US Congress Antitrust sub-committee began hearing on Wednesday, July 29, questioning the leaders of the four tech giants of Silicon Valley; Apple, Facebook, Amazon, and Alphabet’s Google. CEOs of all four companies answered the committee’s questions probing their acquisition policies and anticompetitive practices.
Although the committee’s questions regarding acquisition were focused at Mark Zuckerberg (CEO of Facebook) and Jeff Bezos (CEO of Amazon), Apple’s CEO, Tim Cook distinguished his company’s acquisition policy from others in an interview with CNBC. Cook said,
“If you look at the things behind the investigation, the things are acquisitions, and if you noticed, we didn’t get any questions on acquisitions because our approach on acquisitions has been to buy companies where we have challenges, and IP, and then make them a feature of the phone.”
Apple’s acquisition policy
In the interview, Cook explained that his company’s acquisition strategy is not based on the intent to crush the competition. But to acquire a company to incorporate its technology into its products. Using the iPhone as an example, he listed down technologies implemented in the smartphone which were/are from acquired companies:
- Touch ID company
- Al Technology to improve Siri
- Beddit sleep tracking company
- Dark Sky-weather app
Read the complete interview here.
It is not often when consumers get to hear CEO, Tim Cook give details of the company’s operations and behind the scene deals. Maybe it was necessary to clear the company’s name from the malicious practice of acquiring smaller businesses to eliminate competition. A few members of the investigation committee accused Apple of “copy-acquire-kill” strategy and claimed to have seen strong evidence with “very specific language from top-level executives” of such anti-competitive behavior.
If not for the iPhone maker, this accusation of ‘copy-acquire-kill’ is very strongly persuaded against Facebook and Amazon. Sub-committee shared Facebook internal emails at the time of Instagram acquisition which reveals the intent to eliminate competition. For years, the company tired to acquire rival app Snapchat but when it did not succeed, Facebook simply copied the app’s 24 hrs stories like features and filters on Instagram. Now, FaceBook Inc. has launched a copy cat version of TikTok, called Instagram Reels in selected regions. Email evidence shows that after acquiring Diaper.com parent company, Amazon deliberately undercut its price to earn market share.
It is imperative for legislators to question the big fish in the tech industry to encourage healthy competition for the sake of industry growth and to eliminate monopolization which, inherently, deprives consumers of viable options/alternatives.
Besides this, Apple has to answer for its anti-competitive policies and preferential treatment for some developers on the App Store. Recently, the committee published email correspondence between Jeff Bezos of Amazon and Eddy Cue of Apple, which reveals that Apple reduced Amazon’s App Store revenue cut by half, to 15% from standard 30%, to bring Prime Video to iPhone and Apple TV.
Let us know your opinion on the on-going investigation in the comments section.