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U.S. lawmakers outline plan for reforming big tech

Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Alexis Keenan discuss Congress’ big tech antitrust report.

Video Transcript

ALEXIS CHRISTOFOROUS: Congress also has its eye on big tech this morning now that House Democrats have put out their proposal to rein in four of the biggest names, Apple, Amazon, Facebook, and Google. Alexis Keenan joins us now. And Alexis, some stark language in here, some dramatic of proposed changes, I guess, for these tech giants.

ALEXIS KEENAN: Indeed, Alexis. This House subcommittee, after this 16-month investigation, has concluded in its report that all four companies are monopolies. But more importantly than that, they say that they're using their monopolistic power to stifle competition, that's the legal tag that's needed there. As for Apple, the committee said that the Apple store and its distribution power is really the problem here.

It's saying that it allows the company to control all software distribution to 100 million iOS devices and that it, quote, "uses competitively sensitive information to compete with developers and also charge super competitive prices." Also to Amazon, the committee said that the company uses its platform, its marketplace, to access third party seller data that we've heard so much about in order to compete with its own customers.

For Facebook, it said that the companies acquisitions of social networks are the problem. That they are designed to target, quote, "nation competitive threats in order to acquire, copy, or kill those competitors." As for Google, the focus was on search and advertising businesses. The company's scale, the committee said, provides it with, quote, "near perfect market intelligence in order to compete."

So as for those recommended changes that you mentioned, House Democrats proposed a number of possible solutions, also recognizing that they don't necessarily think all of these need to be made. One is for Congress to consider separating the lines of businesses for these companies. In other words, breaking them up. All of the companies disagree with that method, which shouldn't surprise anybody.

Also commi-- committee recommended that there should be no preferential treatment given to a company's own services as they conduct those lines of businesses. Third, they said that any dominant services should be required to be compatible with their competitors. That's sort of a nod to the app store there. And also, finally, the committee said that the FTC really didn't do its job and failed to scrutinize mergers that took place over the years for these big tech companies. Saying that the really the starting place for these regulatory agencies should be to presume that the mergers are anti-competitive, Alexis.

BRIAN SOZZI: Alexis, what are the-- what's the likelihood that some of these recommendations become law?

ALEXIS KEENAN: Now, Brian, there is definitely bipartisan support for changes to the structure of these big tech companies. And Republicans did issue a separate report supporting antitrust enforcement, but not necessarily all these measures that the Democrats proposed. Still, though, a huge hurdle to actually getting new legislation passed. That, of course, would require a Congress that could agree. So a lot of people see that a blue wave in November would really be the way to new legislation here if Democrats take both the House and the Senate, along with the presidency.