerceChris LLC (Dec. 30, 2019) 

(“Out of desperation, some sellers try to email Jeff Bezos directly.”); Submission from Source 125, to H. Comm. on the 

Judiciary (Jan. 27, 2020) (on file with Comm.); Submission from Source 150, to H. Comm. on the Judiciary (Aug. 16, 

2017) (on file with Comm.).

1688 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 3 (Oct. 29, 2019) (on file with Comm.).

1689 Id.

1690 Data and Innovation Hearing at 49–50 (response to Questions for the Record, Nate Sutton, Assoc. Gen. Counsel, 

Amazon.com, Inc.); Amazon Services Business Solutions Agreement, AMAZON SELLER CENTRAL, 

https://sellercentral.amazon.com/gp/help/external/G1791 (last visited Sept. 29, 2020). 

1691 See, e.g., Interview with Source 125 (Jan. 9, 2020) (explaining reason for agreeing to Amazon’s terms, “What can I do? 

They don’t give me much choice. You are so small that you don’t have any leverage.”).
275

whenever there is a dispute.”

1692 As a result, sellers rarely initiate arbitration actions against Amazon. 

Between 2014 and 2019, even as the number of Amazon sellers continued to grow by hundreds of 

thousands per year, only 163 sellers and 16 vendors initiated arbitration proceedings.1693 Because 

sellers are generally aware that the process is unfair and unlikely to result in a meaningful remedy, they 

have little incentive to bring an action.

As extensive scholarship has shown, forced arbitration often fails to provide a legitimate forum 

for resolving disputes and instead usually serves to insulate those engaging in wrongdoing from 

liability.1694 The case of Amazon sellers is no different. In practice, arbitration functions as a way for 

Amazon to keep disputes within its control, with the scales tipped heavily in its favor. As such, 

Amazon can withhold payments from sellers, suspend their accounts without cause, and engage in 

other abusive behavior without facing any legal consequences for its actions.1695

3) Seller Fee Increases

Amazon’s treatment of sellers indicates that it sees them as a source of profit, rather than 

“Amazon’s treatment of sellers indicates that it sees them as a source of profit, rather than 

“partners.”

1696 Individuals and small businesses who depend on access to the platform to make sales 

report that Amazon has raised seller fees significantly over the past decade. Over the past five years, a 

recent Institute for Local Self-Reliance report estimates that Amazon added an extra 11% to its cut of 

third-party sales.1697 The platform now takes an average of 30% of each sale compared to 19% in 

2015.1698 In 2018, third-party sellers paid Amazon $39.7 billion in fees, which totaled about 25% of 

Amazon’s $160 billion in Gross Merchandise Volume.1699 This amount includes commissions, 

1692 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 3 (Oct. 29, 2019) (on file with Comm.).

1693 Data and Innovation Hearing at 49–51 (response to Questions for the Record, Nate Sutton, Assoc. Gen. Counsel, 

Amazon.com, Inc.).

1694 See Cynthia Estlund, The Black Hole of Mandatory Arbitration, 96 N.C. L. REV. 679, 684 (2018) (stating that mandatory 

arbitration “effectively enables employers to nullify employee rights and to insulate themselves from the liabilities that 

back up crucial public policies”); see also Judith Resnik, Diffusing Disputes: The Public in the Private of Arbitration, the 

Private in Courts, and the Erasure of Rights, 124 YALE L.J. 2804, 2873 (2015) (“Mandated arbitration is also common in 

web-based sales.”).

1695 See Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 3 (Oct. 29, 2019) (on file with Comm.).

1696 See, e.g., Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00206936 (Nov. 8, 2013) (on file with 

Comm.) (“Seems like we should be making more on the seller loans. . . . Net takeaway is that sellers may be getting too 

good of a deal... There are different ways to fix... commitment fees, higher rates, etc.. We should get rewarded for 

satisfying a timing spike like this.”).

1697 STACY MITCHELL, RON KNOX & ZACH FREED, INST. OF LOCAL SELF-RELIANCE, REPORT: AMAZON’S MONOPOLY 

TOLLBOOTH 3 (2020), https://ilsr.org/amazons_tollbooth/. 

1698 Id. See also Interview with Jason Boyce, Founder & CEO, Avenue7Media, LLC (Sept. 15, 2020) (estimating that most 

sellers are currently paying an average of 35% in fees to Amazon when you add up the referral fees and payments for ads 

based on his experience).

1699 MARKETPLACE PULSE, MARKETPLACES YEAR IN REVIEW 4 (2019), 

https://cdn.marketplacepulse.com/misc/marketplaces-year-in-review-2019.pdf.
276

fulfillment and shipping fees, and other third-party seller services, but does not include revenue from 

the advertising fees for third-party sellers,1700 which are often substantial.1701 An internal Amazon 

document suggests the company can increase fees to third-party sellers without concern for them 

switching to another marketplace. The document notes that the amount of “seller attrition as a result of 

[2018] fee increases” for its Fulfillment by Amazon program was “[n]othing significant.”

1702

Amazon’s pattern of exploiting sellers, enabled by its market dominance, raises serious 

competition concerns. For many sellers, there is no viable alternative to Amazon, and a significant 

number of sellers rely on its marketplace for their entire livelihood.1703

4) Appropriation of Third-Party Seller Data

One of the widely reported ways in which Amazon treats third-party sellers unfairly centers on 

Amazon’s asymmetric access to and use of third-party seller data.1704 During the investigation, the 

Subcommittee heard repeated concerns that Amazon leverages its access to third-party sellers’ data to 

identify and replicate popular and profitable products from among the hundreds of millions of listings 

on its marketplace.1705 Armed with this information, it appears that Amazon would (1) copy the 

product to create a competing private-label product;1706 or (2) identify and source the product directly 

from the manufacturer to free ride off the seller’s efforts, and then cut that seller out of the 

equation.1707

Amazon claims that it has no incentive to abuse sellers’ trust because third-party sales make up 

nearly 60% of its sales, and that Amazon’s first-party sales are relatively small.1708 Amazon has 

1700 Id.

1701 See, e.g., Interview with Top Shelf Brands (Sept. 29. 2020) (estimating Top Shelf paid Amazon over $1 million in fees 

for advertising in one year); Submission from Top Shelf, to H. Comm. on the Judiciary, Ex. 1 (Oct. 26, 2019) (on file with 

Comm.).

1702 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00186540 (Jan. 30, 2018) (on file with Comm.). 

1703 See, e.g., JUNGLESCOUT, THE STATE OF THE AMAZON SELLER 2020 4 (2020), https://www.junglescout.com/wpcontent/uploads/2020/02/State-of-the-Seller-Survey.pdf (“More than a third (37%) of sellers [surveyed] earn income from 

Amazon sales alone.”).

1704 Innovation and Entrepreneurship Hearing at 5 (statement of Stacy Mitchell, Co-Director, Inst. for Local Self-Reliance) 

(“Amazon’s [gatekeeper power] allows it to maintain a God-like view of the transactions of rival businesses and customers, 

and use this data to move into new markets with a built-in advantage.”).

1705 See, e.g., Interview with Source 158 (July 2, 2020); Submission from Nat’l Ass’n of Wholesaler-Distributors, to H. 

Comm. on the Judiciary (July 22, 2020) (on file with Comm.).

1706 See, e.g., Interview with Jason Boyce, Founder & CEO, Avenue7Media (Sept. 15, 2020).

1707 See, e.g., Submission from Nat’l Ass’n of Wholesaler-Distributors, to H. Comm. on the Judiciary (July 22, 2020) (on 

file with Comm.). 

1708 CEO Hearing at 23 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).
277

similarly pointed out that third-party listings far outnumber Amazon’s first-party listings.1709 In a 

recent shareholder letter, CEO Jeff Bezos wrote, “Third-party sellers are kicking our first-party butt. 

Badly.”

1710 In response to a question from the Subcommittee, however, Amazon admitted that by 

percentage of sales—a more telling measure—Amazon’s first-party sales are significant and growing 

in a number of categories. For example, in books, Amazon owns 74% of sales, whereas third-party 

sellers only account for 26% of sales.1711 At the category level, it does not appear that third-party 

sellers are kicking Amazon’s first-party butt. Amazon may, in fact, be positioned to overtake its thirdparty sellers in several categories as its first-party business continues to grow.

Third-Party vs. First-Part Listings and Sales on Amazon1712

Amazon recognizes that it competes against many of its third-party sellers.1713 In response to 

concerns about its unfair use of third-party seller data, Amazon points to its Seller Data Protection 

Policy, which it instituted in 2014.1714 According to the company: 

Amazon recognizes that third-party sellers are our customers too, and their trust is 

critical to Amazon’s success. In an effort to further this partnership, Amazon decided 

1709 Id. at 24.

1710 Jeff Bezos, 2018 Letter to Shareholders, THE AMAZON BLOG: DAY ONE (Apr. 11, 2019), 

https://blog.aboutamazon.com/company-news/2018-letter-to-shareholders.

1711 CEO Hearing at 25 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

1712 Id. at 24–25 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

1713 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00142724 (on file with Comm.).

1714 CEO Hearing at 2 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).
278

years ago to take additional voluntary steps to protect seller data by instituting its 

voluntarily-adopted Seller Data Protection Policy, which prohibits Amazon Retail teams 

from using non-public seller-specific data to compete against third-party sellers.1715

Following up on public reporting and information collected during the investigation suggesting 

that Amazon might be abusing its access to third-party sellers’ data, Representative Pramila Jayapal 

(D-WA) asked Amazon lawyer Nate Sutton about this precise issue at a Subcommittee hearing in July 

2019. Sutton testified: “We do not use [third-party sellers’] individual data when we’re making 

decisions to launch private brands.”

1716

Since the July 2019 hearing, public reporting has made clear that, contrary to its own internal 

policy and testimony before Congress, Amazon routinely appropriates seller data to benefit its own 

private-label and retail businesses. After the hearing, according to a July 2019 report, a former 

employee who worked in product management told The Capitol Forum, “I used to pull sellers’ data to 

look at what the best products were when I was there ... That was my job.”

1717 In September 2019, 

employees reported to Yahoo Finance that access to data is a “free-for-all” and that Amazon Retail and 

Marketplace teams “share the same access to the data warehouse, which makes it possible for the retail 

team to use the data from marketplace sellers to develop private labels.”

1718

Earlier this year, in a groundbreaking article, the Wall Street Journal reported that executives in 

Amazon’s private-label division “had access to data containing proprietary information that they used 

to research bestselling items they might want to compete against, including on individual sellers on 

Amazon’s website.”

1719 In one case, Amazon employees reportedly used non-public sales data about a 

third-party seller of car-trunk organizers named Fortem to develop an Amazon private-label version of 

the very same product.1720

In light of the April 2020 report from the Wall Street Journal, the Committee requested that 

Jeff Bezos testify before Congress to address the possibility that Amazon’s lawyer had misled 

1715 Id. at 41 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

1716 Innovation and Entrepreneurship Hearing Transcript at 51 (statement of Nate Sutton, Assoc. Gen. Counsel, 

Competition, Amazon.com, Inc.).

1717 Amazon: Former Employee Challenges Executives’ Denial About Company’s Use of Sellers’ Data, THE CAPITOL 

FORUM (July 18, 2019).

1718 Krystal Hu, Amazon Uses Third-Party Seller Data to Build a Private Label Juggernaut, YAHOO FIN. (Sept. 27, 2019), 

https://finance.yahoo.com/news/amazon-uses-thirdparty-sellers-data-to-build-private-labels-145813238.html. 

1719 Dana Mattioli, Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products, WALL ST. J. (Apr. 23, 

2020), https://www.wsj.com/articles/amazon-scooped-up-data-from-its-own-sellers-to-launch-competing-products11587650015.

1720 Id.
279

Congress.1721 Despite significant public reporting on the issue and references to it in Amazon’s internal 

documents, Mr. Bezos claimed to be unaware of these practices. According to Mr. Bezos, “Amazon 

first learned about the alleged violations of Amazon’s voluntarily adopted Seller Data Protection 

Policy recently reported in the Wall Street Journal from the Wall Street Journal.”

1722 When 

Representative Pramila Jayapal again asked in July 2020 about whether Amazon uses third-party seller 

data to benefit its private-label products, Bezos could only respond: “I can’t answer that question yes 

or no . . . we have a policy against using seller-specific data to aid our private-label business, but I 

can’t guarantee you that that policy has never been violated.”

1723

Representative Ken Buck (R-CO) similarly raised this issue with Mr. Bezos, stating, “I’m 

concerned that you’ve used Amazon’s dominant market position to unfairly harm competition. We’ve 

heard from a number of companies that Amazon uses proprietary data from third-party companies to 

launch its own private-label products.”

1724 Later in the hearing, Representative Kelly Armstrong (RND) described this as an “important issue,” and asked whether “Amazon is conducting an internal 

investigation into the use of third-party data,” to which Mr. Bezos answered in the affirmative. Mr. 

Bezos agreed to inform the Subcommittee of the outcome of that investigation.

In October 2020, approximately six months after Amazon said that it had initiated the 

investigation,1725 the company informed the Committee that it had completed it.1726 According to 

Amazon’s Vice President of Public Policy, Brian Huseman, “Amazon’s records of past data queries 

related to the two products cited in the Wall Street Journal report show that a single former employee 

pulled and analyzed only aggregate data for both products in compliance with the Seller Data 

Protection Policy.”

1727 The results of this limited investigation do not alter the views of Subcommittee 

staff on Amazon’s use of third-party seller data as set forth in this Report. 

1721 Letter from Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. 

on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking 

Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. Joe Neguse, ViceChair, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. Pramila Jayapal, 

Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. Ken Buck, 

Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. Matt Gaetz, 

Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, to Jeff Bezos, CEO, 

Amazon.com, Inc. (May 1, 2020).

1722 CEO Hearing at 1 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

1723 CEO Hearing Transcript at 66 (statement of Jeff Bezos, CEO, Amazon.com, Inc.).

1724 Id. at 128 (question of Rep. Ken Buck (R-CO), Member, Subcomm. on Antitrust, Commercial and Admin. Law of the 

H. Comm. on the Judiciary).

1725 @AmazonPolicy, TWITTER (Apr. 24, 2020), https://twitter.com/amazon_policy/status/1253769684425625601.

1726 Letter from Brian Huseman, Vice Pres., Public Pol’y, Amaazon.com, Inc., to Hon. Jerrold Nadler (D-NY), Chairman, 

H. Comm. on the Judiciary, Hon. David N. Cicilline (D-RI), Chairman, Subcomm. on Antitrust, Commercial and Admin. 

Law of the H. Comm. on the Judiciary, Hon. F. James Sensenbrenner (R-WI), Ranking Member, Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. Jim Jordan (R-OH), Ranking Member, H. Comm. on 

the Judiciary (Oct. 4, 2020) (on file with Comm.).

1727 Id.
280

Subcommittee staff uncovered evidence in interviews with former Amazon employees, as well 

as current and former sellers, that is consistent with the public reporting about Amazon’s misuse of 

seller data.1728 In a submission to the Subcommittee, a former employee said:

In 2010, I started working on the Amazon marketplace team ... It was widely known 

that many (10+) of my peers were running very successful [third-party] accounts, where 

they were pulling private data on Amazon seller activity, so they could figure out 

market opportunity, etc. Totally not legitimate, but no one monitored or seemed to 

care.1729

Referring to accessibility of third-party seller data, the same individual told Subcommittee staff, “It’s a 

candy shop, everyone can have access to anything they want,” and added, “There’s a rule, but there’s 

nobody enforcing or spot-checking. They just say, don’t help yourself to the data ... it was ‘wink 

wink,’ don’t access.”

1730

Subcommittee staff interviewed a third-party seller who described how Amazon uses a request 

for proof of authenticity to collect proprietary information about a seller’s business. According to the 

seller, Amazon will submit a product authenticity claim to sellers, forcing the retailer to submit their 

original sales receipts as proof that the items are authentic.1731 Although a seller is supposed to be able 

to black out price information, sometimes the platform will reject a submission on the basis that is an 

“altered document.”

1732 With insight into the seller’s costs and supplier, combined with its knowledge 

of the seller’s retail price among a virtually unfathomable amount of other data, it appears that Amazon 

Retail can easily replicate the seller’s listing to offer a competing product. 

A former third-party seller and retired U.S. Marine told Subcommittee staff about several 

instances over his seventeen years as a seller when Amazon leveraged his work, undercut him on price, 

and eventually drove him out of business. In each instance, he had to change his business model after 

Amazon took over the Buy Box for his listings, “killing” his sales.1733 On at least two different 

occasions, his company did all the legwork to create a new, top-selling product or product line, as well 

as creating the product listings, only to have Amazon copy the idea and offer a competing product. 

1728 See Submission from Nat’l Ass’n of Wholesaler-Distributors, to H. Comm. on the Judiciary (July 22, 2020) (on file 

with Comm.) (describing a member’s experience in which Amazon allowed a distributor to sell a product for about a year, 

“then went out and replicated the product and began selling their own branded product, terminating the distributor . . . 

Amazon became the winner and the distributor was left empty handed.”).

1729 Submission from Source 91, to H. Comm. on the Judiciary (Sept. 16, 2020) (on file with Comm.).

1730 Id.

1731 Interview with Source 154 (July 2, 2019).

1732 Id.

1733 Interview with Jason Boyce, Founder & CEO, Avenue7Media (Sept. 15, 2020).
281

Amazon used different tactics each time, but the result was always the same: Amazon profited from his 

work and made it impossible for him to fairly compete.1734

As part of his last attempt to sell on Amazon, his business created its own line of table game 

products with a unique design and color palette. Once these products became top sellers, Amazon 

again swooped in to reap the rewards of his work. Amazon copied his designs, down to the color 

palette, and started selling their competing products at unsustainable prices. Ultimately, he exited his 

seller business, gave up on trying to bring new products to consumers, and founded a consulting 

agency for Amazon sellers.1735

In addition to its private-label business, Amazon also uses third-party seller data to benefit its 

Amazon Retail business, where the company functions more like a retailer. At the Subcommittee’s 

sixth hearing, Chairman David Cicilline (D-RI) asked Mr. Bezos about this conduct, recounting the 

story that a former third-party seller shared with Subcommittee staff:

During this investigation, we have heard so many heartbreaking stories of small 

businesses who sunk significant time and resources into building a business and selling 

on Amazon, only to have Amazon poach their best-selling items and drive them out of 

business.

So I want to talk to you about one company that really stood out from the rest. I want 

you to pay close attention to how they described your partnership, Mr. Bezos. We heard 

from a small apparel company that makes and sells what they call “useful apparel” for 

people who work on their feet and with their hands, like construction workers and 

firefighters.

This particular business discovered and started selling a unique item that had never been 

a top seller for the brand. They were making about $60,000 a year on just this one item. 

One day, they woke up and found that Amazon had started listing the exact same 

product, causing their sales to go to zero overnight. Amazon had undercut their price, 

setting it below what the manufacturer would generally allow it to be sold so that, even 

if they wanted to, they couldn’t match the price.1736

Amazon has tried to draw a meaningful distinction between individual and aggregate data, but 

this is largely beside the point when it comes to the concerns that Subcommittee members have about 

the platform’s conduct and its effect on competition. Amazon says it only uses “aggregate” seller data 

1734 Id.

1735 Id.

1736 CEO Hearing Transcript at 117 (question of Rep. David N. Cicilline (D-RI), Chairman, Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary).
282

across multiple sellers, not “individual” data about any specific seller.

1737 Importantly, though, it 

chooses how those terms are defined and uses various methods to deem seller data as aggregate rather 

than individual. According to the Wall Street Journal report, because Fortem accounted for 99.95% of 

total sales in the car-trunk organizer product category, not 100%, Amazon considered that data 

aggregate rather than individual.1738 And at the Subcommittee’s hearing in July 2020, Bezos confirmed 

that Amazon indeed allows the use of aggregate data to inform private-label brands when there are 

only two or three sellers of a product.1739 Separately, if there is only one seller of an item, and Amazon 

is selling returned or damaged versions of that item through its Amazon Warehouse Deals program, 

that data is considered aggregate.1740

An Amazon “Frequently Asked Questions” (FAQ) document from 2014 suggests that Amazon 

was aware that the Seller Data Protection Policy had significant loopholes. For example, the document 

indicates that even seller-specific data can be used for “strategic business decision at the category level

or above.”

1741 The answer to an FAQ also makes clear that the line between “aggregated” data and 

“Seller-specific” data is fuzzy: “As a general rule, if information isn’t directly tied or easily attributed 

to a specific Seller, it can be considered aggregated and non-Seller-specific.” As to how aggregated 

information attributed to a small group of Sellers should be treated, the guidance is also ambiguous: 

“This is a high judgment area. If Seller-specific information could be easily derived from aggregated 

information, it should be treated as Seller-specific.”

1742

In addition to collecting data relating to sales, Amazon may also be able to reverse engineer 

third-party sellers’ cost structures through the tools that it offers sellers to track profits, costs, ad spend, 

and other expenses, as well as fulfillment services through Fulfillment by Amazon (FBA). An internal 

document suggests that Amazon may use its FBA service as an avenue to identify popular third-party 

seller items and gather competitively sensitive information about them.1743 FBA provides another 

avenue for Amazon to access competing sellers’ third-party data. 

1737 Letter from David Zapolsky, Gen. Counsel, Amazon.com, Inc., to Rep. David N. Cicilline (D-RI), Chairman, 

Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary (July 26, 2019) ( on file with 

Comm.).

1738 Dana Mattioli, Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products, WALL ST. J. (Apr. 23, 

2020), https://www.wsj.com/articles/amazon-scooped-up-data-from-its-own-sellers-to-launch-competing-products11587650015.

1739 CEO Hearing Transcript at 155 (statement of Jeff Bezos, CEO, Amazon.com, Inc.).

1740 Dana Mattioli, Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products, WALL ST. J. (Apr. 23, 

2020), https://www.wsj.com/articles/amazon-scooped-up-data-from-its-own-sellers-to-launch-competing-products11587650015.

1741 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00221869 (June 30, 2014) (on file with 

Comm.).

1742 Id.

1743 See, e.g., Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00207035–36 (Sept. 19, 2013) (on file 

with Comm.) (“On the top selling Owl necklace . . . we should go deep and see what we can learn including how much it 

would costs [sic] to manufacture this?”).
283

The documents and information that Subcommittee staff reviewed suggest that instances of 

Amazon’s data misappropriation go beyond what is in the public domain. Furthermore, Subcommittee 

staff rejects Amazon’s contention that Amazon’s use of third-party seller data is no different from a 

traditional brick-and-mortar retailer’s use of data. Subcommittee staff also does not believe that the 

marketplace-derived data the platform uses to inform Amazon Retail’s product pipeline, among other 

decisions, is equally available to all Amazon Marketplace sellers.

On many fronts, Amazon makes inconsistent arguments depending on the forum and issue in 

support of its attempts to escape liability. In the context of lawsuits regarding liability for counterfeits 

and unsafe products sold on its site, Amazon insists it is a marketplace and not a retailer.1744 By 

contrast, in his testimony before the Subcommittee, Mr. Bezos referred to Amazon as a “store” and a 

“retailer.”

1745 Similarly, when Nate Sutton testified before the Subcommittee, he stated, “Amazon is 

one of the leading retailers.”

1746 In response to price gouging allegations, Amazon switches back to the 

position that it is just a marketplace. As Public Citizen observed in a recent report titled Prime 

Gouging:

Amazon is trying to have the best of both worlds by enabling third-party sellers to 

exploit the crisis (and benefiting from facilitating those sales), but also seeking to 

immunize itself from responsibility for directly engaging in price gouging by shifting 

the focus on to the unscrupulous actions of third-party sellers, not only in the eye of the 

public but also in the eye of the law.1747

Amazon identified a few types of non-public seller data that it has access to, but which are 

supposed to be protected by its Seller Data Protection Policy.1748 It is obvious from this small glimpse 

into the data Amazon has at its disposal that the type and scope of data the platform can access is very 

different from the information available to traditional brick-and-mortar stores. Physical stores have 

much less detailed information about the competing products they offer for sale alongside their private1744 See Colin Lecher, How Amazon escapes liability for the riskiest products on its site, THE VERGE (Jan. 28, 2020), 

https://www.theverge.com/2020/1/28/21080720/amazon-product-liability-lawsuits-marketplace-damage-third-party. 

1745 See generally CEO Hearing (statements of Jeff Bezos, CEO, Amazon.com, Inc.).

1746 See generally Innovation and Entrepreneurship Hearing (Nate Sutton, Assoc. Gen. Counsel, Competition, Amazon.com, 

Inc.).

1747 PUBLIC CITIZEN, PRIME GOUGING: HOW AMAZON RAISED PRICES TO PROFIT FROM THE PANDEMIC 5 (2020), 

https://www.citizen.org/article/prime-gouging/ (also noting “a pattern of significant price increases on essential products 

sold directly by Amazon, as well as price gouging by third-party sellers.”).

1748 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00221867 (June 30, 2014) (on file with Comm.) 

(listing information protected by the Seller Data Protection policy as “Seller pricing plans (e.g., future promotions), Seller 

inventory levels, Seller sourcing information, Seller sales (e.g., unit sales, GMS), [and] Seller performance (e.g., non-public 

metrics)”).
284

label items. Physical stores also have far less information about customers’ shopping habits and 

preferences.1749

5) Self-Preferencing

By virtue of its role as an intermediary in the marketplace, Amazon can give itself favorable 

treatment relative to competing sellers. It has done so through its control over the Buy Box, as well as 

by granting itself access to data and tools that are off-limits for third-party sellers. Most recently, there 

have been reports that Amazon has given preferential treatment to its own non-essential products over 

competitors’ non-essential products during the pandemic. 

Critical Inputs

Amazon has control over critical inputs for competing sellers and other types of competitors—

including consumer data, fulfillment and delivery services, and advertising and other marketing 

tools—that give it the ability to advantage itself over rivals. During the investigation, Subcommittee 

staff conducted numerous interviews with market participants that, along with credible public reporting 

and Amazon’s documents, confirm that Amazon employed this business strategy as early as 2009 and 

continues to do so today.

Access to Market Data

Amazon has access to data that gives it greater insight into consumer behavior and preferences 

than competing sellers on its platform. A former Amazon employee that Subcommittee staff 

interviewed summarized the significance of this information asymmetry:

It’s important to understand that Amazon has access to every piece of data on what 

products each customer has searched and purchased [or] not purchased. . . . With 

information about what customers have searched, Amazon is able to create customized 

marketing [and] targeting of products for the individual customer. “Is Amazon using a 

particular [third-party] seller’s data here? No,” but it is using all of the aggregate site 

data to develop a highly targeted marketing plan for each customer. Should Amazon 

choose to use that targeting information to focus [on] its own products, it can, while 

[third-party] sellers don’t have access to similar data.1750

Although Amazon provides its sellers with access to some helpful data and tools—which is a 

key differentiator from other marketplaces with no or limited seller tools—there is a large amount of 

1749 See Stigler Report at 45 (“Traditional brick-and-mortar stores and online platforms differ greatly in their advertising 

and personalization capabilities.”).

1750 Submission from Source 91, to H. Comm. on the Judiciary (Sept. 22, 2020) (on file with Comm.).
285

data that is off-limits, only available at a largely prohibitive cost, or unhelpful because it is outdated or 

inaccurate. One paid service that Amazon offered sellers was called Amazon Retail Analytics 

Premium. Sellers who paid extra to participate in this program could access some, but not all, of the 

data Amazon collected on marketplace activity. But the program was expensive: vendors reportedly 

had to pay a minimum of $30,000 to get access to this database.1751

Another example of this asymmetric access to data is evident from an Amazon internal email 

discussion. The discussion began with a consultant alerting Amazon employees about a problem with 

its Marketplace Web Services APIs that caused it to report information to sellers that is “disconnected 

from the reality and often misleading.”

1752 According to the representative, “This is a huge issue and 

causes sellers losses and inconvenience.”

1753 In response, an Amazon employee said that there was not 

a problem with the API functionality; rather, the Pricing APIs just do not provide sellers with 

information at the level of granularity requested. Further, she explained that this is “a feature request 

for adding location aware information to the Pricing APIs,” which is “currently below the line for 2018 

for the pricing team.”

1754

Marketing Tools

One tool that Amazon Retail uses to benefit its own business is Amazon Vine, a reviewgenerating program.1755 In interviews with market participants, many sellers said that good reviews are 

critical for a product to be successful online.1756 Accordingly, sellers aim to obtain as many positive 

reviews as possible early in a product’s life cycle. At one time, it was permissible for Amazon sellers 

to provide incentives such as free samples to reviewers. However, in 2016, it was widely reported that 

some sellers were generating fake reviews.1757 In response to these reports, Amazon announced that it 

would ban incentivized reviews except for those obtained through its own incentivized review 

1751 Robyn Johnson, Amazon Just Made the $30k Amazon Retail Analytics Premium Data Free, SEARCH ENGINE J. (Feb. 26, 

2020), https://www.searchenginejournal.com/amazon-retail-analytics-premium-data-free/350692/ (last visited Oct. 4, 

2020).

1752 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00188405–06 (Dec. 14, 2017) (on file with 

Comm.).

1753 Id.

1754 Id. at AMAZON-HJC-00188536 (Dec. 15, 2017).

1755 Innovation and Entrepreneurship Hearing at 13 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).

1756 See, e.g., Interview with Source 125 (July 7, 2020) (explaining that the inability to move customer reviews from 

Amazon to other marketplaces is a barrier to use of other marketplaces, due to the importance of customer feedback for 

seller reputation).

1757 Elizabeth Weise, Amazon Bans ‘Incentivized’ Reviews, USA TODAY (Oct. 3, 2016), 

https://www.usatoday.com/story/tech/news/2016/10/03/amazon-bans-incentivized-reviews/91488702/.
286

program, Amazon Vine.1758 As a result, sellers lost access to this program, regardless of whether they 

were engaged in bad conduct or not. 

For many years, including after the incentivized-reviews ban, the Amazon Vine program was 

not available to third-party sellers, while Amazon continued to enjoy the program’s ability to 

“minimize marketing costs associated with generating awareness early in a product’s lifecycle,” among 

other benefits.1759 An Amazon internal document describes other advantages of the program as, 

“[d]rive conversion and sales with more insightful reviews on detail pages,” and “can contribute to 

higher order counts and sales.”

1760

By both banning incentivized reviews and excluding third-party sellers from the Amazon Vine 

program, Amazon allocated to itself a significant marketing advantage over the other businesses with 

which it competes on its platform.

Amazon’s dual position as both operator and seller on its online marketplace also provides it 

with the ability to disadvantage competitors that seek to sell or advertise on its platform. One way that 

Amazon does this is by limiting certain rivals’ ability to buy Amazon.com search advertising—ads that 

present products at the top of the search results when consumers enter specific search terms or a 

product name. Although “search advertising is a lucrative part of the company’s business,” Amazon 

“won’t let some of its own large competitors buy sponsored-product ads tied to searches for Amazon’s 

own devices.”

1761 The Wall Street Journal reported this month that Roku, Inc. “can’t even buy [] 

Amazon ads tied to its own products.”

1762 Consistent with this report, a competitor of Amazon that 

manufacturers voice-enabled devices told Subcommittee staff that Amazon prohibited it from buying 

ads on Amazon.com.1763 The competitor expressed concerns about the harm this could cause 

consumers, who may be confused or deceived when they receive ads promoting Amazon products 

even when they specifically search for a competitor’s product on Amazon.com.1764

1758 Id.

1759 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00146732 (Dec. 14, 2017) (on file with 

Comm.); Spencer Soper, Amazon Doles out Freebies to Juice Sales of Its Own Brands, BLOOMBERG NEWS (Oct. 16, 2018), 

https://www.bloomberg.com/news/articles/2018-10-16/amazon-doles-out-freebies-to-juice-sales-of-its-own-brands (last 

visited Oct. 4, 2020).

1760 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00146732 (Dec. 14, 2017) (on file with Comm); 

see also AMAZON-HJC-0059576 (Nov. 22, 2010) (describing program as “[g]reat for new product launches - good for 

seeding”).

1761 Dana Mattioli, et al., Amazon Restricts How Rival Device Makers Buy Ads on Its Site, WALL ST. J. (Sept. 22, 2020), 

https://www.wsj.com/articles/amazon-restricts-advertising-competitor-device-makers-roku-arlo-11600786638.

1762 Id.

1763 Interview with Source 148 (Aug. 26, 2020).

1764 Id. 
287

The Subcommittee’s investigation also uncovered internal documents showing that Amazon 

executives have long understood the competitive advantage Amazon wields due to the company’s 

control over search advertising on Amazon.com. In an internal email describing an ad block against 

Groupon and other “deal site ecommerce competitors,”

1765 an Amazon executive wrote that “Groupon 

is blocked + let’s keep a clear line on this. No deal site ecommerce competitors allowed to advertise on 

amazon.x sites.”

1766

Similarly, an email discussion in 2009 among high-level Amazon executives discussed the 

possibility of implementing an ad block against Diapers.com, saying:

Do we really think it is ok that Diapers.com flipped from selling on the platform to 

being a large scale user of Product Ads totally unscrrutinized [sic]? I don’t. . . . We’re 

under no obligation to allow them to advertise on our site. I’d argue we should block 

them from buying Product Ads immediately or at minimum price those ads so they truly 

reflect the opportunity cost of a lost diaper buyer (or to reflect the true value of a new 

customer to such a competitor.).1767

The executive suggests that Amazon should maintain a “watch list” of strategic competitors 

and set up “[a]n automatic trigger when a merchant on [the] watch list . . . attempts to launch a 

significant quantity of product ads-with escalated approval required to allow their ads to launch.”

1768

The Wall Street Journal report, based on discussions with Amazon employees, confirms that Amazon 

ultimately implemented a plan of this type. According to the report, “Tier 1 Competitors” are blocked 

from buying certain ads and employees are allegedly instructed to “mark any discussion of this 

practice . . . with ‘privileged and confidential’ to evade regulators.”

1769

In March 2020, Amazon announced that it would begin temporarily delaying shipments of all 

non-essential products from its warehouses, regardless of whether they were sold by Amazon or by 

competing third-party sellers.1770 The company claimed it was doing so to better serve customers in 

need while also helping to ensure the safety of warehouse workers. The effect of this change was to 

block third-party sellers of items that Amazon designated “non-essential” from shipping new inventory 

using fulfillment by Amazon.

1765 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00129156 (Dec. 14, 2017) (on file with Comm). 

1766 Id.

1767 Id. at AMAZON-HJC-00065094 (May 28, 2009) (on file with Comm). 

1768 Id.

1769 Dana Mattioli, et al., Amazon Restricts How Rival Device Makers Buy Ads on Its Site, WALL ST. J. (Sept. 22, 2020), 

https://www.wsj.com/articles/amazon-restricts-advertising-competitor-device-makers-roku-arlo-11600786638.

1770 CEO Hearing Transcript at 7–8 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.)
288

Amazon reportedly excepted itself from this policy and continued to ship non-essential items 

sold by Amazon Retail from its warehouses. According to a survey of Amazon workers conducted by 

Change to Win between April 29 and May 9, 2020, workers reported that Amazon had “continued to 

ship non-essential items such as hammocks, fish tanks, sex toys, and pool floaties.”

1771 More than twothirds of fulfillment center workers reported that 50% or more of the items they handled during this 

period were non-essential. Based on the survey results, Change to Win concluded that “Amazon has 

continued to place workers in danger of contracting COVID-19 in order to ship non-essential 

goods.”

1772 A number of market participants that Subcommittee staff interviewed also indicated that 

Amazon prioritized shipping its own items over those sold by third-party sellers.1773 Amazon 

confirmed that it did give preferential treatment to its own products for a period of time, but claimed it 

was “unintentional.”

1774

6) Tying and Bundling – Fulfillment by Amazon and

Advertising

Fulfillment by Amazon

There is a strong link between Amazon Marketplace and Fulfillment by Amazon (FBA), 

Amazon’s paid logistics service. Amazon uses its dominance in each of these markets to strengthen 

and reinforce its position in the other.

Amazon’s FBA program combines warehousing, packing, and shipping services, and most 

importantly, access to Prime customers.1775 For a seller’s products to get the Prime badge, which is 

essential to making sales on the platform, a seller must either qualify for Amazon’s Seller Fulfilled 

Prime (SFP) program or use Amazon’s FBA service. On August 18, 2020, Amazon informed sellers of 

changes to Seller Fulfilled Prime which render it an entirely impractical option for most sellers.1776

Even before this change, only a very small percentage of sellers could meet the onerous eligibility 

1771 CHANGE TO WIN, AMAZON COVID-19 WORKER SURVEY DATA BRIEF 3 (2020),

https://static1.squarespace.com/static/5d374de8aae9940001c8ed59/t/5ec67b15a155792a0f9ef435/1590065963743/Amazon

-Worker-COVID-19-Data-Brief.pdf. 

1772 Id.

1773 See, e.g., Submission from Source 91, to H. Comm. on the Judiciary (Sept. 16, 2020) (“When we looked at Amazon 

private-label products during April/early May, they were almost all available for immediate Prime delivery, while 

comparable national brands were not able to get the same shipment times. Definitely preference was given to many 

Amazon private-label products during times of “essential”/”non-essential” classification.”); Interview with Source 152 

(Sept. 18, 2020).

1774 CEO Hearing at 8 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.) (“After instituting 

these changes, Amazon became aware that shipments of certain Amazon devices that did not fall into the priority categories 

had been inadvertently included in the list of products with faster delivery promises. This was unintentional.”).

1775 Fulfillment by Amazon, AMAZON, https://sell.amazon.com/fulfillment-by-amazon.html (last visited Oct. 4, 2020).

1776 Pascal, The Seller Fulfilled Prime Team, Important Updates to Seller Fulfilled Prime, AMAZON SERVICES SELLER 

FORUMS (Aug. 18, 2020), https://sellercentral.amazon.com/forums/t/important-updates-to-seller-fulfilled-prime/682240.
289

requirements for Seller Fulfilled Prime.1777 This means FBA is functionally the only way for sellers to 

get the Prime badge for their product listings.1778 A document setting forth draft Q&A before a 2018 

earnings call for Amazon Chief Financial Officer Brian Olsavsky explained the connection between 

Prime and FBA: “Prime and FBA reinforce each other – they are inextricably linked. FBA adds Prime 

eligible selection. Prime member growth and purchasing habits attract sellers to FBA.”

1779

Due to a lack of alternatives, third-party sellers have no choice but to purchase fulfillment 

services from Amazon. More than 73% of all Marketplace sellers worldwide reportedly rely on FBA 

services.1780 Numerous third-party sellers told the Subcommittee that they feel they have no choice but 

to pay for FBA to maintain a favorable search result position, to reach Amazon’s more than 112 

million Prime members, and to win the Buy Box—through which the vast majority of Amazon sales 

are made.1781 A recent consumer survey indicated that 75% of Amazon Prime customers specifically 

search for products flagged as Prime-eligible.1782 As a result, as the Online Merchant’s Guild told 

Subcommittee staff, many sellers will “say that without Prime you are dead.”

1783

In response to concerns about Amazon tying a seller’s ability to make sales on its platform to

participation in FBA, Amazon has offered contradictory statements. In the Subcommittee’s second 

hearing, Representative Lucy McBath (D-GA) asked Amazon’s Associate General Counsel Nate 

Sutton whether Amazon “privileged vendors who use Amazon Fulfillment Services over those who 

chose not to.”

1784 Mr. Sutton asserted that Amazon “do[es] not favor . . . products that use FBA over 

1777 See, e.g., Interview with Jason Boyce, Founder & CEO, Avenue7Media, LLC (Sept. 15, 2020) (“It used to be possible, 

but hard, to be a Seller Fulfilled Prime seller. There were only 200 sellers that were able to meet the requirements. What’s 

changing recently is that they used to allow you to have the Prime badge in certain regions, but now they say you need the 

Prime badge nationally, i.e., you need to have multiple warehouses across the country plus ship on Saturdays, etc.”).

1778 Regan McPhee, How to Sell on Amazon Prime in 2020, JUNGLESCOUT (May 27, 2020), 

https://www.junglescout.com/blog/how-to-sell-on-amazon-prime/.

1779 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00186643 (July 23, 2018) (on file with 

Comm.). 

1780 See J. Clament, Fulfillment by Amazon (FBA) Usage Among Top Marketplace Sellers Worldwide 2017–2018, STATISTA 

(Jan. 7, 2020) https://www.statista.com/statistics/1020046/global-fba-usage-top-amazon-sellers/.

1781 See, e.g., Submission from Source 43, to H. Comm. on the Judiciary, 30 (Oct. 26, 2019) (on file with Comm.).

1782 FEEDVISOR, THE 2019 AMAZON CONSUMER BEHAVIOR REPORT 10 (2019), https://fv.feedvisor.com/CN_2019_AmazonConsumer-Behavior-Report.html.

1783 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 7 (Oct. 23, 2019) (on file with Comm.).

1784 Innovation and Entrepreneurship Hearing Transcript at 53 (question of Rep. Lucy McBath (D-GA), Member, 

Subcomm. on Antitrust, Commercial and Admin. Law).
290

others.”

1785 He also indicated that Fulfillment by Amazon is not a factor in Amazon’s ranking 

algorithm.1786

At the Subcommittee’s sixth hearing, Representative Mary Gay Scanlon (D-PA) asked Mr. 

Bezos about whether there is a connection between a seller’s use of FBA and its ability to win the Buy 

Box.1787 In response, Mr. Bezos said, “I’m not sure if it’s direct, but, indirectly, I think the Buy Box 

does favor products that can be shipped with Prime.”

1788 Given that FBA is effectively the only way 

for sellers to get a Prime badge, this indicates that Amazon does favor sellers who use FBA over those 

who do not for both its search rankings and the Buy Box. Amazon claims that it favors sellers who use 

FBA because it is in the best interest of consumers and that it “does not consider profitability as part of 

the Featured Merchant Algorithm.”1789 Documents reviewed by Subcommittee staff, however, suggest 

that Amazon has used profitability—also referred to internally as “contribution profit” or “CP”—as a 

factor in awarding the Buy Box.1790

Furthermore, Amazon’s own documents show that it has considered FBA participation for 

purposes of determining the Buy Box winner.1791 An Amazon document that sets forth pricing rules for 

a pilot program appears to favor third-party sellers that use FBA over those who do not for awarding 

the Buy Box. 

1785 Id.

1786 Id. at 3 (response to Questions for the Record of Nate Sutton, Associate Gen. Counsel, Competition, Amazon.com, 

Inc.).

1787 CEO Hearing Transcript at 175 (question of Rep. Mary Gay Scanlon (D-PA), Vice Chair, H. Comm. on the Judiciary).

1788 Id. (statement of Jeff Bezos, CEO, Amazon.com, Inc.). 

1789 CEO Hearing at 3 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

1790 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00141750 (Mar. 25, 2010) (on file with 

Comm).

1791 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00142724 (on file with Comm). 
291

Internal Pricing Strategy Document1792

One third-party seller provided the Subcommittee with anecdotal evidence that Amazon favors 

sellers who participate in Amazon’s fulfillment program over sellers who do not. The seller set up an 

experiment where he sold the same product, one self-fulfilled and the other fulfilled through FBA, and 

ran different test cases.1793 The seller found that “Even when the consumer price of the self-fulfilled 

order was reduced and sold for a lower price (7% lower) than the FBA offer, the FBA still ‘won’ the 

‘Buy Box.’”

1794 The seller indicated that, without this favorable treatment for FBA, they would not 

choose to use FBA, as they found Amazon’s fulfillment service was often slower and less reliable than 

self-fulfillment.1795

Although Jeff Bezos told the Subcommittee that Fulfillment by Amazon “is probably the 

greatest invention that we ever created for sellers,” and that “it’s working for sellers,” information that 

Subcommittee staff reviewed suggests that it has significant shortfalls.1796 One third-party seller told 

1792 Prepared by Subcomm. based on Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00141750 

(Mar. 25, 2010) (on file with Comm).

1793 Submission from Source 43, to H. Comm. on the Judiciary, 29 (Oct. 26, 2019) (on file with Comm.).

1794 Id.

1795 Id; see also Interview with Source 920 (July 14, 2020); Interview with Source 100 (July 24, 2020).

1796 CEO Hearing Transcript at 174 (statement of Jeff Bezos, CEO, Amazon.com, Inc.).
292

Subcommittee staff, “We use both FBA and self-fulfillment, all of our negative comments are on items 

shipped through FBA.”

1797 According to another seller that uses FBA, at one point, Amazon decided to 

change the packaging on her products from cardboard boxes to padded envelopes, causing damage to 

her products in transit. When the damaged items started arriving at her customers’ homes in a damaged 

state, this caused a surge of negative reviews and requests for returns. When she asked Amazon to 

remove these bad reviews, which were caused by FBA’s shipping methods, Amazon refused.1798

A competing online marketplace described how Amazon effectively forcing sellers into its 

FBA program makes it more difficult to compete with Amazon for sellers, stating, “[T]hrough 

anticompetitive strategies and practices by Amazon, many . . . sellers are being pulled into Amazon’s 

tied marketplace-and-ecommerce-fulfilment ecosystem in a manner that makes them not only less 

independent but directly dependent on Amazon.”

1799 It further explained that because of Amazon’s 

dominance in online commerce, “Even sellers who sell on other marketplaces are pushed into FBA, 

because it is the only practicable way to obtain sales on the Amazon marketplace.1800 In addition to the 

Subcommittee’s investigation, antitrust enforcement agencies are currently investigating Amazon for 

tying these two services together.1801

Advertising

Consistent with public reporting,1802 evidence that Subcommittee staff reviewed suggests that 

Amazon may require sellers to purchase their advertising services as a condition of making sales on the 

platform. Because 44% of consumers tend to only look through the first two search pages when 

shopping on Amazon, a seller is practically invisible if it does not show up on one of the first two 

pages.1803 Amazon’s Sponsored Products and Sponsored Brand tools allow sellers to ensure they are 

prioritized in search results for specific key terms. A 2020 survey of large brands found that at least 

73% used Amazon’s advertising services, with 65% spending at least $40,000 a month on advertising 

1797 Interview with Source 89 (July 22, 2020).

1798 Interview with Source 149 (Feb. 26, 2020).

1799 Submission from Source 11, to H. Comm. on the Judiciary, 1 (Oct. 14, 2019) (on file with Comm.).

1800 Id. at 2.

1801 See. e.g., Press Release, Ital. Competition Auth., Amazon: Investigation Launched on Possible Abuse of a Dominant 

Position in Online Marketplaces and Logistic Services (Apr. 15, 2019), https://en.agcm.it/en/media/pressreleases/2019/4/A528 (announcing launch of investigation into whether “Amazon would unduly exploit its dominant 

position in the market for e-commerce platforms intermediary services in order to significantly restrict competition in the ecommerce logistics market, as well as - potentially - in the e-commerce platform market, to the detriment of final 

consumers”).

1802 See, e.g., Shira Ovide, Amazon Advertising Is Just a Toll in Disguise, BLOOMBERG (July 15, 2019), 

https://www.bloomberg.com/opinion/articles/2019-07-15/amazon-advertising-is-just-a-toll-in-disguise.

1803 FEEDVISOR, THE 2019 AMAZON CONSUMER BEHAVIOR REPORT 5 (2019), https://fv.feedvisor.com/CN_2019_AmazonConsumer-Behavior-Report.html. 
293

on the site.1804 In just one year, the number of brands with this monthly advertising spend increased by 

33%.1805A recent report issued by the Institute for Local Self-Reliance explained:

Sellers that decline to advertise risk losing their place in Amazon’s organic search 

results, no matter how many glowing customer reviews they have. That’s because the 

Amazon algorithm that delivers the search results favors products with more sales. As 

more orders are driven by ads, sellers than don’t advertise lose out on those sales and, as 

their share of sales declines, they also slip in the search rankings, further reducing their 

sales in a negative cycle.1806

Similarly, the Online Merchants Guild told the Subcommittee in a submission, “[i]t is now 

common belief in the Amazon seller community that the only way to sell on Amazon is through 

Amazon’s Pay-Per-Click (‘PPC’) offering.” The submission describes the situation as “pay-to-play,”

adding that “[Pay-Per-Click advertising] has become a major point of frustration for many sellers, with 

many sellers left feeling as if they are paying a mandatory fee, and have even described [Pay-PerClick] as a way for Amazon to increase their seller fees without looking like they are increasing their 

seller fees.”

1807

At the same time that advertising services have become “less of an option and more of a 

requirement for sellers to compete” on the platform, Amazon’s ads have also become more 

expensive.1808 The ads’ costs are determined by reverse auction—businesses bid on keywords that 

customers may use to search for a given product. In just a year, “the cost-per-click for sponsored ads 

increased by about 15% on average,” and for some, by as much as 127%.1809 A former third-party 

seller told Subcommittee staff that this harms both sellers and consumers, adding that “the good old 

days before [Pay-Per-Click], products would rise on the merits.”

1810 Similarly, the Online Merchants 

Guild said, “[i]n the past, the belief was more reviews would create a trending product.”

1811

1804 FEEDVISOR, BRANDS AND AMAZON IN THE AGE OF E-COMMERCE, 2020 EDITION 12 (2020),

https://fv.feedvisor.com/CN_2020_Brands-and-Amazon-in-the-Age-of-E-Commerce.html. 

1805 Id.

1806 STACY MITCHELL, RON KNOX & ZACH FREED, INST. OF LOCAL SELF-RELIANCE, REPORT: AMAZON’S MONOPOLY 

TOLLBOOTH 9 (2020), https://ilsr.org/amazons_tollbooth/. 

1807 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 8 (Oct. 23, 2019) (on file with Comm.); see 

also Interview with Jason Boyce, Founder & CEO, Avenue7Media, LLC (Sept. 15, 2020) (“Pay-Per-Click is now 

mandatory.”).

1808 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 8 (Oct. 23, 2019) (on file with Comm.). 

1809 STACY MITCHELL, RON KNOX & ZACH FREED, INST. OF LOCAL SELF-RELIANCE, REPORT: AMAZON’S MONOPOLY 

TOLLBOOTH 10 (2020), https://ilsr.org/amazons_tollbooth/. 

1810 Interview with Jason Boyce, Founder & CEO, Avenue7Media, LLC (Sept. 15, 2020).

1811 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 8 (Oct. 23, 2019) (on file with Comm.). 
294

In response to concerns about tying, Amazon claims that it provides non-discriminatory access 

to the Buy Box and that participation in fulfillment by Amazon and its pay-per-click advertising 

program is voluntary.1812 Amazon’s revenue from these sources is increasing, however, and sellers 

continue to raise concerns that increased fees for compulsory fulfillment and advertising services are 

squeezing their business.

7) Strategic Platform Management and Mismanagement

During the investigation, the Subcommittee also heard concerns that Amazon engages in 

strategic mismanagement of its platform by (1) allowing the proliferation of counterfeit and unsafe 

goods; (2) using its ability to control the flow of counterfeits as leverage; and (3) putting in place 

ineffective counterfeit prevention tools that result in the suspension of a large number of innocent 

sellers.1813

As Amazon’s dominance in e-commerce has grown, so has the proliferation of dangerous and 

counterfeit products on its marketplace.1814 A 2019 Wall Street Journal investigation found that 

Amazon had active listings for over 4,000 items “that have been declared unsafe by federal agencies 

[and] are deceptively labeled or are banned by federal regulators.”

1815 In the worst cases, these 

products have even caused bodily injury or even death to unsuspecting consumers.1816 As recently as 

September 2020, CNN released a report describing multiple instances in which Amazon’s own privatelabel products, such as a phone charging cable, have caught fire while in use by consumers.1817

1812 See, e.g., CEO Hearing Transcript at 134 (statement of Jeff Bezos, CEO, Amazon.com, Inc.) (“I think what you’re 

referring to is the fact that we offer an advertising service basically for third party sellers to drive additional promotion to 

their products. That is a voluntary program. Some sellers use it. Some don’t.”).

1813 During the investigation, the Committee also heard concerns about Amazon using “brand gating” to block competitors 

from selling certain products on its platform. See, e.g., Submission from Source 5, to H. Comm. on the Judiciary (Sept. 15, 

2020) (on file with Comm.) (raising concerns about “brand gating,” which allows Amazon, on its own, or in concert with “a 

trademark owner/manufacturer/seller, who is registered on the Brand Registry, to block other third party sellers from selling

a particular brand, unless certain conditions are met.”); Source 100, to H. Comm. on the Judiciary (Jan. 10, 2020) (on file 

with Comm.) (raising concerns that Amazon “gates” a brand when it decides that it wants to source items directly from the 

manufacturer and limit competition from third-party sellers and stating, “[w]e have lost literally millions of dollars on 

[inventory from] brands that Amazon has gated, purchases directly from manufacturers and we are no longer able to sell on 

Amazon.”).

1814 Alexandra Berzon, Shane Shifflett & Justin Scheck, Amazon Has Ceded Control of Its Site. The Result: Thousands of 

Banned, Unsafe or Mislabeled Products, WALL ST. J. (Aug. 23, 2019), https://www.wsj.com/articles/amazon-has-cededcontrol-of-its-site-the-result-thousands-of-banned-unsafe-or-mislabeled-products-11566564990.

