Todd Weaver

Todd Weaver

Founder and CEO
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Todd Weaver

As part of a top-to-bottom review of the online market, the US House Committee on the Judiciary initiated a bipartisan investigation into Amazon, Apple, Facebook, and Google. Antitrust, also known as anticompetitive, is an area where regulators determine if the economic powers of business is healthy and allows competition to flourish. The 449-page report released today that thoroughly reviewed nearly 1.3 million documents, held seven separate hearings, and six hours of testimony from the CEOs of the four companies clearly shows anticompetitive behavior.

It’s about control

The report includes evidence concerning the extent to which these four companies have exploited, entrenched, and expanded their power of digital markets in anticompetitive and abusive ways; determining that each company is a gatekeeper of a key channel of distribution in the market. Controlling access to markets and the users of those markets is abuse and oppressive, while extracting valuable data from the people and businesses that rely on them.

“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.

The (unsurprising) 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.
  • Facebook has monopoly power in the market for social networking.
  • Google has a monopoly in the markets for general online search and search advertising.
  • Amazon has significant and durable market power in the U.S. online retail market.
  • Apple has significant and durable market power in the mobile operating system market.

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. Online platforms rarely charge consumers a monetary price—products appear to be “free” but are monetized through people’s attention or with their data. 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.

At a fundamental level, competition has been a key engine of economic activity in the US, resulting in the “pioneering of entire industries that, in time, come to employ millions and generate trillions.” This is especially true in the digital economy. Competition incentivizes incumbent and new entrants to build new technologies and improve business processes. It its absence, incumbent firms lack incentive to invest, slowing the rate of innovation across an industry. Lack of competition also results in eroded privacy and data protection.

Why Purism is different, point-by-point response from sections of the report

Apple, Google, Amazon, Facebook are all “C” Corporations and they have a fiduciary responsibility to maximize shareholder value at all costs, even anticompetitive ones. Purism is a Social Purpose Company who enshrined its articles of incorporation to protect and respect society and it releases all its source code.

The four companies are gatekeepers that lock in control, exploiting and extracting concessions people would not normally consent to. Purism offers complete freedom to use its products and services in any way people desire without fear of control or exploitation.

These companies push network effects of platform lock in to create a barrier to entry since they refuse to be interoperable with other platforms. Purism offers all services with free and open source software that is interoperable based on standards and supports decentralized hosting between other platforms.

These companies push vendor lock-in so switching costs are prohibitive, as users contribute data (photos, social, reviews, personal information) that they are unable to export to switch creates platform lock-in. Purism offers full transparency, export ability from all its services, in addition offers its customers complete control of their entire digital life to change operating systems, applications, or services.

Data is another area these companies accumulate that reinforces their scalpel-like precision about new business opportunities and anticompetitive practices. Purism does not use third-party trackers, does not profit from nor exploit user data, and went so far as to include avoiding that practice in its articles of incorporation.

Innovation kill zones are the markets these companies operate in and no institutional investor will take a founder seriously when they desire to compete against these monopolistic four companies. Purism competes with a business model that has revenue and builds value across the market of privacy, security, and user freedom–the only areas of weakness in the kill zone of big tech.

The entrenched power of firms with weak privacy protections has created a kill zone around the market for products that enhance privacy online. Purism actively avoids using these four companies’ services to avoid such kill-zone tactics mentioned in the report.

Competitive advantage and differentiators are gobbled up by these four companies to never allow competition to rise. Purism offers a “poison pill” to these types of companies: if you want to compete with us you will have to release all your source code, giving Purism a longer growing period to compete head-to-head with the giants.

Persistent collection and misuse of consumer data is an indicator of market power in the digital economy. 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. 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. 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.

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.

At Purism we recognize we are not just competing with the giants, but we are competing against the marketing budgets of the giants, where they continually use terms like “We care about your privacy” from Facebook or Apple, when they clearly do not, as the report proves.

The Mobile App Stores and Operating Systems

The report also has a section on Mobile App Stores, where unlike laptops or desktops, you almost exclusively must install applications through the vendor-controlled stores, thus reinforcing the gatekeeper control and exploitation. Purism offers the convenience of the PureOS Store with curated applications for your device, with all the freedoms to install applications from wherever you desire if you so choose.

Mobile operating systems also get a section in the report, and like the app stores, it is a duopoly of vendor lock-in and exploitative control. Purism uses PureOS on all devices, servers, laptops, desktops, and phone, where all the source code is released, thus offering the utmost security and privacy in a fully freedom-respecting operating system.

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.

Apple’s co-founder and former CEO Steve Jobs advocated this lock-in approach, noting Apple should “[t]ie all of our products together, so we further lock customers into our ecosystem.”
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. Competition regulators in the Netherlands explained that this strategy creates “path dependency” for consumers.

The report has a large section devoted to the mobile OS market and the barriers to entry for any new mobile OS, including number of apps, large enough user base, combined headset, and OS. Purism with PureOS that runs on laptops and mobile is taking a unique approach to compete in the market even against all the odds of anticompetitive practices, primarily starting with core applications and adapting (not porting nor rewriting) the thousands of existing applications in addition to offering convergence where PureOS as a mobile OS can be a complete desktop computer when using a keyboard, mouse, and monitor.

Restoring Competition in the Digital Economy

The report closes (in page 377 through 404) with section headers including:

  • Reduce Conflicts of Interest Thorough Structural Separations and Line of Business Restriction
  • Implement Rules to Prevent Discrimination, Favoritism, and Self-Preferencing
  • Promote Innovation Through Interoperability and Open Access (Interoperability and Data Portability)
  • Reduce Market Power Through Merger Presumptions
  • Create an Even Playing Field for the Free and Diverse Press
  • Prohibit Abuse of Superior Bargaining Power and Require Due Process
  • Restore the Antimonopoly Goals of the Antitrust Laws
  • Invigorate Merger Enforcement
    • Codify Bright-Line Rules and Structural Concentrated Markets
    • Protect Potential Rivals, Nascent Competitors, and Startups
    • Strengthen Vertical Merger Doctrine
  • Rehabilitate Monopolization Law
  • Additional Measures to Strengthen the Antitrust Laws

The report also includes a shockingly long appendix of acquisitions by these four companies to clearly make the point of market dominance through crushing competition by acquisition that goes from page 405 to 449.

Purism, a social purpose corporation, offers hardware, software, and services as an alternative to the exploitative, abusive, monopolistic, products and services offered by these companies. Support the change you’d like to see by supporting Purism and the products we produce.

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