An executive order signed by President Joe Biden on Friday ordering federal agencies to tighten anti-competitive rules increases the antitrust pressure facing large local tech companies – Amazon in particular, although Microsoft may also be affected.
âCapitalism without competition is not capitalism. It’s exploitation, âBiden said in a White House speech before signing the order.
Biden urged the Federal Trade Commission to establish rules that could limit how Amazon operates its $ 295 billion online retail market. The executive order also calls on the FTC to reconsider guidelines on mergers and acquisitions, in part to prevent so-called “murderous acquisitions” from potential competitors. The agency launched a comprehensive review last year of acquisitions of major tech companies, including Amazon and Microsoft, between 2010 and 2019.
The ordinance included other measures that would affect the operation of local technology companies. The FTC is responsible for making it easier for consumers to repair their electronic devices. Device makers have historically tried to limit the ability of consumers to repair devices at home or at independent repair shops, a practice that conservationists and consumers say increases the bottom line for manufacturers. unnecessary waste. Amazon and Microsoft have both lobbied against previous efforts to make it easier to repair devices.
And tens of thousands of Seattle-area workers could be affected by the executive order’s instruction that the FTC will prohibit or limit the use of non-compete agreements, which are common in the tech industry.
The ordinance also included provisions concerning alleged anti-competitive behavior in the pharmaceutical, transport and banking sectors.
Amazon did not respond to questions about the new decree. The company previously criticized the antitrust reforms championed by the House Antitrust Subcommittee, calling them “fringe notions” that “would destroy small businesses and hurt consumers.” In recent years, Amazon has strengthened its antitrust legal team and devoted more resources to lobbying on antitrust matters.
Microsoft declined to comment on the order.
Supporters of increased regulation on big tech companies have praised Biden’s action. Representative Pramila Jayapal, D-Seattle, deputy chair of the House antitrust subcommittee, said in a statement that she was “delighted” to see the new executive order.
“By unleashing the federal government’s competitive powers and empowering ordinary people, we can break corporate hold on our economy and put money in the pockets of those who need it,” she said. stated in the press release.
Jayapal last month sponsored antitrust legislation targeting large tech companies that, if passed, could allow the federal government to force Amazon to sell its Marketplace platform to third-party vendors.
Biden’s executive order also targets Amazon’s Marketplace platform by asking the FTC to declare that it is unfair for companies to operate online retail platforms where they compete with their customers.
An investigation last year by the House antitrust subcommittee – drafted in part by current FTC President Lina Khan – found that Amazon had misused market data from third-party vendors on its platform. -form to develop its own products which sold better than its competitors. The company’s platform is not a level playing field for vendors, the report concluded.
Groups advocating for a “right to repair” for consumer electronics also welcomed the decree, saying it could help keep devices like phones, tablets and laptops out of landfills. Electronics is now the fastest growing category of waste in the world, according to a report by the World Economic Forum.
Proponents say one of the reasons companies make it difficult to repair devices is to encourage consumers to keep upgrading their gadgets.
âIf I were Microsoft, I would take the program,â said Nathan Proctor, head of the âRight to Repairâ campaign for the US Public Interest Research Group. âI don’t see how they could live up to their environmental goals if they don’t change their mind about the repairs. Microsoft is committed to going carbon negative by 2030.
Microsoft has pushed back efforts to make it easier to repair devices like Surface tablets and Xboxes. Until recently, the company would void a device’s warranty if it was repaired by someone other than a Microsoft technician. Microsoft revised this language after the FTC sent it a warning letter in 2018. The company successfully lobbied against a 2019 Washington bill that would have made it easier for buyers to have devices repaired in retail locations. unauthorized stores.
Amazon, whose Echo smart speakers and Fire tablets have a significant market share in their respective segments, has also fought state-level efforts to make it easier for consumers to repair devices.
Neither company responded to questions about its stance on repairing the devices.
Many of the approximately 120,000 Microsoft and Amazon employees in the Seattle area have signed non-compete agreements limiting their ability to take on new roles at other technology companies. The White House says these deals keep wages low and restrict worker mobility.
As the two companies have taken legal action against former employees who allegedly violated non-compete agreements, Amazon in particular has aroused anger over what some say is its aggressive application of such contract language.
Amazon Web Services, the company’s cloud computing division, has filed a series of lawsuits against its former employees, claiming the workers violated their non-compete agreements when they accepted jobs with competitors from the cloud services like Google. Amazon CEO Andy Jassy, ââwho previously headed AWS, personally set the tone for the division’s aggressive non-compete policy, according to Bloomberg. Amazon denied this claim.
But the company lobbied to exempt workers from non-compete protections. The company was successful in convincing lawmakers in Washington to lower the salary cap under which the state makes non-compete agreements unenforceable, from $ 180,000 to $ 100,000. The amendment allowed Amazon to continue enforcing non-compete agreements for most workers in its Seattle-area offices, who typically earn more than $ 100,000.
Amazon did not respond to questions about the decree’s provisions on non-compete agreements. The company has previously said such restrictions protect its trade secrets, including customer and business relationships.
Shares of Amazon and Microsoft were relatively flat on Friday after Biden’s highly anticipated announcements.
Longer term, however, investors are likely worried about the prospect of antitrust actions that threaten Amazon, Google, Facebook and Apple, said Daniel Ives, chief executive of Equity Research at New York-based Wedbush Securities.
Microsoft, on the other hand, is still “the Teflon type” when it comes to new competition measures, having survived antitrust litigation in the 1990s and 2000s, Ives added.
âI think right now Microsoft is smiling at Redmond, while at Amazon HQ they’re throwing things up against the wall,â he said.