1815 Id.

1816 Id.

1817 Blake Ellis & Melanie Hicken, Dozens of Amazon’s Own Products Have Been Reported As Dangerous – Melting, 

Exploding or Even Bursting Into Flames. Many Are Still on the Market, CNN BUS. (Sept. 10, 2020), 

https://www.cnn.com/2020/09/10/business/amazonbasics-electronics-fire-safety-invs/index.html.
295

The spread of counterfeit products also has serious consequences for vendors and brand 

manufacturers who rely on consumer trust and their reputation to maintain successful businesses. 

Amazon’s marketplace platform is designed in a way that makes it difficult for consumers to identify 

counterfeit products. As the Retail Industry Leaders Association (RILA) noted in a submission to the 

Subcommittee, “Where a platform both obfuscates the origin or source and provides fulfillment 

services, a seller of counterfeits is harder for consumers to uncover because the item appears to have 

the backing of the platform.”

1818

Although it claims to take its counterfeit problem seriously, Amazon’s business model 

incentivizes it to do less, not more. Because Amazon’s profits increase with the number of sales on the 

platform, the company has an incentive to turn a blind eye to counterfeit products that contribute to its 

increased sales volume. Regardless of the source, more sales generally result in more profits for 

Amazon because it typically “profits twice from a sale through purchase and fulfillment[,] and 

potentially three times through advertising.”

1819

For example, Subcommittee staff uncovered evidence during the investigation that Amazon has 

used its ability to police counterfeits more or less aggressively as leverage in contract negotiations with 

brands who attempt to resist Amazon pressure to sell on its platform—referred to internally at Amazon 

as “holdouts.”

1820 This recently occurred when it agreed to increase efforts to crack down on 

counterfeit Apple products as part of Apple agreeing to establish a wholesale relationship with 

Amazon Retail.1821 Documents received by the Subcommittee suggest that Apple was dissatisfied with 

Amazon’s anti-counterfeiting program and sought the following as a condition of selling Apple 

products wholesale to Amazon: “Amazon must proactively monitor platform for 

counterfeits/knockoffs and cooperate with Apple to remove and prevent them.”

1822

At the Subcommittee’s field hearing in Colorado, PopSockets founder David Barnett testified 

that “Amazon was aware that large quantities” of counterfeit PopSockets products were selling on its 

platform, but that Amazon allowed the problem to continue until PopSockets agreed to spend nearly 

two million dollars on Amazon marketing services.1823 Mr. Barnett further testified that Amazon was 

not just facilitating the sale of counterfeit PopSockets products, but that Amazon itself was engaged in 

selling knockoffs. Representative Ken Buck (R-CO) and Representative Hank Johnson (D-GA) 

1818 Submission from Retail Industry Leaders Ass’n, to H. Comm. on the Judiciary, 9 (July 16, 2019) (on file with Comm.). 

1819 Id.

1820 Competitors Hearing Transcript at 2–3 (statement of David Barnett, CEO and Founder, Popsockets LLC); see also

Laura Stevens & Sara Germano, Nike Thought It Didn’t Need Amazon – Then the Ground Shifted, WALL ST. J. (June 28, 

2017), https://www.wsj.com/articles/how-nike-resisted-amazons-dominance-for-years-and-finally-capitulated-1498662435.

1821 Jouzas Kaziukenas, Amazon’s Apple Moment, MARKETPLACE PULSE (Nov. 27, 2018), 

https://www.marketplacepulse.com/articles/amazon-apple-moment (last visited Oct. 4, 2020).

1822 See Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00190195 (Feb. 15, 2018) (on file with 

Comm.) (“We understand Apple’s IP team may not be happy with elements of our anti-counterfeiting program.”). 

1823 Competitors Hearing Transcript at 2–3 (statement of David Barnett, CEO and Founder, PopSockets LLC).
296

confronted Mr. Bezos on Amazon’s behavior towards PopSockets at the Subcommittee’s sixth hearing. 

Mr. Bezos responded, “if those are the facts and if someone somewhere inside Amazon said, you 

know, ‘Buy X dollars in ads, and then we’ll help you with your counterfeit problem,’ that is 

unacceptable. And I will look into that, and we’ll get back to your office with that.” To date, however, 

Amazon has not followed up with the Subcommittee to provide additional information.

In response to criticism and negative publicity about the proliferation of counterfeit products on 

its platform, Amazon announced several initiatives to combat fake products.1824 During the 

Subcommittee’s sixth hearing, Mr. Bezos testified that Amazon “invest[s] hundreds of millions of 

dollars in systems” that police counterfeits.1825 However, Amazon’s approach appears to be ineffective, 

resulting in suspensions of many innocent, third-party sellers, with devastating effects on some sellers’

businesses.1826

For example, Subcommittee staff interviewed a former Amazon employee and current 

consultant for Amazon sellers who described recent unfair changes in Amazon’s treatment of sellers 

suspected of being counterfeiters. He said that, in the past, Amazon would only suspend accounts and 

withhold funds from third-party sellers it confirmed were selling counterfeit goods.1827 However, 

increasingly, “Amazon rejects invoices or fails to verify suppliers without any justification or basis as 

to why . . . and they are using that as a reason to hold funds indefinitely.”

1828

One third-party seller told the Subcommittee that Amazon blocked some of her listings, citing a 

number of her products as “inauthentic.”

1829 The seller provided evidence to Amazon that, not only 

were her vendor’s products authentic, but Amazon actively sold the same products, sourced from the 

same vendor, through its first-party sales.1830 Despite elevating the issue to Amazon executives in July 

2020, this issue has still not been resolved as of September 2020.1831

1824 See, e.g., Press Release, Amazon, Amazon Establishes Counterfeit Crimes Unit to Bring Counterfeiters to Justice (June 

24, 2020), https://press.aboutamazon.com/news-releases/news-release-details/amazon-establishes-counterfeit-crimes-unitbring-counterfeiters. 

1825 CEO Hearing Transcript at 132 (statement of Jeff Bezos, CEO, Amazon.com, Inc.). 

1826 See, e.g., Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00173394 (Sept. 6, 2016) (on file with 

Comm.) (“Additional gating requirements were put in place to reduce counterfeit and improve product safety, but did not 

have the right processes in place to limit the number of false negatives (declining Seller applications despite the seller’s 

ability to provide the correct documentation).”).

1827 Interview with Chris McCabe, Founder, ecommerceChris, LLC (June 12, 2020). 

1828 Id.

1829 Submission from Source 100, to H. Comm. on the Judiciary (Sept. 18, 2020) (on file with Comm.). 

1830 Id.

1831 Id.
297

ii. Most-Favored-Nation and Price Parity Provisions

Amazon also uses its dominant position in e-commerce as leverage with other businesses to 

require most-favored-nation (MFN) clauses or similar price parity provisions to guarantee that it will 

always receive the best prices and most favorable terms. While these clauses are not inherently 

anticompetitive, Amazon has a history of using MFN clauses to ensure that none of its suppliers or 

third-party sellers can collaborate with an existing or potential competitor to make lower-priced or 

innovative product offerings available to consumers. 

The anticompetitive effects of Amazon’s use of MFN clauses are particularly pronounced in 

the book market. According to a book publisher, Amazon used its market power in print and e-book 

sales to force a price MFN on it and other book publishers.1832 As the publisher explained, the result 

has been that “publishers are completely handcuffed from stimulating platform competition because 

Amazon’s price MFN causes publishers to incur significant financial penalties if they offer Amazon’s 

rivals better pricing.”

1833 Another publisher told the Subcommittee that “Amazon always has and still 

does require MFNs.”

1834 According to this publisher, the MFN provisions prevent publishers from 

partnering with any of Amazon’s competitors and reinforces Amazon’s “stranglehold” and “control”

over book distribution.1835 Although Amazon has changed the name and specific mechanisms over the 

years, it appears that the company continues to impose contract provisions that effectively function as 

MFNs on book publishers.

In a joint letter to Subcommittee Chairman Cicilline following the Subcommittee’s sixth 

hearing, a group of organizations representing authors, publishers, and booksellers wrote that 

Amazon’s use of MFNs has “stifle[d] the emergence and growth of competitive alternatives in the 

book distribution marketplace.”

1836 When Amazon entered the e-book market through its release of the 

Kindle and Kindle Store in 2007, it unseated incumbent booksellers in market position by offering 

steep discounts on best-selling books.1837 Over a decade later, Amazon’s dominance in e-books and its 

anticompetitive application of price parity clauses to its business relationships in this market 

1832 Submission from Source 17, to H. Comm. on the Judiciary, 9 (Nov. 15, 2019) (on file with Comm.).

1833 Id. at 10 (Nov. 15, 2019).

1834 Interview with Source 155 (Sept. 29, 2020).

1835 Id.

1836 Letter from Maria A. Pallante, Pres. and CEO, Ass’n of American Publishers, Mary E. Rasenberger, Executive 

Director, The Authors Guild, Allison K. Hill, CEO, American Booksellers Ass’n, to Hon. David. N. Cicilline, Chairman, 

Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 2 (Aug. 17, 2020), 

https://publishers.org/wp-content/uploads/2020/08/Joint-Letter-to-Rep-Cicilline-081720.pdf. 

1837 George Packer, Cheap Words, NEW YORKER (Feb. 10, 2014), 

https://www.newyorker.com/magazine/2014/02/17/cheap-words (last visited Oct. 4, 2020) (noting that in 2007, the prices 

of e-books on Kindle were “below wholesale in some cases, and so low that [they] represented a serious threat to the 

market . . . By 2010, Amazon controlled ninety per cent of the market in digital books—a dominance that almost no 

company, in any industry, could claim.”). 
298

“eliminate[s] the ability of rivals or new entrants to gain any meaningful competitive advantage 

relative to Amazon.”

1838 Essentially, Amazon disrupted this market, dominated it, and now wields its 

immense power to effectively guarantee that no competitor could possibly do the same.

Amazon also aggressively enforces price parity rules on Amazon marketplace’s third-party 

sellers. It imposed MFN provisions on U.S. sellers until 2019. In response to antitrust scrutiny, the 

platform replaced those provisions with a “Fair Pricing Policy,” which has the same effect of blocking 

sellers from offering lower prices to consumers on other retail sites.1839 To enforce the policy, Amazon 

uses “computer software to regularly scan listings on competitors’ websites, and pressuring their 

sellers to change their price if their Amazon price is substantially higher.”

1840 A violation, or even a 

perceived violation, of the policy can lead to suspension of a seller’s account, with dire consequences 

for the seller. A former third-party seller explained that Amazon uses “Buy Box Suppression,” where 

Amazon will remove a seller’s ability to win the Buy Box, as a way to penalize sellers that offer 

products at a lower price on competing sites.1841

One of Amazon’s competitors told the Subcommittee that “as Amazon raises the costs to 

sellers, and requires that Amazon have the lowest prices available, for a seller to be able to make 

significant sales on its marketplace, these sellers will raise the price on competitor sites to match 

Amazon’s price.”

1842 Amazon’s “Fair Price Policy,” which has been described as a “thinly-veiled MFN 

restriction,” is likely anticompetitive with respect to blocking competition from other marketplaces, 

and does not result in lower prices for consumers as Amazon has claimed.1843

iii. Predatory Pricing

As part of its business strategy, Amazon has historically placed a higher premium on long-term 

growth at the expense of short-term profitability. As noted earlier in this Report, Amazon did not post 

1838 Letter from Maria A. Pallante, President and CEO, Ass’n of American Publishers, Mary E. Rasenberger, Executive 

Director, The Authors Guild, Allison K. Hill, CEO, American Booksellers Ass’n, to Hon. David. N. Cicilline, Chairman, 

Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 3 (Aug. 17, 2020), 

https://publishers.org/wp-content/uploads/2020/08/Joint-Letter-to-Rep-Cicilline-081720.pdf. 

1839 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, 7 (Oct. 29, 2019) (on file with Comm.).

1840 Id. at 8. 

1841 Submission from Jason Boyce, Founder & CEO, Avenue7Media (Sept. 25, 2020) (on file with Comm.). 

1842 Submission from Source 11, to H. Comm. on the Judiciary, 4 (Oct. 14, 2019) (on file with Comm.); see also 

Submission from Jason Boyce, Founder & CEO, Avenue7Media (Sept. 25, 2020) (on file with Comm.) (“Amazon 

prohibiting sellers from offering lower prices on other online retail platforms clearly hurts consumers if the only way for 

sellers to regain their listing on Amazon is to raise their prices on other platforms or remove their listings all together, 

therefore limiting competition.”). 

1843 Submission from Int’l Bhd. Of Teamsters, Commc’n Workers of America, United Food & Commercial Workers Int’l 

Union, Service Employees Int’l Union & Change to Win, to H. Comm. on the Judiciary, 4 (March 10, 2020) (on file with 

Comm.).
299

its first full-year profit until 2003—a decade after the company was founded.1844 Consistent with this 

trend, Amazon has adopted a predatory-pricing strategy across multiple business lines at various stages 

in the company’s history.1845

Because of the nature of its marketplace business, Amazon’s below-cost prices on products and 

services tend to lock customers into Amazon’s full marketplace ecosystem. As a former Amazon 

employee told the Subcommittee, “[A]bove all else, Amazon’s goal is to keep the customer shopping 

on Amazon.”

1846 Once a customer is locked in, they are less likely to change their behavior even when 

Amazon’s pricing is not competitive. 

1) Prime

The most prominent example of Amazon’s use of strategic losses to lock customers into the 

platform’s ecosystem is its popular membership program, Amazon Prime. As of August 2020, a Prime 

membership costs $119 per year, up from its original $79 at its launch in February 2005 and $99 from 

March 2014 to April 2018. An Amazon executive wrote in 2013, in reference to pricing Prime, “the 

better course is to let the existing Prime program grow . . . and then raise prices later assuming a lower 

elasticity in future years,”

1847 once customers are locked in.

An Amazon internal document describes the rationale behind Amazon Prime and its other 

membership programs: “Membership programs are created with a long-term, company-wide 

perspective with the goal of increasing loyalty and cross-category shopping behavior. The programs do 

not optimize for short-term gain or profitability in a single category.”

1848 Another internal Amazon 

document describes these membership programs as, “[d]oubl[ing] down on ‘Big Moats,’” aiming to 

create an impenetrable barrier around its dominant position.1849

Despite Amazon Prime’s popularity and wide membership base, it is a loss-leader for the 

company. Many industry analysts have estimated Amazon’s Prime losses over the years, finding that it 

is unprofitable, and that Amazon is willing to spend significant amounts of money to prop up the 

1844 Saul Hansen, Technology; Amazon Reports First Full-Year Profit, N.Y. TIMES (Jan. 28. 2004), 

https://www.nytimes.com/2004/01/28/business/technology-amazon-reports-first-full-year-profit.html.

1845 In this Report, the term “predatory pricing” should be understood in its broadest sense to refer to any situation where a 

dominant firm prices a good or service below cost in a way that is harmful to competition.

1846 Submission from Source 91, to H. Comm. on the Judiciary (Sept. 22, 2020) (on file with Comm.).

1847 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00216088 (Oct. 28. 2013) (on file with 

Comm.).

1848 Id. at AMAZON-HJC-00068510 (Sept. 8, 2010).

1849 Id.; see also Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00184863 (May 7, 2015) (on file 

with Comm.) (“The value differentiation for Prime members accelerates the Prime flywheel creating an additional reason to 

become a Prime member and concentrate household spend with Amazon.”). 
300

program.1850 In 2016, a Forrester Research analysis estimated that Prime costs Amazon $1 billion per 

year.1851 In 2019, J.P. Morgan estimated that, though priced at $119, a Prime subscription is valued at 

about $860, up 10% from its estimated value in 2018.1852 A Prime membership also includes access to 

Prime Video, its library of digital video content, and Amazon Music, its music streaming service.

The Artists Rights Alliance, an advocacy group for the digital rights of music creators, raised 

concerns that Amazon’s inclusion of a streaming music services in its Prime program poses a severe 

risk of “driv[ing] down royalties in an uncompetitive way.”

1853According to its submission:

Amazon’s ongoing efforts to launch a streaming music service as part of its Prime 

family of products should be carefully scrutinized . . . . [W]e are concerned about the 

dangers of predatory/sub-market pricing in a service that Amazon operates as a “loss 

leader.” In general, creators need an economy that more accurately sees and values their 

work; not one with cut-rate prices that entangles music even more deeply in a web of 

soulless data collection and ‘content distribution’ operations.

1854

Although Amazon Prime is a loss leader for the company, it is one of Amazon’s most effective 

drivers of growth. Amazon Prime members account for 65% of Amazon shoppers as of Q4 2019.1855

While the average Amazon customer spends about $600 per year on Amazon.com, Prime members 

reportedly spend more than double that—an average of $1400 per year.1856

In 2010, Amazon started its Amazon Mom program, now called Amazon Family, another 

membership service that offers discounts on diapers and other items associated with parenthood.1857 At 

the outset, Amazon was willing to lose money to ensure the success of this program. A 2010 document 

outlining the lead-up to the official launch of Amazon Mom included a plan to discount diapers and 

1850 See, e.g., Stu Woo, Amazon ‘Primes’ Pump for Loyalty, WALL ST. J. (Nov. 14, 2011), 

http://www.wsj.com/articles/SB10001424052970203503204577036102353359784.

1851 Nanette Byrnes, How Amazon Loses on Prime and Still Wins, MIT TECH. REV. (July 12, 2016), 

https://www.technologyreview.com/2016/07/12/158869/how-amazon-loses-on-prime-and-still-wins/ (last visited Oct. 4, 

2020). 

1852 J.P. MORGAN, RETAIL VS. AMAZON: LIFE IN A POST COVID-19 WORLD (June 11, 2020),

https://markets.jpmorgan.com/research/email/-lbk68f4/Alp1kP9tQUPS29jlzW_bOg/GPS-3397412-0; Production of 

Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00184863 (May 7, 2015) (on file with Comm.).

1853 Submission from Artist Rights Alliance, to H. Comm. on the Judiciary, 5 (July 31, 2019) (on file with Comm.).

1854 Id.

1855 Fareeha Ali, Amazon Prime Has 112 Million Members in the U.S., DIG. COMMERCE 360 (Jan. 24, 2020) 

https://www.digitalcommerce360.com/article/amazon-prime-membership/.

1856 Jack Houston & Irene Anna Kim, How Amazon Gets You to Spend More Money, BUS. INSIDER (Sept. 17, 2020), 

https://www.businessinsider.com/amazon-prime-members-spend-more-money-sneaky-ways-2019-9.

1857 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00130737 (Aug. 31, 2010) (on file with 

Comm.). 
301

wipes at a rate that would “put [their] product below cost.”

1858 And selling diapers was not the goal of 

this program—instead Amazon recognized that “a long-lasting, sticky relationship” with Amazon 

Mom members was the source of its true value.1859 Additionally, an internal presentation observed that 

“[e]arly results from our Amazon Mom program” showed that “[n]ew Amazon customers, whose first 

purchase included diapers, spend over three times as much ($292 vs. $91) during their first year as the 

average new Amazon customer.”

1860

Some of Amazon’s rivals view this dynamic as harmful to competition, saying that Amazon is 

“[u]nderpricing Prime to consumers to build a huge and highly targetable share of ecommerce 

demand.”

1861 Once consumers have paid the yearly fee for Prime, they are incentivized to use it as 

much as possible to maximize return on their investment, “whereas they might otherwise 

multisource.”

1862

2) Diapers.com

The Amazon Mom program served another important function and had a central role in one of 

Amazon’s early applications of its predatory-pricing strategy. In 2009, Bezos and other Amazon 

executives noticed and began discussing the rise of Diapers.com, a competitor in the baby and 

personal-care product markets.

1863 What followed was a year-long price war, ending in Amazon’s 

eventual acquisition of Quidsi, the parent company of Diapers.com.

At the Subcommittee’s hearing, Mr. Bezos testified that Amazon was always a price follower 

in its war with Diapers.com.1864 However, Amazon’s “‘plan to win’ against [D]iapers.com” explicitly 

included price-leading on diapers.1865 Recognizing that Diapers.com was the company’s “#1 short term 

competitor,” Amazon executives decided that going after them required a “need to match pricing . . . 

no matter what the cost.”

1866 Amazon internal documents indicate that Amazon was willing to lose 

$200 million in one month alone on products in the relevant competitive categories.1867 Offering 30% 

cash back on diapers and a free year’s worth of Prime membership to Amazon Mom members, an 

1858 Id. at AMAZON-HJC-00159560 (Apr. 2010).

1859 Id. at AMAZON-HJC-00035545 (July 20, 2010) (“[W]e can see that Moms . . . have a favorable year one downstream 

value relative to the average customer.”).

1860 Id. at AMAZON-HJC-00154656.

1861 Submission from Source 11, to H. Comm. on the Judiciary, 2 (Oct. 14, 2019) (on file with Comm.).

1862 Id. at 3.

1863 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00151723 (Feb. 9, 2009) (on file with Comm.).

1864 CEO Hearing Transcript at 83 (statement of Jeff Bezos, CEO, Amazon.com, Inc.).

1865 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00132026 (June 8, 2010) (on file with Comm.).

1866 Id. at AMAZON-HJC-00151722 (Feb. 9, 2009).

1867 Id. at AMAZON-HJC-00057007 (Apr. 5, 2010)
302

Amazon executive predicted in November 2010 that it would seriously wound Quidsi, stating, “[T]hey 

expect to lose lots of money over the nxt [sic] few yrs [sic]-this will make it worse.”

1868 Quidsi 

explicitly identified “Predatory Pricing” as a “Near-Term Risk” in a 2009 presentation.1869 In 

November 2010, Amazon acquired its self-described “largest and fastest growing competitor in the online diaper and baby care space.”

1870

3) “Can’t Realize Any Profit”

Once Amazon succeeds in trapping enough customers in its “flywheel” to secure dominant 

position across varied markets, it can then raise prices or remove incentives or allowances for 

Marketplace sellers to sell products at favorable prices for consumers. One example of the latter is 

Amazon’s treatment of “CRAP,” a term coined internally which refers to products on which Amazon 

“Can’t Realize Any Profit.”

1871 CRAP products are low-priced items that are heavy and expensive to 

ship—often consumables, like packs of bottled water.1872

These items were integral to Amazon’s pursuit of dominance in the e-commerce market. But 

once Amazon began to switch its focus from pure growth to profitability, it reversed course on these 

products, engaging in an ongoing “CRAP-Out Process,” by which Amazon attempts to make CRAP 

profitable through a variety of methods, such as raising delivery fees or requiring vendors to repackage 

products.1873 This increases costs for sellers and brands, who have no choice but to acquiesce to the 

changed shipping and packaging rules given their dependence on Amazon for e-commerce sales. 

Amazon executives acknowledged that CRAP was an element of its plan for growth, noting in a 

strategy session that, “We want to ensure that if despite all our efforts to improve our cost structure, we 

lose money on an ASIN [Amazon Standard Identification Number] it is for the long term strategic 

growth of Amazon.”

1874

Amazon documents provided in response to the Committee’s requests show the extent to which 

Amazon was committed to below-cost pricing. A 2010 review of its baby formula business identified 

Amazon’s “most frequently matched internal competitor” as ABCBabyFormula, which “typically [ ] 

1868 Id. at AMAZON-HJC-00009716 (Sept. 21, 2010)

1869 Id. at AMAZON-HJC-00009596 (Nov. 2, 2010).

1870 Id. at AMAZON-HJC-00142833 (May 12, 2009).

1871 Id. at AMAZON-HJC-00167480.

1872 Laura Steven, Sharon Terlep & Annie Gasparro, Amazon Targets Unprofitable Items, with a Sharper Focus on the 

Bottom Line, WALL ST. J. (Dec. 16, 2018), https://www.wsj.com/articles/amazon-targets-unprofitable-items-with-a-sharperfocus-on-the-bottom-line-11544965201.

1873 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00167484 (“How to deal with CRAP.”) (on file 

with Comm.).

1874 Id.
303

price[d] 15-20% below [Amazon’s] cost.”

1875 Identifying this company as the most significant 

influence on Amazon’s baby formula profit loss, the document notes of ABCBabyFormula that 

“[m]anufacturers do not sell to them directly and believe they are sourcing black market stolen 

goods.”

1876 Amazon frequently price-matched, at significantly below-cost, a competitor that it had 

reason to believe was sourcing baby formula from illegal and potentially dangerous sources—

indicating the lengths to which Amazon was willing to go to ensure product selection and, in turn, 

growth.

4) Amazon Devices

Finally, Amazon sells its own branded hardware devices on its Marketplace and has often 

priced those devices below cost in an attempt to corner the market for those devices and adjacent 

markets. In Amazon’s effort to “own the smart home,” for example, Amazon sometimes prices its 

Echo Speaker below-cost. Market estimates suggest that Amazon’s Echo Dot third generation 

materials cost is $37.68,1877 while the company listed it at $22 during its 2019 Prime Day.1878 Other 

market research of Amazon products found that Amazon Echo products are on sale as often as they are 

at full price.1879 Illustrating how low prices may not always be in consumers’ best interest, Patrick 

Spence, the CEO of Sonos, testified before the Subcommittee that these pricing habits “hamstring[] 

those companies that have better products that cannot be sold at a loss.”

1880 At the Subcommittee’s 

hearing, Representative Jamie Raskin (D-MD) raised this concern with Mr. Bezos.1881 In response, Mr. 

Bezos responded that the Amazon Echo is “often on promotion, and sometimes when it’s on promotion 

it may be below cost.”

1882

1875 Id. at AMAZON-HJC-0014302 (Sept. 30, 2010).

1876 Id.

1877 Submission from Source 38, to H. Comm. on the Judiciary, 19 (Sept. 1, 2019) (citing TECHINSIGHTS).

1878 Id.; see also Samantha Gordon, Prime Day is Almost Over—These Are the Best Deals You Can Still Get, USA TODAY

(July 15, 2019), https://www.usatoday.com/story/tech/reviewedcom/2019/07/15/prime-day-2019-best-amazon-deals-youcan-get-during-massive-sale/1683589001/ (last visited Oct. 4, 2020) (“Echo Dot—$22”).

1879 Sean Hollister, Amazon Doesn’t Sell Echo Speakers at a Loss, Says Bezos — Unless They’re on Sale, THE VERGE (July 

29, 2020), https://www.theverge.com/2020/7/29/21347121/amazon-echo-speaker-price-undercut-rivals-loss-sale-antitrusthearing.

1880 Competitors Hearing at 4–5 (statement of Patrick Spence, CEO, Sonos, Inc.).

1881 CEO Hearing Transcript at 107 (question of Rep. Jamie Raskin (D-MD, Member, Subcomm. On Antitrust, Commercial 

and Admin. Law).

1882 Id. (statement of Jeff Bezos, CEO, Amazon.com, Inc.).
304

Fulfillment and Delivery

a. Market Power

As Amazon’s e-commerce business has grown, it has also developed a significant logistics 

business surrounding fulfillment and delivery of third-party orders with its Fulfillment by Amazon 

(FBA) program. More than 73% of all Amazon Marketplace sellers reportedly rely on this program to 

fulfill their orders.1883 Because of this, a trade association that represents third-party sellers refers to 

Amazon’s fulfillment operation “as the railroad of [e-commerce].”

1884 In addition to its fulfillment 

operation, Amazon is also one of the largest shippers in the world. The company provides global 

shipping services for its own products and independent sellers that sell on Amazon.com, as well as 

other e-commerce sites.1885

Amazon’s ground shipping infrastructure consists of “trucks, trailers, intermodal containers, 

and delivery vehicles.”

1886 Its truck fleet consists of more than 10,000 trailers.1887 It also has its own 

freight airline, Amazon Air, with about 50 leased aircraft,1888 and plans to expand its fleet to 70 by 

2021.1889 Amazon has also built hundreds of package sorting and delivery centers across the United 

States and has established its own network of contracted delivery providers exclusively dedicated to 

delivering packages for Amazon.1890

In recent years, the size and scope of Amazon’s delivery services network have grown 

significantly. When Amazon first launched Fulfillment by Amazon, it stored products and packed 

1883 See Fulfillment by Amazon Usage Among Top Sellers Worldwide 2017–2018, STATISTA, 

https://www.statista.com/statistics/1020046/global-fba-usage-top-amazon-sellers/ (last visited Oct. 4, 2020).

1884 Submission from Online Merchants Guild, to H. Comm. on the Judiciary, OMG-000009 (Oct. 23, 2019) (on file with 

Comm.). 

1885 Fill Orders from Other Sales Channels (Multi-Channel Fulfillment), AMAZON SELLER CENTRAL,

https://sellercentral.amazon.com/gp/help/external/200332450#:~:text=Multi%2DChannel%20Fulfillment%20(MCF),ships

%20them%20to%20your%20customers (explaining that “Multi-Channel Fulfillment (MCF) is a program within 

Fulfillment by Amazon (FBA),” that fills orders from sales channels placed on sites other than Amazon.com) (last visited 

Oct. 4, 2020).

1886 Innovation and Entrepreneurship Hearing at 19 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).

1887 Press Release, Amazon, Continued Growth for Amazon’s Air Network (June 28, 2019), 

https://press.aboutamazon.com/news-releases/news-release-details/continued-growth-amazons-air-network-expand-primefast-free.

1888 Innovation and Entrepreneurship Hearing at 19 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).

1889 Press Release, Amazon, Continued Growth for Amazon’s Air Network (June 28, 2019), 

https://press.aboutamazon.com/news-releases/news-release-details/continued-growth-amazons-air-network-expand-primefast-free.

1890 INST. FOR LOCAL SELF-RELIANCE, AMAZON’S MONOPOLY TOLLBOOTH 8 (2020), https://cdn.ilsr.org/wpcontent/uploads/2020/07/ILSR_Report_AmazonTollbooth_Final.pdf. 
305

orders in its warehouses, but relied on other carriers to handle shipping and delivery. Today, Amazon 

ships a growing number of products itself. In 2019, “Amazon delivered about half of its own packages, 

up from 15 percent just two years before.”

1891 Amazon has also lessened its use of large delivery 

companies during this time, using “800 small, independent contractors [which] are now responsible for 

around 48 percent of Amazon’s last mile deliveries.”

1892 These smaller providers are economicallydependent on Amazon, and “many are in fact reliant on Amazon for 100 percent of their business.”

1893

Parcel volume handled by Amazon’s delivery service now rivals the top carriers, including 

UPS, FedEx, and the U.S. Postal Service. “In 2019, Amazon delivered 2.5 billion parcels, or about 

one-fifth of all e-commerce deliveries,”

1894 and anticipates growth. In a July 2020 investor call, 

Amazon CFO Brian Olsavsky stated that Amazon “expect[s] a meaningfully higher year-over-year 

square footage growth of approximately 50%,” which includes “strong growth in new fulfillment 

center space as well as sort centers and delivery stations.”

1895

An analysis by Morgan Stanley concluded that Amazon will overtake UPS and FedEx in 

market share for delivery by 2022. Amazon has already surpassed the U.S. Postal Service, which has 

been downsized dramatically under its current leadership.1896 Last year, the U.S. Postal Service had a 

decrease in parcel volume for the first time in nearly a decade.1897

b. Monopsony Power

Amazon exercises monopsony power in labor markets directly and indirectly. As one of the 

largest employers in America, Amazon exercises direct power over hundreds of thousands of workers 

across the United States.1898 Amazon employees make up 22% of the U.S. labor market in warehousing 

1891 Id.

1892 Submission from Int’l Bhd. Of Teamsters, Commc’n Workers of America, United Food & Commercial Workers Int’l 

Union, Service Employees Int’l Union & Change to Win, to H. Comm. on the Judiciary, 13 (March 10, 2020) (on file with 

Comm.).

1893 Id. at 14.

1894 INST. FOR LOCAL SELF-RELIANCE, AMAZON’S MONOPOLY TOLLBOOTH 8 (2020), https://cdn.ilsr.org/wpcontent/uploads/2020/07/ILSR_Report_AmazonTollbooth_Final.pdf. 

1895 Rachel Premack, Amazon Is Piling Up Fulfillment Center Square Footage, and It Shows Bezos Thinks the PandemicDriven Online Shopping Surge Is Here to Stay, BUS. INSIDER: MKTS. (Jul 31, 2020), 

https://markets.businessinsider.com/news/stocks/amazon-fulfillment-center-growth-reveals-pandemic-online-orderingsurge-2020-7-1029456709# (last visited Oct. 4, 2020).

1896 INST. FOR LOCAL SELF-RELIANCE, AMAZON’S MONOPOLY TOLLBOOTH 8 (2020), https://cdn.ilsr.org/wpcontent/uploads/2020/07/ILSR_Report_AmazonTollbooth_Final.pdf. 

1897 Id.

1898 Submission from Int’l Bhd. Of Teamsters, Commc’n Workers of America, United Food & Commercial Workers Int’l 

Union, Service Employees Int’l Union & Change to Win. to H. Comm. on the Judiciary, 12 (March 10, 2020) (on file with 

Comm.).
306

and storage, excluding seasonal workers.1899 There has been a growing amount of public reporting in 

recent years regarding Amazon’s treatment of warehouse employees, including strenuous working 

conditions, unforgiving packing and sorting quotas, and unfair firings.1900 Amazon warehouses also 

have a tendency to depress wages when they enter a local labor market. For example, since Amazon 

opened a warehouse in Lexington County, South Carolina in 2011, the county has seen average annual 

wages for warehouse workers fall more than 30%, from $47,000 to $32,000 annually.1901

Indirectly, Amazon has wage-setting power through its ability to set route fees and other fixed 

costs for independent contractors in localities in which it dominates the delivery labor market. These 

entities are dependent on Amazon for a large majority—or even 100%—of their delivery business.1902

As a result, they have little choice but to “submit to Amazon’s prices and other terms.”

1903 Amazon’s 

dominance also enables it to compel logistics employees to quit their jobs and instead act as 

independent contractors, removing employment protections. A group of labor unions stated in their 

submission to the Subcommittee, “By virtue of its size and power as a buyer of delivery services, 

Amazon can impose monopolistic restraints on the treatment of workers within its supply chain while, 

at the same time, avoiding legal responsibility for their fair treatment.”

1904

Despite the loss of jobs and economic activity in the wake of the COVID-19 pandemic, 

Amazon’s monopsony power has likely increased. In response to higher demand for goods and 

services, Amazon hired 175,000 temporary workers in March and April of 2020, making 125,000 of 

those jobs permanent in May 2020.1905

Alexa’s Internet of Things Ecosystem

a. Overview

Amazon has significant investments in the Internet of Things ecosystem, centering its strategy 

around Amazon’s voice assistant, Alexa. In 2014, Amazon launched the Alexa-enabled Echo smart 

1899 What Amazon Does to Wages, THE ECONOMIST (Jan. 20, 2018), https://www.economist.com/unitedstates/2018/01/20/what-amazon-does-to-wages. 

1900 See, e.g., Colin Lecher, How Amazon Automatically Tracks and Fires Warehouse Workers for ‘Productivity,’ THE 

VERGE (Apr. 25, 2019), https://www.theverge.com/2019/4/25/18516004/amazon-warehouse-fulfillment-centersproductivity-firing-terminations.

1901 What Amazon Does to Wages, THE ECONOMIST (Jan. 20, 2018), https://www.economist.com/unitedstates/2018/01/20/what-amazon-does-to-wages.

1902 Submission from Int’l Bhd. Of Teamsters, Commc’n Workers of America, United Food & Commercial Workers Int’l 

Union, Service Employees Int’l Union & Change to Win, to H. Comm. on the Judiciary, 14 (March 10, 2020) (on file with 

Comm.).

1903 Id.

1904 Id. at 13.

1905 Sebastian Herrera, Amazon to Keep Most of the Jobs It Added During Pandemic, WALL ST. J. (May 28, 2020). 

https://www.wsj.com/articles/amazon-to-keep-most-of-the-jobs-it-added-during-pandemic-11590661802 (last visited Oct. 

4, 2020).
307

speaker.1906 Since then, Amazon has built the largest ecosystem of devices and applications connected 

to the Internet of Things,1907 creating a broad portfolio of services, development tools, and devices for 

its Alexa platform. Amazon’s research and development team, Lab126, leads the development of 

Amazon’s Internet of Things hardware expansion, including the development of Amazon Echo and 

Fire TV.1908 These devices represent a “critical touchpoint that generates insights into user behavior, 

which can then be used to deepen the relationship with consumers and expose them to new products 

through personalized recommendations.”

1909 Amazon encourages consumers to use Alexa through its 

Echo smart speakers and other Alexa compatible devices, ranging from smart microwaves to its Echo 

Frames.1910

In 2015, Amazon launched a kit for independent developers to access Alexa in the cloud and 

create new Alexa apps, which Amazon refers to as “skills.”

1911 Two years later, in an effort to expand 

its ecosystem of devices, Amazon launched Alexa Voice Service. This suite of services allows 

manufacturers of hardware with microphones and speakers to receive and respond to Alexa voice 

commands, making the device “Alexa-enabled,”

1912 or “Alexa built-in.”1913 Additionally, Amazon 

oversees Works with Alexa, an Alexa-compatible device certification program for devices that receive 

commands through an Alexa-enabled device, such as a smart speaker.1914 Amazon does not charge

third-party device manufacturers for access to its integration services, which promotes rapid adoption 

of Alexa in a larger number of devices, which, in turn, drives greater adoption by consumers.1915

1906 See e.g., Chris Welch, Amazon just surprised everyone with a crazy speaker that talks to you, THE VERGE (Nov. 6, 

2014), https://www.theverge.com/2014/11/6/7167793/amazon-echo-speaker-announced; Nick Statt, Amazon wants Alexa to 

be the operating system for your life, THE VERGE (Sept. 27, 2018), 

https://www.theverge.com/2018/9/27/17911300/amazon-alexa-echo-smart-home-eco-system-competition. 

1907 See infra Section IV. 

1908 Amazon Jobs, Lab126, AMAZON, https://amazon.jobs/en/teams/lab126/ (last visited Sept. 29, 2020). 

1909 See Johanna Ambrosio, Amazon smart devices to expand in homes and businesses, TechTarget (Mar. 23, 2020), 

https://searchaws.techtarget.com/feature/Amazon-smart-devices-to-expand-in-homes-and-businesses

1910 Echo Frames – Eyeglasses with Alexa – Black – A Day 1 Editions product, AMAZON, 

https://www.amazon.com/dp/B07W72XKPJ. See also AmazonBasics Microwave, Small, 0.7 Cu. Ft, 700W, Works With 

Alexa, AMAZON, https://www.amazon.com/dp/B07894S727 (last visited Sept. 29, 2020).

1911 David Isbitski, Introducing the Alexa Skills Kit, Enabling Developers to Create Entirely New Voice Driven 

Capabilities, AMAZON DEVELOPER (June 25, 2015), 

https://developer.amazon.com/blogs/post/Tx205N9U1UD338H/Introducing-the-Alexa-Skills-Kit-Enabling-Developers-toCreate-Entirely-New-Voic. 

1912 Satish Iyer, Introducing the Alexa Voice Service Device SDK for Commercial Device Makers, AMAZON ALEXA (Aug. 

17, 2017), https://developer.amazon.com/blogs/alexa/post/7a72f14e-66d6-42fb-b369-c60af364489a/introducing-the-alexavoice-service-avs-device-sdk-for-commercial-device-makers.

1913 What are Alexa Built-in Devices?, AMAZON ALEXA, https://developer.amazon.com/en-US/alexa/devices/alexa-built-in

(last visited Sep. 29, 2020).

1914 Works with Alexa Program, AMAZON ALEXA, https://developer.amazon.com/en-US/alexa/connecteddevices/launch/works-with-alexa (last visited Sept. 29, 2020).

1915 Class Action Complaint at 8, B.F. v. Amazon.com, Inc., Case No.: 2:19-cv-910 (W.D. Wash. June 11, 2019).
308

These programs indicate that Amazon is focused on expanding Alexa’s reach rather than shortterm profitability, consistent with the early stages of its marketplace strategy. Amazon CFO Brian 

Olsavsky confirmed this in an earnings call in July 2019, saying that the company’s “emphasis is 

around expanding the reach of Alexa and the usefulness.”

1916 He added that at the time, Alexa had 

“over 45,000 skills” and was in “over 13,000 smart home devices from 2,500 unique brands.”

1917

Lastly, Amazon’s Alexa ecosystem is a major source of consumer data; it tracks if the home 

owner’s lights are off and the events on their calendar.1918 Amazon is also building a series of devices 

that allow people to have “Alexa in [their] ears, on [their] eyes, and around [their] fingers.”

1919

b. Market Power

Amazon’s Alexa represents one of three emerging voice assistant platforms domestically, along 

with Google Assistant and Apple’s Siri, but has a more expansive collection of integrated devices and 

voice applications than its competitors.1920 The Echo collection of smart speakers—the hub of Alexa’s 

ecosystem—captures over 60% of the smart speaker market in the U.S.1921

As of September 2019, there were 85,000 Works with Alexa devices available for consumers to 

purchase.1922 The current network of Alexa-enabled devices includes companies like Sonos, HewlettPackard, and BMW.1923 The U.S.-based Alexa Skills Store as of January 2020 includes 70,729 

skills.1924 In comparison, as of December 2019, Google’s voice application ecosystem had just over 

18,826 Google Actions.1925

1916 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00200464 (July 26, 2018) (on file with 

Comm.). 

1917 Id. 

1918 Innovation and Entrepreneurship Hearing at 40 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.). 

1919 Daniel Newman, Opinion: Amazon’s Alexa is about to become even more of a fixture in our lives, MARKETWATCH

(Sept. 30, 2019), https://www.marketwatch.com/story/amazons-alexa-is-about-to-become-even-more-of-a-fixture-in-ourlives-2019-09-27.

1920 See infra Section IV.

1921 Submission from Source 38, to H. Comm. on the Judiciary, 7 (Sept. 1, 2019).

1922 Kyle Wiggers, The Alexa Skills Store now has more than 100,000 voice apps, VENTUREBEAT (Sept. 25, 2019), 

https://venturebeat.com/2019/09/25/the-alexa-skills-store-now-has-more-than-100000-voice-apps/.

1923 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00200465 (July 26, 2018) (on file with 

Comm.).

1924 H. Tankovska, Total number of Amazon Alexa skills in selected countries as of January 2020, STATISTA (Aug. 27, 

2020), https://www.statista.com/statistics/917900/selected-countries-amazon-alexa-skill-count/. 

1925 Shanhong Liu, Number of Google Assistant Actions Worldwide 2019, by Language, STATISTA (June 17, 2020), 

https://www.statista.com/statistics/1062722/worldwide-google-action-disappearance-by-language/.
309

The voice assistant market has strong entry barriers due to the significant investments required 

to compete in the market. These include investments in artificial intelligence, voice-enabled hardware, 

and cloud computing infrastructure, which are critical inputs Amazon has been developing for years. 

Amazon’s Alexa Voice Service is also hosted on Amazon Web Services, allowing it to bind products 

and developers to its cloud platform. 1926 In turn, this relationship gives Amazon a potential head-start 

on turning its Alexa business partners into customers through the cross-sale of Amazon Web Services 

and other Amazon products and services down the line. 

Voice assistants collect significant amounts of personal data and learn users’ preferences over 

time. For example, when Alexa users add more devices that integrate with Alexa, they often manage 

the settings for these devices through mobile applications and websites that are tied to their Amazon 

credentials, thereby creating a robust user profile. 1927 As Amazon continues to expand Alexa’s reach, 

this customization of features allows Amazon to better “understand” its users, which may affect their 

willingness to retrain a new voice assistant.1928 In addition to the cost of replacing their devices, this 

friction—retraining a new voice assistant—may increase costs associated with switching to another 

voice assistant ecosystem.

c. Merger Activity

Amazon has expanded its voice assistant ecosystem by acquiring artificial intelligence 

companies to strengthen Alexa’s functionality and voice-enabled device manufacturers to expand 

Alexa’s reach.1929 In 2011, Amazon acquired Yap, a speech recognition platform.1930 The next year, in 

2012, Amazon acquired Evi, a technology for understanding natural language.1931 Over the years, 

Amazon has continued to acquire other businesses engaged in natural language processing, machine 

learning, and other related technologies in support of its continued efforts to improve Alexa’s artificial 

intelligence functionality.1932

One of Amazon’s strategic goals for Alexa has been to use its voice assistant to reinforce the 

company’s dominance in e-commerce and strengthen its presence in offline retail. In 2017, Amazon 

acquired Graphiq, a technology company that collects and organizes details about “products, places, 

1926 Build the future of the connected home with AWS IoT and Amazon Alexa, AWS, 

https://aws.amazon.com/iot/solutions/connected-home/iot-and-alexa/ (last visited Sept. 29, 2020). 

1927 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00172104 (Mar. 9, 2018) (on file with Comm.). 

1928 Submission from Source 39, to H. Comm. on the Judiciary, Source 39-00000098, 19 (Sept. 16, 2019) (on file with 

Comm.). 

1929 See Appendix

1930 Sam Byford, Amazon Acquires Yap, move into Speech Recognition?, THE VERGE (Nov. 9, 2011), 

https://www.theverge.com/2011/11/9/2550764/amazon-acquires-yap-speech-recognition-siri.

1931 Emma Bryce, How Amazon’s Alexa was ‘born’ and where voice-controlled tech will take us next, WIRED (Feb. 14, 

2017), https://www.wired.co.uk/article/amazon-alexa-ai-evi. 

1932 See infra Appendix.
310

and people to simplify online research.”

1933 This acquisition appears to have been part of Amazon’s 

effort to improve Alexa’s overall search capabilities, most notably product search, as the technology 

includes “features to tailor comparisons around individual preferences.”

1934

In 2017, Amazon purchased Blink, followed by Ring in 2018—both to solidify its position in 

the home security market.1935 In an internal document, Amazon recognized that security could “feed 

our flywheels (Prime, Alexa) while being a large, profitable business in its own right.”

1936 Prior to 

these acquisitions Jeff Helbling, Vice President at Amazon, emailed a group of Amazon executives, 

recapping a discussion on the transactions he had with Mr. Bezos. There, he detailed the twin 

justification for the acquisitions, saying that “two senses matter—eyes and ears.”

1937 Amazon had 

already locked down “ears” through its continued development of Alexa. Ring and Blink would act as 

Amazon’s “eyes” right outside the home.

Amazon’s internal documents show that, in large part, it purchased Ring to capture the 

company’s share of the smart home security market. In December 2017, Mr. Bezos wrote to Dave 

Limp, the Senior Vice President of Devices & Services, that Amazon was really “buying market 

position” by acquiring Ring.1938 During the Subcommittee’s sixth hearing, Representative Jamie 

Raskin (D-MD) asked Mr. Bezos about this exchange.1939 Mr. Bezos responded:

Sir, market position is valuable in almost any business, and it’s one of the primary 

things that one would look at in an acquisition. There are multiple reasons that we might 

buy a company. Sometimes we’re trying to buy some technology or some IP.

Sometimes it’s a talent acquisition. But the most common case is market position, that 

the company has traction with customers, they’ve built a service, maybe they were the 

first mover. There could be any number of reasons why they have that market position.

But that’s a very common reason to acquire a company.1940

1933 Paresh Dave, Amazon acquires Santa Barbara start-up Graphiq to try to bolster Alexa, L.A. TIMES (July 20, 2017), 

https://www.latimes.com/business/technology/la-fi-tn-graphiq-amazon-20170719-story.html. 

1934 Id. 

1935 Jacob Kastrenakes, Amazon buys smart camera and doorbell startup Blink, THE VERGE (Dec. 22, 2017), 

https://www.theverge.com/circuitbreaker/2017/12/22/16810516/amazon-blink-acquisition-smart-camera-doorbellcompany; see also Samuel Gibbs, Amazon buys video doorbell firm Ring for over $1bn, THE GUARDIAN (Feb. 28, 2018), 

https://www.theguardian.com/technology/2018/feb/28/amazon-buys-video-doorbell-ring-smart-home-delivery.

1936 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00169702 (Mar. 9, 2018) (on file with Comm.). 

1937 Id. at AMAZON-HJC-00170877. (Oct. 11, 2017).

1938 Id. at AMAZON-HJC-00173560 (Dec. 15, 2017).

1939 CEO Hearing Transcript at 108 (question of Rep. Jamie Raskin (D-MD), Member, Subcomm. on Antirust, 

Commercial and Admin. Law).

1940 Id. (statement of Jeff Bezos, CEO, Amazon.com, Inc.). 
311

This response suggests that adding Ring’s users to the Alexa ecosystem quickly was also important to 

Amazon’s rationale.

A 2017 internal memorandum further explains Amazon’s strategy behind these acquisitions. As 

the memorandum notes, while acquiring each company independently would make Amazon stronger, 

acquiring both “would put us in a meaningfully better position than we are today (and we would not 

want to stake our chances in the segment on closing any one opportunity).”

1941 Douglas Booms, the 

Vice President of Corporate Development at Amazon, sent an email summarizing the thoughts of other 

senior executives at the company, which included: “I don’t know how we can get big fast in that 

segment without an [sic] acquiring someone.”

1942

 

The documents and other relevant information reviewed by Subcommittee staff demonstrate 

that Amazon acquiring Ring and Blink was in part to expand and reinforce its market power for its 

other business lines. Internally, Amazon executives discussed how home surveillance acquisitions 

would help them implement unattended package delivery. Similarly, they discussed the idea that the 

acquisitions would help Amazon develop its Alexa Doorbell application program interface, an AWS 

service that allows Alexa Skills developers to build apps that respond to a ringing doorbell.1943

Amazon referred to this strategy as an “integration approach” to “remove impediments to future 

growth.”

1944

More recently, Amazon purchased Eero, a mesh networking company, for $97 million in 

2019.1945 The purchase was part of Amazon’s strategy to offer “frustration-free setup” for smart home 

devices in the Alexa ecosystem, another move aimed at removing impediments to growing the 

platform’s presence in the home.1946“Amazon Wi-fi Simple Setup” scans the user’s Eero network 

during initial set-up of an Alexa-enabled device, applying the user’s stored credentials to automatically 

connect to other smart devices, such as outlets and Fire TV devices.1947 To achieve this, Eero must 

1941 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00169706 (Mar. 9, 2018) (on file with Comm.). 

1942 Id. at AMAZON-HJC-00170869 (Nov. 1, 2017).

1943 Id. at AMAZON-HJC-00169706 (Mar. 9, 2018); Alexa.DoorbellEventSource Interface, AMAZON ALEXA, 

https://developer.amazon.com/en-US/docs/alexa/device-apis/alexa-doorbelleventsource.html (last visited Sept. 30, 2020).

1944 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00172104 (Mar. 9, 2018) (on file with Comm.). 

1945 Lisa Eadicicco & Alexei Oreskovic, Amazon paid $97 million to acquire Eero in a fire sale deal that left some 

shareholders with practically nothing, according to leaked documents, BUS. INSIDER (Apr. 5, 2019), 

https://www.businessinsider.com/amazon-paid-97-million-to-acquire-eero-in-fire-sale-leaked-documents-2019-4. 

1946 See Lisa Eadicicco, A year after selling to Amazon for $1 billion, the chief inventor of the Ring video doorbell explains 

how he’s bringing his entrepreneurial spirit to the online retailer, BUS. INSIDER (Apr. 9, 2019), 

http://static7.businessinsider.com/ring-founder-jamie-siminoff-life-after-amazon-acquisition-2019-4 (quoting Jamie

Siminoff, Founder of Ring, describing the importance of Eero and his support of Amazon’s acquisition, “[Ring is] a 

product that requires great Wi-Fi connectivity. We use a lot of bandwidth so we we’re certainly very sensitive to Wi-Fi 

networks.”).

1947 Amazon Frustration-Free Setup Frequently Asked Questions, AMAZON, 

https://www.amazon.com/gp/help/customer/display.html?nodeId=GMPKVYDBR223TRPY (last visited Oct. 4, 2018).
312

continually understand which devices are connected to the network, including the IP addresses of those 

devices.1948 This acquisition gives Amazon access to another important input for consumer data.

1949

d. Conduct

During the Subcommittee’s investigation, market participants raised concerns about Amazon’s 

business practices in the smart home market. As these market participants note, Amazon uses Alexa to 

favor its own goods and services, including AmazonBasics and Prime Music. Amazon has also 

imposed barriers to entry for other voice-enabled device manufactures through predatory pricing of 

Alexa-enabled devices, and through its dominance as a leading distribution channel for smart home 

devices.

i. Self-Preferencing

Amazon has the largest voice application “store” of third-party skills, as well as first-party

services that represent popular voice assistant applications, such as Amazon Music and an e-commerce 

platform that it can favor over third-party applications.1950 Amazon favors its services in Alexa by 

making them defaults for common voice commands. For example, Amazon.com is the default store for 

basic voice commands related to shopping. “Alexa, add milk to my cart,” adds milk to the user’s 

Amazon shopping cart.1951

Besides favoring Amazon services with default voice commands, Alexa also allows Amazon to 

favor its retail products over products offered by third-party sellers. When users shop via voice 

command, they are presented with one spoken offer and an option for a follow-up question, which is 

distinct from an online user interface that shows the additional offers ranked. This increases the 

importance of being Alexa’s featured offer.1952

For example, The New York Times reported in 2018 that when a user says, “Alexa, buy 

batteries,” Alexa responds with the AmazonBasics option 1953 Similarly, a study conducted by Bain & 

1948 Legal: Privacy policy for eero Devices, Applications and Services, Eero, https://eero.com/legal/privacy (last visited 

Sept. 29, 2020); Legal: Privacy policy for eero Websites, Eero, https://eero.com/legal/privacy-website (last visited Sept. 29, 

2020).

