No images? Click here Welcome to The Corner. In this issue, we explore the ramifications of Big Tech’s deep penetration into the auto industry, where its products have now become embedded in nearly all cars manufactured by major manufacturers.
Is the Auto Industry Big Tech’s Next Takeover Target? Luke Goldstein Last week, Senator Elizabeth Warren sent a letter to the Federal Trade Commission calling on the agency to investigate Google, Apple, and Amazon's expansion into the auto industry. Each of the Big Tech firms have inked deals with auto companies to become a one-stop shop for all in-vehicle operations systems and info-tainment — from maps navigation and voice assistants to cloud storage and computing. Sen. Warren’s letter focuses closely on how data collection and exclusive dealing arrangements by the tech companies might violate antitrust laws. This is an important start. But when the agencies do begin to dig into this issue, they may want to take a far broader view of the threat. By relying on Google and Apple to provide operating systems for their vehicles, and then handing over all their data to the tech companies, the carmakers appear to be laying the groundwork for a Big Tech takeover of their businesses, and of the auto industry as a whole. Industry analysts have estimated that almost all new cars sold on the market this year have Google’s Android Auto, Apple’s CarPlay, or Amazon’s Alexa installed — and many will carry all three. Google has made the deepest inroads into the industry. At its current pace, Google's Android Automotive Operating System will be running in 70% of all cars by the 2028. Last year, Google struck a partnership with Ford to become the provider of all of its in-car services. Amazon has signed a similar partnership with GM’s Buick line. In most cases, automakers find themselves forced into bundling agreements to buy a full suite of products and services offered by the platforms. These deals represent a major retreat by automakers in their efforts to control their own technological destinies. Over the last decade, major automakers tried to develop their own operating systems, sometimes through cooperative ventures with competitors. One consortium of automakers that attempted to develop its own OS included Toyota, Hyundai, VW, and Mercedes-Benz. One main reason they did so was the fear that they would face the same fate as the once-powerful mobile phone makers Motorola, Nokia, and Ericsson. For years, these corporations dominated all aspects of cell phone manufacturing. But once Google and Apple persuaded them to adopt iOS and Android, these titans swiftly fell. A more recent cautionary tale comes from Uber. Google was an initial investor in Uber and held sizable control of the firm. But early on, Uber executives came to view reliance on Google's mapping and navigation services as a threat to full control over their own business. The corporation pushed a top Google executive off their board, and invested almost $500 million in developing its own maps and navigation technology before admitting failure. By the time Uber launched its initial public offering in 2019, the firm's filings revealed that it paid $58 million to Google for maps and $631 million for advertising and marketing over the previous three-year period. What's more, Google was also bankrolling Uber's main ride-hailing competitor, Lyft. In certain respects, Uber found itself to be little more than a subsidiary in the pocket of Google. The Uber saga should give carmakers pause before lurching further into partnerships with Big Tech. Unless these manufacturers manage to extricate themselves from tech's control, they may end up stripped of their most valuable data and more or less directly controlled by Google, Apple, and Amazon. Antitrust enforcers should review the tech companies emerging creep into the auto market before it's too late.
Lessons from the 2022 Midterms: In a Divided Nation, Antimonopoly is Key to Rebuilding True Democracy. Earlier this week, the Open Markets team examined the key lessons of the midterm elections. Our conclusion? Now’s the time to double down on using antimonopoly law and policy to rebuild our democracy. As we wrote in our statement: “Democracy won this midterm election. Americans voted against far-right threats to their voting rights and abortion rights, delivering the best mid term results for a Democratic president since John Kennedy. But let’s be honest. Given the stakes, this was still way too close a call. The time has come for the people who truly believe in liberal democracy to tell a new story of America, one that will empower us to build a strong and lasting majority.” Read the full statement here.
Open Markets Institute Files Amicus Brief Supporting McDonald’s Workers Last week, Open Markets Institute, together with partners Towards Justice and the National Legal Advocacy Network, filed an amicus brief in support of McDonald’s workers in a Seventh Circuit case called Deslandes v. McDonald’s. McDonald’s workers are seeking damages from the “no-poach” provisions that McDonald’s included in franchise agreements until 2018. These contracts prohibited McDonald’s franchisees from hiring workers who had recently worked at another McDonald’s branch. In practice, this meant an experienced McDonald’s manager could not move to another McDonald’s even when offered higher wages and better benefits. Our brief argues that McDonald’s and its franchisees established and enforced a collusive system to restrict their employees’ labor market freedom, illegally robbing them of bargaining power. In related news, the FTC joined the DOJ in backing McDonald’s laborers in an amicus brief filed last week in Deslandes v. McDonald’s. Arguing that antitrust laws protect competition for workers, the brief asks the appeals court to rule that a lower court applied the wrong test in a decision that dismissed workers’ allegations. 📝 WHAT WE'VE BEEN UP TO:
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We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter. 📈 VITAL STAT:$392 MillionThe amount Google agreed to in a record privacy settlement with a 40-state coalition of attorneys general for misleading users into thinking they had turned off location tracking although the company continued to collect that information. (New York Times) 📚 WHAT WE'RE READING:
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