1949 Innovation and Entrepreneurship Hearing at 41 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).

1950 Competitors Hearing at 4 (statement of Patrick Spence, CEO, Sonos, Inc.).

1951 Do more with Alexa, AMAZON, https://www.amazon.com/alexa-voice-shopping/b?ie=UTF8&node=14552177011 (last 

visited Sept. 30, 2020).

1952 Submission from Source 39, to H. Comm. on the Judiciary, Source 39-00000097, 19 (Sept. 16, 2019) (on file with 

Comm.). 

1953 Julie Creswell, How Amazon Steers Shoppers to Its Own Products, N.Y. TIMES (June 23, 2018), 

https://www.nytimes.com/2018/06/23/business/amazon-the-brand-buster.html. 
313

Company found that for categories in which Amazon offered a private-label product, Alexa 

recommended those products 17% of the time, despite its private-label goods representing only about 

2% of total volume sold.1954 During the Subcommittee’s sixth hearing, Representative Jamie Raskin 

(D-MD) asked Mr. Bezos “[H]as Alexa ever been trained to favor Amazon products when users shop 

by voice?”

1955 Mr. Bezos responded that he didn’t “know if it’s been trained in that way,” but “it 

wouldn’t surprise me if Alexa sometimes does promote our own products.”

1956Amazon chooses the 

products Alexa suggests based on a range of features, including products that “customers frequently 

purchase based on their past orders” and Amazon’s Choice designation.1957 Amazon’s method for 

determining “Amazon’s Choice” is opaque.1958

Amazon minimizes concerns about favoring its first-party goods through voice shopping by 

highlighting how rare it is for people to purchase goods through Alexa.

1959 Reporting suggests, 

however, that there is an increasing number of queries from users who expect to hear product 

information or to complete a transaction while interacting with a voice assistant.1960 Amazon also 

justified the fact that third-party sales through Alexa are lower than third-party sales on 

Amazon.com—42% compared to 58%—by saying that “customers disproportionately use Alexa to 

order household consumable items (like paper towels or batteries) for which Amazon’s offers are 

particularly competitive.”

1961 This demonstrates the problem, however, given that voice shopping is 

most useful for products in which consumers do not have to do much research or engage in price 

comparison. Alexa’s algorithm, in conjunction with the AmazonBasics business model, provides a 

convenient avenue for Amazon to favor first-party products. 

Although it is technically possible for Alexa users to voice shop at other stores, there is 

significant friction. Users must first enable the shopping skills for other online retailers, which then 

requires the user to set up a completely separate billing profile, even though it contains similar 

1954 Aaron Cheris, Darrell Rigby & Suzanne Tager, Dreaming of an Amazon Christmas, BAIN & CO. (Nov. 9, 2017), 

https://www.bain.com/insights/retail-holiday-newsletter-2017-issue-2/.

1955 CEO Hearing Transcript at 120 (question of Rep. Jamie Raskin (D-MD), Member, Subcomm. on Antirust, Commercial 

and Admin. Law).

1956 Id. at 121 (statement of Jeff Bezos, CEO, Amazon.com, Inc.) .

1957 CEO Hearing at 5 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.); see also Aaron 

Cheris, Darrell Rigby & Suzanne Tager, Dreaming of an Amazon Christmas, BAIN & CO. (Nov. 9, 2017), 

https://www.bain.com/insights/retail-holiday-newsletter-2017-issue-2/.

1958 Aaron Cheris, Darrell Rigby & Suzanne Tager, Dreaming of an Amazon Christmas, BAIN & CO. (Nov. 9, 2017), 

https://www.bain.com/insights/retail-holiday-newsletter-2017-issue-2/.

1959 Innovation and Entrepreneurship Hearing at 39 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).

1960 Khari Johnson, Voicelabs ditches analytics service to launch Alpine.ai for ecommerce voice apps, VENTUREBEAT (Jan. 

29, 2018), https://venturebeat.com/2018/01/29/voicelabs-ditches-analytics-service-to-launch-alpine-ai-for-ecommercevoice-apps/. 

1961 CEO Hearing at 5 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).
314

information to their Amazon user profile. 1962 Alexa-enabled devices are tied to the user’s Amazon 

account, which populates the user’s saved credit card and shipping information for use during general 

shopping commands.

1963

ii. Predatory Pricing and Bundling

Amazon uses a predatory pricing strategy to increase its sales of smart home devices by pricing 

its products below cost.1964 It is common for Amazon to sell these products in bundles at steep 

discounts. Several smart home device manufacturers told the Subcommittee that when Amazon sells 

certain devices in a bundle or at a steep discount, it makes it nearly impossible for companies who 

specialize in making one piece of voice-assistant enabled hardware to compete on its merits.1965

Furthermore, as described earlier in this Report, aggressive pricing of smart home devices—

specifically “hubs” such as the Echo—has created a significant barrier to entry for companies that want 

to compete with the leading voice assistant platforms.

iii. Use of Gatekeeper Power

Amazon Marketplace is an important distribution channel for voice-enabled electronics in its 

Alexa ecosystem. Amazon decides the availability and placement of products on its site. As a result, 

Amazon can use the threat of delisting a product on its marketplace to ensure that Alexa is enabled on 

other company’s devices or to secure other favorable contractual terms.

In an interview with Subcommittee staff, a seller that sells a significant number of its device on 

Amazon.com said that during contract negotiations, Amazon repeatedly refers to its power to delist the 

company’s product if Amazon’s services are not prominent enough on the device.1966 In 2017, Amazon 

also reportedly informed one of its main home security competitors—the Google-owned smart home 

company Nest—that it would not list any of its recently announced products, including its latest smart 

thermostat and home security system.1967 Notwithstanding its own market power, Google’s internal 

communications describe Amazon as having “changed the dynamics,” observing that there is a “built 

1962 See Alexa Skills: Shopping, AMAZON,

https://www.amazon.com/s/ref=lp_13727921011_nr_n_16?fst=as%3Aoff&rh=n%3A13727921011%2Cn%3A%21137279

22011%2Cn%3A14284862011&bbn=13727922011&ie=UTF8&qid=1600864849&rnid=13727922011 (last visited Sept. 

30, 2020).

1963 Set Up Your Echo, AMAZON,

https://www.amazon.com/gp/help/customer/display.html?nodeId=GKFJXZCLQ83HGHQZ (last visited Oct. 3, 2020).

1964 Id. at 119 (statement of Jeff Bezos, CEO, Amazon.com, Inc.) .

1965 Competitors Hearing at 3–4 (statement of Patrick Spence, CEO, Sonos, Inc.).

1966 Interview with Source 148 (Aug. 26, 2020).

1967 Steve Kovach, Amazon Will Stop Selling Nest Smart Home Devices, Escalating Its War With Google, BUS. INSIDER

(Mar. 2, 2018), https://www.businessinsider.com/amazon-wont-sell-nest-products-from-google-2018-3. 
315

in incentive to partner with Alexa, since [Amazon] will pull you from their store if you don’t support 

it.”

1968

Additionally, Amazon controls the prominence of competing voice-enabled devices on its 

marketplace and promotes its first-party voice-enabled devices on Amazon.com. In an internal 

memorandum to Amazon executives about the Ring acquisition, Michael Deal, Amazon’s Vice 

President and Associate General Counsel, said that Amazon “can promote Ring’s products and 

subscription plans heavily on our sites as we do with our current [first-party] devices.”

1969

Relatedly, Amazon can also use advertisement placement as leverage during negotiations with 

other device manufacturers. In interviews with Subcommittee staff and submissions to the 

Subcommittee, several market participants said that ad placement was used as leverage in negotiations. 

In one instance, Amazon placed a competing brand’s ad beneath the product of the firm it was 

negotiating with “to influence negotiations.”

1970 Additionally, Subcommittee staff heard from a voiceenabled device manufacturer that offers a competitive product to Amazon’s first-party devices that it 

was prohibited from buying ads on Amazon.com.1971 The competitor expressed concern about the 

harm this causes consumers, who may be confused or deceived when they receive ads promoting 

Amazon products even when they specifically search for a competitor’s product on Amazon.com.

1972

Even Google, which ranks just behind Amazon in online shopping queries, believes it has a 

disadvantage with Amazon. In an internal email about smart speakers, a Google employee noted that 

“fighting Amazon with a very-hard-to-differentiate product and a channel disadvantage and a huge 

economic disadvantage (due to channel mix margin differences) is already like fighting a shark on a 

surfboard.”

1973

iv. Misuse of Data

Amazon has access to information about consumer use of third-party applications on Alexaenabled devices and uses its dominant position in the voice assistant market to collect more data from 

within the Alexa ecosystem. 

1968 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC- 04258793-993 (Jan. 29, 2019) (on file with 

Comm.).

1969 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00172104 (Mar. 9, 2018) (on file with Comm.). 

1970 Submission from Source 38, to H. Comm. on the Judiciary, 27 (Sept. 1, 2019) (on file with Comm.).

1971 Interview with Source 148 (Aug. 26, 2020).

1972 Id.

1973 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04261582-85 (Nov. 27, 2018) (on file with Comm.).
316

Amazon has insight into which Alexa skills are invoked by Alexa users and the frequency of 

usage.1974 Considering Amazon’s use of third-party seller’s data in e-commerce and cloud customer’s 

data on Amazon Web Services, Amazon may use the same tactics with other firms’ voice application 

data to determine which voice assistant skills it should invest in.

Additionally, Amazon uses its market power to collect third-party voice application data. 

According to a July 2020 report by the Wall Street Journal, Amazon told Vivint, a manufacturer of 

smart-home devices that, “it would only allow the company to remain on the Echo if Vivint agreed to 

give it not only the data from its Vivint function on Echo, but from every Vivint device in those 

customers’ homes at all times.”

1975

Amazon has also faced civil suits related to its storage of voice data. 1976 When Alexa hears a 

“wake” word— such as “Alexa” or “Echo”—it records the user’s voice command, including 

conversations in the background, and saves a permanent recording of the user’s voice to its own 

servers, as opposed to temporary storage for artificial intelligence training purposes.1977

v. Copying Nascent Competitors Technology

The Subcommittee’s investigation produced evidence consistent with public reporting that 

Amazon uses information collected through Alexa Fund investments to inform and improve Amazon’s 

smart home ecosystem. When Amazon invests in a startup, it obtains access to the company’s nonpublic financial information, strategic plans, and other proprietary information.1978 According to a 

recent Wall Street Journal report, eight months after Alexa Fund invested in Nucleus, Amazon 

announced the Echo Show, a very similar Alexa-enabled video-chat device.1979 This report described 

several other examples, including Vocalife, the inventors of a “speech-detection technology,” which 

filed a lawsuit against Amazon alleging it improperly used proprietary technology.1980 At the 

Subcommittee’s sixth hearing, Representative Ken Buck (R-CO) said that allegations that Amazon 

incorporated features demonstrated to it by Vocalife’s founders during an investment meeting “are 

1974 Innovation and Entrepreneurship Hearing at 40 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition.com, Amazon, Inc.).

1975 Dana Mattioli & Cara Lombardo, Amazon Met With Startups About Investing, Then Launched Competing Products, 

WALL ST. J. (July 23, 2020), https://www.wsj.com/articles/amazon-tech-startup-echo-bezos-alexa-investment-fund11595520249.

1976 See Tice v. Amazon.com, Inc., No. 5:10-cv-1311, (C.D. Cal. Mar. 25, 2020); C.O. v. Amazon.com, Inc., No. C19-910 

(W.D. Wash. Sept. 23, 2019). 

1977 Id.

1978 Dana Mattioli & Cara Lombardo, Amazon Met With Startups About Investing, Then Launched Competing Products, 

WALL ST. J. (July 23, 2020, 12:08 PM), https://www.wsj.com/articles/amazon-tech-startup-echo-bezos-alexa-investmentfund-11595520249. 

1979 Id.

1980 Id.
317

serious, especially because the size and scope of these practices couldn’t happen without Amazon’s 

monopolistic control of the marketplace.”

1981

Prior to Amazon’s acquisition of Ring, Amazon invested in Ring through the Alexa Fund, and 

internal emails about meetings during this time demonstrate how Amazon is able to obtain crucial 

insights into young companies. Amazon was able to learn about Ring’s “roadmap, future products, 

[and] two acquisitions they have done.”

1982 While Amazon often denies public reporting that it steals 

and copies technology from young startups, Amazon’s emails suggest that it does replicate some of the 

startups it meets with or invests in. An email out of Amazon’s Lab 126 regarding Ring indicated that 

Amazon “could easily replicate all of their hardware to be better, [and] operate in a more secure and 

robust infrastructure, for a LOT less than [the] cost of buying them.”

1983 In the same email chain, 

Amazon employees wondered, “[I]f we move forward with due diligence, then decide not to buy 

[Ring], could we have legal issues if we go into the market by ourselves as a competitor and materially 

impact their business?”

1984

Amazon Web Services

a. Overview

Amazon Web Services (AWS) is considered the pioneer of cloud computing and has sustained 

a first-mover advantage for over a decade.1985 AWS officially launched in 2006, featuring two of its 

core IaaS offerings, Simple Storage Service (S3) and Elastic Compute Cloud (EC2).1986 While

Amazon.com was AWS’s first customer, in the early 2000s AWS began creating cloud offerings for

third-party merchants, who could use AWS to “build online shopping sites on top of Amazon’s ecommerce engine.”

1987 For AWS, meanwhile, this partnership with third parties gave the company 

experience in creating well-documented APIs for internal developers.1988 Over the next few years, AWS 

rolled out additional programs to expand its network of third-party software vendors and 

1981 CEO Hearing Transcript at 102 (statement of Rep. Ken Buck (R-CO), Member, Subcomm. on Antitrust, Commercial 

and Admin. Law of the H. Comm. on the Judiciary). 

1982 Production from Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00214240 (Oct. 18, 2017) (on file with 

Comm.). 

1983 Id. at AMAZON-HJC-00220705 (Nov. 4, 2017).

1984 Id. at AMAZON-HJC-00220703 (Nov. 4, 2017).

1985 Ron Miller, How AWS Came To Be, TECHCRUNCH (July 2, 2016), https://techcrunch.com/2016/07/02/andy-jassys-briefhistory-of-the-genesis-of-aws/.

1986 What’s New, AMAZON WEB SERVICES (Oct. 4, 2006), https://aws.amazon.com/about-aws/whats-new/2006/. 

1987 Id.

1988 Ron Miller, How AWS Came To Be, TECHCRUNCH (July 2, 2016), https://techcrunch.com/2016/07/02/andy-jassys-briefhistory-of-the-genesis-of-aws/. 
318

implementation partners, including AWS Marketplace1989 and the AWS Partnership Network (APN) in 

2012.1990

Over the last decade, AWS has also secured significant government contracts. Most notably, in 

2014, AWS signed a $600 million Commercial Cloud Services (C2S) contract to build the AWS Secret 

Region, a cloud offering tailored for the U.S. intelligence community.1991 The deal marked the largest 

cloud infrastructure contract at the time and signaled the government’s shift from investing in onpremise server capacity to cloud services.1992 Today, AWS boasts work “with over 6,500 government 

agencies” and states that Amazon has been “among the first to solve government compliance 

challenges facing cloud computing,” while also “consistently help[ing] our customers navigate 

procurement and policy issues related to adoption of cloud computing.”

1993

AWS contributes immense value to Amazon’s overall business. In each quarter since Amazon 

began publicly reporting its financials for cloud, AWS has accounted for an outsized share of 

Amazon’s operating profits. While AWS contributes to less than 15% of Amazon’s annual revenue, it 

consistently accounts for over 50% of the company’s operating income. In 2017, AWS accounted for 

over 100% of Amazon’s operating income, due to losses in the company’s international business.1994 In 

the first quarter of 2020, AWS accounted for 13.5% of Amazon’s total revenues but 77% of its 

operating income.1995

1989 Introducing AWS Marketplace, AMAZON WEB SERVICES (Apr. 19, 2012), https://aws.amazon.com/about-aws/whatsnew/2012/04/19/introducing-aws-marketplace/.

1990 Jeff Barr, Announcing the AWS Partner Network, AWS NEWS BLOG (Apr. 17, 2012),

https://aws.amazon.com/blogs/aws/announcing-the-aws-partner-network/. (in beta).

1991 Frank Konkel, Federal Cloud Spending Trends Toward All-Time High, NEXTGOV (Sept. 12, 2018), 

https://www.nextgov.com/it-modernization/2018/09/federal-cloud-spending-trends-toward-all-time-high/151221/.

1992 Id.

1993 The Trusted Cloud for Government, AMAZON WEB SERVICES, https://aws.amazon.com/governmenteducation/government/ (last visited Sept. 30, 2020).

1994 Amazon.com, Inc., Annual Report (Form 10-K) 26 (Feb. 1, 2018), 

https://s2.q4cdn.com/299287126/files/doc_financials/annual/Amazon_AR.PDF.

1995 Amazon.com, Inc., Quarterly Report (Form 10-Q) 17 (Apr. 30, 2020), http://d18rn0p25nwr6d.cloudfront.net/CIK0001018724/708a19c5-7d8c-4fc9-ab37-bfaa7a31629b.pdf.
319

Contributions to Amazon’s Revenue and Operating Profit over Time1996

Profits earned through its cloud services enable Amazon to invest heavily in expanding its 

cloud operation, as well as to support its other lines of business. Several market participants expressed 

concerns to Subcommittee staff that Amazon uses its high and steady profits from AWS to subsidize 

these other lines of business, including its retail operation.1997 In an internal document produced in 

response to the Committee’s requests for information, Amazon instructs its employees to rebut this 

claim by referring to it as a “myth.”

1998 However, Amazon failed to produce the financial data that 

would have enabled Subcommittee staff to make an independent assessment.1999

1996 Prepared by the Subcomm. based on Amazon.com, Inc., Annual Report (Form 10-K) (2015-2019), 

https://www.sec.gov/Archives/edgar/data/1018724/000101872419000004/amzn-20181231x10k.htm

1997 Submission from Source 48, to H. Comm. on the Judiciary, 8 (Nov. 8, 2019) (on file with Comm.).

1998 Production of Amazon, to H. Comm on the Judiciary, AMAZON-HJC-00216209 (Aug. 24, 2018) (on file with 

Comm.).

1999 Letter from Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. 

Comm on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the 

H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary, to Jeff Bezos, CEO, Amazon.com, Inc., at 2 (on file with Comm.).
320

b. Market Power

As discussed earlier in this Report, AWS is the largest provider of cloud computing services, 

capturing approximately 24% of the U.S. spend in 2018 on cloud computing services, including IaaS, 

PaaS, and SaaS.2000 AWS represents close to half of global spending on cloud infrastructure services, 

with three times the market share of Microsoft, its closest competitor.2001 Its growth continues to soar. 

In the first quarter of 2020, AWS crossed $10 billion in quarterly revenue while growing 33% on an 

annualized basis.2002

Amazon has a “lion’s share of the government cloud infrastructure market.”

2003 Exact data on 

AWS’s share of government cloud expenditure is opaque because most of AWS’s public sector 

revenue comes through subcontracts, which are harder to track, and contracts related to the intelligence 

community, which are listed as classified spending and are rarely reported. Market participants, 

however, emphasize that AWS is considered a major player in federal cloud contracts.2004

In its submissions to the Subcommittee, Amazon describes itself as a relatively small player 

representing “less than 1% of IT spending globally and less than 2% in the United States.”

2005 Amazon 

states that AWS competes with a large array of offerings including on-premise computing.2006 In other 

contexts, however, Amazon has highlighted its leading position, describing itself as the “largest cloud 

software marketplace” and the “only cloud provider with existing classified infrastructure.”

2007

Through a careful review of Amazon’s internal documents and other evidence during the 

investigation, Subcommittee staff found that Amazon has a dominant position in cloud computing. 

Amazon’s dominance in cloud computing traces in part to its first-mover advantage and the high fixed 

2000 Letter from David Zapolsky, Gen. Counsel, Amazon.com, Inc., to Hon. David N. Cicilline, Chairman, Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 6 (July 26, 2019) ( on file with Comm.).

2001 Id.; Press Release, Katie Costello, Gartner, Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17.5 Percent

in 2019 (Apr. 2, 2019), https://www.gartner.com/en/newsroom/press-releases/2019-04-02-gartner-forecasts-worldwidepublic-cloud-revenue-to-g.

2002 Jordan Novet, AWS Tops $10 Billion in Quarterly Revenue for the First Time, CNBC (Apr. 30, 2020) 

https://www.cnbc.com/2020/04/30/aws-earnings-q1-2020.html.

2003 David Ramel, AWS vs. Azure Heats Up in Federal Market, WASH. TECH. (Sept. 14, 2018) 

https://washingtontechnology.com/articles/2018/09/14/aws-vs-azure-public-sector.aspx. 

2004 Interview with Source 31 (May 27, 2020).

2005 Letter from David Zapolsky, Gen. Counsel, Amazon.com, Inc., to Hon. David N. Cicilline, Chairman, Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 6 (July 26, 2019) (on file with Comm.).

2006 Id.

2007 Complaint at 5, Amazon Web Servs, Inc. v. United States, 147 Fed. Cl. 146 (2020) (No. 1:19-cv-01796), 

https://www.courthousenews.com/wp-content/uploads/2019/12/amazon-trump-cafc.pdf.
321

costs and economies of scale associated with this market.2008 But evidence suggests that Amazon has 

also taken steps to lock in and extend this dominance in ways that risk harming customers, businesses, 

and the broader public. 

Network effects incentivized Amazon to build out AWS offerings quickly. As with other 

sectors of the digital economy, the value of Amazon’s cloud offerings increases with the number of 

businesses and customers that use it. Introducing more services and partnership programs draws more 

customers, attracts more developers and implementation partners, which, in turn, draws additional 

customers.2009

AWS is considered to have the largest collection of cloud offerings. Its AWS Management 

Console and supporting technologies span many categories, including storage and computing, 

databases, migration services, and machine learning tools.2010 Many of these products are based on 

open-source software or on the technology of companies that Amazon acquired.2011 In addition to 

selling cloud offerings directly, AWS also runs a cloud marketplace where third-party vendors can list 

their products. The AWS Marketplace enjoys over 1,300 vendors as of 2018, and over 9,000 products, 

functioning as the largest cloud marketplace in the sector.2012

The widespread adoption of AWS’s developer certification programs, partner networks, and 

student programs has meant that there are far more engineers familiar with AWS technology than with 

any other platform.2013 Several market participants listed the availability of AWS-trained engineers as a 

reason for selecting AWS over other cloud vendors and as a barrier for switching platforms or 

attempting to multi-cloud.2014

High switching costs reinforce Amazon’s dominance in the cloud market.2015 A cloud-based 

application company interviewed by Subcommittee staff explained these costs: 

We’ve looked at other services (Google, Microsoft, Oracle) but we’ve relied on AWS 

for so long that we couldn’t just flip a switch, and we’ve run down a lot of engineering 

problems with AWS . . . There are other providers we could go to, but it would take 

2008 See infra Section IV.

2009 Production of Google, to H. Comm. on the Judiciary, GOOG-HJC-04260401 (Aug. 25, 2016) (on file with Comm.).

2010 AWS Marketplace, AMAZON WEB SERVICES, https://aws.amazon.com/marketplace (last visited Sept. 30, 2020).

2011 CEO Hearing at 6 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

2012 AWS Marketplace, AMAZON WEB SERVICES, https://aws.amazon.com/marketplace(last visited Sept. 30, 2020); Brad 

Lyman, See What’s New for AWS Marketplace Sellers, AWS PARTNER NETWORK BLOG (Mar. 9, 2018), 

https://aws.amazon.com/blogs/apn/see-whats-new-for-aws-marketplace-sellers. 

2013 Interview with Source 736 (June 10, 2020).

2014 Interview with Source 126 (June 29, 2020).

2015 See infra Section IV.
322

work. We could also build some functionality internally, but that would also take a lot 

of work.2016

For cloud-based application developers, whose entire product is dependent on AWS, the fears 

of lock-in are even greater. One marketplace participant said:

“[A]ny transition of the cloud services currently provided by AWS to another cloud 

service provider would be difficult to implement and would cause us to incur significant 

time and expense and could disrupt or degrade our ability to deliver our products and 

services. Our business relies on the availability of our services for [users] and 

advertisers.2017

Amazon has also taken steps to lock-in its position, including through long-term contracts, 

volume minimums, and the use of fees to move data to other cloud providers, which are also known as 

egress fees. In submissions to the Subcommittee, numerous market participants noted that AWS often 

seeks multi-year contracts during negotiations.2018 These contracts are also commonplace in 

companies’ investor statements. For example, according to Lyft’s 2020 investor filing, they agreed to 

pay “an aggregate of at least $300 million between January 2019 and December 2021 on AWS 

services.”

2019 According to Slack’s investor filling, in 2018 it committed to a five-year contract with 

minimum annual commitments of $50 million.2020

Subcommittee staff also uncovered evidence that Amazon sometimes requires a volume 

agreement when a large company seeks to negotiate lower prices. In an internal email discussion on 

this topic, a senior executive at AWS wrote that Amazon has “a private rate card which has a commit 

level for bandwidth pricing. Rates at or above the private rate card are pre-approved. Anything below 

that has to be first approved by me and then the price goes to service GM.”

2021

When an Amazon customer chooses to move data to another cloud provider, they are charged 

an egress fee. Market participants told Subcommittee staff that they view these fees less as a cost for 

2016 Interview with Source 111 (Apr. 6, 2020).

2017 Submission from Source 32, to H. Comm. on the Judiciary, Source 32-000009 (Oct. 29, 2019) (on file with Comm.).

2018 Id. at Source 32-000017.

2019 Lyft, Annual Report (Form 10-K) 7 (Feb. 28, 2020), https://investor.lyft.com/static-files/981ad93a-5d97-4f7f-8937-

5682ca83cba7. 

2020 Slack, Registration Statement (Form S-1) 90 (Apr. 26, 2019), http://d18rn0p25nwr6d.cloudfront.net/CIK0001764925/b6da15ae-25c5-4447-ba38-c287bf11e624.pdf. 

2021 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00206893 (May 11, 2017) (on file with 

Comm.).
323

Amazon to transport data and more as friction imposed by Amazon for switching providers, noting that 

Amazon charges egress fees even when data is staying locally within the same data center.2022

The COVID-19 pandemic has underscored the centrality of cloud computing to the functioning 

of an increasing swath of businesses—highlighting how cloud services have come to resemble critical 

infrastructure. Reporting by The Information in April 2020 discussed how the major cloud providers 

are facing requests from many customers for financial relief, while the demand for cloud computing 

has increased.2023 As this reporting noted, “AWS has been the least willing to offer flexible terms on 

customer bills, according to numerous customers. That stands in contrast to Microsoft and Google 

which have shown some flexibility, partners say.”

2024

c. Merger Activity

Amazon has acquired a significant number of cloud computing firms over the past decade. 

Although a full discussion of this activity is beyond the scope of this Report, Amazon’s acquisition 

activity in the cloud market appears to be part of a broader trend among dominant cloud providers to 

make serial acquisitions, any one of which may seem insignificant but which collectively serve to 

solidify and expand their dominance.2025 In some instances AWS has acquired cloud technologies that 

previously integrated with multiple clouds, only for AWS to make it an AWS-specific product after 

acquisition, foreclosing competitors and increasing consumers’ switching costs.2026

d. Competitive Significance of AWS to Amazon’s Other Lines of Business

Amazon’s dual role as a dominant provider of cloud infrastructure and as a dominant firm in 

other markets creates a conflict of interest that Amazon has the incentive and ability to exploit.

Amazon’s dominance in cloud computing alongside its integration across an array of 

businesses—online retail, music and video, and smart home devices—creates a core conflict of 

interest. Cloud computing customers like Netflix and Target are in the position of competing with 

Amazon while also relying on AWS. Firms in their position effectively have to choose between 

switching to one of the alternative cloud infrastructure providers or funding their primary 

2022 Interview with Source 170 (May 27, 2020).

2023 Kevin McLaughlin & Amir Efrati, AWS Holds the Line on Cloud Bills as Customers Ask for Relief, THE INFO. (Apr. 17, 

2020) https://www.theinformation.com/articles/aws-holds-the-line-on-cloud-bills-as-customers-ask-for-relief.

2024 Id.

2025 See infra Section IV. 

2026 Ron Miller, Update: Amazon Has Acquired Israeli Disaster Recovery Service CloudEndure for Around $200M, 

TECHCRUNCH (Jan. 8, 2019), https://techcrunch.com/2019/01/08/amazon-reportedly-acquired-israeli-disaster-recoveryservice-cloudendure-for-around-200m/. See also CloudEndure deprecation. GOOGLE CLOUD, 

https://cloud.google.com/compute/docs/deprecations/cloudendure (last visited Oct. 4, 2020).
324

competitor.2027 One venture capitalist described Amazon as “useful but dangerous” because “it’s hard 

to predict what Amazon wants to get into . . . you can’t know.”

2028 Similarly, a business-to-business 

application developer told Subcommittee staff that they felt pressure to switch their entire product to 

Microsoft Azure because of its client’s concerns with Amazon’s anticompetitive conduct in the online 

retail sector.2029

Amazon acknowledges that its cloud customers which are also its competitors are wary of 

using AWS. One internal document had guidance on how to discuss the issue with customers. One

FAQ sheet listed, “What do you say to customers who are worried that using AWS services will 

support Amazon's competitive growth in the retail space?” Amazon’s sample answer stated, “How can 

you afford to not compete with the best possible tools in such a tough market like retail?”2030

Subcommittee staff also spoke with market participants that expressed concern about how this 

conflict of interest shapes Amazon’s behavior in its other lines of business. For example, in 2015,

Amazon kicked Google Chromecast and Apple TV—direct competitors with the Amazon Fire Stick 

and Fire TV cube—out of its retail store.2031 AWS is also positioned to use customer and seller data 

from one line of business to inform decisions in other lines of business, analogous to its conduct in 

Amazon Retail. At least one market participant who spoke with Subcommittee staff had evidence that 

AWS engaged in this cross-business data sharing.2032 In another internal document with guidance for 

staff on “AWS Competitive Messaging,” employees were advised to offer the following response: 

Q. Walmart is warning its suppliers that they don’t want them to be running on 

AWS because they don’t want Amazon.com, a competitor of Walmart’s, to have 

access to their data. How are you addressing that? 

A: Even though Amazon’s consumer business has no access to any customer data 

in AWS, I can understand why Walmart would be paranoid in making sure that 

2027 Christina Farr & Ari Levy, Target Is Plotting a Big Move Away From AWS As Amazon Takes Over Retail, CNBC (Aug. 

29, 2017), https://www.cnbc.com/2017/08/29/target-is-moving-away-from-aws-after-amazon-bought-whole-foods.html); 

See also Netflix on AWS, AMAZON WEB SERVICE, https://aws.amazon.com/solutions/case-studies/netflix/ (last visited Sept. 

30, 2020). 

2028 Interview with Source 146 (May 28, 2020).

2029 Interview with Source 126 (June 29, 2020).

2030 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00216210 (Aug. 24, 2018) (on file with 

Comm.).

2031 Barb Darrow, Why Cloud Users Should Care That Amazon Just Kicked Apple TV to the Curb, FORTUNE (Oct. 2, 2015), 

http://fortune.com/2015/10/02/why-aws-users-should-care-that-amazon-nixed-apple-tv/. 

2032 Interview with Source 126 (June 29, 2020).
325

their data is private. So, I think it’s a pretty reasonable expectation for them to 

ask their suppliers to encrypt that data in AWS.2033

Engineers and market participants have also raised concerns that AWS employees may have 

access to Amazon’s Key Management Services (KMS), which customers can use to store encryption 

keys.2034 If an employee were able to access a customer’s encryption keys, they could potentially see 

the contents of a customer’s application, including proprietary code, business transactions, and data on 

their users. In response to questions from the Subcommittee, Amazon said that the company’s “policies 

prohibit employees from accessing and reading customer keys in KMS. KMS is designed such that 

customer keys in the service cannot be retrieved in plain text (unencrypted) form by anybody, 

including AWS employees.”

2035 Even if AWS employees can never access the content of their 

customers applications, AWS tracks a host of commercially sensitive metrics, including any changes in 

demand for storage and compute services, the components of their application’s architecture, the 

requests to a specific database per second, database size, and the types of requests.2036 One industry 

expert told Subcommittee staff: 

They don’t need to see the encrypted content of a movie to see that there are a ton of 

requests to particular data. If Netflix announced five new movies this weekend and 

there’s a ton of data to five new objects. So, you don’t need all the information to know 

what’s happening.2037

Finally, AWS provides Amazon with unparalleled insights into the trajectory of startups using 

its services, information that it can use to guide acquisitions and replicate promising technology. Data 

that AWS collects on cloud computing customers can provide unique business intelligence, 

information that investors, other firms, and entrepreneurs lack. 

A report from 2011 published in Reuters, profiling the AWS Start-up Challenge, describes 

cases where AWS has used insights gleaned from its cloud computing service to inform its venture 

capital investment decisions.2038 Adam Selipsky, then Vice President of AWS, told Reuters, “AWS has 

great relationships with many young companies and there have been cases where we’ve been able to 

2033 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00216213 (Aug. 24, 2018) (on file with 

Comm.).

2034 Interview with Source 146 (May 28, 2020).

2035 CEO Hearing at 17 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.).

2036 Interview with Source 146 (May 28, 2020); Innovation and Entrepreneurship Hearing at 44 (response to Questions for 

the Record of Nate Sutton, Assoc. Gen. Counsel, Competition, Amazon.com, Inc.).

2037 Interview with Source 146 (May 28, 2020).

2038 Alistair Barr, Amazon Finds Startup Investments in the ‘Cloud,’ REUTERS (Nov. 9, 2011), 

http://www.reuters.com/article/amazon-cloud-idUSN1E7A727Q20111109.
326

help with investment opportunities.”

2039 Today, one way Amazon leverages AWS is through 

relationships with startups. The AWS Activate program provides startups with free credits, technical 

support, and training.2040

Subcommittee staff interviewed a startup and beneficiary of AWS Activate that had engaged in 

partnership conversations with Amazon. During these discussions, the startup shared information about 

how its product was built with AWS. Within a few years, the startup learned that Amazon had 

introduced a replica product. This company said that Amazon “had so many incentives. Rate cuts, and 

free services. Not having a lot of resources, it’s hard to turn that down. But fast forward, we basically 

helped them build their offering that they copied from us.”

2041

As part of its investigation, the Subcommittee asked Amazon whether it uses or has ever used 

AWS usage patterns or data to inform its investment decisions. Amazon responded:

AWS uses data on individual customers’ use of AWS to provide or improve the AWS 

services and grow the business relationship with that customer. This data may inform 

AWS’s decisions about how AWS invests in infrastructure, such as data centers, edge 

networks, hardware, and related software solutions in order improve the customer 

experience.2042

Amazon’s response leaves unclear whether it would view it appropriate to use a firm’s AWS data to 

develop products competing with that firm, so long as Amazon could identify some benefit to the 

broader “customer experience.”

Prior to 2017, Amazon also required that AWS customers agree “not to assert any intellectual

property claim against any AWS service used by that customer.”

2043 Amazon removed that condition 

from the AWS online customer agreement on June 28, 2017.2044

In addition to creating a significant information advantage for Amazon, AWS may also 

reinforce its market power in other ways. Because startups often rely heavily on AWS, Amazon is a 

natural choice when pursuing a sale or seeking investment. In an internal email produced to the

Subcommittee, Peter Krawiec, Amazon’s Vice President of Worldwide Corporate Development, 

recapped a meeting with a recently acquired company, noting that the company was, “[s]uper excited 

2039 Id.

2040 AWS Activate, AMAZON WEB SERVICES, https://aws.amazon.com/activate/ (last visited Sept. 30, 2020).

2041 Interview with Source 126 (June 29, 2020).

2042 Innovation and Entrepreneurship Hearing at 45 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Competition, Amazon.com, Inc.).

2043 Id. at 43.

2044 Id. at 42.
327

about Amazon and relieved that Walmart will not be the buyer. Engineering team thrilled that they 

won’t have to unplug from AWS under a Walmart world.”

2045

e. Conduct

The leading position AWS enjoys in the market traces in part to its first-mover advantage, 

network effects, and steep investments that the company made in building out the physical 

infrastructure on which cloud resides. However, AWS has also engaged in a series of business 

practices designed to maintain its market dominance at the expense of choice and innovation. Through 

a combination of self-preferencing, misappropriation, and degradation of interoperability, Amazon has 

sought to eliminate cross-platform products with Amazon-only products. Amazon’s conduct has 

already led several open-source projects to become more closed, a move driven by a need for 

protection from Amazon’s misappropriation. If unchecked, Amazon’s tactics over the long-term risk 

solidifying lock-in and diminishing the incentive to invest. Because cloud is the core infrastructure on 

which the digital economy runs, ensuring its openness and competitiveness is paramount.

i. Misappropriation of Data

As described earlier in this Report, cloud platform vendors compete by expanding their firstparty cloud offerings, such as those offered through the AWS Management Console.2046 Market 

participants note that one way AWS has expanded its offerings is by creating proprietary versions of 

products that have been developed under open-source licenses.2047

Open-source licenses allow software to be freely used, modified, and shared.2048 Open-source 

software can run on any infrastructure, local machine, server room, or on the cloud, reducing lock-in to 

a specific hardware vendor.2049 Companies based on open-source software bring in revenue by selling 

additional features under proprietary licenses or services.2050 In recent years, open-source development 

has been a leading model for software development, attracting significant venture capital 

investment.2051

2045 Production of Amazon, to H. Comm. on the Judiciary, AMAZON-HJC-00225832 (June 15, 2018) (on file with 

Comm.). 

2046 See infra Section IV.

2047 Interview with Source 152 (Apr. 15, 2020).

2048 Open Source Licenses by Category, OPEN SOURCE INITIATIVE, https://opensource.org/licenses/category (last visited 

Sept. 30, 2020). 

2049 Nicholas Loulloudes et al., Enabling Interoperable Cloud Application Management Through an Open Source 

Ecosystem, 19 IEEE INTERNET COMPUTING, 54 (2015), https://ieeexplore.ieee.org/document/7111887. 

2050 Max Schireson & Dharmesh Thakker, The Money in Open-Source Software, TECHCRUNCH (Feb. 9, 2016), 

https://techcrunch.com/2016/02/09/the-money-in-open-source-software/.

2051 Interview with Source 152 (Apr. 15, 2020). 
328

Market participants note that the rise of cloud computing services has led to a shift in the way 

open-source software is delivered and used. Many open-source software companies allowed engineers 

to download free versions of their software from their website, often without collecting any personal 

data about their users. As engineers outgrew the functionality of the free version, they would purchase 

more powerful versions.2052 As cloud computing grew in popularity, open-source software vendors 

began offering versions of their software on the AWS Marketplace, where application developers 

could easily integrate the software. Market participants explain that AWS was able to use the data 

collected on their customers, including usage metrics, to learn which third-party software was 

performing well and ultimately to create their own proprietary version offered as a managed service. 

Creating a “knock-off” version of software was particularly easy when the product was using an opensource license, which provides more visibility to the underlying code.2053

In interviews with Subcommittee staff, market participants repeatedly said that AWS relied on 

innovations from open-source software communities to gain dominance. A venture capitalist told 

Subcommittee staff that “open-source is critical for AWS getting market power. They’re standing on 

the shoulders of giants and they’re not paying the giants.”

2054 A long-time cloud vendor likewise said 

that “Amazon never built a database, never built cloud services, never built any of their AWS 

offerings. They took open source and offered it out on cloud. At the time that was innovative.”

2055

AWS has developed many of its offerings using this practice and has created products that are 

only accessible as first-party offerings through the AWS Management Console.2056 An example 

frequently cited by market participants is Amazon Elasticsearch Service (AESS), a tool for searching 

and analyzing data, and a first-party product listed on the AWS Management Console.2057 According to 

public reporting and interviews with market participants, this product is a copy of Elastic’s, 

Elasticsearch open-source product that was available for purchase on the AWS Marketplace.2058

According to public reporting, within a year of introducing the product, Amazon was generating more 

money from its replica of Elasticsearch than Elasticsearch itself was generating. One key advantage 

that Amazon’s “knock-off” had was that Amazon had given it superior placement in AWS 

2052 Id.

2053 Id.

2054 Interview with Source 146 (May 28, 2020). 

2055 Interview with Source 31 (May 27, 2020). 

2056 What Is the AWS Management Console, AMAZON WEB SERVICES, 

https://docs.aws.amazon.com/awsconsolehelpdocs/latest/gsg/getting-started.html#learn-whats-new (last visited Sept. 30, 

2020). 

2057 Daisuke Wakabayashi, Prime Leverage: How Amazon Wields Power in the Technology World, N.Y. TIMES (Dec. 16, 

2019), https://www.nytimes.com/2019/12/15/technology/amazon-aws-cloud-competition.html. See also Interview with 

Source 152 (Apr. 15, 2020).

2058 Id. 
329

Management Console.2059 Additionally, as described in the Elasticsearch vs Amazon case, AWS can 

name their open-source “knock-off” products in a way that can mislead customers into believing that 

the “knock-off” product is sponsored by the open-source software vendor.2060

The Subcommittee’s investigation uncovered evidence relating to numerous instances in which 

Amazon has offered proprietary managed services based on knock-offs of open-source code. One 

open-source market participant interviewed by Subcommittee staff said that because of this conduct, 

the benefits of open source “weren’t accruing to [the] open-source community. People were feeling, 

we develop all this work and then some large company comes and monetizes that.”

2061 MongoDB, a 

document-based database, has similarly commented that “once an open source project becomes 

interesting, it is too easy for large cloud vendors to capture all the value but contribute nothing back to 

the community.”

2062

When the Subcommittee inquired about this practice, Amazon responded, that “Projects where 

AWS has developed distributions on top of OSS [open-source software], like Open Distro for 

Elasticsearch and Amazon Corretto, add to, not supplant, the set of capabilities provided by the 

upstream open-source projects... it allows them to move between deploying OSS themselves and using 

managed services for open-source.”

2063 Market participants told Subcommittee staff, however, that in 

the instances when AWS creates a “knock-off” version of an open-source software by adding 

“additional developments,” those additional developments often only work with AWS infrastructure 

and are no-longer cross-platform—heightening the risk of lock-in.2064 As one third-party explains, “So, 

the earlier benefits of open-source go out the window as Amazon takes over each of these product 

areas.”

2065

For example, while MongoDB is an open-source document-based database project, Amazon 

offers a proprietary product called Amazon DocumentDB. According to AWS, DocumentDB

implements the open-source MongoDB API and is designed to “emulate the responses that a 

MongoDB client expects from a MongoDB server.”

2066 When a cloud customer chooses to build an 

2059 Id. 

2060 Complaint at 2, Elasticsearch, Inc. v. Amazon.com, Inc., No. 4:19-cv-06158 (N.D. Cal. Sept. 27, 2019), 

http://ipcasefilings.com/wp-content/uploads/2019/10/ElasticSearch_Amazon.pdf.

2061 Interview with Source 144 (Apr. 17, 2020). 

2062 Server Side Public License FAQ, MONGODB, https://www.mongodb.com/licensing/server-side-public-license/faq (last 

visited Sept. 30, 2020). 

2063 CEO Hearing at 6 (response to Questions for the Record of Jeff Bezos, CEO, Amazon.com, Inc.). 

2064 Interview with Source 152 (Sept. 24, 2020). 

2065 Id.

2066 Jeff Barr, New-Amazon DocumentDB (with MongoDB Compatibility): Fast, Scalable, and Highly Available, AMAZON 

WEB SERVICES: AWS NEWS BLOG (Jan. 9, 2019), https://aws.amazon.com/blogs/aws/new-amazon-documentdb-withmongodb-compatibility-fast-scalable-and-highly-available/.
330

application using DocumentDB they are tied to AWS’s infrastructure. If they ever wanted to switch to 

another provider they would have to extensively re-engineer their product in another software, 

whereas, had they built their application using MongoDB—on AWS or any other cloud provider’s 

infrastructure—their applications could move to other platforms.2067

ii. Harms to Innovation

Amazon’s practice of offering managed service versions of open-source software has prompted 

open-source software companies to make defensive changes, such as closing off advanced features and 

changing their open-source license to be less permissive.2068 One open-source vendor that recently 

started offering premium closed-sourced features said they were “paranoid” in light of Amazon 

cloning Elastic’s features, noting that if this had happened to them they “would not have a 

business.”

2069 Amazon’s conduct has also reduced the availability of features in open-source software. 

Confluent,2070 Redis Labs,2071 and CochroachDB,2072 along with several other open-source software 

vendors, have made similar license and business model changes, reducing the level of access to their 

software.2073

Market participants believe these changes significantly undermine innovation. Several noted 

that more closed-off licenses will result in fewer free, open-source features available to startups

building prototypes and research labs that cannot afford access to paid features.2074 Subcommittee staff 

also spoke with cloud computing customers in the public sector who worry about the changes and 

ambiguity in open-source licenses. One cloud computing customer told Subcommittee staff that three 

pieces of open-source software that they use underwent license changes in the last year and that, due to 

strict “open source only” policies, they are “now stuck using older versions of the software [from] 

before the license change which requires additional work to improve the code base, implement the 

same functionality in-house or switch to a competitive product.”

2075

2067 Interview with Source 152 (Sept. 24, 2020). 

2068 Open Source Licenses by Category, OPEN SOURCE INITIATIVE, https://opensource.org/faq#permissive (last visited Sept. 

30, 2020) (“A ‘permissive’ license is simply a non-copyleft Open source license – one that guarantees the freedoms to use, 

modify, and redistribute, but that permits proprietary derivative works.”).

2069 Interview with Source 144 (Apr. 17, 2020). 

2070 Confluent Community License FAQ, CONFLUENT, https://www.confluent.io/confluent-community-license-faq/ (last 

visited Sept. 30, 2020). 

2071 Frederic Lardinois, Redis Labs Changes Its Open-Source License – Again, TECHCRUNCH (Feb. 21, 2019), 

https://techcrunch.com/2019/02/21/redis-labs-changes-its-open-source-license-again/. 

2072 Tom Krazit, Another Open-Source Database Company Will Tighten Its Licensing Strategy, Wary of Amazon Web 

Services, GEEKWIRE (Jun. 4, 2019), https://www.geekwire.com/2019/another-open-source-database-company-will-tightenlicensing-strategy-wary-amazon-web-services/.

2073 Interview with Source 152 (Apr. 15, 2020). 

2074 Interview with Source 146 (May 28, 2020). 

2075 Interview with Source 49 (May 20, 2020). 
331

iii. Self-Preferencing

According to market participants, once a product—based on open source or otherwise—is 

available in the AWS Management Console, it becomes an easier choice for existing AWS customers 

relative to purchasing a managed service from a third-party vendor or self-managing open-source 

software. In an interview with Subcommittee staff , one startup said they purchased software services 

through the AWS Management Console as opposed to identical or nearly identical software from a 

third-party vendor because they were a small company and “instead of us managing everything, it was 

hit a button . . . they are all in one, it was easier.”

2076 As with all cloud services offered through the 

AWS Management Console, customers benefit from a single sign-on with billing information already 

in place.2077

Market participants also note that Amazon makes certain functionality available to its firstparty products that it doesn’t make available to the companies managing the original version of the 

open-source software.2078 For example, AWS services can run inside Amazon’s Virtual Private Could 

(Amazon VPC) offering, which allows users to provision an “isolated section of the AWS Cloud,” but 

third-party services cannot do so.

2079

While Amazon failed to provide the Subcommittee with financial data identifying what AWS 

makes in revenue from individual cloud offerings, many marketplace participants believe that AWS 

makes more from managed versions of open-source software than the third-party vendors and 

managers of the software. In 2019, The New York Times reported that the Chief Executive of MariaDB, 

an open-source relational database company, estimated that “Amazon made five time more revenue 

from running MariaDB software than his company generated from all of its businesses.”

2080 Market 

participants suggest this multiple of difference in income is likely for other AWS products based on 

open-source projects.2081

2076 Interview with Source 126 (June 29, 2020). 

2077 Interview with Source 146 (May 28, 2020). 

2078 Interview with Source 152 (Sept. 24, 2020). 

2079 Amazon Virtual Private Cloud, AMAZON WEB SERVICES, https://aws.amazon.com/vpc/ (last visited Sept. 30, 2020). 

2080 Daisuke Wakabayashi, Prime Leverage, How Amazon Wields Power in the Technology World, N.Y. TIMES (Dec. 16, 

2019), https://www.nytimes.com/2019/12/15/technology/amazon-aws-cloud-competition.html. 

2081 Interview with Source 146 (May 28, 2020). 
332

D. Apple

Overview

Apple was incorporated in 1977, and is headquartered in Cupertino, California.2082 Apple was 

an early pioneer in designing and marketing mass-produced personal computers.2083 Today, the 

company “designs, manufacturers, and markets smartphones, personal computers, tablets, wearables, 

and accessories, and sells a variety of related services.”

2084 Apple’s hardware products include the 

iPhone, iPad, Mac, Apple TV, and AirPods; its Services business segment includes the App Store, 

iCloud, AppleCare, Apple Arcade, Apple Music, Apple TV+, and other services and software 

applications.2085 Apple tightly integrates its services and software applications with its products to 

ensure a seamless experience for consumers.2086

2082 Apple Inc., Annual Report (Form 10-K) 1 (Sept. 28, 2019), 

https://s2.q4cdn.com/470004039/files/doc_financials/2019/ar/_10-K-2019-(As-Filed).pdf. 

2083 See Angelique Richardson & Ellen Terrell, Apple Computer, Inc., LIB. OF CONGRESS (Apr. 2008), 

https://www.loc.gov/rr/business/businesshistory/April/apple.html. 

2084 Apple Inc., Annual Report (Form 10-K) 1 (Sept. 28, 2019), 

https://s2.q4cdn.com/470004039/files/doc_financials/2019/ar/_10-K-2019-(As-Filed).pdf.

2085 Id. at 1–2. 

2086 See Apple, Apple: Distinctive Products with a Seamless, Integrated User Experience 1 (July 13, 2020) (on file with 

Comm.)
333

Apple’s Ecosystem: Hardware, Software Infrastructure, Apple & Third-Party Apps2087

Apple reports financial information for two business categories: Products and Services.2088 For 

fiscal year 2019, Apple reported total revenue of approximately $260 billion, down 2% from 2018, but 

up nearly 13.5% from 2017.2089 Apple’s total margins were 37.8%, with profits of $98.3 billion.2090 As 

of September 2020, Apple is the most valuable public company in the world, and in August 2020 

became the first publicly traded U.S. firm to be valued at $2 trillion.2091 Apple’s stock rose by 60% in 

the first 8 months of 2020.2092

2087 Are domestic investors missing out?, SWELL, (June 22, 2018), https://swellasset.com.au/2018/06/domestic-investorsmissing/.

2088 Apple Inc., Annual Report (Form 10-K) 19 (Sept. 28, 2019), 

https://s2.q4cdn.com/470004039/files/doc_financials/2019/ar/_10-K-2019-(As-Filed).pdf.

2089 Id. at 17–19; see also Apple’s 1 Crazy Number Key to $800 Billion in Stock Growth, FORBES (July 13, 2020), 

https://www.forbes.com/sites/greatspeculations/2020/07/13/how-did-apple-add-800-billion-in-value-over-3-

years/#5b9250df20f8. 

2090 Id. at 21, 29.

2091 Jessica Bursztynsky, Apple becomes first U.S. company to reach a $2 trillion market cap, CNBC (Aug. 19, 2020), 

https://www.cnbc.com/2020/08/19/apple-reaches-2-trillion-market-cap.html. 

2092 Kif Leswing, Apple’s $2 trillion value is proof that Tim Cook’s services plan worked, CNBC (Aug. 19, 2020), 

https://www.cnbc.com/2020/08/19/apples-2-trillion-value-proof-that-tim-cooks-services-plan-worked.html. 
334

Apple is the leading smartphone vendor in the U.S., accounting for approximately 45% of the 

domestic market,2093 with more than 100 million iPhone users worldwide.2094 Apple’s iOS is also one 

of two dominant mobile operating systems—the other operating system, Android, is discussed 

elsewhere in this Report. iOS runs on more than half of U.S. smartphones and tablets.2095 Globally, 

Apple accounts for less than 20% of the smartphone market, and roughly 25% of smartphones and 

tablets run on iOS worldwide.2096 In 2018, Apple sold its 2 billionth iOS device, and is projected to sell 

its 2 billionth iPhone by 2021.2097

Apple also owns and operates the App Store for iOS devices. Launched in 2008, Apple 

highlights that the App Store allows app developers to reach consumers in 155 countries, and that more 

than 27 million app developers have published millions of apps in the App Store. Apple credits the 

App Store with creating 1.5 million jobs in the United States, and more than $120 billion in worldwide 

revenue for app developers.2098 According to Apple, the App Store ecosystem, including direct sales of 

apps, sales of goods and services inside of apps, and in-app advertising facilitated more than $138 

billion in economic activity in the U.S. last year.2099

2093 See S. O’Dea, Manufacturers’ market share of smartphone sales in the United States from 2016 to 2020, STATISTA

(Sept. 3, 2020), https://www.statista.com/statistics/620805/smartphone-sales-market-share-in-the-us-by-vendor/; S. O’Dea, 

Manufacturers’ market share of smartphone subscribers in the United States from 2013 and 2019, by month*, STATISTA

(June 9, 2020), https://www.statista.com/statistics/273697/market-share-held-by-the-leading-smartphone-manufacturersoem-in-the-us/; US Smartphone Market Share: By Quarter, COUNTERPOINT RESEARCH (Aug. 17, 2020), 

https://www.counterpointresearch.com/us-market-smartphone-share/; S. O’Dea, Share of smartphone users that use an 

Apple iPhone in the United States from 2014 to 2021, STATISTA (Sept. 10, 2020), 

https://www.statista.com/statistics/236550/percentage-of-us-population-that-own-a-iphone-smartphone/. 

2094 S. O’Dea, Share of smartphone users that use an Apple iPhone in the United States from 2014 to 2021, STATISTA (Sept. 

10, 2020), https://www.statista.com/statistics/236550/percentage-of-us-population-that-own-a-iphone-smartphone/.

2095 See S. O’Dea, Subscriber share held by smartphone operating systems in the United States from 2012 to 2020, 

STATISTA (Aug. 17, 2020), https://www.statista.com/statistics/266572/market-share-held-by-smartphone-platforms-in-theunited-states/; Mobile Operating System Market Share United States of America Aug. 2019 – Aug. 2020, GLOBALSTATS (on 

file with Comm). 

2096 See Global Smartphone Market Share: By Quarter, COUNTERPOINT RESEARCH, (Aug. 18, 2020), 

https://www.counterpointresearch.com/global-smartphone-share/; Mobile Operating System Market Share Worldwide Aug. 

2019 – Aug. 2020, GLOBALSTATS (on file with Comm). 

2097 Malcolm Owen, How Apple has hit 2 billion iOS devices sold, and when it will hit 2 billion iPhones, APPLE INSIDER

(Sept. 13, 2018), https://appleinsider.com/articles/18/09/13/how-apple-has-hit-2-billion-ios-devices-sold-and-when-it-willhit-2-billion-iphones. 

2098 See Letter from Kyle Andeer, Vice Pres. Legal & Chief Compliance Officer, Apple Inc., to Hon. Jerrold Nadler, 

Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm. on the Judiciary, Hon. David N. 

Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. F. 

James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the 

Judiciary, 2 (Oct. 14, 2019) ( on file with Comm.); Letter from Kyle Andeer, Vice Pres., Corp. Law and Chief Compliance 

Officer, Apple Inc., to Hon. Jerrold Nader, Chairman, H. Comm. on the Judiciary, Hon. Jim Jordan, Ranking Member, H. 

Comm. on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the 

H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary, at 3 (Sept. 21, 2020) (on file with Comm.). 

2099 Letter from Kyle Andeer, Vice Pres., Corp. Law and Chief Compliance Officer, Apple Inc., to Hon. Jerrold Nader, 

Chairman, H. Comm. on the Judiciary, Hon. Jim Jordan, Ranking Member, H. Comm. on the Judiciary, Hon. David N. 

Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. F. 
335

In addition to the Subcommittee’s investigation of Apple’s market power and conduct, federal 

antitrust authorities are investigating it for potential violations of the U.S. antitrust laws. In June 2019, 

The New York Times and the Wall Street Journal reported that the Justice Department had opened 

investigations into potential violations of the antitrust laws by Apple.2100 Apple is also under 

investigation by multiple international competition authorities for antitrust violations and 

anticompetitive practices,2101 as well as private antitrust lawsuits in the U.S.2102

Previously, the Justice Department and Attorneys General of 33 states sued Apple for 

orchestrating a conspiracy to fix prices in the eBooks market in 2012.2103 Apple was found to have 

violated state and federal antitrust laws and was forced to pay $450 million.2104 In 2010, Apple settled 

an antitrust complaint with the Department of Justice that it conspired with several other technology 

James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the 

Judiciary, at 2 (Sept. 21, 2020) (on file with the Subcomm.) (citing JONATHAN BORCK ET AL., AG ANALYSIS GRP., HOW 

LARGE IS THE APPLE APP STORE ECOSYSTEM: A GLOBAL PERSPECTIVE FOR 2019, 4 (2020), 

https://www.apple.com/newsroom/pdfs/app-store-study-2019.pdf). 

2100 See Celia Kang et al., Antitrust Troubles Snowball for Tech Giants as Lawmakers Join In, N.Y. TIMES (June 3, 2019), 

https://www.nytimes.com/2019/06/03/technology/facebook-ftc-antitrust.html; Brent Kendall & John McKinnon, Congress, 

Enforcement Agencies Target Tech, WALL ST. J. (June 3, 2019), https://www.wsj.com/articles/ftc-to-examine-howfacebook-s-practices-affect-digital-competition-11559576731. 

2101 See e.g., Press Release, Eur. Comm’n, Antitrust: Commission opens investigation into Apple practices regarding Apple 

Pay (June 16, 2020), https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1075; Foo Yun Chee, Apple in Dutch 

Antitrust Spotlight for Allegedly Promoting Own Apps, REUTERS (Apr. 11, 2019), https://www.reuters.com/article/us-appleantitrust-netherlands/apple-in-dutch-antitrust-spotlight-for-allegedly-promoting-own-apps-idUSKCN1RN215; Italy 

Antitrust Opens Inquiry into Google, Apple, Dropbox on Cloud Computing, REUTERS (Sept. 7, 2020), 

https://www.reuters.com/article/us-google-italy-antitrust/italy-antitrust-opens-inquiry-into-google-apple-dropbox-on-cloudcomputing-idUSKBN25Y0YM; Tim Hardwick, Apple and Amazon Under Investigation By Italian Watchdog for Alleged 

Price Fixing, APPLE INSIDER (July 22, 2020), https://www.macrumors.com/2020/07/22/apple-amazon-italy-alleged-pricefixing/. 

2102 See e.g., Nick Statt, Epic Games is suing Apple, THE VERGE (Aug. 13, 2020), 

https://www.theverge.com/2020/8/13/21367963/epic-fortnite-legal-complaint-apple-ios-app-store-removal-injunctiverelief; Reed Albergotti, Apple suppressed competitors in its App Store – until it got caught, a lawsuit alleges, WASH. POST

(Dec. 20, 2019), https://www.washingtonpost.com/technology/2019/12/20/apple-suppressed-competitors-its-app-storeuntil-it-got-caught-lawsuit-alleges/; Bob Van Voris and Peter Blumberg, Apple App Developers Jump on Silicon Valley 

Antitrust Bandwagon, BLOOMBERG (June 4, 2019), https://www.bloomberg.com/news/articles/2019-06-04/apple-inc-suedby-app-developers-claiming-antitrust-violations; David G. Savage and Suhauna Hussain, Supreme Court Rules Apple can 

face antitrust suits from iPhone owners over App Store sales, L.A. TIMES (May 13, 2019), 

https://www.latimes.com/politics/la-na-pol-supreme-court-apple-smart-phone-20190513-story.html. 

2103 See Complaint, U.S. v. Apple Inc., No. 12-02826-UA (S.D.N.Y. 2012).

2104 See U.S. v. Apple Inc., 952 F.Supp.2d 638 (S.D.N.Y. 2013), aff’d by U.S. v. Apple Inc., 791 F.3d 209 (2d Cir. 2015); 

Dawn Chmielewski, Apple to Pay $450 Million E-Book Settlement After Supreme Court Waves Off Case, RECODE (Mar. 7, 

2016), https://www.vox.com/2016/3/7/11586748/apple-to-pay-450-million-e-book-settlement-after-supreme-court-waves; 

see also August 27, 2013 Hr’g Tr. at 17:1-6, U.S. v. Apple Inc. , No. 12-cv-2826 (S.D.N.Y 2012) (“The record at trial 

demonstrated a blatant and aggressive disregard at Apple for the requirements of the law. Apple executives used their 

considerable skills to orchestrate a price-fixing scheme that significantly raised the prices of E-books. This conduct 

included Apple lawyers and its highest level executives.”); see also Philip Elmer-Dewitt, ‘I’d do it again,’ says the man at 

the center of Apple’s e-book case, FORTUNE (Dec. 2, 2014), https://fortune.com/2014/12/02/id-do-it-again-says-the-man-atthe-center-of-apples-e-book-case/.
336

companies to eliminate competition in hiring for employees,2105 and it later settled a class-action 

lawsuit by the affected employees through a $415 million joint settlement agreement with other 

firms.2106

iOS and the App Store

a. Market Power

Apple has significant and durable market power in the market for mobile operating systems and 

mobile app stores, both of which are highly concentrated.2107 Apple’s iOS mobile operating system is 

one of two dominant mobile operating systems, along with Google’s Android, in the U.S. and 

globally.2108 Apple installs iOS on all Apple mobile devices and does not license iOS to other mobile 

device manufacturers. More than half of mobile devices in the U.S. run on iOS or iPadOS, an iOS 

derivation for tablets introduced in 2019.2109 Apple’s market power is durable due to high switching 

costs, ecosystem lock-in, and brand loyalty. It is unlikely that there will be successful market entry to 

contest the dominance of iOS and Android. 

As a result, Apple’s control over iOS provides it with gatekeeper power over software 

distribution on iOS devices. Consequently, it has a dominant position in the mobile app store market 

and monopoly power over distribution of software applications on iOS devices.2110

2105 Press Release, U.S. Dep’t of Justice, Department Requires Six High Tech Companies to Stop Entering into 

Anticompetitive Employee Solicitation Agreements (Sept. 24, 2010), https://www.justice.gov/opa/pr/justice-departmentrequires-six-high-tech-companies-stop-entering-anticompetitive-employee.

2106 Dawn Chmielewski, Silicon Valley Companies Agree to Pay $415 Million to Settle “No Poaching” Suit, RECODE (Jan. 

15, 2015), https://www.vox.com/2015/1/15/11557814/silicon-valley-companies-agree-to-pay-415-million-to-settle-no. 

2107 See Stigler Report at 78 (“[T]he evidence thus far does suggest that current digital platforms face very little threat of 

entry. ... [T]he key players in this industry remained the same over the last two technology waves, staying dominant 

through the shift to mobile and the rise of AI. In the past, dominant businesses found it difficult to navigate innovation or

disruption waves. By contrast, Facebook, Google, Amazon, Apple, and even Microsoft were able to ride these waves 

without significant impact on market share or profit margins. This indirect evidence corroborates the argument that these 

companies are facing few competitive threats.”). 

2108 See infra Section IV.

2109 See S. O’Dea, Subscriber share held by smartphone operating systems in the United States from 2012 to 2020, 

STATISTA (Aug. 17, 2020), https://www.statista.com/statistics/266572/market-share-held-by-smartphone-platforms-in-theunited-states/; Mobile Operating System Market Share United States of America Aug. 2019 – Aug. 2020, GLOBALSTATS (on 

file with Comm); Jason Cipriani, iPad turns 10: Why did it take a decade for Apple’s tablet to get its own operating system, 

ZDNET (Jan. 24, 2020), https://www.zdnet.com/article/a-decade-old-device-why-did-it-take-nine-years-for-the-ipad-to-getits-own-operating-system/. 

2110 See infra Section IV.
337

Apple’s App Store is the only method to distribute software applications on iOS devices.2111 It 

does not permit alternative app stores to be installed on iOS devices, nor does it permit apps to be 

sideloaded. As discussed earlier in this Report, consumers have a strong preference for native apps to 

web apps,2112 and Apple has acknowledged key differences between them. Developers have explained 

that Apple actively undermines the open web’s progress on iOS “to push developers toward building 

native apps on iOS rather than using web technologies.”

2113 As a result, Apple’s position as the sole 

app store on iOS devices is unassailable. Apple fully controls how software can be installed on iOS 

devices, and CEO Tim Cook has explained that the company has no plan to permit an alternative app 

store.2114 The former director of the app review team for the App Store observed that Apple is “not 

subject to any meaningful competitive constraint from alternative distribution channels.”

2115

In response to these concerns, Apple has not produced any evidence that the App Store is not 

the sole means of distributing apps on iOS devices and that it does not exert monopoly power over app 

distribution. Apple says it does not create—nor is it aware of third-party data—that tracks market share 

in the app distribution market.2116 Apple claims the App Store competes in a larger software 

distribution market that includes other mobile app stores, as well as the open internet, personal 

computers, gaming consoles, smart TVs, and online and brick-and-mortar retail stores.2117 While 

consumers can access software and developers can distribute software through those platforms, none of 

those platforms permit consumers to access apps on an iOS device, or for developers to distribute apps 

to iOS devices.

Apple’s monopoly power over software distribution on iOS devices appears to allow it to 

generate supra-normal profits from the App Store and its Services business. Apple CEO Tim Cook set 

a goal in 2017 to rapidly double the size of the Services business by the end of 2020.2118 Apple met this 

goal by July 2020, six months ahead of schedule.2119 The Services business accounted for nearly 18% 

2111 CEO Hearing Transcript at 50 (statement of Tim Cook, CEO, Apple Inc.) (responding to Representative Johnson’s 

question about whether Apple alone determines whether apps are admitted to the App Store Mr. Cook replied “If it’s a 

native app, yes, sir. If it’s a web app, no.”). 

2112 See infra Section IV.

2113 Owen Williams, Apple Is Trying to Kill Web Technology, ONEZERO (Nov. 7, 2019), https://onezero.medium.com/appleis-trying-to-kill-web-technology-a274237c174d. 

2114 CEO Hearing Transcript at 3 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).

2115 Phillip Shoemaker, Apple v. Everybody, MEDIUM (Mar. 29, 2019), https://medium.com/@phillipshoemaker/apple-veverybody-5903039e3be.

2116 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-000008 (Oct. 14, 2019) (on file with Comm.). 

2117 See CEO Hearing Transcript at 52, 164 (statement of Tim Cook, CEO, Apple Inc.). See also Production of Apple, to H. 

Comm. on the Judiciary, HJC-APPLE-000012-13 (Oct. 14, 2019) (on file with Comm.). 

2118 Anita Balakrishnan, Tim Cook: Goal is to double Apple’s services revenue by 2020, CNBC (Jan. 31, 2017), 

https://www.cnbc.com/2017/01/31/tim-cook-on-apple-earnings-call-double-services-revenue-by-2020.html. 

2119 See Apple (AAPL) Q3 2020 Earnings Call Transcript, MOTLEY FOOL (July 31, 2020), 

https://www.fool.com/earnings/call-transcripts/2020/07/31/apple-aapl-q3-2020-earnings-call-transcript.aspx. 
338

of total revenue ($46.2 billion) in fiscal year 2019. Services grew faster than Products in recent years, 

increasing by more than 41% since 2017.2120 The Services category is also Apple’s highest margin 

business at 63.7% in fiscal year 2019 and 67.2% for Apple’s quarter ending in June 2020.2121

Annual Revenue by Segment2122

Industry observers credit Apple’s rising valuation and future long-term value to its successful 

focus on growing the Services business.2123 Apple has attributed the growth of Services as a driver of 

the firm’s profits from sales and an important factor supporting Apple’s overall margins as hardware 

2120 Apple Inc., Annual Report (Form 10-K) 19 (Sept. 28, 2019), 

https://s2.q4cdn.com/470004039/files/doc_financials/2019/ar/_10-K-2019-(As-Filed).pdf.

2121 Apple Inc., Annual Report (Form 10-K) 21 (Sept. 28, 2019), 

https://s2.q4cdn.com/470004039/files/doc_financials/2019/ar/_10-K-2019-(As-Filed).pdf; Apple Inc., Quarterly Report 

(Form 10-Q) 28 (June 27, 2020), https://s2.q4cdn.com/470004039/files/doc_financials/2020/q3/_10-Q-Q3-2020-(AsFiled).pdf. 

2122 Prepared by the Subcomm. based on Apple Inc., Annual Report (Form 10-K) (2017–2019), 

https://www.sec.gov/Archives/edgar/data/320193/000032019318000145/a10-k20189292018.htm.

2123 See e.g., Kif Leswing, Apple’s $2 trillion value is proof that Tim Cook’s services plan worked, CNBC (Aug. 19, 2020), 

https://www.cnbc.com/2020/08/19/apples-2-trillion-value-proof-that-tim-cooks-services-plan-worked.html; Anne Sraders, 

As Apple stock tops $500, bulls cite these key reasons it could still go higher, FORTUNE (Aug. 24, 2020), 

https://fortune.com/2020/08/24/apple-stock-tops-500-can-it-go-higher/. 
339

sales slowed or declined.2124 The company has consistently credited the App Store, licensing sales, and 

AppleCare for the success of Services.2125

b. Merger Activity

In 2019, Apple CEO Tim Cook told CNBC that Apple buys a new company every two to three 

weeks, with a focus on acquiring “talent and intellectual property.”

2126 In July 2020, Mr. Cook 

explained that Apple’s “approach on acquisitions has been to buy companies where we have 

challenges, and IP, and then make them a feature of the phone.”

2127 An Apple submission to the 

Subcommittee explains that it: 

[H]as not embarked on a strategy of acquiring nascent competitors in service of its 

growth and market position. Instead, Apple’s acquisitions generally are meant to 

complement its product business by accelerating innovation and building out new 

features and technologies for Apple’s hardware and software offerings.2128

In 2020, Apple continued acquiring small firms, including artificial intelligence and virtual 

reality startups, an enterprise software maker, a contactless payment startup, and a weather application, 

2124 Apple Inc., Annual Report (Form 10-K) 22, 26 (Sept. 29, 2018), 

https://www.sec.gov/Archives/edgar/data/320193/000032019318000145/a10-k20189292018.htm; Apple Inc., Annual 

Report (Form 10-K) 22, 26 (Sept. 30, 2017), https://www.sec.gov/Archives/edgar/data/320193/000032019317000070/a10-

k20179302017.htm. 

2125 Apple Inc., Annual Report (Form 10-K) 19 (Sept. 28, 2019), 

https://s2.q4cdn.com/470004039/files/doc_financials/2019/ar/_10-K-2019-(As-Filed).pdf.; Apple Inc., Annual Report 

(Form 10-K) 25 (Sept. 29, 2018), https://www.sec.gov/Archives/edgar/data/320193/000032019318000145/a10-

k20189292018.htm; Apple Inc., Annual Report (Form 10-K) 25 (Sept. 30, 2017), 

https://www.sec.gov/Archives/edgar/data/320193/000032019317000070/a10-k20179302017.htm. AppleCare is Apple’s 

extended warranty products for Apple devices. See Jason Cross, AppleCare+: Everything you need to know about Apple’s 

extended warranty program, MACWORLD (Sept. 16, 2020), https://www.macworld.com/article/3227045/applecarewarranty-faq.html. In addition to the markets discussed in this section, the Committee sought information and continues to 

investigate competition and conduct in the resale and repair markets for Apple products.

2126 Lauren Feiner, Apple buys a company every few weeks, says CEO Tim Cook, CNBC (May 6, 2019), 

https://www.cnbc.com/2019/05/06/apple-buys-a-company-every-few-weeks-says-ceo-tim-cook.html. 

2127 Kif Leswing, Tim Cook says Apple buys innovation, not competitors, CNBC (July 31, 2020), 

https://www.cnbc.com/2020/07/31/tim-cook-contrasts-apple-ma-with-other-big-tech.html. 

2128 Apple, Apple: Distinctive Products with a Seamless, Integrated User Experience 2 (July 13, 2020) (on file with 

Comm.). 
340

among others.2129 One of Apple’s largest transactions occurred in 2019, when it paid $1 billion to 

acquire Intel’s smartphone modem business.2130

Apple has also recently acquired software companies to create a foundation from which it could 

launch new apps. After purchasing the digital magazine subscription service Texture in 2018, for 

example, Apple integrated most of Texture’s functionality into its own Apple News+ service, which 

debuted the following year.2131 Similarly, one of Apple’s largest purchases to date—its $3 billion 

acquisition of Beats Electronics in 2014—was instrumental to the 2015 launch of Apple Music.2132

Apple sought to grow Apple Music quickly after its introduction. Apple pre-installed the service on 

iPhones and made it the only music service accessible through Siri, Apple’s virtual assistant. Apple 

also offered Apple Music with a free month trial period and made it available on Android devices. The 

strategy saw Apple gain 10 million paying subscribers within six months.2133 Apple supplemented its 

music services business in 2018 by acquiring the music recognition app Shazam, and most recently in 

2020 by acquiring podcast app Scout FM.2134

It is common for Apple to integrate apps it purchases into its own pre-existing apps or into the 

iOS mobile operating system. Examples include acquisitions of Swell, a podcast app that Apple 

acquired in 2014, and HopStop, a transit navigation app it acquired in 2013.2135

2129 See Jordan Novet, Apple buys an A.I. start-up that came from Microsoft co-founder Paul Allen’s research lab, CNBC 

(Jan. 15, 2020), https://www.cnbc.com/2020/01/15/apple-acquires-xnor-ai-startup-that-spun-out-of-allen-institute.html; 

Mark Gurman, Apple Acquires AI Startup to Better Understand Natural Language, BLOOMBERG (Apr. 3, 2020), 

https://www.bloomberg.com/news/articles/2020-04-03/apple-acquires-ai-startup-to-better-understand-natural-language; Kif 

Leswing, Apple buys virtual reality company NextVR, CNBC (May 14, 2020), https://www.cnbc.com/2020/05/14/applebuys-virtual-reality-company-nextvr.html; Kif Leswing, Apple buys Fleetsmith, a company making it easier to deploy 

iPhones and Macs at workplaces, CNBC (June 24, 2020), https://www.cnbc.com/2020/06/24/apple-acquires-devicemanagement-company-fleetsmith.html; Jessica Bursztynsky, Apple buys popular weather app Dark Sky and plans to shut 

down Android versions, CNBC (Mar. 31, 2020), https://www.cnbc.com/2020/03/31/apple-buys-popular-weather-app-darksky.html; Mark Gurman, Apple Buys Startup to Turn iPhones Into Payment Terminals, BLOOMBERG (July 31, 2020), 

https://www.bloomberg.com/news/articles/2020-08-01/apple-buys-startup-to-turn-iphones-into-payment-terminals. 

2130 Press Release, Apple, Apple to acquire the majority of Intel’s smartphone modem business (July 25, 2019), 

https://www.apple.com/newsroom/2019/07/apple-to-acquire-the-majority-of-intels-smartphone-modem-business/. 

2131 Anita Balakrishnan, Apple buys Texture, a digital magazine subscription service, CNBC (Mar. 12, 2018), 

https://www.cnbc.com/2018/03/12/apple-buys-texture-a-digital-magazine-subscription-service.html. 

2132 Billy Steele, Apple’s $3 billion purchase of Beats has already paid off, ENGADGET (May 28, 2019), 

https://www.engadget.com/2019-05-28-apple-beats-five-years-later.html. 

2133 Neth. Auth. For Consumers & Mkts. Study at 62.

2134 Press release, Apple, Apple acquires Shazam, offering more ways to discover and enjoy music (Sept. 24, 2018), 

https://www.apple.com/newsroom/2018/09/apple-acquires-shazam-offering-more-ways-to-discover-and-enjoy-music/; 

Mark Gurman, Apple Buys Startup That Creates Radio-Like Stations for Podcasts, BLOOMBERG (Sept. 24, 2020), 

https://www.bloomberg.com/news/articles/2020-09-24/apple-buys-startup-that-creates-radio-like-stations-for-podcasts. 

2135 Chris Gayomali, Swell Shuts Down Following Apple Acquisition, FAST CO. (July 29, 2014), 

https://www.fastcompany.com/3033698/swell-shuts-down-following-apple-acquisition; Andrew Nusca, Apple Maps vs. 

Google Maps heats up as Apple shuts down HopStop, FORTUNE (Sept. 12, 2015), https://fortune.com/2015/09/12/hopstopapple-shutdown/. 
341

Apple has followed a similar strategy for integrating the Dark Sky weather app. Apple shut 

down Dark Sky’s Android app in August 2020 and plans to integrate the app’s features with the 

iPhone’s Weather widget on iOS 14.2136 In addition to its app, Dark Sky supplied data to independent 

weather apps, like Carrot, Weather Line, and Partly Sunny. As a result of Apple’s takeover of Dark 

Sky, independent weather apps will lose access to the inexpensive, hyper-local weather data that Dark 

Sky supplied, leading some weather apps to shut down and others to rely on higher-priced suppliers for 

forecast data.2137

c. Conduct

i. Commissions and In-App Purchases

The Subcommittee sought information regarding Apple’s policy of collecting commissions 

from apps sold through the App Store and purchases made in iOS apps. Apple charges a 30% 

commission on paid apps—those that charge a fee for users to download—downloaded from the App 

Store. It also takes a 30% fee on in-app purchases (IAP) of “digital goods and services.”

2138 App 

subscriptions are charged a 30% commission for the first year and a 15% commission for subsequent 

years.2139 Apps are not permitted to communicate with iOS users that the app may be available for 

purchase at a lower price outside the App Store, provide links outside of the app that may lead users to 

find alternative subscription and payment methods, or offer their own payment processing mechanism 

in the app to avoid using Apple’s IAP.2140 Apps that violate Apple’s policies can be removed from the 

App Store, losing access to the only means of distributing apps to consumers with iOS devices.2141

2136 Hannah Klein, The Dark Sky Android App Is Officially Kaput, SLATE (Aug. 4, 2020), 

https://slate.com/technology/2020/08/dark-sky-app-android-shuts-down.html. 

2137 Jared Newman, Apple’s Dark Sky acquisition could be bad news for indie weather apps, FAST COMPANY (Apr. 2, 

2020), https://www.fastcompany.com/90485131/apples-dark-sky-acquisition-could-be-bad-news-for-indie-weather-apps; 

but see CEO Hearing Transcript at 9 (response to Questions for the Record of Tim Cook, CEO, Apple) (noting Dark Sky 

will “continue to make its API available to Dark Sky’s existing customers until the end of 2021.”). 

2138 App Store: Dedicated to the best store experience for everyone, APPLE, https://www.apple.com/ca/ios/appstore/principles-practices/ (last visited Oct. 4, 2020). 

2139 Id. 

2140 See Innovation and Entrepreneurship Hearing at 1–2 (response to Questions for the Record of Kyle Andeer, Vice Pres., 

Corp. Law, Apple Inc.); Submission from ProtonMail, to H. Comm. on the Judiciary, 5 (Aug. 22, 2020) (on file with 

Comm.); Interview with Source 143 (Aug. 27, 2020).

2141 See e.g., Sara Morrison, Apple’s Fortnite ban, explained, VOX: RECODE (Sept. 8, 2020), 

https://www.vox.com/recode/2020/8/20/21373780/fortnite-epic-apple-lawsuit-app-store-antitrust; Nick Statt, Apple doubles 

down on controversial decision to reject email app Hey, THE VERGE (June 18, 2020), 

https://www.theverge.com/2020/6/18/21296180/apple-hey-email-app-basecamp-rejection-response-controversy-antitrustregulation. 
342

Apple describes its policies as a standard industry practice and says that other app stores charge 

the same fees.2142 In 2020, Apple funded a study that concluded that other software distribution 

platforms run by Google, Amazon, Samsung, Microsoft, and others charge identical or similar 

commissions on software downloads and transactions, and that commissions are common in other 

digital markets.2143 Apple also highlighted that its commissions are lower than the cost of software 

distribution by brick-and-mortar retailers, which dominated the marketplace prior to the introduction of 

the App Store.2144 The Apple-commissioned study explained Apple funds the App Store through a $99 

annual fee it charges to developers and $299 for developers building enterprise apps, as well as the 

commission and fees collected on apps and in-app purchases.2145

Apple also noted that 84% of all apps distributed through the App Store pay no commissions or 

fees.2146 Apple does not take a commission on purchases from apps like Uber or Etsy that sell 

“physical goods or services that will be consumed outside the app.”

2147 Apple also makes some 

exceptions to its rules and may change or update its rules.2148 For example, Apple has an exception for 

“Reader” apps such as Netflix and Kindle that permit users to access content purchased outside the 

2142 Innovation and Entrepreneurship Hearing at 2 (Response to Questions for the Record of Kyle Andeer, Vice Pres., Corp. 

Law, Apple Inc.), https://docs.house.gov/meetings/JU/JU05/20190716/109793/HHRG-116-JU05-20190716-SD037.pdf. 

See also Mark Gurman, Apple Defends App Store Revenue Take Ahead of Antitrust Hearing, BLOOMBERG (July 22, 2020), 

https://www.bloomberg.com/news/articles/2020-07-22/apple-defends-app-store-revenue-cut-ahead-of-antitrust-hearing; 

David Pierce and Emily Birnbaum, Apple defends its App Store tax ahead of antitrust hearings, PROTOCOL (July 22, 2020), 

https://www.protocol.com/apple-app-store-commission-study. 

2143 See JONATHAN BORCK ET AL., APPLE’S APP STORE AND OTHER DIGITAL MARKETPLACES: A COMPARISON OF 

COMMISSION RATES 2, 5-6 (2020),

https://www.analysisgroup.com/globalassets/insights/publishing/apples_app_store_and_other_digital_marketplaces_a_com

parison_of_commission_rates.pdf. 

2144 See CEO Hearing Transcript at 30 (statement of Tim Cook, CEO, Apple Inc.); Letter from Kyle Andeer, Vice Pres., 

Corp. Law and Chief Compliance Officer, Apple Inc., to Hon. Jerrold Nader, Chairman, H. Comm. on the Judiciary, Hon. 

Jim Jordan, Ranking Member, H. Comm. on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary, Hon. F. James Sensenbrenner, Ranking Member, 

Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 3 (Sept. 21, 2020) ( on file with 

Comm.). 

2145 See JONATHAN BORCK ET AL., APPLE’S APP STORE AND OTHER DIGITAL MARKETPLACES: A COMPARISON OF 

COMMISSION RATES 4, n.5, Appendix A-3 (2020),

https://www.analysisgroup.com/globalassets/insights/publishing/apples_app_store_and_other_digital_marketplaces_a_com

parison_of_commission_rates.pdf.

2146 See e.g., Innovation and Entrepreneurship Hearing at 68 (statement of Kyle Andeer, Vice Pres., Corp. Law, Apple Inc.); 

Letter from Timothy Powderly, Apple Inc., to Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary, and Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on 

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 3 (July 15, 2019).

2147 App Store Review Guidelines 3.1.3(e): Goods and Services Outside of the App, APPLE, https://developer.apple.com/appstore/review/guidelines/#goods-and-services-outside-of-the-app (last visited Sept. 27, 2020). 

2148 See e.g., Sarah Perez & Anthony Ha, Apple revises App Store rules to permit game streaming apps, clarify in-app 

purchases and more, TECHCRUNCH (Sept. 11, 2020), https://techcrunch.com/2020/09/11/apple-revises-app-store-rules-topermit-game-streaming-apps-clarify-in-app-purchases-and-more/; Phillip Shoemaker, Apple v. Everybody, MEDIUM (Mar. 

29, 2019), https://medium.com/@phillipshoemaker/apple-v-everybody-5903039e3be. 
343

app, but do not allow for in-app subscriptions or purchases.2149 Apple also makes exceptions for “thirdparty premium video apps” that integrate with Apple TV and other Apple services.2150 Mr. Cook 

explained, “[t]oday, there are over 130 apps that participate in this program,” and “[t]he reduced 15% 

commission is available to all developers offering premium video content on the same terms as 

Amazon Prime Video, with the same qualification criteria.”

2151 Amazon Prime Video, Altice One, and 

Canal+ have been publicly confirmed as participants.2152

During the investigation, the Subcommittee received evidence from app developers regarding 

Apple’s commissions and fees for IAP. ProtonMail, a secure email provider, explained that Apple’s 

justification of its 30% commission overlooks the dynamics of the marketplace for distributing 

software to consumers with iOS devices—conflating practices that may be unremarkable in 

competitive markets but abusive in monopoly markets.2153

For example, personal computer (PC) users can install software from app stores run by 

Microsoft, Google, Amazon and others, or they can download software directly from the software 

developer’s website and bypass app stores altogether. Similarly, Apple’s Mac App Store is one of 

many options for Mac users to download software. While Samsung is a global leader in smartphones, 

the Samsung Galaxy Store is one of several app stores available on Samsung’s mobile devices. 

Google’s Play Store dominates app distribution on Android devices and is the most apt comparison to 

the App Store, but Google permits some competition via sideloading and alternative app stores.2154

In contrast, Apple owns the iOS operating system as well as the only means to distribute 

software on iOS devices. Using its role as operating system provider, Apple prohibits alternatives to 

the App Store and charges fees and commissions for some categories of apps to reach customers. It 

responds to attempts to circumvent its fees and commissions with removal from the App Store.2155

Because of this policy, developers have no other option than to play by Apple’s rules to reach 

customers who own iOS devices. Owners of iOS devices have no alternative means to install apps on 

2149 App Store Review Guidelines 3.1.3(a): “Reader” Apps, APPLE, https://developer.apple.com/appstore/review/guidelines/#reader-apps (last visited Sept. 27, 2020). 

2150 CEO Hearing Transcript at 8 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.)

2151 Id. 

2152 Nick Statt, Apple now lets some video streaming apps bypass the App Store cut, THE VERGE (Apr. 1, 2020), 

https://www.theverge.com/2020/4/1/21203630/apple-amazon-prime-video-ios-app-store-cut-exempt-program-deal. See 

also, Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-015111 (Nov. 1, 2016) (showing details of 

negotiations between Eddy Cue, Senior Vice President, Internet Software and Services, Apple, and Jeff Bezos, CEO, 

Amazon.) (on file with Comm.). 

2153 See Submission from ProtonMail, to H. Comm. on the Judiciary, 11–12 (Aug. 22, 2020) (on file with Comm.).

2154 See id. Apple has pointed to these as benchmarks for the App Store. See JONATHAN BORCK ET AL., APPLE’S APP STORE 

AND OTHER DIGITAL MARKETPLACES: A COMPARISON OF COMMISSION RATES 4–6 (2020),

https://www.analysisgroup.com/globalassets/insights/publishing/apples_app_store_and_other_digital_marketplaces_a_com

parison_of_commission_rates.pdf. 

2155 See Submission from ProtonMail, to H. Comm. on the Judiciary, 5 (Aug. 22, 2020) (on file with Comm.).
344

their phones. Apple notes that its 30% commission has remained static for most apps for more than a 

decade.2156 A group of developers that filed a lawsuit against Apple because of this policy argue that 

the persistence of Apple’s 30% rate over time, particularly “despite the inevitable accrual of experience 

and economies of scale,” indicates there is insufficient competition.2157 Additionally, as previously 

noted, there is little likelihood for new market entry in the mobile operating system or mobile app store 

markets to compel Apple to lower its rates.2158

Industry observers have also challenged Apple’s implicit claim that the iPhone was the start of 

the online software distribution market. For example, Mac and iOS developer Brent Simmons 

remarked that “when the App Store was created, developers were selling and distributing apps over the 

web, and it worked wonderfully,” noting that he began distributing software over the internet in the 

1990s.2159 Software designer and technology writer John Gruber agreed, explaining that in the mid1990s there was “a thriving market for software sold directly over a thing called ‘The Internet,’” and 

that Apple’s omission of the fact that “direct downloads and sales over the web” pre-dated the iPhone 

by more than a decade “is flat-out dishonest.”

2160

Many developers have stressed that because Apple dictates that the App Store is the only way 

to install software on iOS devices and requires apps offering “digital goods and services” implement 

the IAP mechanism, that Apple has illegally tied IAP to the App Store.2161 Consumers with iOS 

devices account for a disproportionately high amount of spending on apps—spending twice as much as 

Android users.2162 Further, iOS users seldom switch to Android.2163 Thus, developers cannot abandon 

2156 See CEO Hearing Transcript at 52 (statement of Tim Cook, CEO, Apple Inc.); Letter from Kyle Andeer, Vice Pres., 

Corp. Law and Chief Compliance Officer, Apple Inc., to Hon. Jerrold Nader, Chairman, H. Comm. on the Judiciary, Hon. 

Jim Jordan, Ranking Member, H. Comm. on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary, and Hon. F. James Sensenbrenner, Ranking Member, 

Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 3 (Sept. 21, 2020) ( on file with 

Comm.). 

2157 Class Action Complaint at 2, Cameron v. Apple Inc., No. 5:19-cv-3074 (N.D. Cal. June 4, 2019). 

2158 See infra Section IV.

2159 See Rob Pegoraro, What Tim Cook Left Out Of His Version of App Store History, FORBES (July 29, 2020), 

https://www.forbes.com/sites/robpegoraro/2020/07/29/what-tim-cook-left-out-of-his-version-of-app-store-history/. 

2160 John Gruber, Parsing Tim Cook’s Opening Statement from Today’s Congressional Antitrust Hearing, DARING 

FIREBALL (July 29, 2020), https://daringfireball.net/2020/07/parsing_cooks_opening_statement. 

2161 See e.g., Submission from Source 711, to H. Comm. on the Judiciary, Appendix A 4–8 (Oct. 15, 2019) (on file with 

Comm.); Submission from Source 202, to H. Comm. on the Judiciary, 22–41 (Oct. 18, 2018); Submission from Source 736, 

to H. Comm. on the Judiciary, 6–10 (Oct. 31, 2019) (on file with Comm.). 

2162 See Global App Revenue Grew 23% Year-Over-Year Last Quarter to $21.9 Billion, SENSORTOWER (Oct. 23, 2019), 

https://sensortower.com/blog/app-revenue-and-downloads-q3-2019; Prachi Bhardwaj & Shayanne Gal, Despite Android’s 

growing market share, Apple users continue to spend twice as much money on apps as Android users, BUS. INSIDER (July 6, 

2018), https://www.businessinsider.com/apple-users-spend-twice-apps-vs-android-charts-2018-7. 

2163 See Mobile Operating System Loyalty: High and Steady, CONSUMER INTEL. RESEARCH PARTNERS (Mar. 8, 2018), 

http://files.constantcontact.com/150f9af2201/4bca9a19-a8b0-46bd-95bd-85740ff3fb5d.pdf; iPhone vs. Android – Cell 

Phone Brand Loyalty Survey 2019, SELLCELL (Aug. 20, 2019), https://www.sellcell.com/blog/iphone-vs-android-cellphone-brand-loyalty-survey-2019/; see also MORNINGSTAR EQUITY ANALYST REPORT, APPLE INC 3 (Aug. 6, 2020) (on file 
345

the App Store—it is where the highest value customers are and will remain. As a result, developers say 

that Apple abuses its control of its valuable user base by prohibiting alternative payment processing 

options to compete with Apple’s IAP mechanism. 

Developers further argue that Apple’s 30% commission from IAP is a “payment processing”

fee, and not a distribution fee.2164 In a submission to the Subcommittee, Match said “Apple distorts 

competition in payment processing by making access to its App Store conditional on the use of IAP for 

in-app purchases, thus excluding alternative payment processors. IAP eventually becomes the vessel 

through which Apple extracts its extraordinary commissions.”

2165 Two app developers that offer 

services that compete with Apple explained that IAP is a payment processing fee and not a distribution 

fee. Both pointed out that Apple does not charge apps for distribution, evidenced by the fact Apple 

admits distributing most apps for free. Instead, Apple generates revenue by adding a 30% processing 

fee on transactions in the App Store and using IAP.2166 Apple’s Developer Program website explains 

that Apple does charge for distribution—it requires enrollment in the Apple Developer Program and 

payment of a $99 fee to distribute apps on the App Store.2167

Apple responded that its “commission is not a payment processing fee” and that it “reflects the 

value of the App Store as a channel for the distribution of developers’ apps and the cost of many 

services” it incurs to maintain the App Store.2168 It said that “[t]he commission also enables Apple to 

with Comm.) (“Recent survey data shows that iPhone customers are not even contemplating switching brands today. In a 

December 2018 survey by Kantar, 90% of U.S.-based iPhone users said they planned to remain loyal to future Apple 

devices.”); Martin Armstrong, Most iPhone Users Never Look Back, STATISTA (May 22, 2017), 

https://www.statista.com/chart/9496/most-iphone-users-never-look-back/. 

2164 See e.g., Competitors Hearing at 9 (statement of David Heinemeier Hansson, Founder and CTO, Basecamp); Interview 

with Source 143 (Aug. 27, 2020); Submission from Match Group, to H. Comm. on the Judiciary, MATCH-GRP_00000168 

(July 1, 2019) (on file with Comm.); Submission from Source 482, to H. Comm. on Judiciary, 9 (Oct. 15, 2019) (on file 

with Comm.).

2165 Submission from Match Group, to H. Comm. on the Judiciary, MATCH_GRP_00000238 (Nov. 1, 2019) (on file with 

Comm.). 

2166 See Submission from ProtonMail, to H. Comm. on the Judiciary, 11 (Aug. 22, 2020) (on file with Comm.); Submission 

from Spotify, to H. Comm. on the Judiciary, Appendix A at 7–8 (Oct. 15, 2019) (on file with Comm.).

2167 See Apple Developer Program, How the Program Works, APPLE, https://developer.apple.com/programs/how-it-works/

(last visited Sept. 27, 2020) (“If you’re new to development on Apple Platforms, you can get started with our tools and 

resources for free. If you’re ready to build more advanced capabilities and distribute your apps on the App Store, enroll in 

the Apple Developer Program. The cost is 99 USD per membership year.”). 

2168 Letter from Kyle Andeer, Vice Pres., Corp. Law & Chief Compliance Officer, Apple Inc. to Hon. Jerrold Nadler, 

Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm on the Judiciary, Hon. David N. 

Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, and Hon. F. 

James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the 

Judiciary, 3 (Feb. 17, 2020) ( on file with Comm.), https://docs.house.gov/meetings/JU/JU05/20200117/110386/HHRG116-JU05-20200117-SD004.pdf; see also Letter from Kyle Andeer, Vice Pres., Corp. Law and Chief Compliance Officer, 

Apple Inc., to Hon. Jerrold Nader, Chairman, H. Comm. on the Judiciary, Hon. Jim Jordan, Ranking Member, H. Comm. 

on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, and Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary, 3 (Sept. 21, 2020) ( on file with Comm.). 
346

realize a return on its investment in the App Store and in Apple’s intellectual property, and to fund 

future App Store innovation.”

2169 Similarly, a study commissioned by Apple in 2020 explained that the 

annual fees paid by developers, commissions, and charges for in-app purchases fund investments in the 

App Store ecosystem, such as app review, developer tools, marketing, search functionality, application 

program interfaces, and software development kits.2170 Apple has also argued that its App Store 

Developer Guidelines—including its requirement to use Apple’s in-app purchase mechanism—is 

“designed to keep the store safe for our users.”

2171

Apple’s rationale for its commissions and fees has evolved over time. Its recent explanations of 

the basis for its 30% commission differs significantly from its explanation of its fee and revenue 

expectations in the early years of the App Store. Prior to the App Store’s debut in 2008, then-Apple 

CEO Steve Jobs explained “We don’t intend to make any money off the App Store . . . We’re basically 

giving all the money to the developers and the 30 percent that pays for running the store, that’ll be 

great.”

2172 In 2011, Apple Chief Financial Officer Peter Oppenheimer explained to Apple’s 

shareholders that Apple runs the App Store “just a little over break even.”

2173

Apple’s financial reports indicate that the App Store is faring far better than the modest 

business Apple originally contemplated. According to a 2019 market analysis, Apple’s net revenue 

from the App Store is projected to be $17.4 billion for fiscal year 2020.2174 CNBC estimated the App 

Store had total sales of nearly $50 billion in 2019, generating “about $15 billion in revenue for Apple.”

2169 Apple, Apple: Distinctive Products with a Seamless, Integrated User Experience 14 (July 13, 2020) (on file with 

Comm.). See also Letter from Kyle Andeer, Vice Pres., Corp. Law and Chief Compliance Officer, Apple Inc., to Hon. 

Jerrold Nader, Chairman, H. Comm. on the Judiciary, Hon. Jim Jordan, Ranking Member, H. Comm. on the Judiciary, Hon. 

David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 

and Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, 3 (Sept. 21, 2020) ( on file with Comm.). 

2170 See JONATHAN BORCK ET AL., APPLE’S APP STORE AND OTHER DIGITAL MARKETPLACES: A COMPARISON OF 

COMMISSION RATES 2–3 (2020),

https://www.analysisgroup.com/globalassets/insights/publishing/apples_app_store_and_other_digital_marketplaces_a_com

parison_of_commission_rates.pdf; see also Letter from Kyle Andeer, Vice Pres., Corp. Law & Chief Compliance Officer, 

Apple Inc. to Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm 

on the Judiciary, Hon. David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. 

Comm. on the Judiciary, and Hon. F. James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and 

Admin. Law of the H. Comm. on the Judiciary, 2 (Feb. 17, 2020) ( on file with Comm.), 

https://docs.house.gov/meetings/JU/JU05/20200117/110386/HHRG-116-JU05-20200117-SD004.pdf.

2171 Kif Leswing, Apple sued by Fortnite maker after kicking the game out of the App Store for payment policy violations, 

CNBC (Aug. 13, 2020), https://www.cnbc.com/2020/08/13/apple-kicks-fortnite-out-of-app-store-for-challenging-paymentrules.html. 

2172 Peter Cohen, ‘App Store’ will distribute iPhone software, MACWORLD (Mar. 6, 2008), 

https://www.macworld.com/article/1132402/appstore.html. 

2173 Daniel Eran Dilger, Inside Apple’s shareholder meeting and Q&A with Tim Cook, APPLE INSIDER (Feb. 23, 2011), 

https://appleinsider.com/articles/11/02/23/tim_cook_presides_over_annual_apple_shareholder_meeting. 

2174 Eric J. Savitz, App Stores Could Be Ripe for Regulation. Here’s Who Benefits if Commissions Fall, BARRONS (July 25, 

2019), https://www.barrons.com/articles/news-updates-51599747657. 
347

With $50 billion in annual sales, CNBC explained “the App Store alone would be no. 64 on the 

Fortune 500, ahead of Cisco and behind Morgan Stanley.”

2175 An analytics firm concluded that Apple 

likely made $15.5 billion from the App Store in 2018, and estimated $18.8 billion for 2022. Bloomberg

reported that analysts forecasting Apple’s third-quarter 2020 performance predicted growth from 

Services “up 15% from a year earlier,” and that growth would largely be attributable to the App Store 

and licensing, not new services.2176 In addition to Apple’s commissions and fees for IAP, App Store 

revenue also includes an $2.67 billion Apple would make through the $99 annual fee paid by Apple’s 

27 million iOS developers.2177 Apple also reportedly made $9 billion in 2018 and $12 billion in 2019 

to set Google as the default search engine on the Safari browser.2178 Revenue from setting Google as 

Safari’s default search engine is attributed to Apple’s Services business, which is the business unit that 

includes the App Store.2179

In an interview with Subcommittee staff , Phillip Shoemaker, former director of app review for 

the App Store, estimated that Apple’s costs for running the App Store is less than $100 million. Other 

analysts estimate that the App Store has significantly higher profits. A gaming developer explained 

that the fees it pays Apple’s add up to millions of dollars—or even tens or hundreds of millions of 

dollars for some developers—far in excess of the developer’s estimate of Apple’s costs of reviewing 

and hosting those apps.2180 Although only estimates, these figures indicate that as the mobile app 

economy has grown, Apple’s monopoly power over app distribution on iPhones permits the App Store 

to generate supra-normal profits. These profits are derived by extracting rents from developers, who 

either pass on price increases to consumers, or reduce investments in innovative new services. Apple’s 

ban on rival app stores and alternative payment processing locks out competition, boosting Apple’s 

profits from a captured ecosystem of developers and consumers.2181

2175 Kif Leswing, Apple’s App Store had gross sales around $50 billion last year, but growth is slowing, CNBC (Jan. 8, 

2020), https://www.cnbc.com/2020/01/07/apple-app-store-had-estimated-gross-sales-of-50-billion-in-2019.html. 

2176 Mark Gurman, Apple’s New Services Off to a Slow Start in First Year, BLOOMBERG (July 28, 2020), 

https://www.bloombergquint.com/business/apple-s-new-services-off-to-a-slow-start-in-first-year. 

2177 See Letter from Kyle Andeer, Vice Pres., Corp. Law and Chief Compliance Officer, Apple Inc., to Hon. Jerrold Nader, 

Chairman, H. Comm. on the Judiciary, Hon. Jim Jordan, Ranking Member, H. Comm. on the Judiciary, Hon. David N. 

Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, and Hon. F. 

James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the 

Judiciary, 3 (Sept. 21, 2020) ( on file with Comm.). (“[T]here are more than 1.8 million apps on the App Store, and a 

thriving community of more than 27 million iOS developers.”); Developer Support, Purchase and Activation, APPLE,

https://developer.apple.com/support/purchase-activation/ (last visited Sept. 27, 2020) (“The Apple Developer Program 

annual fee is $99 USD and the Apple Developer Enterprise Program annual fee is $299 USD”).

2178 See Lisa Marie Segarra, Google to Pay Apple $12 Billion to Remain Safari’s Default Search Engine in 2019: Report, 

FORTUNE (Sept. 29, 2018), https://fortune.com/2018/09/29/google-apple-safari-search-engine/. 

2179 See Mark Gurman, Apple’s New Services Off to a Slow Start in First Year, BLOOMBERG (July 28, 2020), 

https://www.bloombergquint.com/business/apple-s-new-services-off-to-a-slow-start-in-first-year.

2180 Interview with Source 143 (Aug. 27, 2020).

2181 Dr. Carl Shapiro of the University of California, Berkeley—the former top economist for the Justice Department’s 

Antitrust Division under the Obama Administration—has noted that persistently high corporate profits that are not eroded 

by competitive forces over time are an indicator of market power. It also suggests the rise of incumbency rents, or the 

earning of excess profits “by firms whose positions are protected by high barriers to entry.” Carl Shapiro, Antitrust in a 
348

To address this concern without compromising the security or quality of the App Store, some 

developers argue in favor of allowing third-party payment processors like PayPal, Square, and Stripe to 

compete in the App Store. They explain that the most likely competitors are already trusted and widely 

used for e-commerce transactions.2182 David Heinemeier Hansson, the Founder and CTO of Basecamp, 

testified at the Subcommittee’s fifth hearing that Apple’s market power allows it to keep fees 

“exorbitantly high.”

2183 By comparison, he noted that other markets, such as credit card processes, are 

“only able to sustain a 2 percent fee for merchants. Apple, along with Google, has been able to charge 

an outrageous 30 percent for years on end.”

2184 Several other firms observed that Apple’s control over 

app distribution allows it to extract high fees on a minority of apps, and that competition for processing 

payments would drive prices down. For example, developers explain that payment processing typically 

costs less than 5% of the transaction value.2185 Before the App Store, one developer reportedly 

explained that “[w]e typically paid about 5%—not 30%—to a payment processor,” and it “worked just 

as well for small developers as for large.”

2186

Other developers have noted that alternative payment processing providers charge significantly 

lower rates than Apple’s fee for IAP. Match estimates that Apple’s expenses related to payment 

processing “justify charging no more than 3.65% of revenue.”

2187 Some app developers would prefer to 

implement in-house payment processing. In August 2020, Epic Games introduced a direct payment 

option in its Fortnite app, allowing gamers to elect to use Apple’s IAP or pay Epic directly. Epic’s 

payment processing option that charged consumers 10%, a 20% discount from purchases using 

IAP.2188 In response, Apple disabled updates for Fortnite for violating the App Store Guidelines.2189

Time of Populism, 61 INT’L J. INDUS. ORG. 714, 733–737 (2018), 

https://faculty.haas.berkeley.edu/shapiro/antitrustpopulism.pdf. 

2182 Submission from ProtonMail, to H. Comm. on the Judiciary, 13 (Aug. 22, 2020) (on file with Comm.).

2183 Competitors Hearing at 8 (statement of David Heinemeier Hansson, Founder and CTO, Basecamp); see also Interview 

with Source 88 (May 12, 2020).

2184 Competitors Hearing at 8 (statement of David Heinemeier Hansson, Founder and CTO, Basecamp); see also Interview 

with Source 873 (May 12, 2020). 

2185 See e.g., Competitors Hearing at 8 (statement of David Heinemeier Hansson, Founder and CTO, Basecamp); 

Submission from Source 202, to H. Comm. on the Judiciary, 15 (Oct. 18, 2018) (on file with Comm.). 

2186 Rob Pegoraro, What Tim Cook Left Out Of His Version of App Store History, Forbes (July 29, 2020), 

https://www.forbes.com/sites/robpegoraro/2020/07/29/what-tim-cook-left-out-of-his-version-of-app-store-history/. 

2187 Submission of Source 736, to H. Comm. on the Judiciary, 6 (Oct. 31, 2019) (on file with Comm.). 

2188 See Andrew Webster, Epic offers new direct payment in Fortnite on iOS and Android to get around app store fees, THE 

VERGE (Aug. 13, 2020), https://www.theverge.com/2020/8/13/21366259/epic-fortnite-vbucks-mega-drop-discount-iphoneandroid. 

2189 Nick Statt, Apple just kicked Fortnite off the App Store, THE VERGE (Aug. 13, 2020), 

https://www.theverge.com/2020/8/13/21366438/apple-fortnite-ios-app-store-violations-epic-payments. 
349

Developers have also detailed that Apple attempts lock in its fees by preventing apps from 

communicating with customers about alternatives. Under the App Store Guidelines, apps may not 

provide any information “that direct[s] customers to purchasing mechanisms other than in-app 

purchase.”

2190 They also cannot communicate with iOS app customers about purchasing methods other 

than IAP.2191

In an interview with Subcommittee staff, one developer that offers a “freemium” app—a 

popular business model where the app is available for free but users can purchase upgrades—recalled 

that it sent an email to customers with iOS devices with information about how to upgrade to a paid 

subscription, including a link to the service’s website where customers could upgrade their 

subscription. Apple responded by threatening to remove the app from the App Store and blocked its 

updates, including security patches.2192 A game developer described Apple’s rules as reaching outside 

the App Store itself to police the communications that an app can have with its own customers, 

including communications intended to improve customer experience and offer discounts.2193

In his questions for the record for the Subcommittee’s second hearing, Representative W. 

Gregory Steube (R-FL) asked Apple about banning communications to customers by app providers. 

Apple responded that its restrictions on communications between apps and customers are to ensure 

Apple can collect commissions and “prevent free-riding.”

2194 Apple explained that it restricts 

developers from using the iOS ecosystem to “direct customers they have acquired through Apple to 

purchase content elsewhere for the purpose of avoiding Apple’s rightful commission.”

2195 The 

company described its policy as a prohibition “on developers promoting, via the App Store, 

transactions outside the App Store,” and said Apple’s policies were no different than most other 

retailers.2196

In June 2020, the European Commission announced that it had opened a formal antitrust 

investigation of Apple’s App Store rules and conduct, including “the mandatory use of Apple’s own 

2190 App Store Developer Guidelines 3.1.1: In-App Purchase, APPLE, https://developer.apple.com/appstore/review/guidelines/#in-app-purchase (last visited Sept. 27, 2020). 

2191 Apple, App Store Developer Guidelines 3.1.3: Other Purchase Methods, APPLE, https://developer.apple.com/appstore/review/guidelines/#other-purchase-methods (last visited Sept. 27, 2020). 

2192 Submission from ProtonMail, to H. Comm. on the Judiciary, 5 (Aug. 22, 2020) (on file with Comm.).

2193 Interview with Source 143 (Aug. 27, 2020). 

2194 Innovation and Entrepreneurship Hearing at 2 (Response to Questions for the Record of Kyle Andeer, Vice Pres., Corp. 

Law, Apple Inc.).

2195 Id. at 1. 

2196 Id. at 1–2. 
350

proprietary in-app purchase system and restrictions on the availability of developers to inform iPhone 

and iPad users of alternative cheaper purchasing possibilities outside of apps.”

2197

As Apple has emphasized growing its Services business, app developers and technology writers 

have observed Apple is increasingly insistent that apps implement IAP—cutting Apple in on revenue 

from more developers—and threatening apps that do not comply with expulsion from the App 

Store.2198 In June 2020, an email app developed by Basecamp called HEY was approved by the App 

Store and then abruptly told it would have to implement Apple in-app purchasing or face removal from

the platform.2199 While HEY’s app updates were eventually allowed, Apple did force it to create a free 

trial option for iOS customers.2200 Basecamp Founder and CTO David Heinemeier Hansson observed 

that Apple threatened and abused small app developers for years, and that the conflict with HEY 

amounted to a “shakedown.”

2201 In August 2020, Apple denied WordPress the ability to update its app 

unless it implemented IAP, even though the WordPress app does not sell anything. Apple ultimately 

backed off its demands only after the issue received negative attention on social media.2202 ProtonMail 

told the Subcommittee that its privacy-focused email app competes with an Apple’s email app, and 

after being in the App Store for two years, Apple demanded the ProtonMail implement IAP or be 

removed from the App Store. ProtonMail complied to avoid damage to its business.2203

Internal Apple communications reviewed by Subcommittee staff indicate that Apple has 

leveraged its power over the App Store to require developers to implement IAP or risk being thrown 

2197 Press Release, Eur. Comm’n, Antitrust: Commission opens investigations into Apple’s App Store rules (June 16, 2020), 

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1073. 

2198 See e.g., Jeremy Howitz, Apple’s antitrust woes stem from its obsessions with control and money, VENTURE BEAT (Aug. 

7, 2020), https://venturebeat.com/2020/08/07/apples-antitrust-woes-stem-from-its-obsessions-with-control-and-money/

(“Apple might act like it’s too large to care about money, but the company has recently sniped at developers who have 

succeeded on iOS without paying Apple anything, while doing as much as possible to push other developers — and users 

— into coughing up recurring subscription fees for both apps and games.”). 

2199 See e.g., Nilay Patel, Apple approves Hey email app, but the fight’s not over, THE VERGE (June 22, 2020), 

https://www.theverge.com/2020/6/22/21298552/apple-hey-email-app-approval-rules-basecamp-launch; Rob Pegoraro, 

Apple To Basecamp’s Hey: Expect to Pay Us If You Want To Sell Privacy, FORBES (June 17, 2020), 

https://www.forbes.com/sites/robpegoraro/2020/06/17/apple-to-basecamps-hey-expect-to-pay-us-if-you-want-to-sellprivacy/. 

2200 Chaim Gartenberg, Hey opens its email service to everyone as Apple approves its app for good, THE VERGE (June 25, 

2020), https://www.theverge.com/2020/6/25/21302931/hey-email-service-public-launch-apple-approves-app-fight-policyprice. 

2201 Apple v. Hey, HEY, https://hey.com/apple/ (last visited Sept. 27, 2020). 

2202 See Sean Hollister, WordPress founder claims Apple cut off updates to his completely free app because it wants 30 

percent, THE VERGE (Aug. 21, 2020), https://www.theverge.com/2020/8/21/21396316/apple-wordpress-in-app-purchasetax-update-store; Sean Hollister, Apple apologizes to WordPress, won’t force the free app to add purchases after all, THE 

VERGE (Aug. 23, 2020), https://www.theverge.com/2020/8/22/21397424/apple-wordpress-apology-iap-free-ios-app. 

2203 Submission from ProtonMail, to H. Comm. on the Judiciary, 5 (Aug. 22, 2020) (on file with Comm.). 
351

out of the App Store.2204 Then-Apple CEO Steve Jobs once explained, “there will be some roadkill 

because of it. I don’t feel guilty” when confronted with developer complaints about Apple’s 

commission and requirement to use IAP.2205 The Netherlands Authority for Consumers and Markets 

(ACM) has noted that some app developers attribute Apple’s inconsistent application of its rules to 

inattention to apps that are infrequently updated, and that Apple likely focuses on requiring IAP for 

high revenue-generating apps.2206

In response to the COVID-19 pandemic, some businesses moved physical events online, often 

booking through an app and holding the event through a video chat application. Educators have also 

shifted resources online, including through apps. The New York Times reported that Apple demanded a 

30% commission from these virtual class offerings. As a result, one company stopped offering virtual 

classes to users of its iOS app. The Times reported that Apple threatened Airbnb that it would remove 

its app from the App Store if Airbnb did not comply with Apple’s demand for a share of its 

revenues.2207

In interviews with Subcommittee staff , multiple app developers confirmed the The New York 

Times’ reporting.2208 Airbnb spoke with Subcommittee staff and described conversations with the App 

Store team in which Apple said it had observed an uptick in the number of apps offering virtual classes 

in lieu of in-person classes due to the COVID-19 pandemic. As a result, Apple began canvassing the 

App Store to require app developers implement IAP, entitling Apple to take 30% of in-app sales. 

Airbnb explained that Apple’s commission, plus compliance with Apple’s pricing tiers for in-app 

purchases would ultimately result in a 50-60% price increase for consumers.2209

Technology industry observers have reported similar conduct. On June 17, 2020, Ben 

Thompson, a prominent business analyst, wrote that app developers told him that Apple was 

demanding 30% commissions from businesses that have had to change their business models from 

live, in-person events to virtual events as a result of the COVID-19 pandemic. Mr. Thompson quoted 

one developer that explained Apple was taking advantage of small businesses in the midst of the 

ongoing public health crisis.2210

2204 See Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-014701-702 (Nov. 23, 2010) (on file with 

Comm.). 

2205 Patrick McGee & Javier Espinoza, Apple conflict with developers escalates ahead of worldwide conference, FINANCIAL 

TIMES (June 22, 2020) https://www.ft.com/content/733ae8d4-e516-4418-9998-30414c368c6f. 

2206 See Neth. Auth. for Consumers & Mkts. at 89, 92–93.

2207 Jack Nicas & David McCabe, Their Business Went Virtual. Then Apple Wanted a Cut., N.Y. TIMES (July 28, 2020), 

https://www.nytimes.com/2020/07/28/technology/apple-app-store-airbnb-classpass.html.

2208 See e.g., Interview with Airbnb; Interview with Source 147 (Sept. 10, 2020).

2209 See Interviews with Airbnb.

2210 See Ben Thompson, Xscale and ARM in the Cloud, Hey Versus Apple, Apple’s IAP Campaign, STRATECHERY (June 17, 

2020), https://stratechery.com/2020/xscale-and-arm-in-the-cloud-hey-versus-apple-apples-iap-campaign/. 
352

At the Subcommittee’s hearing on July 29, 2020, Chairman Jerrold Nadler (D-NY) asked Mr. 

Cook about the allegations that Apple was canvassing the App Store to extract commissions from 

businesses that have been forced to change their business model in order to survive during the 

pandemic. Mr. Cook responded that Apple “would never take advantage” of the pandemic, but 

justified the conduct, explaining that the app developers were now offering what Apple defined as a 

“digital service” and Apple was entitled to commissions.2211 Responding to The New York Times’

reporting on the mater, Apple defended its conduct, explaining “[t]o ensure every developer can create 

and grow a successful business, Apple maintains a clear, consistent set of guidelines that apply equally 

to everyone.”

2212

App developers affected by these changes said that after Apple’s conduct became public it 

created an exception to its policies until the end of 2020. However, on January 1, 2021 those 

businesses will be required to implement IAP or remove the ability to book virtual classes in their 

apps.2213

Developers have submitted evidence that Apple’s commissions and fees, combined with the 

lack of competitive alternatives to the App Store and IAP harm competition and consumers. For 

instance, Match called Apple’s fee for IAP “unreasonable,” leading to higher prices for consumers and 

“an inferior user experience and a reduction of innovation.”

2214 One developer that offers an app that 

directly competes with Apple told the Subcommittee that it was forced to raise prices to pay Apple’s 

commission. 

As a result, it was less competitive and fewer iOS users purchased its service. The company 

said that because apps often have small margins, they cannot absorb Apple’s fees, so the price 

consumers pay for its app is more than 25% higher than it would otherwise be.2215 Small developers 

described Apple’s 30% cut “onerous.”

2216 Epic Games, which recently filed an antitrust complaint 

against Apple, has told a federal court that Apple’s fees and commissions force developers “to increase 

the prices they charge in order to pay Apple’s app tax. There is no method app developers can use to 

2211 CEO Hearing Transcript at 156 (statement of Tim Cook, CEO, Apple Inc.) 

2212 Jack Nicas & David McCabe, Their Business Went Virtual. Then Apple Wanted a Cut., N.Y. TIMES (July 28, 2020), 

https://www.nytimes.com/2020/07/28/technology/apple-app-store-airbnb-classpass.html.

2213 Interview with Airbnb (Aug. 31, 2020).

2214 Submission by Match Group, to H. Comm. on the Judiciary, MATCH_GRP_00000236, MATCH_GRP_00000238 

(Oct. 23, 2019) (on file with Comm.). 

2215 Submission from ProtonMail, to H. Comm. on the Judiciary, 6 (Aug. 22, 2020) (on file with Comm.); see also Neth. 

Auth. for Consumers & Mkts. Study at 91. 

2216 Interview with Source 143 (Aug. 27, 2020).
353

avoid this tax.”

2217 Mac and iOS app developer Brent Simmons explained Apple’s fees reduce 

innovation and lead to fewer apps in the marketplace, observing: 

[T]he more money Apple takes from developers, the fewer resources developers have. 

When developers have to cut costs, they stop updating apps, skimp on customer 

support, put off hiring a graphic designer, etc. They decide not to make apps at all that 

they might have made were it easier to be profitable.2218

In Apple’s internal documents and communications, the company’s senior executives 

previously acknowledged that IAP requirement would stifle competition and limit the apps available to 

Apple’s customers. For example, in an email conversation with other senior leaders at Apple about 

whether to require IAP for e-Book purchases, then-CEO Steve Jobs concluded, “I think this is all 

pretty simple—iBooks is going to be the only bookstore on iOS devices. We need to hold our heads 

high. One can read books bought elsewhere, just not buy/rent/subscribe from iOS without paying us, 

which we acknowledge is prohibitive for many things.”

2219

International competition authorities have also examined the competitive effects of Apple’s 

App Store commissions and fees. The Australian Competition and Consumer Commission (ACCC) 

observed that Apple’s control over app distribution on iOS devices gives it leverage to extract 

commissions from apps, reducing the revenue that app providers like media businesses can invest in 

content.2220 The ACM, which completed a comprehensive study of mobile app stores in 2019, noted 

that developers have increased prices to account for commissions and fees.2221 The ACM also 

remarked that Apple’s 30% commission on in-app purchases may distort competition because Apple’s 

requirement to use IAP often applies to apps competing directly against Apple’s apps. As a result, app 

developers with small margins cannot simply absorb the cost of Apple’s commission, so they increase 

their price, which gives Apple’s competing service an advantage.2222 Developers ACM spoke with 

“mentioned that it is highly unlikely that it is a coincidence that these digital services that are required 

to use IAP face competition from Apple’s own apps, or possibly will do in the future.”

2223

2217 Complaint at 3, Epic Games, Inc. v. Apple Inc., 4:20-cv-05640 (N.D.Cal. 2020), https://cdn2.unrealengine.com/applecomplaint-734589783.pdf.

2218 Brent Simmons, I Got Teed Off and Went on a Long Rant About This Opinion Piece on the App Store, INESSENTIAL

(July 28, 2020), https://inessential.com/2020/07/28/untrue.

2219 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-014816-18 (Feb. 6, 2011) (on file with Comm.). 

2220 See Austl. Competition & Consumer Comm’n at 223, 225 (2019); see also Ben Thompson, Antitrust, the App Store, 

and Apple, STRATECHERY (Nov. 27, 2018), https://www.stratechery.com/2018/antitrust-the-app-store-and-apple (“Apple 

makes a huge amount of money, with massive profit margins, by virtue of its monopolistic control of the App Store. It 

doesn’t make the games or the productivity applications or the digital content, it simply skims off 30%, and not because its 

purchasing experience is better, but because it is the only choice.”). 

2221 Neth. Auth. for Consumers & Mkts. Study at 91. 

2222 See id. at 7. 

2223 Id. at 89.
354

ii. Pre-Installed Apps, Default Settings, Private App Programming Interfaces (APIs), and 

Device Functionality

In addition to investigating whether Apple abuses its monopoly power over app distribution to 

leverage high commissions and fees from app developers, Subcommittee also examined whether Apple 

abuses its role as iOS and App Store owner to preference its own apps or harm rivals. The Committee 

requested information regarding Apple’s practice of locking-in Apple’s apps as defaults on the iPhone, 

and Subcommittee Chairman Cicilline requested information from Apple regarding its practice of preinstalling its own apps on the iPhone. Subcommittee Chairman Cicilline also sought input on whether 

Apple’s policy of reserving certain application programing interfaces (APIs) and access to certain 

device functionalities for its apps gives Apple’s services a competitive advantage.

It is widely understood that consumers usually do not change default options.2224 This is the 

case “even if they can freely change them or choose a competitive alternative.”

2225 Subcommittee staff 

reviewed communications between Apple employees that demonstrate an understanding inside Apple 

that pre-loading apps could be advantageous when competing against third-party apps.2226

Apple pre-installs about 40 Apple apps into current iPhone models.2227 Several of these apps 

are set as defaults and are “operating system apps” that are “integrated into the phone’s core operating 

system and part of the combined experience of iOS and iPhone.”

2228 According to Apple, users can 

delete most of these pre-installed apps.2229 Apple does not pre-install any third-party apps, and until the 

September 2020 release of iOS 14, it did not allow consumers to select third-party web browser or 

email apps as defaults.2230 Apple says that it is making “more than 250,000 APIs available to 

developers in iOS 14.”

2231

2224 See e.g., Dig. Competition Expert Panel Report at 36 (“[C]onsumers in digital markets display strong preferences for 

default options and loyalty to brands they know.”); Stigler Report at 8, 41 (“Consumers do not replace the default apps on 

their phones... and take other actions that may look like poor decisions if those consumers like to choose among options 

and experience competition.”).

2225 JOHN BERGMAYER, PUBLIC KNOWLEDGE, TENDING THE GARDEN: HOW TO ENSURE THAT APP STORES PUT USERS FIRST 

19 (2020), https://www.publicknowledge.org/wp-content/uploads/2020/06/Tending_the_Garden.pdf.

2226 See Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-011035–36 (Mar. 12, 2019) (on file with Comm.) 

(noting that Apple pre-loading software products on to iOS devices “would clearly be even more problematic” than “Apple 

releasing its apps via the App Store....”).

2227 CEO Hearing Transcript at 1 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).

2228 Id. at 2.

2229 Id.

2230 Id. See also Press Release, Apple, Apple reveals new developer technologies to foster the next generation of apps (June 

22, 2020), https://www.apple.com/newsroom/2020/06/apple-reveals-new-developer-technologies-to-foster-the-nextgeneration-of-apps/ (“Email and browser app developers can offer their apps as default options, selectable by users.”). 

2231 CEO Hearing Transcript at 3 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).
355

A report by the Netherlands Authority for Consumers and Markets (ACM) on mobile app 

stores recently observed that app providers believe they “have a strong disadvantage” when competing 

with Apple’s apps due to the fact that those services are often pre-installed on iOS devices.2232 The 

study also noted that “pre-installation of apps can create a so-called status-quo bias. Consumers are 

more likely to use the apps that are pre-installed on their smartphones.”

2233 Consumers will download 

apps that compete with pre-installed apps only when there is a noted quality difference, and even then, 

lower-quality pre-installed apps will still enjoy an advantage over third-party apps.2234 The European 

Commission’s 2019 report on competition in digital markets explained that privileging access to APIs 

can provide an advantage to those with greater access over those with more innovative products.2235

Public Knowledge concluded that Apple’s control of iOS and the App store enables it to advantage its 

own apps and services by pre-installing them on iOS devices, leading consumers to rely on the preinstalled apps rather than looking for alternatives in the App Store.2236

Mobile operating system providers develop APIs to permit apps to access a device’s features, 

such as the microphone, camera, or GPS, or other software programs and determine what information 

on the device apps can access.2237 Public APIs for iOS are made available to app developers to ensure 

apps are integrated with the device and function as intended. These public APIs also control the 

services that are opened via default when users click a link to open a webpage or an address to open a 

map application. Private APIs access functionality that is not publicly released. Apple is permitted to 

use the private APIs on iOS devices, but third-party developers are not.2238

Apple’s public APIs default to Apple’s pre-installed applications. As a result, when an iPhone 

user clicks on a link, the webpage opens in the Safari Browser, a song request opens in Apple Music, 

and clicking on an address launches Apple Maps.2239 With some recent exceptions, iPhone users are 

2232 Neth. Auth. for Consumers & Mkts. Study at 5, 15, 85–86.

2233 Id. at 84 (citing Press Release, Eur. Comm’n, Antitrust: Commission Fines Google €4.34 Billion for Illegal Practices 

Regarding Android Mobile Devices to Strengthen Dominance of Google’s Search Engine (July 18, 2018), 

https://ec.europa.eu/commission/presscorner/detail/en/ip_18_4581).

2234 Id.

2235 Eur. Comm’n Competition Report at 34.

2236 JOHN BERGMAYER, PUBLIC KNOWLEDGE, TENDING THE GARDEN: HOW TO ENSURE THAT APP STORES PUT USERS FIRST

20 (2020), https://www.publicknowledge.org/wp-content/uploads/2020/06/Tending_the_Garden.pdf. See also DIG.

COMPETITION EXPERT PANEL, PUBLIC RESPONSES TO CALL FOR EVIDENCE FROM ORGANISATIONS, RESPONSE OF BRITISH 

BROAD. CORP. 44 (2018),

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785549/DCEP_Public_re

sponses_to_call_for_evidence_from_organisations.pdf (“Apple’s control of devices and operating system allows it to preload and favour its own services i.e. Apple Podcasts.”). 

2237 Competition & Mkts. Auth. Report at 42; Neth. Auth. for Consumers & Mkts. Study at 59.

2238 See Thomas Claburn, Apple Frees a Few Private API, Makes them Public, THE REGISTER (June 13, 2017), 

https://www.theregister.com/2017/06/13/apple_inches_toward_openness/. 

2239 Neth. Auth. for Consumers & Mkts. Study at 59–60.
356

unable to change this default setting;2240 however they are able to send app-specific links from inside 

many popular apps. For example, a person can share a link to a song in a third-party music streaming 

app such that it would open that song in the same app if it is already downloaded on the recipient’s 

smartphone. One app developer has argued, however, that Apple uses its control over iOS to give its 

own apps and services advantages that are not available to competitors. For example, the developer 

explained that for years it was barred from integrating with Siri, Apple’s intelligent virtual assistant 

that is built into Apple devices. Although Siri can now integrate with the app, users must explicitly 

request Siri launch the third-party app, otherwise it will default to launch Apple’s service.2241

Like setting advantageous defaults and pre-installing its own apps, Apple is also able to 

preference its own services by reserving access to APIs and certain device functionalities for itself. 

ACM and technology reporters have both noted that “private APIs have the potential to give Apple 

apps a competitive advantage,” and that “Apple has for a long time favored its own services through 

APIs.”

2242 For example, from the release of iOS 4.3 until iOS 8, “third-party developers had to rely on 

the UIWebView API to render web pages in iOS apps, while Apple gave its own apps access to a 

private, faster API,” and as a result, “Google’s mobile version of Chrome for iOS could not compete 

with Apple’s mobile version of Safari in terms of speed.”

2243

Apple’s mobile payments service, Apple Pay, is an example of an in-house app that enjoys an 

advantage due to its ability to access certain functionalities, such as near-field communication (NFC), 

on the iPhone that are off limits to third-party apps. According to Apple, “NFC is an industry-standard, 

contactless technology” that enables communications between the mobile device and payment 

terminal.2244 Apple Pay uses the iPhone’s NFC chip to allows users to make contactless payments at 

retail outlets that use the technology.2245 However, Apple blocks access for third-party apps. In June 

2020 the European Commission opened a formal antitrust investigation into Apple’s conduct in the 

mobile payments market, including “Apple’s limitation of access to the Near Field Communication 

(NFC) functionality (‘tap and go’) on iPhones for payments in stores.”

2246 In response to questions 

2240 See Press Release, Apple, Apple Reveals New Developer Technologies to Foster the Next Generation of Apps (June 22, 

2020), https://www.apple.com/newsroom/2020/06/apple-reveals-new-developer-technologies-to-foster-the-next-generationof-apps/ (“Email and browser app developers can offer their apps as default options, selectable by users.”). 

2241 Submission from Source 711, to H. Comm. on the Judiciary, Source 711-00000080 at 23 (Oct. 15, 2019) (on file with 

Comm.). 

2242 Thomas Claburn, Apple Frees a Few Private API, Makes them Public, THE REGISTER (June 13, 2017), 

https://www.theregister.com/2017/06/13/apple_inches_toward_openness/. See also Neth. Auth. for Consumers & Mkts. 

Study at 82.

2243 Thomas Claburn, Apple Frees a Few Private API, Makes them Public, THE REGISTER (June 13, 2017), 

https://www.theregister.com/2017/06/13/apple_inches_toward_openness/. 

2244 Apple Pay Security and Privacy Overview, APPLE, https://support.apple.com/en-us/HT203027 (last visited Oct. 4, 

2020).

2245 Id.

2246 Press Release, Eur. Comm’n, Antitrust: Commission Opens Investigation into Apple Practices Regarding Apple Pay 

(June 16, 2020) https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1075. 
357

from Subcommittee Chairman Cicilline and Representative Kelly Armstrong (D-ND) about Apple’s 

treatment of third-party mobile payment apps and access to the iPhone’s NFC chip, Apple said that it 

limits access to the NFC chip to protect the security of the iPhone and has detailed the differences 

between Apple’s treatment of Apple Pay and third-party mobile payment apps.2247

The advantage Apple provides Apple Pay may be heightened during the COVID-19 pandemic. 

Due to the novel coronavirus, consumers have accelerated their adoption of contactless payments, with 

more than half of global consumers preferring contactless payments over cash or traditional credit 

cards.2248 In April 2020, MasterCard reported a 40% rise in use of contactless payments, with the trend 

expected to continue after the pandemic. MasterCard CEO Ajay Banga explained the trend was driven 

by shoppers “looking for a quick way to get in and out of stores without exchanging cash, touching 

terminals, or anything else.”

2249Apple itself has capitalized on the perception that contactless is the 

safest way to make transactions, marketing Apple Pay as “a safer way to pay that helps you avoid 

touching buttons or exchanging cash.”

2250

Like Apple Pay, Safari is another pre-installed app that enjoys advantages over rivals. Safari is 

Apple’s default browser on iOS and Mac devices. When someone using an Apple device clicks on a 

website link, the webpage opens in the Safari browser.2251 Until the September 2020 release of iOS 14, 

Apple did not allow consumers to select third-party web browser as a default.2252 This was unique to 

iOS. Other mobile device operating systems allow the user to set a default browser across all 

applications.2253

2247 CEO Hearing Transcript at 1, 3 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).

2248 See DYNATA, GLOBAL CONSUMER TRENDS: COVID-19 EDITION, THE NEW NORMAL, A BREAKTHROUGH FOR 

CONTACTLESS PAYMENTS 2 (2020), http://info.dynata.com/rs/105-ZDT-791/images/Dynata-Global-Consumer-TrendsCOVID-19-The-New-Normal-Breakthrough-for-Contactless-Payments.pdf. See also Press Release, Eur. Comm’n, 

Antitrust: Commission Opens Investigation into Apple Practices Regarding Apple Pay (June 16, 2020) 

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1075 (“Executive Vice-President Margrethe Vestager, in 

charge of competition policy, said: ’Mobile payment solutions are rapidly gaining acceptance among users of mobile 

devices, facilitating payments both online and in physical stores. This growth is accelerated by the coronavirus crisis, with 

increasing online payments and contactless payments in stores.’”). 

2249 Kate Rooney, Contactless payments jump 40% as shoppers fear germs on cash and credit cards, Mastercard says, 

CNBC (Apr. 29, 2020) https://www.cnbc.com/2020/04/29/mastercard-sees-40percent-jump-in-contactless-payments-dueto-coronavirus.html. 

2250 Apple Pay, APPLE, https://www.apple.com/apple-pay/ (last visited Sept. 26, 2020). 

2251 Neth. Auth. for Consumers & Mkts. Study at 59–60.

2252 See Mark Gurman, Apple’s Default iPhone Apps Give It Growing Edge Over App Store Rivals, BLOOMBERG (Oct. 2, 

2019), https://www.bloomberg.com/news/articles/2019-10-02/iphone-ios-users-can-t-change-default-apps-safari-mailmusic; Press Release, Apple, Apple reveals new developer technologies to foster the next generation of apps (June 22, 

2020), https://www.apple.com/newsroom/2020/06/apple-reveals-new-developer-technologies-to-foster-the-next-generationof-apps/ (“Email and browser app developers can offer their apps as default options, selectable by users.”). 

2253 See e.g., Google Chrome Help, GOOGLE

https://support.google.com/chrome/answer/95417?co=GENIE.Platform%3DAndroid&hl=en-GB (last visited Sept. 26, 

2020); Support, MOZILLA, https://support.mozilla.org/en-US/kb/make-firefox-default-browser-android (last visited Sept. 
358

Apple’s policies require alternative browsers apps for iOS (iPhone) to use Apple’s WebKit 

browser engine. As a result, all competing web browser companies must rebuild their product to make 

it available for iOS users.2254 Additionally, browser engines are used in other applications that link to 

web content, such as email applications.2255 Market participants explained to Subcommittee staff that 

these guidelines cost significant internal resources and create a hurdle for market entry on iOS. These 

requirements also make alternative browsers on iOS less technically distinct from Safari limiting 

product differentiation.2256 Further, market participants expressed concern that because Apple 

mandates the use of WebKit, as opposed to allowing developers an option, that WebKit has become 

slower to innovate and adopt standards.2257

At the Subcommittee’s second hearing, Chairman Cicilline asked Apple about its policies 

related to web browser engines. Apple responded: “By requiring use of WebKit, Apple can provide 

security updates to all our users quickly and accurately, no matter which browser they decide to 

download from the App Store.”

2258 While market participants agree that Apple’s WebKit mandates 

would allow for easier updates to browser apps, there is disagreement about whether WebKit is 

measurably less secure than other browser engines.2259

The ACM has noted app providers have limited access to some APIs “that are essential for the 

functioning of apps. In certain cases, these functionalities are, however, used by Apple for their own 

apps,”

2260 which may limit competitive alternatives to Apple’s products and services.2261

26, 2020); Support, MICROSOFT, https://support.microsoft.com/en-us/help/4028606/windows-10-change-your-defaultbrowser (last visited Sept. 26, 2020).

2254 App Store Review Guidelines 2.5.6, APPLE: DEVELOPER, https://developer.apple.com/appstore/review/guidelines/#software-requirements (last visited Sept. 26, 2020) (“Apps that browse the web must use the 

appropriate WebKit framework and WebKit Javascript.”).

2255 See Michael Krasnov, Browser Engine Diversity or Internet of Google, EVERDAY.CODES (Dec. 15 2019),

https://everyday.codes/google/browser-engine-diversity-or-internet-of-google/.

2256 Interview with Source 269 (July 23, 2019) (“Apple prohibits competitors from deploying their own web browsing 

engines on its mobile operating system. Web browsing engines provide the distinctive features of a web browser. Apple 

forces competitors to base their web browsers on a reduced version of its own web browser engine, ‘WebKit’.”). 

2257 See Owen Williams, Apple is Trying to Kill Web Technology, ONEZERO (Nov. 7, 2019),

https://onezero.medium.com/apple-is-trying-to-kill-web-technology-a274237c174d. 

2258 Innovation and Entrepreneurship Hearing at 2 (response to Questions for the Record of Kyle Andeer, Vice Pres., Corp. 

Law, Apple Inc.). 

2259 See Andy Greenberg, How Safari and iMessage Have Made iPhones Less Secure, WIRED (Sept. 9, 2019), 

https://www.wired.com/story/ios-security-imessage-safari/. 

2260 Neth. Auth. for Consumers & Mkts. Study at 85–86.

2261 Id. at 103.
359

In January 2020, Kirsten Daru, Chief Privacy Office and General Counsel of Tile offered 

testimony to Subcommittee about this dynamic.2262 Tile is a company that makes hardware and 

software that helps people find lost items. 2263 Tile testified that for years it successfully collaborated 

with Apple. However, in 2019 reports surfaced that Apple planned a launch a hardware product to 

compete with Tile.2264 In her testimony, Ms. Daru said that Apple’s 2019 release of iOS 13 harmed 

Tile’s service and user experience while simultaneously introducing a new pre-installed Apple finder 

app called Find My.2265 Changes to iOS 13 made it more difficult for Tile’s customers to set up the 

service, requiring several confusing steps to grant Tile permission to track the phone’s location.2266

Meanwhile, Apple’s Find My app was pre-installed on iOS devices and activated by default during 

iOS installation. Users are unable to opt out of Find My’s location tracking “unless they go deep into 

Apple’s labyrinthine menu of settings.”

2267 Tile’s response to the Subcommittee’s Questions for the 

Record included detailed location permission flow comparisons between Tile and Find My.2268 Tile 

explained that as a result of Apple’s changes to iOS 13 it saw significant decreases in users and a steep 

drop off in users enabling the proper settings on iOS devices.2269

A group of app developers wrote to Apple CEO Tim Cook in 2019 arguing that Apple’s new 

location notification permission polices will hurt their businesses and accused Apple of acting 

anticompetitively because it was treating its own services differently:

The developers conclude their email by asserting that Apple’s own apps don’t have to 

jump through similar hoops to get access to user location. An Apple app called Find My 

for tracking the location of other iPhone users, for example, bypasses the locating 

tracking requests that apps from outside developers must go through, the email reads. 

2262 See Competitors Hearing (statement of Kirsten Daru, Chief Privacy Officer & Gen. Counsel, Tile, Inc.).

2263 Id. at 1.

2264 See Guilherme Rambo, Apple revamping Find My Friends & Find My iPhone in unified app, developing Tile-like 

personal item tracking, 9TO5MAC (Apr. 17, 2019), https://9to5mac.com/2019/04/17/find-my-iphone-revamp/.

2265 Competitors Hearing at 2 (statement of Kirsten Daru, Chief Privacy Officer & Gen. Counsel, Tile, Inc.).

2266 Id.

2267 Reed Albergotti, Apple says recent changes to operating system improve user privacy, but some lawmakers see them as 

an effort to edge out its rivals, WASH. POST (Nov. 26, 2019), 

https://www.washingtonpost.com/technology/2019/11/26/apple-emphasizes-user-privacy-lawmakers-see-it-an-effort-edgeout-its-rivals/; see also Competitors Hearing at 3 (statement of Kirsten Daru, Chief Privacy Officer & Gen. Counsel, Tile, 

Inc.).

2268 Competitors Hearing at 4–14 (response to Questions for the Record of Kirsten Daru, Chief Privacy Officer & Gen. 

Counsel, Tile, Inc.).

2269 Competitors Hearing at 6 (response to Questions for the Record of Kirsten Daru, Chief Privacy Officer & Gen. 

Counsel, Tile, Inc.); Interview with Kirsten Daru, Vice President and General Counsel, Tile Inc. (July 10, 2020).
360

Instead, Find My gains location access through a process that occurs as users install the 

new operating system.2270

The app developers—including Tile, Arity, Life360, Happn, Zenly, Zendrive, and Twenty—explained 

that this gives Apple products that compete against their apps an advantage. “Apple says Find My and 

other apps are built into iOS and that it doesn’t see a need to make location-tracking requests from 

users for the apps after they install the operating system.”

2271 Apple also differentiates Find My by 

pointing out that “‘Find My’ stores user location data locally on the user’s iPhone, and Apple only 

transmits the location up on the user’s request.”

2272

In response to the Subcommittee’s questions at its second hearing in July 2019, Apple 

responded and explained that the iOS 13 changes give users more control over background location 

tracking by apps. Apple also explained that turning on location tracking to Apple’s Find My service 

was “essential” for users, and that the disparate treatment between Find My and Tile was due to the 

fact that data from Find My remains on the device, while Tile stores data externally.2273 Additionally, 

during Apple’s June 2020 World Wide Developers Conference, Apple announced that the Find My 

app would work with third-party finder hardware like Tile’s.2274 However, Apple’s service would 

require companies like Tile to abandon their apps and the ability to differentiate their service from 

Apple’s and other competitors.2275 Apple’s solution would continue to put Tile and other apps and

hardware developers offering finder services at a competitive disadvantage.2276

2270 Aaron Tilley, Developers Call Apple Privacy Changes Anti-Competitive, THE INFO. (Aug. 16, 2019), 

https://www.theinformation.com/articles/developers-call-apple-privacy-changes-anti-competitive.

2271 Id.

2272 Letter from Kyle Andeer, Vice Pres., Corp. Law & Chief Compliance Officer, Apple Inc., to Hon. Jerrold Nadler, 

Chairman, H. Comm. on the Judiciary, Hon. Doug Collins, Ranking Member, H. Comm on the Judiciary, Hon. David N. 

Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, and Hon. F. 

James Sensenbrenner, Ranking Member, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the 

Judiciary, 3 (Feb. 17, 2020), https://docs.house.gov/meetings/JU/JU05/20200117/110386/HHRG-116-JU05-20200117-

SD004.pdf. 

2273 See id. at 2.

2274 See Ben Lovejoy, Comment: This week’s keynote quietly tackled five of Apple’s antitrust issues, 9TO5MAC (Jun. 24, 

2020), https://9to5mac.com/2020/06/24/apples-antitrust-issues-2/. 

2275 See Interview with Kirsten Daru, Vice President and General Counsel, Tile Inc. (July 10, 2020); APPLE, FIND MY 

NETWORK ACCESSORY SPECIFICATION, DEVELOPER PREVIEW: RELEASE R1, 14, https://images.frandroid.com/wpcontent/uploads/2020/06/Find_My_network_accessory_protocol_specification.pdf (prohibiting “an accessory that supports 

the Find My network accessory protocol” from “operat[ing] simultaneously on the Find My network and another finder 

network....”). 

2276 Interview with Kirsten Daru, Vice Pres. and Gen. Counsel, Tile Inc. (Jun. 26, 2020). See Reed Albergotti, Amid 

antitrust scrutiny, Apple makes quiet power moves over developers, WASH. POST (July 24, 2020), 

https://www.washingtonpost.com/technology/2020/07/24/apple-find-my-competition/. 
361

iii. App Search Rankings

In response to extensive reporting on the subject, Subcommittee staff has also examined the 

competitive effects of Apple’s search rankings in its App Store. In 2019, the Wall Street Journal and 

The New York Times both conducted extensive investigations and reported that Apple appeared to be 

favoring its apps in the App Store search results.2277 The Wall Street Journal explained that “Apple’s 

mobile apps routinely appear first in search results ahead of competitors in its App Store, a powerful 

advantage that skirts some of the company’s rules on search rankings.”

2278 The New York Times

reported that six years of analysis of App Store search rankings found Apple-owned apps ranked first 

for at least 700 common search terms. “Some searches produced as many as 14 Apple apps before 

showing results from rivals,” although app developers could pay Apple to place ads at the top of the 

search results.2279 Searches for the app titles of competing apps even resulted in Apple’s apps ranked 

first.2280

Apple’s apps “ranked first in more than 60% of basic searches, such as for ‘maps’” and “Apple 

apps that generate revenue through subscriptions or sales, like Music or Books, showed up first in 95% 

of searches related to those apps.”

2281 The Wall Street Journal noted that growing revenue from its 

apps is core to Apple’s strategy of offsetting sluggish hardware sales by increasing revenue from its 

Services business.2282

Rival app developers slipped down the search rankings as Apple introduced new services in 

their product categories. For example, Spotify had long been the top search result for the query 

“music,” but Apple Music quickly became the top search result shortly after it joined the App Store in 

June 2016. By the end of 2018, eight of Apple’s apps appeared in the first eight search results for 

“music,” and Spotify had fallen to the 23rd result. Similarly, Audiobooks.com was the top ranked 

result for “audiobooks” for nearly two years but was overtaken by Apple Books shortly after Apple 

began marketing for Books. Audiobooks explained to the Wall Street Journal that losing the top search 

ranking to Apple “triggered a 25% decline in Audiobooks.com’s daily app downloads.”

2283

2277 See Tripp Mickle, Apple Dominates App Store Search Results, Thwarting Competitors, WALL ST. J (July 23, 2019), 

https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221; Jack Nicas & 

Keith Collins, How Apple’s Apps Topped Rivals in the App Store it Controls, N.Y. TIMES (Sept. 9, 2019), 

https://www.nytimes.com/interactive/2019/09/09/technology/apple-app-store-competition.html.

2278 Tripp Mickle, Apple Dominates App Store Search Results, Thwarting Competitors, WALL ST. J (July 23, 2019), 

https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221. 

2279 Jack Nicas & Keith Collins, How Apple’s Apps Topped Rivals in the App Store it Controls, N.Y. TIMES (Sept. 9, 2019), 

https://www.nytimes.com/interactive/2019/09/09/technology/apple-app-store-competition.html.

2280 Tripp Mickle, Apple Dominates App Store Search Results, Thwarting Competitors, WALL ST. J (July 23, 2019), 

https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221.

2281 Id.

2282 Id.

2283 Id.
362

The reporting on App Store search also revealed that Apple may also advantage its apps by 

holding them to a different standard when they appear in the App Store search rankings. Apple told 

The Wall Street Journal “it uses 42 factors to determine where apps rank,” and that the four most 

important factors are “downloads, ratings, relevance, and ‘user behavior,’” with user behavior the most 

important factor because it measures how often users select and download an app.2284 Approximately 

forty of Apple’s apps come preinstalled on iPhones. These apps do not have reviews and consumers 

cannot rate them. Mr. Cook explained at the Subcommittee’s hearing that Apple’s “apps that are 

integrated into the iPhone are not reviewable by users on the App Store.”

2285 Apple has also said that 

its search algorithm works the same for all apps, including its own.2286

Despite the fact that Apple’s pre-installed apps do not have ratings or reviews—factors that 

Apple says are most influential in determining app ranking—many of Apple’s pre-installed apps “still 

tend to be ranked first, even when users search for exact titles of other apps.”

2287 For example, Apple 

Books has no reviews or rankings and appears first in a search for “books,” while competing apps have 

tens-of-thousands of customer reviews and ratings of 4.8 or 4.9 stars on Apple’s five-star rating 

system.2288 A search by Subcommittee staff of terms “music,” “news,” “TV,” and “podcast” returned 

Apple Music, News, TV, and Podcasts as top ranked search results although those apps do not have 

any reviews or ranking.2289

Despite the lack of reviews or rankings, Apple told the Wall Street Journal that “the No. 1 

position for Books in a ‘books’ search is reasonable, since it is an exact name match.”

2290 Philip 

Schiller, Apple’s Senior Vice President, Worldwide Marketing who oversees the App Store and Eddy 

Cue, Apple’s Senior Vice President Internet and Software Services said “there was nothing 

underhanded about the algorithm the company had built to display search results in the store,”

2291 and 

2284 Id.

2285 CEO Hearing Transcript at 2 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).

2286 See Tripp Mickle, Apple Dominates App Store Search Results, Thwarting Competitors, WALL ST. J (July 23, 2019), 

https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221. 

2287 Id.

2288 Search Results: “books,” IOS APP STORE (Sept. 17, 2020).

2289 Search Results: “music,” “news,” “TV,” “podcast,” IOS APP STORE (Sept. 17, 2020). 

2290 Tripp Mickle, Apple Dominates App Store Search Results, Thwarting Competitors, WALL ST. J (July 23, 2019), 

https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221.

2291 Jack Nicas & Keith Collins, How Apple’s Apps Topped Rivals in the App Store it Controls, N.Y. TIMES (Sept. 9, 2019), 

https://www.nytimes.com/interactive/2019/09/09/technology/apple-app-store-competition.html.
363

that Apple’s apps tend to rank highly because they are popular and their generic names like Books and 

Music closely match common search terms.2292

It appears that Apple does not apply the same rule to third-party apps. Documents reviewed by 

Subcommittee staff show that Apple previously punished non-Apple apps that attempted to “cheat” the 

app store rankings. Apple determined that at least one third-party app had achieved its high search 

ranking because its name was a generic name that was also a common search term. Apple’s employees 

determined it was cheating to give an app the name of common search term. 

In February 2018, Apple’s App Store search team noted that an app named “Photo Editor—

Stylo” was the top ranked result when users searched the App Store for “photo editor.”

2293 In an email

thread with Philip Schiller, Apple’s Senior Vice President, Worldwide Marketing, an Apple employee 

wrote that “[s]ince the app name matched a broad query term like ‘photo editor’ the developer was able 

to game the query with a direct name match.”

2294 The Apple employee explained that “[t]he app has 

been added to the Search Penalty Box for rank demotion,” and the action was labeled as complete.2295

Additional action was slated to disable the initial boost that new apps are given in the app store if the 

app name is an “exact match to broad queries.”

2296 Here, Apple punished an app for the same conduct 

it said justified Apple’s position atop the App Store rankings. 

Apple’s position as the provider of iOS enabled it to designate the App Store as the sole means 

for app developers to distribute software to iPhone users. Apple’s public statements, including 

testimony by Mr. Cook that Apple’s apps “go through the same rules” as more than 1.7 million thirdparty apps appear to be inconsistent with Apple’s actual practices.2297 In this case, Apple leveraged its 

control of iOS and the App Store to give its own apps preferential treatment, and applied a different set 

of rules than third-party apps, punishing them for the very conduct Apple engaged in. Subcommittee 

staff did not have access to additional evidence from Apple to determine how widespread this practice 

is within the company. 

iv. Competitively Sensitive Information

In addition to investigating allegations Apple engages in self-preferencing in the App Store, the 

Committee sought information regarding whether Apple exploits third-party developers that rely on 

2292 Id.; see also Apple, Apple: Distinctive Products with a Seamless, Integrated User Experience 23 (July 13, 2020) (on file 

with Comm.) (“Because many of Apple’s apps are named after generic topics (such as Music, Maps, and Podcasts), those 

apps benefit from functional queries that have essentially become navigational.”). 

2293 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-008082–86 (Feb. 9, 2018) (on file with Comm.).

2294 Id.

2295 Id.

2296 Id.

2297 CEO Hearing Transcript at 176 (statement of Tim Cook, CEO, Apple Inc.).
364

distribution in the App Store. Developers have alleged that Apple abuses its position as the provider of 

iOS and operator of the App Store to collect competitively sensitive information about popular apps 

and then build competing apps, or integrate the popular app’s functionality into iOS.2298 The practice is 

known as “Sherlocking.” The antitrust laws do not protect app developers from competition, and 

platforms should continue to innovate and improve their products and services. However, Sherlocking 

can be anticompetitive in some instances.2299

Some app developers have complained that Apple leverages its control of iOS and the App 

Store to glean business intelligence that enables it to better compete against third-party apps.2300 For 

example, after a stress relief app called Breathe was Sherlocked in 2016, the app’s developers said that 

Apple used third-party developers “as an R&D arm.”

2301 The Washington Post reported on the 

phenomenon, explaining: 

Developers have come to accept that, without warning, Apple can make their work 

obsolete by announcing a new app or feature that uses or incorporates their ideas. Some 

apps have simply buckled under the pressure, in some cases shutting down. They 

generally don’t sue Apple because of the difficulty and expense in fighting the tech 

giant—and the consequences they might face from being dependent on the platform.2302

At the Subcommittee’s fifth hearing, Representative Joe Neguse (D-CO) asked Ms. Daru of 

Tile about how Apple used competitively sensitive information it collects as owner of the iOS 

ecosystem to compete against third-party apps. She explained that as operating system provider and 

App Store operator, Apple knows who Tile’s customers are, the types of apps those customers 

preferred, and the demographics of iOS users that look at Tile’s app or search for similar apps—

information that would give Apple a competitive advantage against Tile.2303 Ms. Daru testified that 

2298 See e.g., Brian Heater, The makers of Duet Display and Luna on life after Apple’s Sidecar, TECHCRUNCH (Jun. 7, 

2019), https://techcrunch.com/2019/06/07/the-makers-of-duet-display-and-luna-on-life-after-apples-sidecar/.

2299 See JOHN BERGMAYER, PUBLIC KNOWLEDGE, TENDING THE GARDEN: HOW TO ENSURE THAT APP STORES PUT USERS

FIRST 21, 58 (2020), https://www.publicknowledge.org/wp-content/uploads/2020/06/Tending_the_Garden.pdf.

2300 See e.g., Reed Albergotti, How Apple uses its App Store to copy the best ideas, WASH POST (Sept. 5, 2019), 

https://www.washingtonpost.com/technology/2019/09/05/how-apple-uses-its-app-store-copy-best-ideas/. 

William Gallagher, Developers talk about being ‘Sherlocked’ as Apple uses them ‘for market research’, APPLE INSIDER

(Jun. 6, 2019), https://appleinsider.com/articles/19/06/06/developers-talk-about-being-sherlocked-as-apple-uses-them-formarket-research; John Patrick Pullen, Why These People Are Upset About Apple’s Latest Updates, TIME (Jun. 21, 2016), 

https://time.com/4372515/apple-app-developers-wwdc-sherlock-sherlocked/; Adi Robertson, Apple restores mail app after 

developer tries to rally ‘Sherlocked’ victims, THE VERGE (Feb. 11, 2020), 

https://www.theverge.com/2020/2/11/21133023/apple-bluemail-blix-restored-mac-app-store-sherlocking-patent-lawsuit.

2301 John Patrick Pullen, Why These People Are Upset About Apple’s Latest Updates, TIME (Jun. 21, 2016), 

https://time.com/4372515/apple-app-developers-wwdc-sherlock-sherlocked/. 

2302 Reed Albergotti, How Apple uses its App Store to copy the best ideas, WASH POST. (Sept. 5, 2019), 

https://www.washingtonpost.com/technology/2019/09/05/how-apple-uses-its-app-store-copy-best-ideas/.

2303 Competitors Hearing Transcript at 53 (statement of Kirsten Daru, Chief Privacy Officer & Gen. Counsel, Tile, Inc.).
365

Apple had harmed Tile’s service and user experience, while simultaneously introducing a rival app and 

preparing to launch a rival hardware product.2304 Blix, developer of email management app BlueMail, 

has sued Apple in federal court claimed Apple has engaged in Sherlocking and infringed the patents 

underlying BlueMail: 

Apple frequently takes other companies’ innovative features, adds those ideas to 

Apple’s own software products without permission, and then either ejects the original 

third-party application from the App Store (as it did with Blix’s software) or causes the 

third-party software developer to close its doors entirely.2305

In response to the requests for information, Match Group, Inc. told the Subcommittee that 

Apple has a history of “closely monitoring the success of apps in the App Store, only to copy the most 

successful of them and incorporate them in new iPhones” as a pre-installed app.2306 Phillip Shoemaker, 

former director of app review for the App Store, similarly told Subcommittee staff that during his time 

at Apple an app developer proposed an innovative way to wirelessly sync the iPhone and Mac.2307 The 

app did not violate any of Apple’s Guidelines, but it was rejected from the App Store nonetheless.2308

Apple then appropriated the rejected app’s feature for its own offerings.2309

During the Subcommittee’s sixth hearing, Rep. Neguse asked Mr. Cook about Tile’s testimony. 

In particular, he asked if Apple has access to the confidential information of app developers, and 

whether Apple’s Developer Agreement explicitly authorizes Apple to use developers’ information to 

build apps to compete against them.2310 Mr. Cook’s answer was non-responsive regarding allegations 

of Sherlocking. Instead, he said that Apple does not violate other companies’ intellectual property 

rights.2311

2304 See Competitors Hearing at 4 (statement of Kirsten Daru, Chief Privacy Officer & General Counsel, Tile, Inc.); 

Guilherme Rambo, Apple revamping Find My Friends & Find My iPhone in unified app, developing Tile-like personal item 

tracking, 9TO5MAC (Apr. 17, 2019), https://9to5mac.com/2019/04/17/find-my-iphone-revamp/. 

2305 Amended Complaint at 4, Dkt No. 13, Blix Inc. v. Apple Inc., No. 1:19-cv-1869-LPS (D. Del Dec. 20, 2019). 

2306 Submission from Source 736, to H. Comm. on the Judiciary, Source 736_00000243 (Oct. 23, 2019) (on file with 

Comm.). 

2307 Interview with Phillip Shoemaker, former Senior Dir., App Store Review, Apple Inc. (Sept. 21, 2020).

2308 Id.

2309 Id.

2310 CEO Hearing Transcript at 177 (question of Rep. Neguse (D-CO), Vice Chairman, Subcomm. on Antitrust, 

Commercial and Admin. Law).

2311 Id. at 177–78 (statement of Tim Cook, CEO, Apple Inc.) (“[Apple] run[s] the App Store to help developers, not hurt 

them. We respect innovation. It’s what our company was built on. We would never steal somebody’s IP.”).
366

In contrast, Apple co-founder and former CEO Steve Jobs once noted that “[w]e have always 

been shameless about stealing great ideas.”

2312 The Apple Developer Agreement, which Apple requires 

every app developer to agree to, appears to warns developers that in exchange for access to the App 

Store, Apple is free to build apps that “perform the same or similar functions as, or otherwise compete 

with” apps in the App Store.2313 Additionally, “Apple will be free to use any information, suggestions 

or recommendations you provide to Apple pursuant to this Agreement for any purpose, subject to any 

applicable patents or copyrights.”

2314

Mr. Cook’s statement that Apple’s apps play by the same rules as other apps appears contrary 

to Apple’s stated policies. While the Apple Developer Agreement provides Apple the right to replicate 

third-party apps, Apple’s Guidelines direct developers not to “copy another developer’s work” and 

threaten removal of apps and expulsion from the Developer Program for those that do.2315 Further, the 

Guidelines instruct developers to “[c]ome up with your own ideas,” and admonishes them “[d]on’t 

simply copy the latest popular app on the App Store, or make some minor changes to another app’s 

name or UI and pass it off as your own.”

2316 Lastly, Apple differentiates between—rather than 

conflates or confuses—copycat apps and intellectual property infringement, which are both prohibited 

in the App Store.2317

v. Excluding Rival Apps

During the Subcommittee’s sixth hearing, Representatives Val Demings (D-FL) and Lucy 

McBath (D-GA) asked questions regarding Apple’s conduct in 2018 and 2019 removing parental 

control apps from the App Store. In 2018, Apple announced its Screen Time app, a new feature 

bundled with iOS 12 that helped iOS users limit the time they and their children spent on the iPhone. 

Thereafter, Apple began to purge many of the leading rival parental control apps from the App Store. 

Apple explained the apps were removed because they used a technology called Mobile Device 

Management (MDM). The MDM technology allowed parents to remotely take over their children’s 

2312 Reed Albergotti, How Apple uses its App Store to copy the best ideas, WASH POST. (Sept. 5, 2019), 

https://www.washingtonpost.com/technology/2019/09/05/how-apple-uses-its-app-store-copy-best-ideas/.

2313 Apple Developer Agreement, Clause 11: Apple Independent Development, APPLE,

https://developer.apple.com/terms/apple-developer-agreement/Apple-Developer-Agreement-English.pdf. 

2314 Id.

2315 App Store Review Guidelines: Introduction, APPLE: DEVELOPER, https://developer.apple.com/appstore/review/guidelines/ (last visited Sept. 27, 2020).

2316 App Store Review Guidelines 4.1: Copycats, APPLE: DEVELOPER, https://developer.apple.com/appstore/review/guidelines/#copycats (last visited Sept. 27, 2020).

2317 App Store Review Guidelines 4.1: Copycats, 5.2: Intellectual Property, APPLE: DEVELOPER, 

https://developer.apple.com/app-store/review/guidelines/ (last visited Sept. 27, 2020).
367

phones and block content. Apple noted that MDM could allow the app developer to access sensitive 

content on the device.2318

According to The New York Times, the parental control apps using MDM had been offered in 

the App Store for years, and hundreds of updates to those apps had been approved by Apple.2319 As a 

result, many apps were forced to shut down,2320 although some were given a reprieve.2321 Two parental 

control apps filed a complaint with the European Commission, alleging Apple’s App Store policies 

were anticompetitive. The complaint alleged that as Apple purged competitors it introduced Screen 

Time, pre-installed Screen Time on iOS 12 and activated it by default, and gave Screen Time access to 

iOS functionalities it denied to competing third-party apps.2322

Subcommittee staff reviewed emails from parents who contacted Apple to complain about the 

removal of one of the purged parental control apps.2323 They said that Screen Time was a comparably 

worse option for consumers—and described it as “more complicated” and “less restrictive” than 

competitors.2324 In emails to the company reviewed by Subcommittee staff, parents complained about 

Apple’s monopoly power over app distribution on iOS and self-interest in promoting Screen Time 

2318 See Jack Nicas, Apple Cracks Down on Apps that Fight iPhone Addiction, N.Y. TIMES (Apr. 27, 2019), 

https://www.nytimes.com/2019/04/27/technology/apple-screen-time-trackers.html. See also Sarah Perez, Apple puts thirdparty screen time apps on notice, TECHCRUNCH (Dec. 5, 2018), https://techcrunch.com/2018/12/05/apple-puts-third-partyscreen-time-apps-on-notice/. 

2319 Jack Nicas, Apple Cracks Down on Apps that Fight iPhone Addiction, N.Y. TIMES (Apr. 27, 2019), 

https://www.nytimes.com/2019/04/27/technology/apple-screen-time-trackers.html. See also Production of Apple, to H. 

Comm. on the Judiciary, HJC-APPLE-012255–59 (Apr. 28, 2019); HJC-APPLE-013251–53 (Apr. 28, 2019).

2320 See e.g., Nick Kuh, Mute App: Startup to Shutdown, MEDIUM (Oct. 22, 2018), https://medium.com/@nick.kuh/muteapp-startup-to-shutdown-a1db01440c56; Georgie Powell, In the Kill Zone – Update for Space on iOS, SPACE (Nov. 6, 

2018), https://findyourphonelifebalance.com/news/2018/11/6/in-the-kill-zone-an-update-for-space-on-ios; Is Apple 

Systematically Destroying the Time Management Industry?, KIDSLOX (Nov. 8, 2018), https://kidslox.com/blog/appledestroying-screen-time-industry/; OurPact, There Used to Be an App for That, MEDIUM (May 1, 2019), 

https://medium.com/@ourpactapp/there-used-to-be-an-app-for-that-41344f61fb6f; Justin Payeur, Letter to Users About 

Apple Parental Controls, BOOMERANG (Jan. 31, 2020), https://useboomerang.com/2020/01/31/letter-users-apple-parentalcontrols/. 

2321 See Nick Kuh, Apple Called..., MEDIUM (Oct. 27, 2018), https://medium.com/@nick.kuh/apple-called-a229d86ece30; 

Georgie Powell, Space is Back! An Update on our Discussions with Apple., SPACE (Nov. 7, 2018), 

https://findyourphonelifebalance.com/news/2018/11/7/space-versus-apple. 

2322 Press Release, Qustodio & Kidslox File a Complaint Against Apple with the European Commission over Abuse of 

Dominant Position, GLOBENEWSWIRE (Apr. 30, 2019), https://www.globenewswire.com/newsrelease/2019/04/30/1812192/0/en/Qustodio-Kidslox-File-a-Complaint-Against-Apple-with-the-European-Commissionover-Abuse-of-Dominant-Position.html#. 

2323 See e.g., Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-012242–43 (May 6, 2019) (on file with 

Comm.); HJC-APPLE-012245–46 (May 6, 2019); HJC-APPLE-012247–48 (June 5, 2019); HJC-APPLE-013220 (May 14, 

2019); HJC-APPLE-013219 (May 5, 2019); HJC-APPLE-013251–53 (Apr. 28, 2019).

2324 Jack Nicas, Apple Cracks Down on Apps That Fight iPhone Addiction, N.Y. TIMES (Apr. 27, 2019), 

https://www.nytimes.com/2019/04/27/technology/apple-screen-time-trackers.html.
368

motivated Apple’s actions.2325 In response, Apple Senior Vice President Worldwide Marketing, Phil 

Schiller explained that Screen Time was “designed to help parents manage their children’s access to 

technology.”

2326 He added that Apple would “work with developers to offer many great apps on the 

App Store for these uses, using technologies that are safe and private for us and our children.”

2327

Internally, Apple’s Vice President of Marketing Communications, Tor Myhren concurred, 

responding “[t]his is quite incriminating. Is it true?” to an email with a link to The New York Times’

reporting.2328 Apple’s communications team asked CEO Tim Cook to approve a “narrative” in that 

Apple’s clear-out of Screen Time’s rivals was “not about competition, this is about protecting kids 

privacy.”

2329

Developers of the purged apps also contacted Apple, outraged that they had been removed from 

the App Store while other apps that used MDM remained.2330 One developer explained it had invested 

more than $200,000 building its parental control app, then another $30,000 to fix the problem Apple 

identified, only to be told that Apple would no longer support parental control apps in the App 

Store.2331

Although Apple claimed its conduct was motivated to protect privacy and not intended to clear 

out competitors to Screen Time, Apple reinstated many of the apps the same day that it was reported 

the Department of Justice was investigating Apple for potential antitrust violations. 2332 Apple’s 

solution to address privacy concerns was to ask the apps to promise not to sell or disclose user data to 

third parties, which could have been achieved through less restrictive means and without removing 

those apps from the App Store.2333

2325 See e.g., Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-013210–11 (Apr. 27, 2019) (on file with 

Comm.); HJC-APPLE-013215 (May 17, 2019); HJC-APPLE-013216 (May 6, 2019); HJC-APPLE-013221–23 (Apr. 29, 

2019); HJC-APPLE-013265–66 (Apr. 27, 2019).

2326 See e.g., id. at HJC-APPLE-013210–11 (Apr. 27, 2019) (on file with Comm.); HJC-APPLE-013217 (Apr. 27, 2019); 

HJC-APPLE-013221–23 (Apr. 29, 2019).

2327 Id. at HJC-APPLE-013221–23 (Apr. 29, 2019).

2328 Id. at HJC-APPLE-013175 (Apr. 27, 2019).

2329 Id. at HJC-APPLE-012223 (June 2, 2019). See also CEO Hearing Transcript at 127 (statement of Tim Cook, CEO, 

Apple Inc.) (“It was that the use of technology called MDM, mobile device management, placed kids’ data at risk, and so 

we were worried about the safety of kids.”); CEO Hearing Transcript at 139 (statement of Tim Cook, CEO, Apple Inc.) 

(“We were concerned, Congresswoman, about the privacy and security of kids.”). 

2330 See, e.g., Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-012255–59 (Apr. 28, 2019) (on file with 

Comm.); HJC-APPLE-012275–79 (Jan. 17, 2019); Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE012286–87 (Jan. 17, 2019).

2331 Id. at HJC-APPLE-012286–87 (Jan. 17, 2019) (on file with Comm.).

2332 Jack Nicas, Apple Cracks Down on Apps that Fight iPhone Addiction, N.Y. TIMES (Apr. 27, 2019), 

https://www.nytimes.com/2019/04/27/technology/apple-screen-time-trackers.html. 

2333 Id. See App Store Review Guidelines 5.5: Mobile Device Management, APPLE, https://developer.apple.com/appstore/review/guidelines/#mobile-device-management (last visited Sept. 27, 2020). 
369

Developers of parental control apps asked Apple to “release a public API granting developers 

access to the same functionalities that Apple’s native ‘Screen Time’ uses.”

2334 Eventually, Apple did 

grant some apps access to APIs,2335 but only after rival app developers were accused of being a risk to 

children’s privacy, removed from the App Store, forced to incur significant costs, only for Apple to 

change its mind.2336 As one developer noted, Apple’s new MDM privacy policies resulted in “really 

nothing much changing from the developer side as far as the technology goes.”

2337

Here, Apple’s monopoly power over app distribution enabled it to exclude rivals to the benefit 

of Screen Time. Apple could have achieved its claimed objective—protecting user privacy—through 

less restrictive means, which it ultimately did only after significant outcry from the public and a 

prolonged period of harm to rivals.2338 Apple’s conduct here is a clear example of Apple’s use of 

privacy as a sword to exclude rivals and a shield to insulate itself from charges of anticompetitive

conduct. 

Subcommittee staff learned that Apple has engaged in conduct to exclude rivals to benefit 

Apple’s services in other instances. For example, Mr. Shoemaker explained that Apple’s senior 

executives would find pretextual reasons to remove apps from the App Store, particularly when those 

apps competed with Apple services.2339

vi. Opaque Guidelines and Arbitrary Enforcement

At the Subcommittee’s sixth hearing, Representative Henry C. “Hank” Johnson, Jr. (D-GA) 

asked Mr. Cook about how the App Store Developer Guidelines are interpreted and applied to 

developers in the App Store. Subcommittee Chairman Cicilline requested similar information about the 

Guidelines as well, including how they have evolved and whether there are “unwritten rules”

developers must comply with.

The Guidelines are rules for the more than 20 million iOS app developers and more than 1.8 

million apps in the App Store must comply with to reach “hundreds of millions of people around the 

2334 SCREEN TIME API, https://screentimeapi.com/ (last visited Sept. 27, 2020). 

2335 See Joe Rossignol, Apple Reverses Course and Allows Parental Control Apps to Use MDM Technology With Stricter 

Privacy Requirements, MACRUMORS (Jun. 4, 2019), https://www.macrumors.com/2019/06/04/apple-lets-parental-apps-usemdm-strict-privacy/. 

2336 See, e.g., Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-012275-79 (Jan. 17, 2019) (on file with the 

Comm.); HJC-APPLE-013210–11 (Apr. 27, 2019). 

2337 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-012273–74 (June 4, 2019) (on file with Comm.). 

2338 See Damien Geradin & Dimitrios Katsifis, The Antitrust Case Against the Apple App Store 55–56 (Apr. 22, 2020), 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3583029.

2339 Interview with Phillip Shoemaker, former Senior Dir., App Store Review, Apple Inc. (Sept. 21, 2020).
370

world.”

2340 Apple notes that the App Store is “highly curated” and that “every app is reviewed by 

experts.”

2341 The introductory section of the Guidelines warns that Apple can create new rules at any 

time, and explains “[w]e will reject apps for any content or behavior that we believe is over the line. 

What line, you ask? Well as a Supreme Court Justice once said, ‘I’ll know it when I see it.’ And we 

think that you will also know it when you cross it.”

2342

App developers the Subcommittee spoke with expressed frustration with Apple’s curation of 

the App Store. David Heinemeier Hansson testified before the Subcommittee and explained: 

It’s complete tyranny, and the rules are often interpreted differently by different 

reviewers because they’re intentionally left vague. So we live in constant fear we may 

have violated these vague rules, and that the next update to our applications will be 

blocked by Apple. There are countless examples where developers large and small have 

been denied access to publish their applications without explanation for days or even 

weeks at a time. It’s insufferable.2343

One social media platform expressed concern that Apple has absolute discretion about whether 

to approve apps or accept updates.2344 Developers are frustrated that Apple’s interpretation and 

enforcement of the Guidelines have changed over time, despite prior precedents and the fact 

developers rely on understanding the Guidelines to operate their businesses. One developer described 

Apple’s Guidelines as “arbitrarily interpreted,” and another party that called it “opaque and 

arbitrary.”

2345 Internally, after an app was rejected from the App Store an Apple employee wrote to the 

leadership of the App Store that Apple’s decision “still isn’t obvious to people inside the company that 

work directly on the App Store.”

2346

In 2017, Gizmodo reported that iOS app maker Deucks saw its Finder for AirPods app removed 

from the App Store. The app used the iPhone’s Bluetooth signal to locate lost AirPods, helping its 

users find a missing earbud and save money by not having to purchase replacements. After the app was 

reviewed and approved, it disappeared from the App Store. Deucks told Gizmodo that Apple’s app 

2340 App Store Review Guidelines: Introduction, APPLE: DEVELOPER, https://developer.apple.com/appstore/review/guidelines/ (last visited Sept. 27, 2020).

2341 Id.

2342 Id.

2343 Competitors Hearing at 9 (statement of David Heinemeier Hansson, Chief Technology Officer & Co-Founder, 

Basecamp).

2344 Submission from Source 247, to H. Comm. on the Judiciary, Source 247_0000000002 (Oct. 14, 2019) (on file with 

Comm.). 

2345 Submission from Source 736, to H. Comm. on the Judiciary, Source 736_00000236 (Oct. 23, 2019) (on file with 

Comm.); Interview with Source 88 (May 12, 2020). 

2346 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-014848 (May 30, 2018) (on file with Comm.). 
371

review team “didn’t find anything wrong with the app itself, but rather they didn’t like the ‘concept’ of 

people finding their AirPods and hence [the app] was deemed ‘not appropriate for the App Store.’”

2347

At the time, Deucks had several other finder apps, such as Finder for Fitbit and Finder for Jawbone, 

that remained available in the App Store.2348

Developers also say that Apple uses its power over the App Store to change the Guidelines 

when convenient in ways that benefit Apple. The Guidelines—along with their interpretation and 

enforcement—all change over time in ways that always appear to benefit Apple.2349 Spotify noted, 

“[t]he reality is Apple continues to move the goal posts and change the rules to its advantage and the 

detriment of developers,” and that the company’s “selective and capricious enforcement [of its App 

Store policies] is designed to put companies like [Spotify] at an untenable competitive 

disadvantage.”

2350 ProtonMail explained it offered a free version of its app in the App Store for years, 

but then Apple abruptly changed the way it applied its IAP requirement and demanded the app add the 

ability for consumers to purchase upgraded functionality through the app—giving Apple a 30% cut 

from those subscriptions. ProtonMail noted that its app competes with an Apple service and that 

requiring it to implement IAP would increase its customer acquisition costs and make it less 

competitive, benefitting Apple.2351 Another party Subcommittee staff spoke with said when Apple 

introduces a new app, developers with rival apps know they may be targeted for a violation of a rule 

Apple has suddenly decided to interpret or enforce differently.2352 Another app developer that 

competes with an Apple services noted the Guidelines are constantly shifting, that Apple arbitrarily 

decides when an app no longer complies with the rules, and those decisions always favor Apple’s 

interests.2353

Others have noted that Apple unilaterally determines if, how, and when to apply its Guidelines, 

and that it also freely makes up “unwritten rules” when convenient.2354 For example, Apple’s 

2347 Michael Nunez, ‘Finder for AirPods’ App Mysteriously Disappears From App Store Without Much Explanation from 

Apple, GIZMODO (Jan. 9, 2017), https://gizmodo.com/finder-for-airpods-app-mysteriously-disappears-from-app1790999059.

2348 Id.

2349 See Dieter Bohn, Apple’s App Store policies are bad, but its interpretation and enforcement are worse, The VERGE

(June 17, 2020), https://www.theverge.com/2020/6/17/21293813/apple-app-store-policies-hey-30-percent-developers-thetrial-by-franz-kafka (“The key thing to know is that the text of this policy is not actually the policy. Or rather, as with any 

law, the text is only one of the things you need to understand. You also need to know how it is enforced and how the 

enforcers interpret that text.”). 

2350 Kara Swisher, Is It Finally Hammer Time for Apple and Its App Store, N.Y. TIMES (June 19, 2020, 

https://www.nytimes.com/2020/06/19/opinion/apple-app-store-hey.html?referringSource=articleShare. 

2351 Submission from ProtonMail to H. Comm. on the Judiciary, 5 (Aug. 22, 2020) (on file with Comm.).

2352 Interview with Source 88 (May 12, 2020). 

2353 Interview with Source 766 (July 2, 2020). 

2354 See JOHN BERGMAYER, PUBLIC KNOWLEDGE, TENDING THE GARDEN: HOW TO ENSURE THAT APP STORES PUT USERS 

FIRST 27 (2020), https://www.publicknowledge.org/wp-content/uploads/2020/06/Tending_the_Garden.pdf; Bapu Kotapati, 
372

distinction between “business” and “consumer” apps to justify its June 2020 decision to require 

Basecamp to redesign its app to permit in-app signups—and attempt to require implementation of 

IAP—was not a distinction that appeared in Apple’s Guidelines until an update on September 11, 

2020.2355 Apple said that it has a “set of standard terms for Amazon, and every other video-streaming 

service that met the criteria, to launch their service on Apple TV and iOS.”

2356 One of Apple’s business 

partners told Subcommittee staff that it suspects Amazon receives preferential treatment by being 

exempt from sharing revenue for some categories of transactions.2357

Subcommittee staff reviewed communications between Apple CEO Tim Cook and an 

executive from Baidu regarding whether Apple would provide Baidu with preferential treatment. At 

the Subcommittee’s sixth hearing, Rep. Johnson questioned Mr. Cook whether Apple differentiates in 

how it treats app developers. Rep. Johnson also asked if it was true that Apple assigned Baidu two 

employees to help it navigate the App Store bureaucracy, and whether other app developers receive the 

same access to Apple personnel. Mr. Cook responded, “we treat every developer the same,” and 

explained the App Store Guidelines “apply evenly to everyone.”

2358 He also said “I don’t know about 

that, sir,” in response to Mr. Johnson’s inquiry about Baidu, adding, “We do a lot of things with 

developers including looking at their beta test apps regardless of whether they’re large or small.”

2359

Communications reviewed by Subcommittee staff show that in 2014 Baidu requested, among 

other things, that Apple “set up a fast track for the review process for Baidu APPs,” along with setting 

Baidu as the default search and mapping services on “all Apple devices in China.”

2360 Mr. Cook 

solicited feedback from Apple’s senior executives regarding these and other requests from Baidu, and 

also noting, “I think we should have someone focus on them as we have done with Facebook. 

Thoughts?”

2361 Responding to the email thread with Mr. Cook’s request that Apple focus on Baidu as 

it had with Facebook, one executive explained, “Engineering proposal is for extensions to be our path 

et al., The Antitrust Case Against Apple, YALE UNIV., THURMOND ARNOLD PROJECT, DIGITAL PLATFORM THEORIES OF 

HARM PAPER SERIES: PAPER 2, 22 (2020), https://som.yale.edu/sites/default/files/DTH-Apple-new.pdf.

2355 See Ben Thompson, Xscale and ARM in the Cloud, Hey Versus Apple, Apple’s IAP Campaign, STRATECHERY (Jun. 17, 

2020) https://stratechery.com/2020/xscale-and-arm-in-the-cloud-hey-versus-apple-apples-iap-campaign/; John Gruber, The 

Flimsiness of ‘Business vs. Consumer’ as a Justification for Apple’s Rejection of Hey From the App Store for Not Using InApp Purchases, DARING FIREBALL (June 16, 2020), https://daringfireball.net/2020/06/hey_app_store_rejection_flimsiness; 

Sarah Perez & Anthony Ha, Apple revises App Store Rules to permit game streaming apps, clarify in-app purchases and 

more, TECHCRUNCH (Sept. 11, 2020), https://techcrunch.com/2020/09/11/apple-revises-app-store-rules-to-permit-gamestreaming-apps-clarify-in-app-purchases-and-more/.

2356 CEO Hearing Transcript at 8 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).

2357 Interview with Source 77 (Sept. 10, 2020). 

2358 CEO Hearing Transcript at 51 (statement of Tim Cook, CEO, Apple Inc.).

2359 Id. 

2360 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-011082 (June 3, 2015) (on file with Comm.).

2361 Id. at HJC-APPLE-011081 (Aug. 3, 2014).
373

for integration,” and responded to Baidu’s app review fast track request, “I believe we put a lot of work 

into having a fast review process for all apps.”

2362

Within two weeks, Mr. Cook responded to the Baidu executive’s requests. “I’d like Apple to 

have a deeper relationship with Baidu,” Cook wrote, noting that “some of” the Baidu executive’s 

requests were “great starts.”

2363 In response to the Baidu executive’s request for “APP Review Fast 

Track,” Mr. Cook wrote “We can set up a process where Baidu could send us a beta app for review and 

this can often speed up the process.”

2364 Mr. Cook then noted he had assigned Baidu two employees 

from App Store chief Phil Schiller’s team to “help manage through Apple.”

2365

When asked about these issues in questions submitted for the record following the hearing, Mr. 

Cook explained his view that “There is no ‘fast track’ for App Review special to Baidu,” that “any 

developer can request expedited review from App Review by submitting a formal expedite request,”

and “[t]he beta app review process I referenced in my email has been available to developers since 

2009.”

2366 Mr. Cook also noted “The key contacts referenced in my email were focused on other 

strategic opportunities outlined by Baidu. Neither individual had responsibility for App Store 

review.”

2367

In a subsequent interview with Mr. Shoemaker, the former Director of App Review for the App 

Store, Subcommittee staff asked about Apple’s treatment of app developers. Mr. Shoemaker responded 

that Apple “was not being honest” when it claims it treats every developer the same.2368 Mr. 

Shoemaker has also written that the App Store rules were often “arbitrary” and “arguable,” and that 

“Apple has struggled with using the App Store as a weapon against competitors.”

2369 He has noted that 

“Apple has complete and unprecedented power over their customers’ devices. The decisions they make 

with regards to third-party apps needs to be above reproach, and currently are not.”

2370

Mr. Shoemaker also admitted that Apple advantages its own apps over third-party apps. In an 

interview with Subcommittee staff, he described it as inaccurate to say Apple does not favor its own 

2362 Id. at HJC-APPLE-011079-80 (Aug. 3, 2014).

2363 Id. at HJC-APPLE-011083 (June 3, 2015).

2364 Id. at HJC-APPLE-011084 (June 3, 2015).

2365 Id. 

2366 CEO Hearing Transcript at 8 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).

2367 Id. at 9. 

2368 Interview with Phillip Shoemaker, former Senior Dir., App Store Review, Apple Inc. (Sept. 21, 2020).

2369 Phillip Shoemaker, A Modern Content Store, MEDIUM (Dec. 12, 2017), https://medium.com/@phillipshoemaker/amodern-content-store-3344bbe79edc. 

2370 Phillip Shoemaker, Apple v. Everybody, MEDIUM (Mar. 29, 2019), https://medium.com/@phillipshoemaker/apple-veverybody-5903039e3be.
374

apps over third-party apps.2371 He has previously noted that apps that compete against Apple’s services 

have a track record of problems getting through the App Store’s review process. For example, Apple’s 

gaming service, Apple Arcade, is a type of app that was “consistently disallowed from the store,” when 

offered by third-party developers, but Apple allowed its own app in the store “even though it violates 

existing [App Store] guidelines.”

2372 Mr. Shoemaker explained to Subcommittee staff that Apple’s new 

Guideline 3.1.2a related to streaming game services was likely written to “specifically exclude Google 

Stadia,” describing the decision as “completely arbitrary.”

2373 Similar conduct has been commented on 

by the courts,2374 as well as international antitrust authorities.2375

Apple disputes that its rules are opaque and arbitrarily applied. In response to questions from 

Rep. Johnson, Mr. Cook insisted the Guidelines are “open and transparent,” and that Apple “treat[s] 

every developer the same.”

2376 In response to questions submitted for the record from Subcommittee 

Chairman Cicilline (D-RI), Mr. Cook reiterated that “[t]he Guidelines provide transparency and act as 

a practical guide to help developers better understand the app approval process. . . . Apple attempts to 

apply the Guidelines uniformly to all developers and all types of apps.”

2377

Apple appears to have recently revised some of its App Store policies under the scrutiny of the 

Subcommittee, the Department of Justice, and global competition authorities. In June 2020, Apple

announced new policies for its App Store review that will allow app developers to appeal decisions by 

app reviewers and even challenge the Guidelines governing the App Store. Apple also announced that 

app updates with bug fixes will no longer be held up due to a violation of an App Store guideline. 

Additionally, on September 11, 2020 Apple changed its App Developer Guidelines to address some of 

the questions raised about the Guidelines arising from many recent controversies described earlier in 

this Report.

2378

2371 Interview with Phillip Shoemaker, former Senior Dir., App Store Review, Apple Inc. (Sept. 21, 2020).

2372 Phillip Shoemaker, Apple v. Everybody, MEDIUM (Mar. 29, 2019), https://medium.com/@phillipshoemaker/apple-veverybody-5903039e3be.

2373 Interview with Phillip Shoemaker, former Senior Dir., App Store Review, Apple Inc. (Sept. 21, 2020).

2374 U.S. v. Apple Inc., 952 F. Supp. 2d 638, 662 (S.D.N.Y. 2013), aff’d 791 F.3d 290 (2d Cir. 2015).

2375 See e.g., Neth. Auth. for Consumers & Mkts. Study at 5–6, 68, 79; Killian Bell, Apple Rejects Samsung Pay app for 

iOS, CULT OF MAC (Dec. 12, 2016), https://www.cultofmac.com/457916/apple-rejects-samsung-pay-app-ios/; Gil Jaeshik 

& Park Sora, Apple Rejects Samsung Pay Mini to Be Registered on Its App Store, KOREA IT NEWS (Dec. 12, 2016), 

http://english.etnews.com/20161212200003.

2376 CEO Hearing Transcript at 61 (statement of Tim Cook, CEO, Apple Inc.).

2377 CEO Hearing Transcript at 5 (response to Questions for the Record of Tim Cook, CEO, Apple Inc.).

2378 See Sarah Perez and Anthony Ha, Apple Revises App Store Rules to permit game streaming apps, clarify in-app 

purchases and more, TECHCRUNCH (Sept. 11, 2020), https://techcrunch.com/2020/09/11/apple-revises-app-store-rules-topermit-game-streaming-apps-clarify-in-app-purchases-and-more/. 
375

Siri Intelligent Voice Assistant

a. Market Power

Apple describes Siri as “an intelligent assistant that offers a faster, easier way to get things 

done on Apple devices,” helping users to “make calls, send text messages or email, schedule meetings 

and reminders, make notes, search the Internet, find local businesses, get directions, get answers, find 

facts, and more just by asking.”

2379 Apple integrated Siri into iPhone 4S at its release in October 2011. 

As of January 2018, Apple said Siri was active on over 500 million devices, making Siri one of the 

most widely used voice assistants in the world.

2380

In a submission to the Subcommittee, Apple states that it neither creates market share data for 

Siri nor tracks third-party market share data for integrated voice assistants.2381 Market research firm 

FutureSource Consulting found that as of December 2019 Siri was the leading intelligent virtual 

assistant with a 35% market share globally.2382 A third-party supplied the Subcommittee with 

additional market research that reported in the first half of 2018 Apple’s Siri was built into 42% of 

virtual assistant-enabled devices sold worldwide.2383 Apple, along with Google, Amazon, and 

Microsoft are the leading providers of intelligent virtual assistants.2384 Siri’s success reflects its 

integration into the iPhone and other Apple hardware, such as the iPad, Mac, Apple Watch, Apple TV, 

and HomePod.2385 Siri is the hub of Apple’s ecosystem of smart-home devices. Users can control 

Apple HomeKit-compatible devices using Siri on an Apple device.2386

b. Merger Activity

2379 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-000007 (Oct. 14, 2019) (on file with Comm.). 

2380 Press Release, Apple, HomePod arrives February 9, available to order this Friday (Jan. 13, 2018), 

https://www.apple.com/newsroom/2018/01/homepod-arrives-february-9-available-to-order-this-friday/.

2381 Production of Apple, to H. Comm. on the Judiciary, HJC-APPLE-000011 (Oct. 14, 2019) (on file with Comm.). 

2382 Press Release, FutureSource Consulting, Virtual Assistants to Exceed 2.5 Billion Shipments in 2023 (Dec. 18, 2019), 

https://www.futuresource-consulting.com/press-release/consumer-electronics-press/virtual-assistants-to-exceed-25-billionshipments-in-2023/. 

2383 Submission from Source 918, to H. Comm. on the Judiciary, Source 918-0001578 (Nov. 4, 2019) (on file with Comm.).

2384 See e.g., Press Release, FutureSource Consulting, Virtual Assistants to Exceed 2.5 Billion Shipments in 2023 (Dec. 18, 

2019), https://www.futuresource-consulting.com/press-release/consumer-electronics-press/virtual-assistants-to-exceed-25-

billion-shipments-in-2023/; Submission from Source 918, to H. Comm. on the Judiciary, Source 918-0001578 (Nov. 4, 

2019) (on file with Comm.).

2385 See Press Release, FutureSource Consulting, Virtual Assistants to Exceed 2.5 Billion Shipments in 2023 (Dec. 18,

2019, https://www.futuresource-consulting.com/press-release/consumer-electronics-press/virtual-assistants-to-exceed-25-

billion-shipments-in-2023/; Juli Clover, Siri: Everything You Need to Know, MAC RUMOrs (July 27, 2020), 

https://www.macrumors.com/guide/siri/.

2386 Daniel Wroclawski, How to Use Siri and Apple HomeKit to Control Your Smart Home, CONSUMER REPS. (Oct. 5, 

2019), https://www.consumerreports.org/home-automation-systems/how-to-use-siri-to-control-smart-home/. 
376

The startup Siri, Inc launched the Siri app for iOS in February 2010 based on a prototype 

developed by Adam Cheyer while working at SRI International Research Lab.2387 Apple acquired the 

company two months later.2388 Apple has followed up on its acquisition of Siri with a series of 

additional acquisitions to strengthen Siri’s underlying technology and natural language processing. For 

example, in 2019, Apple acquired Laserlike, technology to help Siri improve at delivering personalized 

results for users.2389 In 2020, Apple acquired Inductiv, an AI technology for correcting data flaws, 

Xnor.ai which specializes in low-power, edge-based artificial-intelligence tools needed for smart home 

devices, and Voysis to increase Siri’s speech recognition accuracy.2390

c. Conduct

As with many of Apple’s other products and services, Apple has taken a walled garden 

approach to the intelligent voice assistant market by, among other things, limiting interoperability by 

restricting how digital voice assistants work on Apple devices and how Siri works with non-Apple 

devices, and by using Siri to guide users to its own products and services. 

Apple does not allow competing digital voice assistants to replace Siri as the default on Apple 

devices. On iOS devices the user must download the app for a competing digital voice assistant and 

then either use Siri to access that voice assistant, or use that app directly.2391 Additionally, Apple does 

not have a program where third-party device manufactures can install a speaker that receives Siri 

commands; only Apple devices can respond to the “hey Siri” prompt.2392 While third-party hardware 

manufactures can make their products Siri-compatible through the Works with Apple HomeKit, the 

voice commands needed to control the smart devices must still be directed to Siri on an Apple device, 

such as an iPhone or iPad.2393

2387 Catherine Clifford, Here’s how Siri made it onto your iPhone, CNBC (Jun. 29, 2017), 

https://www.cnbc.com/2017/06/29/how-siri-got-on-the-iphone.html.

2388 Jenna Wortham, Apple Buys a Start-Up for Its Voice Technology, N.Y. TIMES (Apr. 29, 2010), 

https://www.nytimes.com/2010/04/29/technology/29apple.html. 

2389 Jeremy Horwitz, Apple acquires Laserlike, an ML startup that might make Siri smarter, VENTURE BEAT (Mar. 13, 

2019), https://venturebeat.com/2019/03/13/apple-bought-laserlike-an-ml-startup-that-might-make-siri-smarter/.

2390 See Lisa Eadicicco, Apple just bought another AI startup to help Siri catch up to rivals Amazon and Google, BUS.

INSIDER (May 28, 2020), https://www.businessinsider.com/apple-buys-ai-startup-inductiv-siri-catch-up-amazon-google2020-5; Mark Gurman, Apple Acquires AI Startup to Better Understand Natural Language, BLOOMBERG (Apr. 3, 2020), 

https://www.bloomberg.com/news/articles/2020-04-03/apple-acquires-ai-startup-to-better-understand-natural-language; 

Charlie Wood, Apple has acquired the artificial-intelligence startup Xnor.ai for a reported $200 million, BUS. INSIDER

(Jan. 16, 2020), https://www.businessinsider.com/apple-reportedly-buys-xnor-ai-200-million-2020-1.

2391 See, e.g., Ben Lovejoy, Alexa iPhone app can now operate hands-free — with a little help from Siri, 9TO5MAC (July 8,

2020), https://9to5mac.com/2020/07/08/alexa-iphone-app/; Chris Welch, Google Assistant just got much better and more 

convenient on iOS thanks to Siri Shortcuts, THE VERGE (Nov. 20, 2018), 

https://www.theverge.com/2018/11/20/18105693/google-assistant-siri-shortcuts-feature-iphone-ios. 

2392 How ‘Hey Siri’ works with multiple devices, APPLE, https://support.apple.com/en-us/HT208472 (last visited Sept. 27, 

2020).

2393Homekit, APPLE, https://developer.apple.com/homekit/ (last visited Oct. 3, 2020). 
377

In addition to keeping Siri closely tied to Apple hardware, Apple has used its voice-enabled 

devices to strengthen consumer engagement with its own services and apps. For example, as of the 

writing of this Report, by default requests to Siri to play music open the Apple Music app; requests for 

directions open the Apple Maps app; and requests for web searches open the Safari app.2394 To use a 

competing service through Siri a user must adjust the device’s settings and identify the service in the 

command to Siri (e.g., “Hey Siri, play the National Anthem on Spotify”).2395 For streaming music 

services, this integration only became possible with the introduction of iOS 13 in 2019.2396 Previously, 

even when a user said the name of a third-party streaming service in the voice command, Apple 

opened an Apple-branded alternative.2397 In June 2020 Apple announced that it would update its 

HomePod smart speaker system to support third-party music services.2398 It remains unclear how 

seamless the integration will be and if Apple Music will remain the pre-installed default service.2399

One third party that spoke with Subcommittee staff described Siri as a “closed” intelligent 

virtual assistant that limits the types of voice interactions voice app developers have access to.2400 The 

app developer explained that SiriKit, which allows iOS apps to work with Siri, relies on a pre-deigned 

list of basic interactions that third parties can use, such as messaging, calling, payments, etc. The very 

limited set of interactions permitted by Apple can make it impossible to launch an app for the thirdparty’s services, including applications that compete with an Apple service.2401

These practices have recently come under scrutiny by antitrust authorities. In March 2019, 

Spotify filed a complaint against Apple before the European Commission, reportedly alleging, among 

2394 E.g., Use Siri to play music or podcasts, APPLE, https://support.apple.com/en-us/HT208279 (last visited Sept. 27, 2020); 

David Phelan, Apple Mulls Letting You Choose Default iOS 14 Apps: Why it Matters, FORBES (FE. 21, 2010)

https://www.forbes.com/sites/davidphelan/2020/02/21/apple-mulls-letting-you-switch-default-iphone-apps-in-ios14/#70330c9c11f8.

2395 Kate Kozuch, How to Use Siri to Control Spotify in iOS 13, TOM’S GUIDE (Oct. 7, 2019), 

https://www.tomsguide.com/how-to/how-to-use-siri-to-control-spotify-ios-13.

2396 Jason Cross, iOS 13 enables Siri support in third party media apps: Spotify, Pandora, Overcast, and much more, 

MACWORLD (Jun. 7, 2019), https://www.macworld.com/article/3400881/ios-13-enables-siri-support-in-third-party-mediaapps.html. 

2397 See Submission from Source 301, to H. Comm. on the Judiciary, Source 301-00000080 at 23 (Oct. 15, 2019) (on file 

with Comm.)

2398 Kif Leswing, Apple will let iPhone users change default mail and browser apps, addressing antitrust concerns, CNBC

(June 22, 2020), https://www.cnbc.com/2020/06/22/apple-allows-users-to-change-default-mail-and-browser-apps-atwwdc.html. 

2399 Filipe Esposito, iOS 14 includes option to change default services on HomePod for each user, 9TO5MAC (July 7, 2020), 

https://9to5mac.com/2020/07/07/ios-14-includes-option-to-change-default-services-on-homepod-for-each-user/. 

2400 Submission from Source 711, to H. Comm. on the Judiciary, Source 711-00000080 at 6–7 (Oct. 15, 2019) (on file with 

Comm.). 

2401 Id. 
378

other things, that Apple is restricting Spotify’s access to Siri.2402 July 2020, the European 

Commission’s antitrust authority announced that it had opened an inquiry into the use of digital 

assistants and smart home products by Apple, Google, and Amazon, among other companies.2403 In her 

statement accompanying the announcement, Margrethe Vestager, the Commission’s Executive Vice 

President, identified interoperability and self-preferencing as areas of concern.2404

RECOMMENDATIONS

As part of its top-to-bottom review of competition in digital markets, the Subcommittee 

examined whether current laws and enforcement levels are adequate to address the market power 

concerns identified through this investigation. In pursuit of this goal, on March 13, 2020, the 

Subcommittee requested submissions from antitrust and competition policy experts. These experts 

were chosen on a careful, bipartisan basis to ensure the representation of a full range of views. 

Throughout the investigation the Subcommittee received additional submissions and written statements 

from antitrust enforcers and other leading experts, including Margrethe Vestager, the Executive Vice 

President of the European Commission, and Rod Sims, the Chair of the Australian Competition and 

Consumer Commission. Most recently, the Subcommittee held an oversight hearing on October 1, 

2020 on “Proposals to Strengthen the Antitrust Laws and Restore Competition Online,” its seventh and 

final hearing as part of the investigation. 

Subcommittee Chairman David N. Cicilline requested that staff provide Members of the 

Subcommittee with a series of recommendations, informed by this investigation, on how to strengthen 

the antitrust laws and restore competition online. As he noted in remarks to the American Antitrust 

Institute in June 2019:

No doubt, other branches of government have a key role to play in the development of 

antitrust law. But Congress—not the courts, agencies, or private companies—enacted 

the antitrust laws, and Congress ultimately decides what the law should be and whether 

the law is working for the American people. As such, it is Congress’ responsibility to 

conduct oversight of our antitrust laws and competition system to ensure that they are

properly working and to enact changes when they are not. While I do not have any 

preconceived ideas about what the right answer is, as Chairman of the Antitrust 

Subcommittee, I intend to carry out that responsibility with the sense of urgency and 

serious deliberation that it demands.2405

2402 Thomas Ricker, Apple to be formally investigated over Spotify’s antitrust complaint, says report, THE VERGE (MAY 6,

2019), https://www.theverge.com/2019/5/6/18530894/apple-music-monopoly-spotify-app-store-europe. 

2403 Statement by Executive Vice-President Margrethe Vestager on the launch of a Sector Inquiry on the Consumer Internet 

of Things, EUR. COMM’N (July 16, 2020), https://ec.europa.eu/commission/presscorner/detail/en/speech_20_1367.

2404 Id.

2405 David N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 

Keynote Address at American Antitrust Institute’s 20th Annual Policy Conference (June 20, 2019), 
379

In response to this request, Subcommittee staff identified a broad set of reforms for further 

examination by the Members of the Subcommittee for purposes of crafting legislative and oversight 

responses to the findings of this Report. These reforms include proposals to: (1) promote fair 

competition in digital markets; (2) strengthen laws relating to mergers and monopolization; and (3) 

restore vigorous oversight and enforcement of the antitrust laws.

Subcommittee staff intends for these recommendations to serve as a complement, not a 

substitute, to strong enforcement of the antitrust laws. This is particularly true for acquisitions by 

dominant firms that may have substantially lessened competition or tended to create a monopoly in 

violation of the Clayton Act. In these cases, Subcommittee staff supports as a policy matter the 

examination of the full range of remedies—including unwinding consummated acquisitions or 

divesting business lines—to fully restore competition that was harmed as a result of these acquisitions 

and to prevent future violations of the antitrust laws.2406

A. Restoring Competition in the Digital Economy

For more than a century, Congress has addressed the market power of dominant intermediaries 

using a robust antitrust and antimonopoly toolkit.2407 The antitrust laws prohibit anticompetitive 

mergers and monopolistic conduct in order to promote open markets and prevent undue concentration 

of economic power. In many critical sectors of the economy—including financial services, 

telecommunications, and transportation—Congress has also relied on a broad set of policies to create 

the conditions necessary for fair competition, even when economies of scale may favor concentration. 

In a similar vein, the remedies identified in this section seek to restore competition online by 

addressing harmful business practices as well as certain features of digital markets that tend to tip the 

market towards concentration.

Reduce Conflicts of Interest Thorough Structural Separations and Line of Business Restrictions 

In addition to controlling one or multiple key channels of distribution, the dominant firms 

investigated by the Subcommittee are integrated across lines of business. When operating in adjacent 

markets, these platforms compete directly with companies that depend on them to access users, giving 

https://cicilline.house.gov/press-release/cicilline-delivers-keynote-address-american-antitrust-institute%E2%80%99s-20thannual-policy. 

2406 Due to separation of powers concerns and other relevant considerations, we do not take a position on the outcome of 

any individual matter before the Justice Department or Federal Trade Commission.

2407 See, e.g., Subcomm. on Study of Monopoly Power of the H. Comm. on the Judiciary, 81st Cong. 2d Sess., The Antitrust 

Laws: A Basis for Economic Freedom iii (1950) (identifying an extensive list of statutes “dealing directly with the 

preservation of the American competitive economy” and reflecting the legislative policy that “under no circumstances 

should [laws] foster the growth of monopoly.”).
380

rise to a conflict of interest. As discussed earlier in this Report, the Subcommittee’s investigation 

uncovered several ways in which Amazon, Apple, Facebook, and Google use their dominance in one 

or more markets to advantage their other lines of business, reducing dynamism and innovation. 

First, the investigation revealed that the dominant platforms have misappropriated the data of 

third parties that rely on their platforms, effectively collecting information from customers only to 

weaponize it against them as rivals. For example, the investigation produced documents showing that 

Google used the Android operating system to closely track usage trends and growth patterns of thirdparty apps—near-perfect market intelligence that Google can use to gain an edge over those same 

apps. Facebook used its platform tools to identify and then acquire fast-growing third-party apps, 

thwarting competitive threats at key moments. A former Amazon employee told the Subcommittee that 

Amazon has used the data of third-party merchants to inform Amazon’s own private label strategy, 

identifying which third-party products were selling well and then introducing copycat versions. These 

and other examples detailed in this Report demonstrate a dangerous pattern of predatory conduct that, 

if left unchecked, risk further concentrating wealth and power.

Some have suggested that there is little difference between the dominant platforms’ access to 

and use of this data and the way that brick-and-mortar retailers track popular products. The 

Subcommittee’s investigation, however, produced evidence that the platforms’ access to competitively 

significant market data is unique. Specifically, the dominant platforms collect real-time data which, 

given the scale of their user-base, is akin to near-perfect market intelligence. Whereas firms with a 

choice among business partners might seek to protect their proprietary data, the platforms’ market 

power lets them compel the collection of this data in the first place.

Second, dominant platforms can exploit their integration by using their dominance in one 

market as leverage in negotiations in an unrelated line of business. For example, evidence produced 

during the investigation showed that Amazon has leveraged its dominance in online commerce as 

pressure during negotiations with firms in a separate line of business. Market participants that depend 

on Amazon’s retail platform are effectively forced to accept its demands—even in markets where 

Amazon would otherwise lack the power to set the terms of commerce.

Third, dominant platforms have used their integration to tie products and services in ways that 

can lock in users and insulate the platform from competition. Google, for example, required that 

smartphone manufacturers seeking to use Android also pre-install and give default status to certain 

Google apps—enabling Google to maintain its search monopoly and crowd out opportunities for thirdparty developers.

And fourth, these firms can use supra-competitive profits from the markets they dominate to 

subsidize their entry into other markets. Documents uncovered during the Subcommittee’s 

investigation indicate that the dominant platforms have relied on this strategy to capture markets, as 

startups and non-platform businesses tend to lack the resources and capacity to bleed billions of dollars 
381

over multiple years in order to drive out rivals. For dominant platforms, meanwhile, this strategy 

appears to be a race to capture ecosystems and control interlocking products that funnel data back to 

the platforms, further reinforcing their dominance.

Through using market power in one area to advantage a separate line of business, dominant 

firms undermine competition on the merits. By functioning as critical intermediaries that are also 

integrated across lines of business, the dominant platforms face a core conflict of interest. The 

surveillance data they collect through their intermediary role, meanwhile, lets them exploit that conflict 

with unrivaled precision. Their ability both to use their dominance in one market as negotiating 

leverage in another, and to subsidize entry to capture unrelated markets, have the effect of spreading 

concentration from one market into others, threatening greater and greater portions of the digital 

economy.

To address this underlying conflict of interest, Subcommittee staff recommends that Congress 

consider legislation that draws on two mainstay tools of the antimonopoly toolkit: structural separation 

and line of business restrictions.2408 Structural separations prohibit a dominant intermediary from 

operating in markets that place the intermediary in competition with the firms dependent on its 

infrastructure. Line of business restrictions, meanwhile, generally limit the markets in which a 

dominant firm can engage. 

Congress has relied on both policy tools as part of a standard remedy for dominant 

intermediaries in other network industries, including railroads and telecommunications services.2409 In 

the railroad industry, for example, a congressional investigation found that the expansion of common 

carrier railroads’ into the coal market undermined independent coal producers, whose wares the 

railroads would deprioritize in order to give themselves superior access to markets. In 1893, the 

Committee on Interstate and Foreign Commerce wrote that “[n]o competition can exist between two 

producers of a commodity when one of them has the power to prescribe both the price and output of 

the other.”

2410

Congress subsequently enacted a provision to prohibit railroads from transporting any goods 

that they had produced or in which they held an interest.2411 Congress has legislated similar 

prohibitions in other markets. The Bank Holding Company Act of 1956 broadly prohibited bank 

2408 See Submission from Sally Hubbard, Dir. of Enforcement Strategy, Open Mkts. Inst. et al., to H. Comm. on the 

Judiciary, 7–8 (Apr. 17, 2020) (on file with Comm.) [hereinafter Hubbard Submission]; Submission from Stacy Mitchell, 

Co-Dir., Inst. for Local Self-Reliance, to H. Comm. on the Judiciary, 4 (May 4, 2020) (on file with Comm.) [hereinafter 

Mitchell Submission]; Submission from Zephyr Teachout, Assoc. Professor of Law, Fordham Law School, to H. Comm. on 

the Judiciary, 6 (Apr. 23, 2020) (on file with Comm.) [hereinafter Teachout Submission]; Submission from Americans for 

Fin. Reform, to H. Comm. on the Judiciary, 3–4 (Apr. 17, 2020) (on file with Comm.).

2409 Mitchell Submission at 4.

2410 H.R. REP. NO. 52-2278, vii–viii (1893).

2411 Hepburn Act, Pub. L. No. 59-337, § 1, 34 Stat. 584, 585 (1906).
382

holding companies from acquiring nonbanking companies.2412 Vertically integrated television 

networks, meanwhile, were subject to “fin-syn” rules, which prohibited networks from entering 

production and syndication markets.2413

Both structural separations and line of business restrictions seek to eliminate the conflict of 

interest faced by a dominant intermediary when it enters markets that place it in competition with 

dependent businesses. In certain cases, structural separations have also been used to prevent 

monopolistic firms from subsidizing entry into competitive markets and to promote media 

diversity.2414

At a general level, there are two forms of structural separation: (1) ownership separations, 

which require divestiture and separate ownership of each business; and (2) functional separations, 

which permit a single corporate entity to engage in multiple lines of business but prescribe the 

particular organizational form it must take.2415 Importantly, both forms of structural limits apply on a 

market-wide basis while divestitures in antitrust enforcement generally apply to a single firm or 

merging party.

A benefit of these proposals is their administrability. By setting rules for the underlying 

structure of the market—rather than policing anticompetitive conduct on an ad hoc basis—structural 

rules are easier to administer than conduct remedies, which can require close and continuous 

monitoring.2416

The challenges of crafting and implementing structural solutions vary by market and market 

participants. In response to the Subcommittee’s requests for comments on potential reforms, some 

antitrust experts have cautioned that crafting separations can pose a major cost and challenge, 

especially in dynamic markets.2417 Others have responded by identifying certain principles that can 

make identifying the fault lines easier. In the case of separations that are undoing vertical mergers, the 

fault lines designating the separate companies are likely to still be apparent, even in the new 

2412 Bank Holding Company Act of 1956, Pub. L. No. 84-511, § 2(a), 70 Stat. 133, 133 (codified as amended at 12 U.S.C. § 

1841(a) (2012)).

2413 Competition & Responsibility in Network Television Broad., 23 F.C.C.2d 382, 398, para. 30 (1970) (report and order).

2414 Mitchell Submission at 4.

2415 John Kwoka & Tommaso Valletti, Scrambled Eggs and Paralyzed Policy: Breaking Up Consummated Mergers and 

Dominant Firms 22 (forthcoming Oct. 2020) (on file with Comm.).

2416 OECD, STRUCTURAL SEPARATION IN REGULATED INDUSTRIES: REPORT ON IMPLEMENTING THE OECD

RECOMMENDATION 9 (2016) (“[S]eparation limits the need for regulation that is difficult and costly to devise and 

implement, and may be only partly effective; it improves information; and it eliminates the risk of cross-subsidies by the 

incumbent from its non-competitive to its competitive segments.”), https://www.oecd.org/daf/competition/Structuralseparation-in-regulated-industries-2016report-en.pdf. 

2417 See, e.g., Submission from Maureen K. Ohlhausen, Partner, Baker Botts L.L.P., to H. Comm. on the Judiciary, 5 (Apr. 

17, 2020) (on file with Comm.). 
383

structure.2418 In cases where a firm grew through internal expansion, or when the constituent parts are 

no longer clearly distinguishable, scholars have suggested identifying distinct business operations.2419

Experts have also noted that business-initiated corporate restructuring and divestitures may in some 

cases also provide a guide to designing and implementing successful break-ups.2420

Several enforcement bodies around the world are exploring the use of structural separations in 

digital markets. In July 2020, the United Kingdom’s Competition and Markets Authority 

recommended that its digital regulatory body have powers to “implement ownership separation or 

operational separation,” concluding that “there could be significant benefits if there were more formal 

separation between businesses with market power” in digital advertising markets in particular.2421

Meanwhile the OECD in 2001 adopted recommendations to structurally separate vertically integrated 

regulated firms that operate in concentrated markets.2422 In its 15-year overview, the OECD concluded 

that “structural separation remains a relevant remedy” and identified other market areas where it might 

be adopted.2423

Implement Rules to Prevent Discrimination, Favoritism, and Self-Preferencing

As discussed throughout this Report, the Subcommittee identified numerous instances in which 

dominant platforms engaged in preferential or discriminatory treatment. In some cases, the dominant 

platform privileged its own products or services. In others, a dominant platform gave preferential 

treatment to one business partner over others. Because the dominant platform was, in most instances, 

the only viable path to market, its discriminatory treatment had the effect of picking winners and losers 

in the marketplace. 

Google, for example, engaged in self-preferencing by systematically ranking its own content 

above third-party content, even when its content was inferior or less relevant for users. Web publishers 

of content that Google demoted suffered economic losses and had no way of competing on the merits. 

Over the course of the investigation, numerous third parties also told the Subcommittee that selfpreferencing and discriminatory treatment by the dominant platforms forced businesses to lay off 

employees and divert resources away from developing new products and towards paying a dominant 

platform for advertisements or other ancillary services. They added that some of the harmful business 

2418 John Kwoka & Tommaso Valletti, Scrambled Eggs and Paralyzed Policy: Breaking Up Consummated Mergers and 

Dominant Firms 11 (forthcoming Oct. 2020) (on file with Comm.). 

2419 Id. at 15.

2420 Id.; Rory Van Loo, In Defense of Breakups: Administering a ‘Radical’ Remedy, 105 CORNELL L. REV (forthcoming 

2020), https://ssrn.com/abstract=3646630.

2421 Competition & Mkts. Auth. Report at 405–06.

2422 OECD, STRUCTURAL SEPARATION IN REGULATED INDUSTRIES: REPORT ON IMPLEMENTING THE OECD

RECOMMENDATION 9 (2016), https://www.oecd.org/daf/competition/Structural-separation-in-regulated-industries2016report-en.pdf.

2423 Id. at 3. 
384

practices of the platforms discouraged investors from supporting their business and made it 

challenging to grow and sustain a business even with highly popular products. Without the opportunity 

to compete fairly, businesses and entrepreneurs are dissuaded from investing and, over the long term, 

innovation suffers.

In response to these concerns, the Subcommittee recommends that Congress consider 

establishing nondiscrimination rules to ensure fair competition and to promote innovation online. 

Nondiscrimination rules would require dominant platforms to offer equal terms for equal service and 

would apply to price as well as to terms of access. As several experts noted, nondiscrimination has 

been as a mainstay principle for governing network intermediaries, especially those that play essential 

roles in facilitating transportation and communications.2424

The 1887 Interstate Commerce Act, for example, prohibited discriminatory treatment by 

railroads.2425 In the century years since, Congress and policymakers have continued to apply 

nondiscrimination principles to network monopolies, even as technologies have rapidly evolved. Most 

recently, the Open Internet Order written by the Federal Communications Commission (FCC) in 2015 

was effectively a nondiscrimination regime, prohibiting internet service providers from picking 

winners and losers among content providers and other users.2426 Other jurisdictions have begun to 

apply nondiscrimination principles to digital markets. For example, after determining that Google had 

engaged in illegal self-preferencing, the European Commission required that Google follow “the 

simple principle of equal treatment.”

2427

Historically, Congress has implemented nondiscrimination requirements in a variety of 

markets. With railroads, the Interstate Commerce Commission oversaw obligations and prohibitions 

applied to railroads designated as common carriers.2428 More recently, the Cable Act of 1992 included 

a provision requiring the Federal Communications Commission to oversee a nondiscrimination 

2424 See, e.g., Submission from Harry First, Charles L. Denison Professor of Law, N.Y.U. School of Law & Eleanor Fox, 

Walter J. Derenberg Professor of Trade Reg., N.Y.U. School of Law, to H. Comm. on the Judiciary (Aug. 6, 2020) 

(“[Google, Amazon, Facebook, and Apple] are akin to essential facilities for many smaller businesses. Many businesses, to 

do business, must use the platform. They have almost no choice. The GAFA compete with the businesses on their 

platforms.”) (on file with Comm.) [hereinafter First & Fox Submission]; Submission from Albert A. Foer, Founder and 

Senior Fellow, Am. Antitrust Inst., to H. Comm. on the Judiciary, 1–2 (Apr. 14, 2020)(on file with Comm.) [hereinafter 

Foer Submission]; Hubbard Submission at 5–7; Remedies Hearing 6–7 (statement of K. Sabeel Rahman, President, 

Demos).

2425 Hubbard Submission at 4–5.

2426 Protecting and Promoting the Open Internet, 30 FCC Rcd. 5601, 5603, para. 4 (2015) (“[C]arefully-tailored rules that 

would prevent specific practices we know are harmful to Internet openness—blocking, throttling, and paid prioritization—

as well as a strong standard of conduct designed to prevent the deployment of new practices that would harm Internet 

openness.”).

2427 Press Release, Eur. Comm’n, Antitrust: Commission Fines Google €2.42 Billion for Abusing Dominance as Search 

Engine by Giving Illegal Advantage to Own Comparison Shopping Service (June 27, 2017), 

https://ec.europa.eu/commission/presscorner/detail/en/MEMO_17_1785.

2428 Hubbard Submission at 5.
385

requirement for cable operators.2429 Some experts have proposed establishing a similar venue to 

adjudicate discrimination disputes between dominant platforms and the third parties that depend on 

them.2430 Others note that the Federal Trade Commission could also use its existing competition 

rulemaking authority to “require dominant gatekeepers to apply a rule of neutrality in operating their 

platforms.”

2431

Finally, on several occasions, nondiscrimination rules have been treated as an important 

complement to divestitures in antitrust enforcement. For example, the Justice Department combined 

AT&T’s divestiture of the Regional Bell Operating Companies with an equal access obligation, 

requiring AT&T to offer independent long-distance providers access to its network on equal terms of 

quality and price.2432 The DOJ argued that requiring equal access without mandating divestiture would 

be insufficient due to AT&T’s incentive and ability to discriminate against local carriers.2433

Promote Innovation Through Interoperability and Open Access 

As discussed elsewhere in the Report, digital markets have certain characteristics—such as 

network effects, switching costs, and other entry barriers—that make them prone to tipping in favor of 

a single dominant firm. As a result, these markets are no longer contestable by new entrants,2434 and 

the competitive process shifts from “competition in the market to competition for the market.”

2435

This dynamic is particularly evident in the social networking market. As discussed earlier in the 

Report, Facebook’s internal documents and communications indicate that due to strong network effects 

and market tipping, the most significant competitive pressure to Facebook is from within its own 

family of products—Facebook, Instagram, Messenger, and WhatsApp—rather than from other social 

2429 See, e.g., Submission from Hal Singer, Managing Dir., Econ One Research, to H. Comm. on the Judiciary, 4–5 (Mar. 

30, 2020) (on file with Comm.) [hereinafter Singer Submission].

2430 Id.

2431 First & Fox Submission at 12.

2432 See United States v. AT&T Co., 552 F. Supp. 131 (D.D.C. 1982).

2433 Mitchell Submission at 4 (“It’s important to note here that applying this kind of [nondiscrimination-based] regulatory 

oversight to the big tech firms will not be effective unless it’s done in conjunction with breakups. In the case of Amazon, 

it’s my view that several factors make it virtually impossible to establish a system of oversight and adjudication that would 

be robust enough to protect competition and fair market access, absent spinning off its shopping platform from its other 

divisions. These factors include the enormous number of sellers and transactions, the low dollar value of most transactions, 

and the many subtle and hard-to-detect ways that Amazon can skew outcomes to favor its own interests. Therefore, 

oversight must be combined with structural separation, which would do much of the work by removing the underlying 

conflicts of interest, thus allowing for an effective and less bureaucratic system of oversight.”).

2434 Competition & Mkts. Auth. Report at 10–11.

2435 See Stigler Report at 29; Michael Kades & Fiona Scott Morton, Interoperability as a Competition Remedy for Digital 

Networks, WASH. CTR. FOR EQUITABLE GROWTH 1 (Sept. 2020) (“The monopolist operates in a market with significant 

network effects, scale and scope economies, and low distribution costs. Therefore, the competition that matters most is 

often for the market not within the market. Anticompetitive conduct is more likely to succeed. And, the harm to consumers 

greater because the market tends to be winner-take-all, or most.”) (on file with Comm.).
386

apps in the market, such as Snapchat or Twitter. In the case of messaging apps, Facebook’s documents 

show that network effects can be even more extreme. And because Facebook is not interoperable with 

other social networks, its users have high costs to switch to other platforms, locking them into 

Facebook’s platform.

High switching costs are also present in other markets. In the smartphone market, switching 

costs include learning a new operating system, which can discourage users from leaving Google or 

Apple due to familiarity with their distinct operating systems, as well as the inability to easily port all 

of their data, such as messages, call history, and photos. In online commerce, sellers have high 

switching costs associated with their reputation. Sellers can be locked into an incumbent platform for 

online commerce if they are unable to transfer their reputation—ratings and customer reviews accrued 

over a long period of time—to a different platform. Switching costs involving data for other services, 

such as email, can also contribute to user lock-in.2436 In response to these concerns, Subcommittee staff 

recommends that Congress consider data interoperability and portability to encourage competition by 

lowering entry barriers for competitors and switching costs by consumers. These reforms would 

complement vigorous antitrust enforcement by spurring competitive entry. 

a. Interoperability 

Interoperability is fundamental to the open internet.2437 It is present in email, which is an open, 

interoperable protocol for communicating online regardless of a person’s email service or the type of 

device they use to send the email.2438 It has also been built into numerous other services online2439 and 

is a “core technical structure of the Internet.”

2440 Interoperability standards are also present in other 

communications systems, from telephones to telegraphs.2441 Telecommunications would not work 

without the ability of users on one carrier’s network to interconnect with other carriers.2442 And in the 

absence of interoperability, dominant carriers could foreclose new entrants from offering lower prices 

or better services, reinforcing their monopoly power while harming consumers and competition.2443

2436 Chris Riley, A Framework for Forward-Looking Tech Competition Policy, MOZILLA 10 (2019), 

https://blog.mozilla.org/netpolicy/files/2019/09/Mozilla-Competition-Working-Paper.pdf.

2437 See generally id. at 18–24. 

2438 Michael Kades & Fiona Scott Morton, Interoperability as a Competition Remedy for Digital Networks 14 (Sept. 2020) 

(on file with Comm.). 

2439 Becky Chao & Russ Schulman, Promoting Platform Interoperability, NEW AM. FOUND. (May 13, 2020), 

https://www.newamerica.org/oti/reports/promoting-platform-interoperability/.

2440 Chris Riley, A Framework for Forward-Looking Tech Competition Policy, MOZILLA 18 (2019), 

https://blog.mozilla.org/netpolicy/files/2019/09/Mozilla-Competition-Working-Paper.pdf.

2441 Becky Chao & Russ Schulman, Promoting Platform interoperability, NEW AM. FOUND. (May 13, 2020), 

https://www.newamerica.org/oti/reports/promoting-platform-interoperability/.

2442 Michael Kades & Fiona Scott Morton, Interoperability as a Competition Remedy for Digital Networks 13–14 (Sept. 

2020) (on file with Comm.).

2443 Id.
387

An interoperability requirement would allow competing social networking platforms to 

interconnect with dominant firms to ensure that users can communicate across services.2444 Foremost, 

interoperability “breaks the power of network effects” by allowing new entrants to take advantage of 

existing network effects “at the level of the market, not the level of the company.”

2445 It would also 

lower switching costs for users by ensuring that they do not lose access to their network as a result of 

switching.

The implementation cost of requiring interoperability by dominant firms would be relatively 

low. Unlike interconnecting in traditional communications markets, there is little direct cost associated 

with interoperating with dominant platforms.2446

Finally, interoperability is an important complement, not substitute, to vigorous antitrust 

enforcement. As discussed in this Report, Facebook has tipped the social network toward a monopoly, 

and due to its strong network effects, does not face competitive pressure. On its own, interoperability is 

unlikely to fully restore competition in the social networking market due to the lack of meaningful 

competition in the market today. On the other hand, in the absence of pro-competitive policies like 

interoperability, it is also possible that enforcement alone may provide incomplete relief due to future 

market tipping.2447

b. Data Portability

Data portability is also a remedy for high costs associated with leaving a dominant platform. 

These costs present another barrier to entry for competitors and a barrier to exit for consumers. 

Dominant platforms can maintain market power in part because consumers experience significant 

2444 Competition in Digital Technology Markets: Examining Self-Preferencing by Digital Platforms: Hearing Before 

Subcomm. on Antitrust, Competition Policy and Consumer Rights of the S. Comm. on the Judiciary, 116th Cong. 21 (2020) 

(statement of Sally Hubbard, Dir. of Enforcement Strategy, Open Mkts. Inst.) (“Interoperability is an anti-monopoly tool 

that has been used successfully many times to promote innovation by reducing barriers to entering markets.”) (on file with 

Comm.).

2445 Michael Kades & Fiona Scott Morton, Interoperability as a Competition Remedy for Digital Networks 13–14 (Sept. 

2020) (on file with Comm.).

2446 Id. at 15 (“Unlike the familiar AT&T example, there would be no cost to interconnection in the digital platform context. 

The standard is simply a way to present and transfer information that is already being presented and transferred. No wire 

needs to be connected to achieve it, nor do machines need to be co-located, or special workers employed. Transferring 

digital files has almost zero cost, but regardless of that cost, Facebook would be transferring those files to serve its users in 

any case. Facebook might need to pay some costs to redesign the format in which it transfers text and images, but if it has 

been found liable for monopolization by a court, it is expected that a remedy will have costs. The real cost of ongoing 

interoperability to Facebook.com is the possibility that it loses customers once the barriers to entry fall. But that risk is what 

every firm faces in a competitive market and represents a benefit to consumers.”).

2447 Id. at 10. (“A divestiture may reduce the existing market power of the dominant network but not eliminate the market 

power due to network effects that was achieved through anticompetitive conduct. And, alone, divestiture may not prevent 

future tipping. Thus, on their own, they risk being insufficient to fully restore the lost competition.”).
388

frictions when moving to a new product.2448 Users contribute data to a platform, for example, but can 

find it hard to migrate that data to a rival platform.2449 The difficulty of switching tends to keep users 

on incumbent platforms.2450 Providing consumers and businesses with tools to easily port or rebuild 

their social graph, profile, or other relevant data on a competing platform would help address these 

concerns.2451 Although complementary to interoperability, data portability alone would not fully 

address concerns related to network effects since consumers would still need to recreate their networks 

on a new platform and would not be able to communicate with their network on the incumbent 

platform.2452

Reduce Market Power Through Merger Presumptions

The firms investigated by the Subcommittee owe part of their dominance to mergers and 

acquisitions. Several of the platforms built entire lines of business through acquisitions, while others 

used acquisitions at key moments to neutralize competitive threats. Although the dominant platforms 

collectively engaged in several hundred mergers and acquisitions between 2000-2019, antitrust 

enforcers did not block a single one of these transactions. The Subcommittee’s investigation revealed 

that several of these acquisitions enabled the dominant platforms to block emerging rivals and 

undermine competition.

Despite a significant number of ongoing antitrust investigations, the dominant platforms have 

continued to pursue significant deal-making. Over the last year, for example, Google purchased Fitbit 

for $2.1 billion and Looker for $2.6 billion; Amazon purchased Zoox for $1.3 billion; and Facebook 

2448 See JOSHUA GANS, THE HAMILTON PROJECT, ENHANCING COMPETITION WITH DATA AND IDENTITY PORTABILITY 5

(June 2018), http://www.hamiltonproject.org/assets/files/Gans_20180611.pdf.

2449 See id.

2450 See Josh Constine, Friend Portability Is the Must-Have Facebook Regulation, TECHCRUNCH (May 12, 2019), 

https://technologycrunch.com/2019/05/12/friends-wherever; Chris Dixon, The Interoperability of Social Networks, BUS.

INSIDER (Nov. 10, 2010), https://www.businessinsider.com/the-interoperability-of-social-networks-2011-2; Data and 

Privacy Hearing at 2 (statement of Dina Srinivasan, Fellow, Thurman Arnold Project).

2451 Submission from Charlotte Slaiman, Competition Policy Dir., Public Knowledge, to H. Comm. on the Judiciary (May 

14, 2020) (on file with Comm.); Appendix I at 3–4 (statement of Gene Kimmelman, Senior Advisor, Public Knowledge) 

[hereinafter Slaiman Submission].

2452 Competition in Digital Technology Markets: Examining Self-Preferencing by Digital Platforms: Hearing Before 

Subcomm. on Antitrust, Competition Policy and Consumer Rights of the S. Comm. on the Judiciary, 116th Cong. 21 (2020) 

(statement of Sally Hubbard, Dir. of Enforcement Strategy, Open Mkts. Inst.) (on file with Comm.). Last year, Senators 

Mark R. Warner (D-VA), Josh Hawley (R-MO), and Richard Blumenthal (D-CT) introduced S.2648, the “Augmenting 

Compatibility and Competition by Enabling Service Switching (ACCESS) Act,” bipartisan legislation to require that 

dominant platforms make user data portable and their services interoperable. Additionally, this proposal would also allow 

users to delegate management of their privacy preferences to a third-party service. Press Release, Sen. Mark R. Warner, 

Senators Introduce Bipartisan Bill to Encourage Competition in Social Media (Oct. 22, 2019), 

https://www.warner.senate.gov/public/index.cfm/2019/10/senators-introduce-bipartisan-bill-to-encourage-competition-insocial-media.
389

acquired Giphy for an undisclosed amount.2453 Meanwhile, all four of the firms investigated by the 

Subcommittee have recently focused on acquiring startups in the artificial intelligence and virtual 

reality space.2454

Ongoing acquisitions by the dominant platforms raise several concerns. Insofar as any 

transaction entrenches their existing position, or eliminates a nascent competitor, it strengthens their 

market power and can close off market entry. Furthermore, by pursuing additional deals in artificial 

intelligence and in other emerging markets, the dominant firms of today could position themselves to 

control the technology of tomorrow.

It is unclear whether the antitrust agencies are presently equipped to block anticompetitive 

mergers in digital markets. The record of the Federal Trade Commission and the Justice Department in 

this area shows significant missteps and repeat enforcement failures. While both agencies are currently 

pursuing reviews of pending transactions, it is not yet clear whether they have developed the analytical 

tools to challenge anticompetitive deals in digital markets. For example, the Justice Department in 

February permitted Google’s acquisition of Looker, a data analytics and business intelligence startup, 

despite serious risks that the deal would eliminate an independent rival and could allow Google to cut 

off access to rivals.2455 These concerns are especially acute today, given the combined national health 

and economic crises, which have widened the gap between the dominant platforms and businesses 

across the rest of the economy.

To address this concern, Subcommittee staff recommends that Congress consider shifting 

presumptions for future acquisitions by the dominant platforms. Under this change, any acquisition by 

a dominant platform would be presumed anticompetitive unless the merging parties could show that 

the transaction was necessary for serving the public interest and that similar benefits could not be 

achieved through internal growth and expansion. This process would occur outside the current HartScott-Rodino Act (HSR) process, such that the dominant platforms would be required to report all

transactions and no HSR deadlines would be triggered. Establishing this presumption would better 

reflect Congress’s preference for growth through ingenuity and investment rather than through 

acquisition.

2453 Chaim Gartenberg, Google buys Fitbit for $2.1 billion, THE VERGE (Nov. 1, 2019), 

https://www.theverge.com/2019/11/1/20943318/google-fitbit-acquisition-fitness-tracker-announcement; Lauren Feiner & 

Jordan Novet, Google cloud boss Thomas Kurian makes his first big move — buys Looker for $2.6 billion, CNBC (June 6, 

2019), https://www.cnbc.com/2019/06/06/google-buys-cloud-company-looker-for-2point6-billion.html; Karen Weise & 

Erin Griffith, Amazon to Buy Zoox, in a Move Toward Self-Driving Cars, N.Y. TIMES (June 26, 2020), 

https://www.nytimes.com/2020/06/26/business/amazon-zoox.html; Kurt Wagner & Sarah Frier, Facebook Buys Animated 

Image Library Giphy for $400 Million, BLOOMBERG (May 15, 2020), https://www.bloomberg.com/news/articles/2020-05-

15/facebook-buys-animated-image-library-giphy-to-boost-messaging. 

2454 See infra Appendix.

2455 Letter from Diana L. Moss, President, Am. Antitrust Inst., to Hon. Makan Delrahim, Assistant Att’y Gen., Dep’t of 

Justice, Antitrust Div. (July 8, 2019), https://www.antitrustinstitute.org/wp-content/uploads/2019/07/AAI-Ltr-toDOJ_Google-Looker_7.8.19.pdf.
390

Create an Even Playing Field for the Free and Diverse Press

The free and diverse press—particularly local press—is the backbone of a healthy and vibrant 

democracy. But as discussed in this Report, the rise of market power online has corresponded with a 

significant decline in the availability of trustworthy sources of news.2456 Through dominating both 

digital advertising and key communication platforms, Google and Facebook have outsized power over 

the distribution and monetization of trustworthy sources of news online,2457 creating an uneven playing 

field in which news publishers are beholden to their decisions.2458

To address this imbalance of bargaining power, we recommend that the Subcommittee consider 

legislation to provide news publishers and broadcasters with a narrowly tailored and temporary safe 

harbor to collectively negotiate with dominant online platforms. 

In April 2019, Subcommittee Chairman Cicilline and Doug Collins (R-GA), the formerRanking Member of the Committee on the Judiciary, introduced H.R. 2054, the “Journalism 

Competition and Preservation Act of 2019.”

2459 H.R. 2054 would allow coordination by news 

publishers under the antitrust laws if it (1) directly relates to the quality, accuracy, attribution or 

branding, or interoperability of news; (2) benefits the entire industry, rather than just a few publishers, 

and is non-discriminatory to other news publishers; and (3) directly relates to and is reasonably 

necessary for these negotiations, instead of being used for other purposes. As Subcommittee Chairman 

Cicilline noted at the time of the bill’s introduction:

The free press is a cornerstone of our democracy. Journalists keep the public informed, 

root out corruption, and hold the powerful accountable. This bill will provide a muchneeded lifeline to local publishers who have been crushed by Google and Facebook. It’s 

about time we take a stand on this issue.2460

2456 Free and Diverse Press Hearing at 3 (statement of David Chavern, Pres.and CEO, News Media Alliance) (“In effect, a 

couple of dominant tech platforms are acting as regulators of the digital news industry.”).

2457 Submission of Source 52, to H. Comm. on the Judiciary, 12 (Oct. 30, 2019) (on file with Comm.).

2458 Submission from Source 53, to H. Comm. on the Judiciary, 7 (Oct. 14, 2019) (on file with Comm.). Although Apple 

News and Apple News Plus are increasingly popular news aggregators, most market participants that the Subcommittee 

received evidence from during the investigation do not view it as a critical intermediary for online news at this time. Some 

publishers raised competition concerns about the tying of payment inside Apple’s news product. 

2459 Press Release, Cicilline, Collins Introduce Bill to Provide Lifeline to Local News, Congressman David. N. Cicilline 

(Apr. 3, 2019), https://cicilline.house.gov/press-release/cicilline-collins-introduce-bill-provide-lifeline-local-news. 

2460 Id.
391

Mr. Collins added that the proposed legislation would allow “community newspapers to more fairly 

negotiate with large tech platforms that are operating in an increasingly anti-competitive space,” which 

would “help protect journalism, promote competition and allow communities to stay informed.”

2461

We recommend the consideration of this legislation as part of a broader set of reforms to 

address the rise of market power online. This proposed legislation follows a long congressional 

tradition of allocating coordination rights to individuals or entities that lack bargaining power in a 

marketplace.2462 Although antitrust exemptions have been disfavored, at various times lawmakers have 

created exemptions in order to rectify imbalances of power or to promote non-competition values.2463

In this instance, the risk associated with antitrust exemptions to preserve the free and diverse press—a 

bedrock constitutional value—is low, while the benefits of preserving access to high-quality 

journalism are difficult to overstate. As discussed earlier in the Report, the bill would follow steps that 

other jurisdictions are similarly taking to rebalance the power between news publishers and the 

dominant platforms.

Prohibit Abuse of Superior Bargaining Power and Require Due Process

By virtue of functioning as the only viable path to market, dominant platforms enjoy superior 

bargaining power over the third parties that depend on their platforms to access users and markets. 

Their bargaining leverage is a form of market power,2464 which the dominant platforms routinely use to 

protect and expand their dominance. 

Through its investigation, the Subcommittee identified numerous instances in which the 

dominant platforms abused this power. In several cases, dominant platforms used their leverage to 

extract greater money or data than users would be willing to provide in a competitive market. While a 

firm in a competitive market would lose business if it charged excessive prices for its goods or services 

because the customer would switch to a competitor, dominant platforms have been able to charge 

excessive prices or ratchet up their prices without a significant loss of business. Similarly, certain 

dominant platforms have been able to extort an ever-increasing amount of data from their customers 

and users, ranging from a user’s personal data to a business’s trade secrets and proprietary content. In 

the absence of an alternative platform, users effectively have no choice but to accede to the platform’s 

demands for payment whether in the form of dollars or data.

2461 Id.

2462 See generally Submission from Sanjukta Paul, Assistant Professor of Law, Wayne State Univ., to H. Comm. on the 

Judiciary, 2–4 (Apr. 21, 2020) (on file with Comm.) [hereinafter “Paul Submission”].

2463 See, e.g., Clayton Act, 15 U.S.C. § 17 (1914); Capper-Volstead Act, ch. 57, 42 Stat. 388–89 (1922) (codified as 

amended at 7 U.S.C. §§ 291, 292 (2012)). 

2464 Aviv Nevo, Deputy Assistant Att’y Gen. for Econ., Dep’t of Justice, Antitrust Div., “Mergers that Increase Bargaining 

Leverage,” Remarks at the Stanford Institute for Economic Policy Research, 7 (Jan. 22, 2014), 

https://www.justice.gov/atr/file/517781/download (“[A]s a matter of economic theory and case law bargaining leverage is a 

source of market power.”). 
392

The Subcommittee’s investigation found that dominant platforms have also leveraged their 

market power in negotiations with businesses and individuals to dictate the terms of the relationship. 

The dominant platforms frequently impose oppressive contractual provisions or offer “take-it-or-leaveit” terms in contract negotiations—even when dealing with relatively large companies represented by 

sophisticated counsel.2465 Lacking bargaining power, dependent third parties often find themselves at 

the whims of the platform’s arbitrary decisions. Subcommittee staff encountered numerous instances in 

which a third party had been abruptly delisted or demoted from a platform, without notice or 

explanation, and often without a clear avenue for recourse. 

The dominant platforms’ ability to abuse their superior bargaining power in these ways can 

cause long-term and far-reaching harm. To address these issues, the Subcommittee recommends that 

Congress consider prohibiting the abuse of superior bargaining power, including through potentially 

targeting anticompetitive contracts, and introducing due process protections for individuals and 

businesses dependent on the dominant platforms.2466

B. Strengthening the Antitrust Laws

Restore the Antimonopoly Goals of the Antitrust Laws 

The antitrust laws that Congress enacted in 1890 and 1914—the Sherman Act, the Clayton Act, 

and the Federal Trade Commission Act—reflected a recognition that unchecked monopoly power 

poses a threat to our economy as well as to our democracy.2467 Congress reasserted this vision through 

subsequent antitrust laws, including the Robinson-Patman Act of 1936, the Celler-Kefauver Act of 

1950, and the Hart-Scott-Rodino Act of 1976.2468

In the decades since Congress enacted these foundational statutes, the courts have significantly 

weakened these laws and made it increasingly difficult for federal antitrust enforcers and private 

plaintiffs to successfully challenge anticompetitive conduct and mergers.2469 Through adopting a 

2465 See, e.g., Dig. Competition Expert Panel Report at 45 (noting how a report commissioned by the UK’s Department for 

Digital, Culture, Media & Sport found that as “a consequence of their high market share, ownership of key technologies 

and strong user data assets, Google and Facebook are, to some extent, able to set their own terms to advertisers and 

publishers”).

2466 Foer Submission at 2–3; Submission from Marshall Steinbaum, Assistant Professor of Econ., Univ. of Utah, to H. 

Comm. on the Judiciary, 8 (Apr. 2020) (on file with Comm.) [hereinafter Steinbaum Submission]. See generally Austl. 

Competition & Consumer Comm’n Report at 205–79; Commission and Mkts. Auth. Report at 328–49.

2467 See generally First & Fox Submission at 10–11; Steinbaum Submission; Submission from Robert H. Lande, Venable 

Professor of Law, Univ. of Balt. School of Law, to H. Comm. on the Judiciary (Apr. 16, 2020) (on file with Comm.) 

[hereinafter Lande Submission]; Paul Submission at 2-4; Submission from Maurice Stucke, Douglas A. Blaze 

Distinguished Professor of Law, Univ. of Tennessee, to H. Comm. on the Judiciary, 2 (Mar. 13, 2020) (on file with Comm.) 

[hereinafter Stucke Submission].

2468 Thomas J. Horton, Rediscovering Antitrust’s Lost Values, 16 U.N.H. L. REV. 179 (2018). 

2469 See generally Submission from Tim Wu, Julius Silver Professor of Law, Columbia Law School, to H. Comm. on the 

Judiciary (Apr. 25, 2020) (on file with Comm.) [hereinafter “Wu Submission”]; Submission from Spencer Weber Waller, 
393

narrow construction of “consumer welfare” as the sole goal of the antitrust laws, the Supreme Court 

has limited the analysis of competitive harm to focus primarily on price and output rather than the 

competitive process2470—contravening legislative history and legislative intent.2471 Simultaneously, 

courts have adopted the view that under-enforcement of the antitrust laws is preferable to overenforcement, a position at odds with the clear legislative intent of the antitrust laws, as well as the view 

of Congress that private monopolies are a “menace to republican institutions.”

2472 In recent decades, 

the Justice Department and the Federal Trade Commission have contributed to this problem by taking 

a narrow view of their legal authorities and issuing guidelines that are highly permissive of market 

power and its abuse. The overall result is an approach to antitrust that has significantly diverged from 

the laws that Congress enacted.

In part due to this narrowing, some of the anticompetitive business practices that the 

Subcommittee’s investigation uncovered could be difficult to challenge under current law.2473 In 

response to this concern, this section identifies specific legislative reforms that would help renew and 

rehabilitate the antitrust laws in the context of digital markets. In addition to these specific reforms, the 

Subcommittee recommends that Congress consider reasserting the original intent and broad goals of 

the antitrust laws, by clarifying that they are designed to protect not just consumers, but also workers, 

entrepreneurs, independent businesses, open markets, a fair economy, and democratic ideals.2474

Invigorate Merger Enforcement

Section 7 of the Clayton Act of 1914 prohibits any transaction where “the effect of such 

acquisition may be substantially to lessen competition, or to tend to create a monopoly.”

2475 In 1950, 

Congress passed the Celler-Kevauver Anti-Merger Act to broaden the types of transactions covered by 

John Paul Stevens Chair in Competition Law, Loyola Univ. Chicago School of Law, to H. Comm. on the Judiciary (Apr. 

28, 2020) (on file with Comm.) [hereinafter “Waller Submission”].

2470 Jonathan Sallet, Protecting the “Competitive Process”—The Evolution of Antitrust Enforcement in the United States, 

WASH. CTR. FOR EQUITABLE GROWTH (Oct. 31, 2018), https://equitablegrowth.org/competitive-edge-protecting-thecompetitive-process-the-evolution-of-antitrust-enforcement-in-the-united-states/.

2471 Submission from John Newman, Assoc. Professor of Law, Univ. of Miami School of Law, to the Subcomm. on

Antitrust, Commercial and Admin. Law of the H. Comm. on the Judiciary, 2 (Apr. 1, 2020) (on file with Comm.) 

[hereinafter Newman Submission]; Stucke Submission at 2.

2472 21 CONG. REC. 3146 (1890) (statement of Sen. Hoar).

2473 See Wu Submission at 2 (“If read broadly, the prohibitions on ‘monopolization,’ ‘unfair means of competition,’ and 

‘restraints on trade’ could be used to handle the challenges of our time. But ‘broadly’ is manifestly not how the laws are 

read by the judiciary at this point. For the courts have grafted onto these laws burdens of proof, special requirements and 

defenses that are found nowhere in the statutes, and that have rendered the laws applicable only to the narrowest of 

scenarios, usually those involving blatant price effects. And it is this that makes the laws inadequate for the challenges 

presented by digital markets.”).

2474 See generally First & Fox Submission at 10–11; Stucke Submission at 2; Wu Submission; Waller Submission.

2475 Clayton Act, 15 U.S.C. § 18 (1914).
394

the Clayton Act, specifically to include vertical mergers, conglomerate mergers, and purchases of 

assets.2476

As noted above, since 1998, Amazon, Apple, Facebook, and Google collectively have 

purchased more than 500 companies.2477 The antitrust agencies did not block a single acquisition. In 

one instance—Google’s purchase of ITA—the Justice Department required Google to agree to certain 

terms in a consent decree before proceeding with the transaction.2478

The Subcommittee’s review of the relevant documents revealed that several of these 

acquisitions lessened competition and increased market power. In several cases, antitrust enforcers 

permitted dominant platforms to acquire a competitive threat. For example, documents produced 

during the investigation demonstrate that Facebook acquired Instagram to neutralize an emerging rival, 

while Google purchased Waze to eliminate an independent provider of mapping data. In other 

instances, the platform engaged in a series of acquisitions that enabled it to gain a controlling position 

across an entire supply chain or ecosystem. Google’s acquisitions of DoubleClick, AdMeld, and 

AdMob, for example, let Google achieve a commanding position across the digital ad tech market.

In light of this, Subcommittee staff recommends that Congress considers a series of reforms to 

strengthen merger enforcement.

a. Codify Bright-Line Rules and Structural Presumptions in Concentrated Markets

A major change in antitrust enforcement over the last few decades has been the shift away from 

bright-line rules in favor of “rule of reason” case-by-case analysis. Although the rule of reason 

approach is said to reduce errors in enforcement through fact-specific analysis, in practice the standard 

tilts heavily in favor of defendants.2479 The departure from bright-line rules and presumptions has 

especially affected merger enforcement, where enforcers seeking to challenge a merger must fully 

prove that it will have anticompetitive effects, even in cases where the merging parties are dominant 

firms in highly concentrated markets. Scholarship by Professor John Kwoka of Northeastern 

University shows that the antitrust agencies acted in only 38% of all mergers that led to price increases, 

suggesting that the current approach to merger review is resulting in significant under-enforcement.2480

2476 Celler-Kefauver Anti-Merger Act, 64 Stat. 1125 (1950).

2477 See Appendix.

2478 Stipulation and Order, United States v. Google Inc. & ITA Software Inc. (D.D.C. 2011) (No. 1:11-cv-00688).

2479 Michael A. Carrier, The Rule of Reason: An Empirical Update for the 21st Century, 16 GEO. MASON L. REV. 827 

(2009).

2480 JOHN KWOKA, MERGERS, MERGER CONTROL, AND REMEDIES 155 (2014).
395

To respond to this concern, the Subcommittee recommends that Members consider codifying 

bright-line rules for merger enforcement, including structural presumptions.2481 Under a structural 

presumption, mergers resulting in a single firm controlling an outsized market share, or resulting in a 

significant increase in concentration, would be presumptively prohibited under Section 7 of the 

Clayton Act.2482 This structural presumption would place the burden of proof upon the merging parties 

to show that the merger would not reduce competition. A showing that the merger would result in 

efficiencies should not be sufficient to overcome the presumption that it is anticompetitive. It is the 

view of Subcommittee staff that the 30% threshold established by the Supreme Court in Philadelphia 

National Bank is appropriate, although a lower standard for monopsony or buyer power claims may 

deserve consideration by the Subcommittee. 

By shifting the burden of proof to the merging parties in cases involving concentrated markets 

and high market shares, codifying the structural presumption would help promote the efficient 

allocation of agency resources and increase the likelihood that anticompetitive mergers are blocked. 

b. Protect Potential Rivals, Nascent Competitors, and Startups

The Subcommittee’s investigation produced evidence that several of the dominant platforms 

acquired potential rivals and nascent competitors. Potential rivals are firms that are planning to enter or 

could plausibly enter the acquirer’s market. Nascent competitors are firms whose “prospective 

innovation represents a serious future threat to an incumbent.”

2483 In digital markets, potential rivals 

and nascent competitors play a critical role in driving innovation, as their prospective entry may 

dislodge incumbents or spur competition. For this reason, incumbents may view potential rivals and 

nascent competitors as a significant threat, especially as their success could render the incumbent’s 

technologies obsolete.

To strengthen the law relating to potential rivals and nascent competitors, Subcommittee staff 

recommends strengthening the Clayton Act to prohibit acquisitions of potential rivals and nascent 

competitors. This could be achieved by clarifying that proving harm on potential competition or 

nascent competition grounds does not require proving that the potential or nascent competitor would 

2481 For support of codifying the structural presumption, see Submission from John Kwoka, Finnegan Professor of Econ., 

Northeastern Univ., to H. Comm. on the Judiciary, 3 (Apr. 17, 2020) (on file with Comm.) [hereinafter Kwoka 

Submission]; Submission from Michael Kades, Dir., Mkts. & Competition Policy, Wash. Ctr. for Equitable Growth et al., 

to H. Comm. on the Judiciary, 9 (Apr. 30, 2020) (on file with Comm.) [hereinafter “Kades Submission”]; Lande 

Submission at 5; Slaiman Submission at 3; Foer Submission at 9. See also Herbert Hovenkamp & Carl Shapiro, Horizontal 

Mergers, Market Structure, and Burdens of Proof, 127 YALE L.J. 1996 (2018); Steven C. Salop, The Evolution and Vitality 

of Merger Presumptions: A Decision-Theoretic Approach, 80 ANTITRUST L.J. 269 (2015).

2482 Although some courts still follow the structural presumption adopted by the Supreme Court in Philadelphia National 

Bank, it is not universally followed, especially given the D.C. Circuit’s decision in United States v. Baker Hughes Inc., 908 

F.2d 981 (D.C. Cir. 1990).

2483 Wu Submission at 4–5; see also C. Scott Hemphill & Tim Wu, Nascent Competitors, 168 U. PA. L. REV. (forthcoming 

2020); Kades Submission at 14. 
396

have been a successful entrant in a but-for world.2484 Given the patchwork of cases that are unfavorable 

to potential- and nascent competition-based theories of harm, this amendment should also make clear 

that Congress intends to overrides this case law.2485

Since startups can be an important source of potential and nascent competition, the antitrust 

laws should also look unfavorably upon incumbents purchasing innovative startups. One way that 

Congress could do so is by codifying a presumption against acquisitions of startups by dominant firms, 

particularly those that serve as direct competitors, as well as those operating in adjacent or related 

markets.2486

Lastly, Subcommittee staff ’s review of relevant documents produced by the Federal Trade 

Commission and Justice Department demonstrated that the antitrust agencies consistently 

underestimated—by a significant margin—the degree to which an acquisition would undermine 

competition and impede entry. In light of this tendency, Subcommittee staff recommends that 

Congress consider strengthening the incipiency standard by amending the Clayton Act to prohibit 

acquisitions that “may lessen competition or tend to increase market power.”

2487 Revising the law 

would “arrest the creation of trusts, conspiracies, and monopolies in their incipiency and before 

consummation.”

2488

c. Strengthen Vertical Merger Doctrine

The Subcommittee’s investigation identified several ways in which vertical integration of 

dominant platforms enabled anticompetitive conduct. For this reason, the Subcommittee recommends 

that Congress examine proposals to strengthen the law relating to vertical mergers. The current case 

law disfavors challenges to vertical mergers. Specifically, courts tend to defer to claims from the 

merging parties that the transaction will yield efficiencies through the “elimination of double 

marginalization” and are skeptical about claims that the merger will result in foreclosure.

To address this concern, the Subcommittee recommends that Congress explore presumptions 

involving vertical mergers, such as a presumption that vertical mergers are anticompetitive when either 

2484 Wu Submission at 6; Kwoka Submission at 6.

2485 See, e.g., United States v. Marine Bancorporation, Inc., 418 U.S. 602 (1974).

2486 Submission from Mark Lemley, William H. Neukom Professor of Law, Stanford Law School, to H. Comm. on the 

Judiciary, 7–8 (Apr. 8, 2020) (on file with Comm.) [hereinafter Lemley Submission].

2487 Submission from Consumer Reports, to H. Comm. on the Judiciary, 5 (Apr. 17, 2020) (on file with Comm.) [hereinafter 

Consumer Reports Submission]; Submission from Richard M. Steuer, Adjunct Professor, Fordham School of Law, to H. 

Comm. on the Judiciary (Apr. 8, 2020) (on file with Comm.) [hereinafter Steuer Submission]; Peter C. Carstensen & 

Robert H. Lande, The Merger Incipiency Doctrine and the Importance of ‘Redundant’ Competitors, 2018 WIS. L. REV. 783 

(2018).

2488 S. Rep. No. 698 (1914) in EARL W. KINTNER, THE LEGISLATIVE HISTORY OF THE FEDERAL ANTITRUST LAWS AND 

RELATED STATUTES 1744–52 (1978) (noting that the Senate Judiciary Committee report stated that the purpose of the bill 

was to supplement the Sherman Act “by making these practices illegal, to arrest the creation of trusts, conspiracies, and 

monopolies in their incipiency and before consummation”).
397

of the merging parties is a dominant firm operating in a concentrated market, or presumptions relating 

to input foreclosure and customer foreclosure.2489

Rehabilitate Monopolization Law

Section 2 of the Sherman Act makes it illegal to “monopolize, or attempt to monopolize, or 

combine or conspire with any other person or persons, to monopolize any part of the trade or 

commerce among the several States.”

2490 Over recent decades, courts have significantly heightened the 

legal standards that plaintiffs must overcome in order to prove monopolization. Several of the business 

practices the Subcommittee’s investigation uncovered should be illegal under Section 2. This section 

briefly identifies the relevant business practices and the case law that impedes effective enforcement of 

section 2 of the Sherman Act. 

a. Abuse of Dominance

The Subcommittee’s investigation found that the dominant platforms have the incentive and 

ability to abuse their dominant position against third-party suppliers, workers, and consumers. Some of 

these business practices are a detriment to fair competition, but they do not easily fit the existing 

categories identified by the Sherman Act, namely “monopolization” or “restraint of trade.” Since 

courts have shifted their interpretation of the antitrust law to focus primarily on the formation or 

entrenchment of market power, and not on its exploitation or exercise, many of the business practices 

that Subcommittee staff identified as undermining competition in digital markets could be difficult to 

reach under the prevailing judicial approach. 

To address this concern, Subcommittee staff recommends that Congress consider extending the 

Sherman Act to prohibit abuses of dominance.2491 Furthermore, the Subcommittee should examine the 

creation of a statutory presumption that a market share of 30% or more constitutes a rebuttable 

presumption of dominance by a seller, and a market share of 25% or more constitute a rebuttable 

presumption of dominance by a buyer.2492

b. Monopoly Leveraging

The Subcommittee’s investigation found that the dominant platforms have engaged in 

“monopoly leveraging,” where a dominant firm uses its monopoly power in one market to boost or 

2489 Kades Submission at 5; Jonathan Baker et al., Five Principles for Vertical Merger Enforcement Policy, 33 ANTITRUST 3 

(2019).

2490 Sherman Act, 15 U.S.C. § 2 (1890).

2491 First & Fox Submission at 2; Foer Submission at 2–4; Newman Submission at 7–8; Stucke Submission at 14; Waller 

Submission at 13.

2492 Waller Submission at 12.
398

privilege its position in another market. For example, Google’s use of its horizontal search monopoly 

to advantage its vertical search offerings is a form of monopoly leveraging. Although monopoly 

leveraging was previously a widely cognizable theory of harm under antitrust law, courts now require 

that use of monopoly power in the first market “actually monopolize” the secondary market or 

“dangerously threaten[] to do so.”

2493 The Subcommittee’s investigation identified several instances in 

which use of monopoly power in one market to privilege the monopolist’s position in the second 

market injured competition, even if the conduct did not result in monopolization of the second market. 

For this reason, Subcommittee staff recommends overriding the legal requirement that monopoly 

leveraging “actually monopolize” the second market, as set out in Spectrum Sports, Inc. v. 

McQuillan.2494

c. Predatory Pricing

The Subcommittee’s investigation identified several instances in which a dominant platform 

was pricing goods or services below-cost in order to drive out rivals and capture the market. For 

example, documents produced during the investigation revealed that Amazon had been willing to lose 

$200 million in a single quarter in order to pressure Diapers.com, a firm it had recognized as its most 

significant rival in the category. Amazon cut prices and introduced steep promotions, prompting a 

pricing war that eventually weakened Diapers.com. Amazon then purchased the company, eliminating 

its competitor and subsequently cutting back the discounts and promotions it had introduced. 

Predatory pricing is a particular risk in digital markets, where winner-take-all dynamics 

incentivize the pursuit of growth over profits, and where the dominant digital platforms can crosssubsidize between lines of business. Courts, however, have introduced a “recoupment” requirement, 

necessitating that plaintiffs prove that the losses incurred through below-cost pricing subsequently 

were or could be recouped. Although dominant digital markets can recoup these losses through various 

means over the long term, recoupment is difficult for plaintiffs to prove in the short term. Since the 

recoupment requirement was introduced, successful predatory pricing cases have plummeted.2495

The Subcommittee recommends clarifying that proof of recoupment is not necessary to prove 

predatory pricing or predatory buying, overriding the Supreme Court’s decisions in Matsushita v. 

Zenith Ratio Corp.,

2496 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.,2497 and 

Weyerhaeuser Company v. Ross-Simmons Hardwood Lumber Company.

2498

2493 506 U.S. 447 (1993).

2494 Id. See also Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536 (9th Cir. 1991).

2495 Hubbard Submission at 20; Stucke Submission at 7; Teachout Submission at 12; Christopher R. Leslie, Predatory 

Pricing and Recoupment, 113 COLUM. L. REV. 1695 (2013).

2496 475 U.S. 574 (1986).

2497 509 U.S. 209 (1993).

2498 549 U.S. 312 (2007).
399

d. Essential Facilities and Refusals to Deal

The Subcommittee’s investigation uncovered several instances in which a dominant platform 

used the threat of delisting or refusing service to a third party as leverage to extract greater value or 

more data or to secure an advantage in a distinct market. Because the dominant platforms do not face 

meaningful competition in their primary markets, their threat to refuse business with a third party is the 

equivalent of depriving a market participant of an essential input. This denial of access in one market 

can undermine competition across adjacent markets, undermining the ability of market participants to 

compete on the merits. 

To address this concern, the Subcommittee recommends that Congress consider revitalizing the 

“essential facilities” doctrine, or the legal requirement that dominant firms provide access to their 

infrastructural services or facilities on a nondiscriminatory basis.2499 To clarify the law, Congress 

should consider overriding judicial decisions that have treated unfavorably essential facilities- and 

refusal to deal-based theories of harm.2500

e. Tying

The Subcommittee’s investigation identified several instances in which a dominant platform 

conditioned access to a good or service that the dominant platform controlled on the purchase or use of 

a separate product or service. This business practice undermines competition on the merits, by enabling 

a firm with market power in one market to privilege products or services in a distinct market. 

Although antitrust law has long treated tying by a monopolist as anticompetitive, in recent 

decades, courts have moved away from this position. Subcommittee staff recommends that Congress 

consider clarifying that conditioning access to a product or service in which a firm has market power to 

the purchase or use of a separate product or service is anticompetitive under Section 2, as held by the 

Supreme Court in Jefferson Parish Hosp. Dist. v. Hyde.

2501

f. Self-Preferencing and Anticompetitive Product Design

The Subcommittee’s investigation uncovered several instances in which a dominant platform 

used the design of its platform or service to privilege its own services or to disfavor competitors. This 

practice undermines competition by enabling a firm controlling an essential input to distort 

competition in separate markets. The Subcommittee recommends that Congress consider whether 

2499 Submission from the Am. Antitrust Inst., to H. Comm. on the Judiciary, 4 (Apr. 17, 2020) (on file with Comm.) 

[hereinafter “AAI Submission”]; Waller Submission at 13.

2500 Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004); Pacific Bell Telephone Co. v. 

linkLine Communications, Inc., 555 U.S. 438 (2009).

2501 466 U.S. 2 (1984).
400

making a design change that excludes competitors or otherwise undermines competition should be a 

violation of Section 2, regardless of whether the design change can be justified as an improvement for 

consumers.2502

Additional Measures to Strengthen the Antitrust Laws

In response to the Subcommittee’s requests for submissions, experts identified other proposals 

that Subcommittee staff believes warrant review by Congress. These include:

• Overriding Ohio v. American Express by clarifying that cases involving platforms do not 

require plaintiffs to establish harm to both sets of customers;2503

• Overriding United States v. Sabre Corp., clarifying that platforms that are “two-sided,” or serve 

multiple sets of customers, can compete with firms that are “one-sided”;

2504

• Clarifying that market definition is not required for proving an antitrust violation, especially in 

the presence of direct evidence of market power;2505 and

• Clarifying that “false positives” (or erroneous enforcement) are not more costly than “false 

negatives” (erroneous non-enforcement), and that, when relating to conduct or mergers 

involving dominant firms, “false negatives” are costlier.2506

C. Strengthening Antitrust Enforcement

Congressional Oversight 

As discussed earlier in the Report, Congress has a strong tradition of performing vigorous 

oversight of the enforcement and adequacy of the antitrust laws. Over the last century, Congress at key 

2502 This would require overriding Allied Orthopedic Appliances, Inc. v. Tyco Health Care Group LP, 592 F.3d 991 (9th 

Cir. 2010).

2503 AAI Submission at 4; Submission from Herbert Hovenkamp, James G. Dinan Univ. Professor, Univ. of Pa. Law 

School, to H. Comm. on the Judiciary, 3 (Apr. 17, 2020) (on file with Comm.) [hereinafter “Hovenkamp Submission”]; 

Hubbard Submission at 20; Kades Submission at 8.

2504 United States v. Sabre Corp., 452 F.Supp.3d 97 (D. Del. 2020). See also Kades Submission at 10.

2505 Hovenkamp Submission at 3–4; Newman Submission at 5–6. 

2506 Subcommittee staff believes that Congress could clarify that the views set out by then-Professor Frank Easterbrook in 

The Limits of Antitrust, 63 TEX. L. REV. 1 (1984) do not reflect the views of the Congress in enacting the antitrust laws. See 

also Submission from Bill Baer, Visiting Fellow, The Brookings Institution, to H. Comm. on the Judiciary, 3 (May 19, 

2020) (on file with Comm.) [hereinafter “Baer Submission”] (“That is my fundamental concern with the state of antitrust 

enforcement today. It is too cautious, too worried about adverse effects of “over enforcement” (so called Type I errors).”).
401

moments responded forcefully to the courts’ narrowing of antitrust laws, the rising tide of economic 

concentration, or other challenges to the sound and effective administration of the antitrust laws.2507

This tradition includes the creation of the Federal Trade Commission and concurrent enactment 

of the Clayton Antitrust Act in 1914, as both a response to the Supreme Court’s narrow construction of 

the Sherman Act in 1911 and an effort to limit the discretion of the courts.2508 It also includes 

Congress’s broadening of merger enforcement to cover non-horizontal acquisitions and other 

transactions in the Celler-Kefauver Antimerger Act of 1950 as well as establishing a mechanism for 

judicial oversight of consent decrees in response to political interference in merger enforcement with 

the Tunney Act of 1974.2509 Additionally, Congress has regularly investigated the rise and abuse of 

market power in important markets.2510 In support of these efforts, Congress dedicated substantial 

congressional and agency resources to perform the task of identifying and responding to 

anticompetitive conduct.2511

In recent decades, Congress has departed from this tradition, deferring largely to the courts and 

to the antitrust agencies in the crafting of substantive antitrust policy.2512 Its inaction has been read as 

acquiesce to the narrowing of the antitrust laws and has contributed to antitrust becoming “overly 

technical and primarily dependent on economics.”

2513

In other cases, congressional attention has fallen short as lawmakers tried to address 

competition problems without sustained efforts to implement enforcement changes, leading some 

reform efforts in recent decades to have misfired.2514 Responding to these concerns, Congress has 

2507 See generally, Marc Winerman, The Origins of the FTC: Concentration, Cooperation, Control, and Competition, 71 

ANTITRUST L.J. 1 (2003).

2508 Clayton Act, 15 U.S.C. § 12; Fed. Trade Comm’n Act, 15 U.S.C. § 41.

2509 5 U.S.C. § 16. See also Consent Decree Program of the Dep’t of Justice: Hearings Before the Subcomm. on Antitrust of 

the H. Comm. on the Judiciary, 85th Cong. (1957); REPORT OF THE SUBCOMM. ON ANTITRUST OF THE H. COMM. ON THE 

JUDICIARY, CONSENT DECREE PROGRAM OF THE DEP’T OF JUSTICE, 86TH CONG., 1ST SESS. (1959).

2510 In the 1990s, the Committee on the Judiciary conducted significant oversight of competition in the telecommunications 

market in the wake of the breakup of Ma Bell and through oversight of the 1982 consent decree. These efforts culminated 

in the passage of H.R. 3626, the “Antitrust and Communications Reform Act,” by the House of Representatives in 1994 by 

a vote of 423 to 5. Chairman Jack B. Brooks introduced this bill—a precursor to the Telecommunications Act of 1996—to 

address monopolization in the telecommunications market. See generally H. Rept. 103-559; Robert M. Frieden, The 

Telecommunications Act of 1996: Predicting the Winners and Losers, 20 HASTINGS COMM. & ENT. L.J. 11, 57 n.8 (1997).

2511 Submission from Alison Jones & William E. Kovacic, to H. Comm. on the Judiciary, 4 (Apr. 17, 2020) (on file with 

Comm.) [hereinafter Jones & Kovacic Submission].

2512 Harry First & Spencer Weber Waller, Antitrust’s Democracy Deficit, 81 FORDHAM L. REV. 2543, 2556 (2013) 

(“[D]espite a history of bipartisan congressional support for the importance of the antitrust laws and their enforcement, of 

late Congress has done little. And when it has done something, it has focused on the micro rather than the macro changes 

that have occurred in the field.”).

2513 Id. at 2559.

2514 Submission of Alison Jones & William E. Kovacic at 4 (Apr. 17, 2020) (on file with Majority staff of the Subcomm.) 

[hereinafter “Jones & Kovacic Submission”] (“The miscalculation of Congress (and the agencies) about the magnitude of 
402

increased appropriations and provided modest improvements to the Federal Trade Commission’s 

budget and remedial authority during this period. But these efforts were insufficient without sustained 

support in the face of “ferocious opposition” from large defendants and businesses lobbying 

Congress.2515

To remedy these broader trends, Subcommittee staff recommends that Congress revive its long 

tradition of robust and vigorous oversight of the antitrust laws and enforcement, along with its 

commitment to ongoing market investigations and legislative activity. Additionally, greater attention to 

implementation challenges will enable Congress to better see its reform efforts through.

Agency Enforcement

Over the course of the investigation, the Subcommittee uncovered evidence that the antitrust 

agencies consistently failed to block monopolists from establishing or maintaining their dominance 

through anticompetitive conduct or acquisitions. This institutional failure follows a multi-decade trend 

whereby the antitrust agencies have constrained their own authorities and advanced narrow readings of 

the law. In the case of the Federal Trade Commission, the agency has been reluctant to use the 

expansive set of tools with which Congress provided it, neglecting to fulfill its broad legislative 

mandate. Restoring the agencies to full strength will require overcoming these trends.

As a general matter, Congress created the FTC to police and prohibit “unfair methods of 

competition,”

2516 and to serve as an “administrative tribunal” that carefully studied ongoing business 

practices and economic conditions.2517 To enable the agency to carry out these functions, Congress 

assigned the Commission powers to “make rules and regulations for the purpose of carrying out the 

[FTC Act’s] provisions,” as well as broad investigative authority to compel business information and 

conduct market studies.2518 Notably, Congress established the provision prohibiting “unfair methods of 

competition” to reach beyond the other antitrust statutes, “to fill in the gaps in the other antitrust laws, 

implementation tasks in this earlier period came at a high price. Implementation weaknesses undermined many 

investigations and cases that the federal agencies launched in response to congressional guidance. The litigation failures 

raised questions about the competence of the federal agencies, particularly their ability to manage large cases dealing with 

misconduct by dominant firms and oligopolists. The wariness of the federal agencies since the late 1970s to bring cases in 

this area—a wariness that many observers today criticize as unwarranted—is in major part the residue of bitter litigation 

experiences from this earlier period.”).

2515 Jones & Kovacic Submission at 6.

2516 “The committee gave careful consideration to the question as to whether it would attempt to define the many and 

variable unfair practices which prevail in commerce and to forbid [them] . . . or whether it would, by a general declaration 

condemning unfair practices, leave it to the commission to determine what practices were unfair. It concluded that the latter 

course would be better, for the reason . . . that there were too many unfair practices to define, and after writing 20 of them 

into the law it would be quite possible to invent others.” S. REP. NO. 63-597, 13 (1914).

2517 Neil W. Averitt, The Meaning of “Unfair Methods of Competition” in Section 5 of the Federal Trade Commission Act, 

21 B.C. L. REV. 227 (1980); see also Marc Winerman, The Origins of the FTC: Concentration, Cooperation, Control, and 

Competition, 71 ANTITRUST L.J. 1 (2003).

2518 15 U.S.C. § 46.
403

to round them out and make their coverage complete.”

2519 Lawmakers delegated to the FTC the task of 

defining what constituted an “unfair method of competition,” recognizing that an expert agency 

equipped to continuously monitor business practices would be best positioned to ensure the legal 

definition kept pace with business realities. 

In practice, however, the Commission has neglected to play this role. In its first hundred years, 

the FTC promulgated only one rule defining an “unfair method of competition.”

2520 In 2015 the 

Commission adopted a set of “Enforcement Principles” stating that the FTC’s targeting of “unfair 

methods of competition” would be guided by the “promotion of consumer welfare,” a policy goal 

absent from any legislative directive given to the Commission.2521 Since the adoption of this 

framework, the FTC has brought only one case under its standalone section 5 authority.2522 The agency 

has also failed to regularly produce market-wide studies, having halted regular data collection in the 

1980s.2523

Together with the DOJ, the FTC has also chosen to stop enforcing certain antitrust laws 

entirely. For two decades, neither agency has filed a suit under the Robinson-Patman Act, which 

Congress passed in order to limit the power of large chain retailers to extract concessions from 

independent suppliers.2524 In 2008, the Justice Department issued a report recommending that section 2 

of the Sherman Act be curbed dramatically.2525 Although the report was subsequently rescinded, the 

Justice Department has not filed a significant monopolization case in two decades. Meanwhile, both 

2519 Neil W. Averitt, The Meaning of “Unfair Methods of Competition” in Section 5 of the Federal Trade Commission Act, 

21 B.C. L. REV. 227, 251 (1980) (“Section 5 is not confined to conduct that actually violates, or that threatens to violate, 

one of the other antitrust statutes. If it were limited to this extent it would be a largely duplicative provision. The legislative 

purpose instead assigned to Section 5 a broader role. It was to be an interstitial statute: it was to fill in the gaps in the other 

antitrust laws, to round them out and make their coverage complete. In addition to overt violations, therefore, Section 5 

would reach closely similar conduct that violates the policy or ‘spirit’ of the antitrust laws, even though it may not come 

technically within its terms.”).

2520 Discriminatory Practices in Men’s and Boys’ Tailored Clothing Industry, 16 C.F.R. pt. 412 (1968).

2521 Fed. Trade Comm’n, Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 

5 of the FTC Act (Aug. 13, 2015), 

https://www.ftc.gov/system/files/documents/public_statements/735201/150813section5enforcement.pdf.

2522 The one exception is FTC’s recent suit against Qualcomm. Fed. Trade Comm’n v. Qualcomm Inc., 411 F.Supp.3d 658 

(N.D. Cal. 2019) (5:17-cv-00220).

2523 FED. TRADE COMM’N, BUREAU OF ECON., ANNUAL LINE OF BUSINESS REPORT 1977 (1985), 

https://www.ftc.gov/reports/us-federal-trade-commission-bureau-economics-annual-line-business-report-1977-statistical. 

2524 In a memo submitted on behalf of the United States to the OECD, the Justice Department stated that “a shift in 

emphasis based on economic analysis resulted in a significant reduction in enforcement actions brought by the Agencies 

under the Robinson-Patman Act. As a result, current enforcement of the Act occurs mainly through private treble damages 

actions.” Note by the United States, Roundtable on “Price Discrimination,” OECD (Nov. 2016), 

https://www.justice.gov/atr/case-document/file/979211/download.

2525 Thomas O. Barnett & Hill B. Wellford, The DOJ’s Single-Firm Conduct Report: Promoting Consumer Welfare 

Through Clearer Standards for Section 2 of the Sherman Act (Sept. 8, 2008), 

https://www.justice.gov/sites/default/files/atr/legacy/2009/05/11/238599.pdf. 
404

agencies have targeted their enforcement efforts on relatively small players—including ice skating 

teachers and organists—raising questions about their enforcement priorities.2526

The agencies have also been hamstrung by inadequate budgets. In 1981, FTC Chairman Jim 

Miller won steep budget cuts at the Commission, a drastic rollback from which the agency has not yet 

recovered. Prior to this Congress, appropriations for both agencies have reached historic lows.2527 To 

restore the antitrust agencies to full strength, Subcommittee staff recommends that Congress consider 

the following:

• Triggering civil penalties and other relief for violations of “unfair methods of competition”

rules, creating symmetry with violations of “unfair or deceptive acts or practices” rules;

• Requiring the Commission to regularly collect data and report on economic concentration and 

competition in sectors across the economy, as permitted under section 6 of the FTC Act;

• Enhancing the public transparency and accountability of the antitrust agencies, by requiring the 

agencies to solicit and respond to public comments for merger reviews, and by requiring the 

agencies to publish written explanations for all enforcement decisions;2528

• Requiring the agencies to conduct and make publicly available merger retrospectives on 

significant transactions consummated over the last three decades; 

• Codifying stricter prohibitions on revolving door between the agencies and the companies that 

they investigate, especially with regards to senior officials;2529 and

• Increasing the budgets of the Federal Trade Commission and the Antitrust Division.2530

Private Enforcement 

Private enforcement plays a critical role in the nation’s antitrust system. The Sherman Act and 

Clayton Act both include a private right of action. This reflected lawmakers’ desire to ensure that those 

2526 Sandeep Vaheesan, Accommodating Capital and Policing Labor: Antitrust in the Two Gilded Ages, 78 MD. L. REV. 766 

(2019). See also Brief for the United States and the Fed. Trade Comm’n as Amicus Curiae in Support of Appellant and in 

Favor of Reversal, Chamber of Commerce of the United States of America and Rasier, LLC, v. City of Seattle, 890 F.3d 

769 (9th Cir. 2018) (No. 17-35640).

2527 MICHAEL KADES, WASH. CTR. FOR EQUITABLE GROWTH, THE STATE OF U.S. FEDERAL ANTITRUST ENFORCEMENT

(2019), https://equitablegrowth.org/wp-content/uploads/2019/09/091719-antitrust-enforcement-report.pdf. 

2528 Mitchell Submission at 9–10.

2529 See submission from Source 17.

2530 See Baer Submission at 7–8; Kades Submission at 12–13.
405

abused by monopoly power have an opportunity for direct recourse.2531 It also reflected a recognition 

that public enforcers would be susceptible to capture by the very monopolists that they were supposed 

to investigate, necessitating other means of enforcement.

Empirical surveys of trends in antitrust enforcement indicate that private enforcement deters 

anticompetitive conduct and strengthens enforcement overall.2532 In recent decades, however, courts 

have erected significant obstacles for private antitrust plaintiffs, both through procedural decisions and 

substantive doctrine.

One major obstacle is the rise of forced arbitration clauses, which undermine private 

enforcement of the antitrust laws by allowing companies to avoid legal accountability for their 

actions.2533 These clauses allow firms to evade the public justice system—where plaintiffs have far 

greater legal protections—and hide behind a one-sided process that is tilted in their favor.2534 For 

example, although Amazon has over two million sellers in the United States, Amazon’s records reflect 

that only 163 sellers initiated arbitration proceedings between 2014 and 2019.2535 This data seem to 

confirm studies showing that forced arbitration clauses often fails to provide a meaningful forum for 

resolving disputes and instead tend to suppress valid claims and shield wrongdoing.2536

Several other trends in judicial decisions have hampered private antitrust plaintiffs, including in 

cases involving dominant platforms. To address these concerns, the Subcommittee recommends that 

Congress consider:

2531 See, e.g., 51 CONG. REC. 9073 (1914) (remarks of Rep. Webb that private Section 7 remedies “open the door of justice 

to every man, whenever he may be injured by those who violate the antitrust laws, and give the injured party ample 

damages for the wrong suffered.”).

2532 Joshua P. Davis & Robert H. Lande, Toward an Empirical and Theoretical Assessment of Private Antitrust 

Enforcement, 36 SEATTLE U. L. REV. 1269, 1276 (2013).

2533 Justice Denied: Forced Arbitration and the Erosion of our Legal System: Hearing Before the Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm. on the Judiciary, 116th Cong. 2 (2019) (statement of Myriam Gilles, Paul R. 

Verkuil Research Chair in Public Law & Professor of Law, Benjamin N. Cardozo School of Law). 

2534 Justice Denied: Forced Arbitration and the Erosion of our Legal System: Hearing Before the Subcomm. on Antitrust, 

Commercial and Admin. Law of the H. Comm on the Judiciary, 116th Cong. 2 (2019) (statement of Deepak Gupta, 

Founding Principal, Gupta Wessler PLLC). 

2535 Innovation and Entrepreneurship Hearing at 49 (response to Questions for the Record of Nate Sutton, Assoc. Gen. 

Counsel, Amazon).

2536 Judith Resnik, Diffusing Disputes: The Public in the Private of Arbitration, the Private in Courts, and the Erasure of 

Rights, 124 YALE L. J. 2804 (2015).
406

• Eliminating court-created standards for “antitrust injury”

2537 and “antitrust standing,”2538 which 

undermine Congress’s granting of enforcement authority to “any person . . . injured . . . by 

reason of anything forbidden in the antitrust laws;”

2539

• Reducing procedural obstacles to litigation, including through eliminating forced arbitration 

clauses

2540 and undue limits on class action formation;2541 and

• Lowering the heightened pleading requirement introduced in Bell Atlantic Corp. v. 

Twombly.

2542

* * *

2537 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977).

2538 Associated Gen. Contractors v. California State Council of Carpenters, 459 U.S. 519 (1983).

2539 Clayton Act, 15 U.S.C. § 15 (1914).

2540 American Express v. Italian Colors, 570 U.S. 228 (2013); AT&T Mobility v. Concepcion, 563 U.S. 333 (2011).

2541 Comcast v. Behrend, 569 U.S. 27 (2013).

2542 550 U.S. 544 (2007).
407

APPENDIX: MERGERS AND ACQUISITIONS BY DOMINANT PLATFORMS2543

A. Amazon

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Zoox 2020 Autonomous Vehicles, Robotics, 

Transportation 1,200,000,000

Health Navigator 2019 Health Care --

Internet Gaming 

Database (IGDB) 2019 Video Games, Content, Media and Entertainment --

INLT 2019

Enterprise Applications, Freight 

Service, Logistics, SaaS, Shipping, 

Transportation

--

E8 Storage 2019 Cloud Computing, Enterprise 

Software, Flash Storage, Software 50,000,000

Bebo 2019 Internet, Video Games 25,000,000

Sizmek Ad Server 2019 Advertising, Marketing --

CANVAS Technology 2019 Robotics --

Eero 2019 Internet, IoT, Wireless 97,000,000

CloudEndure 2019 Cloud Computing, Cloud Storage, 

Enterprise Software, SaaS 200,000,000

2543 Prepared by Subcomm. based on The Acquisition Takeover by the 5 Tech Giants, 

https://people.ischool.berkeley.edu/~neha01mittal/infoviz/dashboard/, (last visited Oct 4, 2020); see also BIG TECH 

MERGERS, AMERICAN ECON. LIBERTIES PROJ., https://www.economicliberties.us/big-tech-merger-tracker/ (last visited Oct 

4, 2020); see also Search: Acquisitions, CRUNCHBASE, https://www.crunchbase.com/ (last visited Oct 4, 2020). 
408

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

TSO Logic 2019 Analytics, Cloud Computing, Cloud 

Management, Data Center, Software --

Tapzo 2018 E-Commerce, Mobile, Software 40,000,000

PillPack 2018 Pharmacy, E-Commerce 753,000,000

Ring 2018 Consumer Electronics, Security, 

Smart Home --

Immedia 2018 Semiconductors --

Sqrrl 2018 Cybersecurity 40,000,000

Dispatch 2017 Robotics --

Blink 2017 Consumer Electronics, Electronics, 

Hardware, Security 90,000,000

Goo Technologies 2017 3D Technology, Internet, Software, 

Web Development --

Body Labs 2017

3D Technology, Artificial 

Intelligence, Computer Vision, 

Developer APIs, Machine Learning

50,000,000

Wing 2017 Information Technology, Logistics, 

Mobile, SaaS --

GameSparks 2017 E-Commerce, Mobile, Software 10,000,000

Graphiq 2017

Artificial Intelligence, Big Data, 

Data Visualization, Market Research, 

Search Engine, Semantic Web

50,000,000
409

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Souq.com 2017 Consumer Electronics, E-Commerce, 

Shopping 580,000,000

Whole Foods 2017 Food and Beverage, Grocery, 

Organic Food 13,700,000,000

Do.com 2017 Internet, Meeting Software, Software --

Thinkbox Systems 2017 Software --

Colis Privé 2017 Shipping & Delivery, Logistics --

Harvest.ai 2017

Artificial Intelligence, Cloud 

Security, Cyber Security, Predictive 

Analytics

19,000,000

Biba Systems 2016 Apps, Messaging, Mobile --

Partpic 2016 Photo Recognition --

Westland 2016 Publishing --

Curse Inc. 2016 Digital Media, Gaming, Video 

Games --

Cloud9 IDE 2016

Cloud Computing, Enterprise 

Software, Mobile, Open Source, 

Software

--

Orbeus 2016 Artificial Intelligence, Photo 

Recognition --

NICE 2016 Cloud Infrastructure, Enterprise 

Software, Power Grid --
410

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Emvantage Payments 2016 Mobile Payments, Payments --

Elemental Technologies 2015

Content Delivery Network, 

Enterprise Software, Video, Video 

Streaming

500,000,000

Safaba Translation 

Systems 2015 Software --

AppThwack 2015 Android, Cyber Security, iOS, 

Mobile, SaaS, Test and Measurement --

Shoefitr 2015 E-Commerce, Fashion, 

Personalization, Software --

ClusterK 2015 Software --

Amiato 2015 Analytics, Real Time, Service 

Industry --

2lemetry 2015 Cloud Computing, IoT, Software --

Annapurna Labs 2015 Cloud Computing, Cloud Storage, 

Data Storage 350,000,000

GoodGame 2014 Video Games, Social Media --

Rooftop Media 2014 Content, Digital Entertainment, 

Audio --

ComiXology 2014

Cloud Data Services, Comics, 

Digital Entertainment, Digital Media, 

Reading Apps

--

Twitch 2014 Social Media, Video, Video Games, 

Video Streaming 970,000,000
411

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Double Helix Games 2014 Developer Platform, PC Games, 

Video Games --

TenMarks Education 2013 E-Learning, EdTech, Education --

Liquavista 2013 Electronics, Hardware, 

Manufacturing, Software --

Goodreads 2013 E-Learning, Social Media --

INOVA Software 2013 Software --

UpNext 2012 3D Mapping --

Evi 2012 Mobile, Search Engine 26,000,000

Avalon Books 2012 Books, Education --

Kiva Systems 2012 Hardware, Mobile, Robotics, 

Software 775,000,000

Teachstreet 2012 Charter Schools, Education --

Yap 2011

Artificial Intelligence, Audio, 

Messaging, Mobile, Speech 

Recognition, Telecommunications

--

Pushbutton 2011 Content, Digital Entertainment, TV --

The Book Depository 2011 E-Commerce, Retail --
412

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Toby Press 2010 Books --

Quidsi 2010 Beauty, Child Care, E-Commerce 545,000,000

BuyVIP 2010 E-Commerce, Marketing, Shopping 96,500,000

Amie Street 2010 Media and Entertainment, Music, 

Music Streaming --

Woot.com 2010 Electronics, Fashion, Wine And 

Spirits 110,000,000

Touchco 2010 Hardware, Software --

Zappos 2009 E-Commerce, Retail, Shoes 1,200,000,000

SnapTell 2009 Advertising, Marketing, Mobile --

Lexcycle 2009 iOS, Mobile, Software --

AbeBooks 2008 E-Commerce, Marketplace, 

Shopping --

Reflexive Entertainment 2008 Gaming, Mobile, Video Games --

Shelfari 2008 Social Media --

Box Office Mojo 2008 Analytics, Film, Media and 

Entertainment --
413

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Fabric.com 2008 E-Commerce, Fashion, Retail --

LoveFilm 2008 Digital Entertainment, Gaming, 

Internet 312,000,000

Without A Box 2008 Video --

Audible 2008

Audio, Audiobooks, Digital 

Entertainment, E-Commerce, Media 

and Entertainment

300,000,000

Brilliance Audio 2007 E-Commerce --

Digital Photography 

Review 2007 E-Commerce, News, Publishing --

Text Pay Me 2006 Messaging, Payments --

Shopbop.com 2006 E-Commerce, Lifestyle, Shopping --

CustomFlix 2005 Digital Media, DVDs --

Small Parts Inc. 2005 3D Printing, E-Commerce, 

Manufacturing, Retail --

MobiPocket 2005 Shopping --

Createspace 2005 Digital Media, Printing, Publishing --

Joyo.com 2004 E-Commerce, Internet, Music, Video 75,000,000
414

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Egghead.com 2002 E-Commerce, Retail 6,100,000

OurHouse 2001 E-Commerce, Retail --

Leep Technology 1999 CRM, Information Technology, 

Software --

Back to Basics 1999 Internet, Toys, Video Games --

Tool Crib 1999 Tools, E-Commerce --

Convergence Corp. 1999 Enterprise Software, Internet, 

Wireless 23,000,000

Accept.com 1999 E-Commerce Platforms, 

Photography, Retail 101,000,000

Alexa 1999 Digital Marketing, SEO, Web 

Development 250,000,000

LiveBid 1999 Auctions --

Exchange.com 1999 Books, Music --

MindCorps 1999 Web Development, Consulting --

Bookpages 1998 E-Commerce, Internet --

Internet Movie Database 

(IMDb) 1998 Content, Media and Entertainment, TV 55,000,000
415

Amazon

Company Year 

Acquired Categories Acquisition Value (USD)

Junglee 1998 E-Commerce, Retail, Shopping 250,000,000

PlanetAll 1998 Internet, Social Media, Web 

Development --

Telebook 1998 E-Commerce, Internet --

B. Apple

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

Spaces 2020 AR/VR --

Mobeewave 2020 Software 100,000,000

Fleetsmith 2020 Software, Security --

NextVR 2020 AR/VR 100,000,000

Inductiv 2020 AI, Machine Learning, Software --

Voysis 2020 AI, Machine Learning, Software --

Dark Sky 2020 Software, Apps --
416

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

Xnor.ai 2020 AI, Machine Learning, Software 200,000,000

Spectral Edge 2019 Photography, Software, Artificial 

Intelligence --

iKinema 2019 Graphics, 3D Animation, Digital 

Media --

Intel Smartphone 

Modem Business 2019 Hardware 1,000,000,000

Drive.ai 2019 Autonomous Vehicles --

Tueo Health 2019 Health Care, Information 

Technology --

Laserlike 2019 Machine Learning --

Stamplay 2019

Cloud Computing, Data Integration, 

Developer Tools, SaaS, Sales 

Automation

5,600,000

DataTiger 2019 Marketing --

PullString 2019 Voice Recognition --

Platoon 2018 Talent Search/Acquisition --

Silk Labs 2018 AI, Machine Learning, Software --

Dialog 2018 Semiconductors 300,000,000
417

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

Shazam 2018 Android, iOS, Music, Audio 

Recognition 400,000,000

Akonia 2018 Glasses, AR --

Texture 2018 Content, Digital Entertainment, 

Digital Media --

Buddybuild 2018 Developer Tools, Mobile, Software --

Pop Up Archive 2017 Audio, Podcasts, Software --

Spektral 2017 Photography, Software, AR 30,000,000

InVisage 2017 Photography, Software --

Vrvana 2017 Computer, Hardware, Information 

Technology, Virtual Reality 30,000,000

Init.ai 2017

Artificial Intelligence, B2B, 

Developer Platform, Developer 

Tools, Machine Learning, 

Messaging, Natural Language 

Processing, Virtual Assistant

--

PowerbyProxi 2017 Consumer Electronics, Industrial, 

Wireless --

Regaind 2017 Artificial Intelligence, Computer 

Vision, Photo Sharing, Photography --

SensoMotoric 

Instruments

2017 Computer Vision, Image 

Recognition, Psychology, Software --
418

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

Beddit 2017 Fitness, Health Care, Wellness --

Lattice Data 2017 Big Data, Information Technology, 

Machine Learning 200,000,000

Workflow 2017 Mobile, Productivity Tools, Software --

RealFace 2017 Facial Recognition --

Indoor.io 2016 Mapping Services, Navigation, 

Service Industry, Internet --

Tuplejump 2016

Analytics, Artificial Intelligence, Big 

Data, Data Visualization, Machine 

Learning, Software

--

Turi 2016 Analytics, Artificial Intelligence, Big 

Data, Machine Learning, Software 200,000,000

Gliimpse 2016 Health Care, Information 

Technology --

Emotient 2016 Artificial Intelligence, Machine 

Learning, Software, Video --

LearnSprout 2016 Analytics, Big Data, EdTech, 

Education, Predictive Analytics --

Flyby Media 2016

Augmented Reality, Computer 

Vision, Internet, Location Based 

Services, Mobile, Social Media, 

Video

--

Faceshift 2015

Broadcasting, Content Creators, 

Digital Media, Facial Recognition, 

Information Technology, Video 

Conferencing

--
419

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

LegbaCore 2015 Consulting, Information Technology, 

Security --

VocalIQ 2015

Artificial Intelligence, Audio, 

Automotive, Machine Learning, 

Mobile, Wearables

--

Perceptio 2015 Artificial Intelligence, Digital Media, 

Machine Learning --

Mapsense 2015 Geospatial, Location Based Services, 

Web Hosting 25,000,000

Coherent Navigation 2015 Apps, Software --

Metaio 2015 Advertising, Augmented Reality, 

Mobile, Software --

LinX 2015 Mobile, Social Media 20,000,000

Dryft 2015 Hardware, Software --

FoundationDB 2015 Analytics, Database, Enterprise 

Software --

Camel Audio 2015 Audio, Music --

Semetric 2015 Analytics, Content Discovery, 

Predictive Analytics 50,000,000

Prss 2014 iOS, Publishing --

Beats Electronics 2014

Consumer Electronics, Hardware, 

Manufacturing, Media and 

Entertainment, Music, Software

3,000,000,000
420

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

BookLamp 2014 Content Discovery, Reading Apps, 

Software --

Spotsetter 2014 Big Data, Social Media --

Swell 2014 Content Discovery, Machine 

Learning, Mobile, Personalization 30,000,000

LuxVue Technologies 2014 Consumer Electronics, Hardware, 

Software --

Burstly 2014 Advertising, Analytics, iOS, Mobile 

Advertising --

SnappyLabs 2014 Photography --

Acunu 2013 Analytics, Big Data, Software --

Topsy 2013 Analytics, Internet, Real Time, 

Search Engine, Social Media 200,000,000

BroadMap 2013 Geospatial, Software --

PrimeSense 2013 3D Technology, Consumer 

Electronics, Hardware 345,000,000

Cue 2013 Internet, Mobile Apps 35,000,000

Passif Semiconductor 2013 Manufacturing, Semiconductor, 

Wireless --

Matcha 2013 Content, Online Portals, Video --
421

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

Embark 2013 Mobile, Mobile Apps, Public 

Transportation --

AlgoTrim 2013 Mobile --

Catch.com 2013 Android, iOS, Mobile --

Locationary 2013 Analytics, Crowdsourcing, Location 

Based Services --

HopStop.com 2013 Android, iOS, Navigation --

OttoCat 2013 Apps, Internet, Mobile --

WiFiSlam 2013 Location Based Services, Mobile, 

Wireless 20,000,000

Novauris Technologies 2013 Information Services, Mobile, VoIP --

Anobit 2012 Electronics, Flash Storage, 

Semiconductor 390,000,000

Chomp 2012 Mobile 50,000,000

AuthenTec 2012

Biometrics, Cyber Security, Identity 

Management, NFC, Security, 

Semiconductor, Sensors

356,000,000

Particle 2012 Developer Platform, Mobile, Web 

Development --

Redmatica 2012 Music, Music Streaming --
422

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

C3 Technologies 2011 Assistive Technology, Enterprise 

Software, Information Technology 240,000,000

Quattro Wireless 2010

Ad Network, Advertising, 

Advertising Platforms, Mobile, 

Publishing

275,000,000

Intrinsity 2010 Manufacturing, Mobile, 

Semiconductor 121,000,000

Siri 2010 Consumer Electronics, iOS, 

Software, Virtualization --

Gipsy Moth Studios 2010 App Localization --

Poly9 2010 Geospatial, Software --

Polar Rose 2010 Internet, Browser Extensions, Image 

Recognition, Photography 22,000,000

IMSense 2010 Image Recognition, Photography, 

Software --

Placebase 2009 Database, Developer APIs, 

Developer Tools --

Lala 2009 Internet, Music, Music Streaming 17,000,000

P.A. Semi 2008 Electronics, Manufacturing, 

Semiconductor 278,000,000

Silicon Color 2006 Film, Software, Video --

Proximity 2006 Media Asset Management --
423

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

SchemaSoft 2005 Software --

FingerWorks 2005 Hardware, Human Computer 

Interaction, Software --

Nothing Real 2002 Software --

Zayante 2002 Software 13,000,000

Emagic 2002 Software 30,000,000

Prismo Graphics 2002 Robotics, Software, Video 20,000,000

Silicon Grail CorpChalice 2002 Software 20,000,000

Propel Software 2002 Computer, Internet, Software --

PowerSchool 2001 EdTech, Education, SaaS, Software 62,000,000

Spruce Technologies 2001 Information Technology 15,000,000

Bluebuzz 2001 Internet Service Provider --

Bluefish Labs 2001 Database, Mobile Apps, Web Apps --

Astarte 2000 DVD Authoring --
424

Apple

Company Year 

Acquired Categories Acquisition Value (USD)

NetSelector 2000 Information Technology, Internet, 

Software --

SoundJam MP 2000 MP3 Player, Audio Player, Software --

Raycer Graphics 1999 3D Technology, Graphic Design, 

Information Technology 15,000,000

Xemplar Education 1999 Education 5,000,000

NeXT 1997 Education, Hardware, Software 404,000,000

Power Computing Corp. 1997 Manufacturing, Software 100,000,000

Coral Software 1989 Artificial Intelligence, Information 

Technology, Software --

Nashoba Systems 1988 Software --

Network Innovations 1988 Information Technology, Software, 

Virtualization --

Orion Network Systems 1988 Communications Infrastructure, 

Satellite Communication --

Styleware 1988 Internet, IoT, Software, Web Hosting --

C. Facebook
425

Facebook

Company Year 

Acquired Categories Acquisition Value (USD)

Giphy 2020 Software 400,000,000

Ready at Dawn 2020 VR, Video Games --

Mapillary 2020 Software, Mapping --

Sanzaru Games 2020 VR, Video Games --

Scape Technologies 2020 AR/VR, Computer Vision, Software 40,000,000

PlayGiga 2019 Digital Media, Video Games --

Beat Games 2019 VR, Video Games --

Packagd 2019 E-Commerce, Shopping --

GrokStyle 2019 Artificial Intelligence --

CTRL-labs 2019 Augmented Reality --

Servicefriend 2019 AI, Messaging --

Chainspace 2019 Apps, Blockchain, Information 

Technology --

Vidpresso 2018 Broadcasting, Software --
426

Facebook

Company Year 

Acquired Categories Acquisition Value (USD)

Redkix 2018 Productivity, Enterprise 

Collaboration --

Bloomsbury AI 2018 AI, Machine Learning 30,000,000

Confirm.io 2018 Identity Management --

Tbh 2017 iOS, Mobile Apps, Social, Social 

Media --

Fayteq 2017 Software --

Source3 2017 Content Rights Management --

Ozlo 2017 Artificial Intelligence, Computer, 

Information Services, Mobile --

Zurich Eye 2017 AR/VR, Computer Vision, Robotics --

CrowdTangle 2016 Brand Marketing, Non-Profit, Social 

Media --

FacioMetrics 2016 Machine Learning, Mobile Apps, 

Social Media, Software --

InfiniLED 2016 Lighting, Hardware --

Nascent Objects 2016 Manufacturing, Product Design, 

Software --

Two Big Ears 2016 Audio, Consumer Electronics, 

Software, Virtual Reality --
427

Facebook

Company Year 

Acquired Categories Acquisition Value (USD)

Masquerade 2016 Consumer Applications, Mobile, 

Photo Editing --

Endaga 2015

Communications Infrastructure, 

Impact Investing, Infrastructure, 

Mobile, Telecommunications

--

Pebbles Interfaces 2015 Digital Media, Hardware, Mobile 60,000,000

Surreal Vision 2015 Software --

TheFind 2015

Coupons, E-Commerce, Lifestyle, 

Local, Mobile, Search Engine, 

Shopping

--

QuickFire Networks 2015 Cloud Data Services, Video --

Wit.ai 2015

Artificial Intelligence, Computer, 

Developer APIs, Machine Learning, 

Software

--

WaveGroup Sound 2014 Music, Product Design --

PRYTE 2014 Mobile Devices, Emerging Markets --

PrivateCore 2014 Cyber Security, Security --

LiveRail 2014 Advertising, Enterprise Software, 

Video 500,000,000

ProtoGeo Oy 2014 Mobile --

Ascenta 2014 Aerospace, Manufacturing 20,000,000
428

Facebook

Company Year 

Acquired Categories Acquisition Value (USD)

WhatsApp 2014 Android, Messaging, Mobile, 

Subscription Service 19,000,000,000

Oculus VR 2014

Augmented Reality, Consumer 

Electronics, Hardware, Video 

Games, Virtual Reality, 

Virtualization

2,000,000,000

Branch 2014 Internet, Messaging, Social 15,000,000

Little Eye Labs 2014 Android, Mobile, Test and 

Measurement 15,000,000

SportStream 2013 Consumer Electronics, Mobile, 

Sports --

Onavo 2013 Finance, Mobile, Social Network --

Jibbigo 2013 Apps, Audio, Big Data, Language 

Learning, Mobile --

Monoidics 2013 Analytics, Enterprise Software, 

Information Technology --

Parse 2013

Android, Cloud Computing, 

Enterprise Software, iOS, Mobile, 

PaaS

85,000,000

Hot Studio 2013 Internet, Social Media, Web Design --

Spaceport 2013 Gaming, Mobile, Mobile Devices, 

Online Games, Web Development --

Atlas Solutions 2013 Advertising, Advertising Platforms, 

Internet 100,000,000
429

Facebook

Company Year 

Acquired Categories Acquisition Value (USD)

Osmeta 2013 Hardware, Software --

Storylane 2013 Social Media --

Threadsy 2012 Messaging, Social Media, Social 

Network --

Spool 2012 Enterprise Software, Mobile, Social 

Bookmarking, Video --

Acrylic Software 2012 Software --

Karma 2012 Gifts, Mobile, Social --

Face.com 2012

Artificial Intelligence, Cloud 

Storage, Facial Recognition, 

Machine Learning, Photography, 

Social Network

100,000,000

TagTile 2012 Direct Marketing, Loyalty Programs, 

Mobile, Social Media --

Glancee 2012

Android, Dating, iOS, Location 

Based Services, Mobile, Public 

Relations, Search Engine

--

Lightbox.com 2012 Android, Mobile, Photo Sharing --

Instagram 2012 Mobile, Photo Sharing, Photography, 

Social Media 1,000,000,000

Caffeinated Mind 2012 File Transfer, Big Data --
430

Facebook

Company Year 

Acquired Categories Acquisition Value (USD)

Gowalla 2011

Location Based Services, 

Photography, Private Social 

Networking, Travel, Internet

--

Strobe 2011 iOS, Mobile, Software, Web 

Development --

Friend.ly 2011 Blogging Platforms, Social Media --

Push Pop Press 2011 Advertising, Digital Media, 

Marketing --

MailRank 2011 Email, CRM, Information 

Technology, Software --

DayTum 2011 Analytics, Big Data, Database --

Sofa 2011 Developer Tools, Software --

RecRec 2011 Computer Vision --

Beluga 2011 Messaging, Mobile, Social Media --

Rel8tion 2011 Advertising, Advertising Platforms --

Snaptu 2011 Mobile 70,000,000

ShareGrove 2010 Real Time, Social Network, Web 

Hosting --

Drop.io 2010

EdTech, Education, Email, File 

Sharing, Finance, FinTech, Flash 

Storage, Mobile

10,000,000
431

Facebook

Company Year 

Acquired Categories Acquisition Value (USD)

Hot Potato 2010 Social, Social Media, Social Media 

Marketing 10,000,000

Nextstop 2010 Digital Entertainment, Social, Travel 2,500,000

Chai Labs 2010 Software 10,000,000

Zenbe 2010

Android, Email, Location Based 

Services, Messaging, Mobile, 

Software, Web Apps

--

Divvyshot 2010 Photo Sharing, Social Network, Web 

Hosting --

Octazen 2010 Enterprise Software, Social Network, 

Web Browsers --

FriendFeed 2009 Social Media 47,500,000

ConnectU 2009 Social Media --

Parakey 2007 Social Media, Web Browsers, 

WebOS --

AboutFace 2007 Internet --
432

D. Google

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Stratozone 2020 Cloud, Platform Migration --

North 2020 Hardware, Glasses 180,000,000

Looker 2020 Big Data, Analytics 2,600,000,000

Cornerstone 

Technology 2020 Cloud, Platform Migration --

AppSheet 2020 Enterprise Software --

Pointy 2020 Software, Inventory 163,000,000

Fitbit 2019 User Data, Mobile Devices, Fitness 

Tracking, Health Care 2,100,000,000

Typhoon Studios 2019 Video Games, Video Streaming --

CloudSimple 2019 Cloud --

Elastifile 2019 Cloud, Storage --

Nightcorn 2019 Internet, Social Media, Video 

Streaming --

Alooma 2019 Data Integration, Cloud, Platform 

Migration --
433

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Superpod 2019 Software 60,000,000

DevOps Research and 

Assessment 2018 Cloud --

Sigmoid Labs 2018 Software --

Workbench 2018 Software, Education --

Onward 2018 AI, Customer Service, Sales --

GraphicsFuzz 2018 Graphics Drivers, Security --

Velostrata 2018 Cloud Migration, Data Centers --

Cask Data 2018 Big Data, Analytics --

Lytro 2018 Photography, Film, Hardware, VR --

Tenor 2018 Messaging, Social Media, Video --

Socratic 2018 AI, Software --

Xively 2018 Enterprise Software, IoT, SaaS --

Redux 2018 Speakers, Mobile Devices --
434

Google

Company Year 

Acquired Categories Acquisition Value (USD)

HTC Smartphone 

Division 2018 Consumer Electronics, Manufacturing, Mobile 1,100,000,000

Banter 2017 Mobile Software, Messaging --

Relay Media 2017 Analytics --

60db 2017 Audio, Media and Entertainment, 

Social Media, Video Streaming --

Bitium 2017

Cloud Computing, Cyber Security, 

Identity Management, SaaS, 

Security, Software

--

AIMatter 2017 Artificial Intelligence, Computer 

Vision, Software --

Senosis Health 2017 Health, Mobile Device, Software --

Halli Labs 2017 Artificial Intelligence, Machine 

Learning, Software Engineering --

Owlchemy Labs 2017 Gaming, Software Engineering, 

Virtual Reality --

Kaggle 2017 Analytics, Big Data, Data Mining, 

News, Predictive Analytics --

AppBridge 2017 Apps, Data Storage, Google --

Crashlytics 2017 Android, iOS, Mobile, SaaS --

Fabric 2017

Cloud Infrastructure, Developer 

APIs, Developer Tools, Enterprise 

Software, Mobile Apps, Real Time

--
435

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Limes Audio 2017 Audio, Communication Hardware, 

Telecommunications --

Cronologics 2016 Hardware, Software, Wearables --

LeapDroid 2016 Software --

Qwiklabs 2016 Cloud Computing, Information 

Technology, Software --

FameBit 2016 Internet, Music, Video --

Eyefluence 2016 Consumer Electronics, 

Manufacturing, Wearables --

Apigee 2016 Cloud Data Services, Enterprise 

Software, Information Technology 625,000,000

Urban Engines 2016 Analytics, Big Data, GovTech, 

Mobile, Software, Transportation --

Api.ai 2016 Natural Language Processing, Voice 

Recognition --

Orbitera 2016

Analytics, Cloud Computing, ECommerce, Marketing Automation, 

SaaS, Software

100,000,000

Apportable 2016 Developer Tools, Enterprise 

Software, Mobile, iOS --

Moodstocks 2016

Artificial Intelligence, Hardware, 

Image Recognition, Machine 

Learning, Mobile, QR Codes, Real 

Time, Visual Search

--
436

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Anvato 2016 Software, Video Conferencing, 

Video Streaming --

Kifi 2016

Analytics, Artificial Intelligence, Big 

Data, Content Discovery, Knowledge 

Management

--

LaunchKit 2016 Developer Tools, Mobile Apps --

Webpass 2016 Internet, ISP, Wireless --

Synergyse 2016 Apps, Search Engine, Software, 

Training --

BandPage 2016 Consumer, Facebook, Marketplace, 

Music --

Pie 2016 Automotive, Incubators --

Fly Labs 2015 iOS --

Bebop 2015 Business Development, Enterprise, 

Enterprise Software 380,000,000

Digisfera 2015 Images --

Oyster 2015 Email, Web Design, Web Hosting --

Jibe Mobile 2015 File Sharing, Messaging, Mobile, 

Social Media --

Pixate 2015 Computer, Enterprise Software, 

Mobile --
437

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Timeful 2015

Analytics, Artificial Intelligence, 

Database, Machine Learning, Task 

Management

--

Pulse.io 2015 Apps, Mobile --

Thrive Audio 2015 Audio, 3D Technology --

Skillman & Hackett 2015 Software, Virtual Reality --

Launchpad Toys 2015 Apps, Education, iOS --

Odysee 2015 Enterprise Software, Mobile Apps, 

Photo Sharing --

Softcard 2015 Apps, Mobile Payments --

Red Hot Labs 2015 Advertising Platforms, Apps, 

Mobile, Software --

Granata Decision 

Systems 2015 Analytics, Artificial Intelligence, Machine Learning --

Vidmaker 2014 Collaboration, Social Media, Video --

Lumedyne 

Technologies 2014 Consumer Electronics, Information Technology, Semiconductors --

RelativeWave 2014 Apps, Developer Tools --

Agawi 2014 EdTech, Gaming, Mobile Apps, 

Mobile Devices --
438

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Firebase 2014

Cloud Infrastructure, Developer 

APIs, Developer Tools, Enterprise 

Software, Mobile Apps, Real Time

--

Dark Blue Labs 2014 Artificial Intelligence, Data 

Visualization, Machine Learning --

Vision Factory 2014

Artificial Intelligence, Computer 

Vision, Machine Learning, Search 

Engine, Software

--

Revolv 2014 Internet of Things, Smart Home, 

Software --

Lift Labs 2014 Hardware, Health Care, Medical, 

Software --

Polar 2014 Fitness, Health Care, Wearables --

Skybox Imaging 2014

Cloud Security, Cyber Security, 

Enterprise Software, Network 

Security, Security, Software

500,000,000

Emu 2014 E-Commerce --

Directr 2014 Energy, Solar --

Jetpac 2014 AI, ML --

Gecko Design 2014 Product Design --

Zync Render 2014 Digital Media, Flash Storage, Social 

Media --

Dropcam 2014 Consumer Electronics, Hardware, 

SaaS 555,000,000
439

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Songza 2014 Music --

DrawElements 2014 Enterprise Software --

mDialog 2014 Advertising, Information 

Technology, Video Streaming --

Aplental Technologies 2014 Information Technology, Wireless --

Baarzo 2014 Video, Search --

Appurify 2014 Android, Apps, iOS, Mobile, Test 

and Measurement --

Rangespan 2014 Analytics, E-Commerce, Supply 

Chain Management --

Adometry 2014 Advertising, Analytics, SaaS --

Appetas 2014 Network Security, Restaurants, SaaS --

Stackdriver 2014 Apps, Cloud Computing, Enterprise 

Software, Infrastructure --

Quest Visual 2014 Data Visualization, iOS, Software --

Gridcentric 2014 Software, Virtualization --

Divide 2014 Enterprise Software, Information 

Technology, Mobile, SaaS, Software --
440

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Titan Aerospace 2014 Aerospace, Manufacturing --

GreenThrottle 2014 Console Games, Consumer 

Electronics, Mobile --

Nest Labs 2014 Sensor, Manufacturing, Smart Home 3,200,000,000

SlickLogin 2014 Mobile, Mobile Apps, Security --

Spider.io 2014 Advertising, Analytics, Fraud 

Detection, Internet, Security --

Bitspin 2014 Apps, Web Development --

Impermium 2014 Security --

DeepMind 

Technologies 2014 AI, ML 500,000,000

Flutter 2013 Content, Software 40,000,000

FlexyCore 2013 Software 23,000,000

Calico 2013 Biotech, Genetics, Health Care --

Bump 2013 Mobile, Contact Sharing --

WIMM Labs 2012 Hardware, Software, Wearables --
441

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Waze 2013 Mobile Apps, Navigation, 

Transportation 966,000,000

Makani Power 2013 Energy --

MyEnergy 2013 Clean Energy, Energy Efficiency --

Behavio 2013 Software --

Wavii 2013 ML, AI 30,000,000

Channel Intelligence 2013 Manufacturing, Product Search, 

Shopping 125,000,000

DNNresearch 2013 AI --

Talaria Technologies 2013 Software, Web Design, Web 

Development --

Schaft 2013 Hardware, Robotics --

Industrial Perception 2013 AI --

Redwood Robotics 2013 Robotics --

Meka Robotics 2013 Robotics --

Holomni 2013 Mobile, Robots --
442

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Bot & Dolly 2013 Software, Robotics --

Autofuss 2013 Product Design --

Incentive Targeting 2012 Public Relations, Retail --

BufferBox 2012 E-Commerce, Marketplace, 

Shopping 17,000,000

Viewdle 2012

Analytics, Augmented Reality, 

Computer Vision, Mobile, Facial 

Recognition

45,000,000

VirusTotal.com 2012 Security --

Nik Software 2012 Image Recognition, Software --

Sparrow 2012 Email, Messaging 25,000,000

Wildfire Interactive 2012 Consulting, Content, Data 

Integration, Developer Tools 450,000,000

Cuban Council 2012 Consulting, Consumer Electronics, 

Search Engine --

Meebo 2012 Internet, Messaging, Web 

Development 100,000,000

Quickoffice 2012 Enterprise Software, iOS, Mobile --

TxVia 2012 Finance, FinTech, Mobile, PaaS --
443

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Milk, Inc 2012 Apps, Mobile, Software --

RightsFlow 2011 Accounting, Music, Legal --

Clever Sense 2011 ML, AI --

Apture 2011 Advertising --

Katango 2011 Social Media --

Anthony’s Robots 2011 Autonomous Vehicles --

510 Systems 2011 Autonomous Vehicles, Software --

SocialGrapple 2011 Analytics, Social Media --

Zave Networks 2011 Apps, Mobile --

Zagat 2011 Consumer Reviews 151,000,000

DailyDeal 2011 Beauty, Shopping 114,000,000

Dealmap 2011 Coupons, Local, Mobile, Search 

Engine, Social Media --

Motorola Mobility 2011 Mobile Apps 12,500,000,000
444

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Punchd 2011 Android, iOS, Loyalty Programs, 

Mobile --

Fridge 2011 Photo Sharing --

PittPatt 2011 Facial Recognition --

PostRank 2011 Analytics, Social Media, Test and 

Measurement --

Admeld 2011 Advertising, Auctions, Software 400,000,000

SageTV 2011 Digital Entertainment, Events, Media 

and Entertainment --

Modu 2011 Mobile, Telecommunications, 

Wireless --

Sparkbuy 2011 Consumer Electronics, E-Commerce, 

Shopping --

PushLife 2011 Digital Media, E-Commerce, Mobile 25,000,000

ITA Software 2011 Information Technology 676,000,000

TalkBin 2011 Messaging --

BeatThatQuote.com 2011 Auto Insurance, E-Commerce, Price 

Comparison 65,000,000

Next New Networks 2011 Video, Video Streaming --
445

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Green Parrot Pictures 2011 Digital Media, Enterprise Software, 

Video --

Zynamics 2011 Security --

eBook Technologies 2011 Content, E-Books --

SayNow 2011 Messaging, Social Network, 

Telecommunications --

Phonetic Arts 2010 Software --

Widevine 

Technologies 2010 Digital Entertainment, Digital Media, Video --

Zetawire 2010 Mobile Payments, NFC --

BlindType 2010 Mobile --

Plannr 2010 Mobile --

Quiksee 2010 Digital Media 10,000,000

MentorWave 

Technologies 2010 Software, 3D Visualization --

Slide.com 2010 Developer Tools, Software 228,000,000

Jambool 2010 Apps, Internet 70,000,000
446

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Like.com 2010 Image Recognition 100,000,000

Angstro 2010 Enterprise Software, Facebook, 

Social Network --

SocialDeck 2010 Mobile, Social Website --

Metaweb 2010 Database, Infrastructure --

Invite Media 2010 Advertising 81,000,000

Instantiations 2010 Software --

Global IP Solutions 2010 Software 68,200,000

Simplify Media 2010 Digital Entertainment, Digital Media, 

Mobile --

Ruba.com 2010 Guides, Internet --

PinkArt 2010 Software --

Agnilux 2010 Hardware --

LabPixies 2010 Software --

BumpTop 2010 Software 30,000,000
447

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Picnik 2010 Photosharing --

DocVerse 2010 Document Management 25,000,000

Episodic 2010 Broadcasting, Internet --

reMail 2010 Email, Messaging, Mobile Apps --

Aardvark 2010 Internet, Search Engine, Social 50,000,000

AdMob 2009 Ad Network, Advertising, Apps, 

Marketing, Mobile 750,000,000

Gizmo5 2009 Public Relations, VoIP 30,000,000

Teracent 2009 Advertising, Machine Learning --

AppJet 2009 Software, Web Development --

reCAPTCHA 2009 Security --

On2 2009 Content, Internet, SaaS, Software, 

Video 133,000,000

Eluceon Research 2009 Internet, Software --

TNC 2008 Google, Web Browsers, Web 

Hosting --
448

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Begun 2008 Advertising --

Omnisio 2008 File Sharing, Video 15,000,000

Jaiku 2007 Mobile --

Zingku 2007 Digital Media, Social Media, Social 

Network --

Postini 2007 Cyber Security, Internet, Security 625,000,000

ImageAmerica 2007 Software, Document Scanning --

FeedBurner 2007 Blogging Platforms, Internet, 

Podcast 100,000,000

PeakStream 2007 Apps, Developer APIs, GPU, 

Software --

Zenter 2007 Content, E-Commerce, Web Hosting --

GrandCentral 2007 Mobile, Telecommunications, VoIP 45,000,000

GreenBorder 2007 Computer, Internet, Software --

Panoramio 2007 Photo Sharing, Photography, Social 

Media --

Crusix 2007 Social Networking --
449

Google

Company Year 

Acquired Categories Acquisition Value (USD)

DoubleClick 2007 Advertising 3,100,000,000

Tonic Systems 2007 Web Development --

Marratech 2007 Software, Video Conferencing 15,000,000

Trendalyzer 2007 Visual Statistics, Data Visualization, 

Software --

Adscape 2007 Advertising, Digital Media, 

Marketing 23,000,000

Endoxon 2006 Information Technology 28,000,000

JotSpot 2006 Collaboration, Enterprise Software, 

Software --

YouTube 2006 Internet, Music, Video 1,650,000,000

Neven Vision 2006 Software --

2Web Technologies 2006 Software --

Orion 2006 Content, Search Engine, Web 

Hosting --

Upstartle 2006 Software --

@Last Software 2006 3D Technology, Developer Tools --
450

Google

Company Year 

Acquired Categories Acquisition Value (USD)

Measure Map 2006 Advertising, Analytics, Big Data --

dMarc Broadcasting 2006 Advertising, Advertising Platforms, 

Internet Radio 102,000,000

Phatbits 2005 XML Desktop Applications --

allPAY GmbH 2005 Mobile --

bruNET GmbH 2005 Digital Entertainment, Social Media --

Skia 2005 Graphic Design --

Akwan Information 

Technologies 2005 Information Technology, IT Management, Search Engine --

Android 2005 Linux, Mobile, Search Engine 50,000,000

Reqwireless 2005 Wireless --

Dodgeball 2005 Mobile Devices, Software --

Urchin Software 

Corporation 2005 Software --

Where 2 Technologies 2004 Software --

Keyhole 2004 Geospatial, Software --
451

Google

Company Year 

Acquired Categories Acquisition Value (USD)

ZipDash 2004 Automotive, E-Commerce, Mobile, 

Real Time, Travel --

Picasa 2004 Photos, Photo Editing --

Ignite Logic 2004 Internet, Software, Web Design --

Sprinks 2003 Online Advertising --

Genius Labs 2003 Developer APIs, Developer Tools, 

Software --

Neotonic Software 2003 CRM, Software --

Applied Semantics 2003 Developer APIs, Enterprise 

Software, Mobile Apps 102,000,000

Kaltix 2003 SEO, Web Hosting --

Pyra Labs 2003

Blogging Platforms, Developer APIs, 

Developer Tools, Enterprise 

Software, Project Management, 

Social Media

--

Outride 2001 Energy, Information Technology, 

Online Portals --

Deja 2001 Information Technology, Internet, 

Web Development --