Big Tech Claims It’s Not Choking Competitors, but Data Suggests Otherwise

Facebook, Google, Apple and Amazon called out in antitrust hearings

An orange robot fighting a green robot
Recent months have seen politicians take increasingly pointed jabs at the web's giants.
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Some of the biggest household names in tech—Facebook, Google, Apple and Amazon—faced the ire of lawmakers and regulators in Washington, D.C. earlier this week during the largest antitrust hearing in decades. Questions focused on market power and accused the companies of various practices—from buying out smaller firms to reshaping algorithms—that leave other tech and media organizations struggling (and oftentimes failing) to compete.

In total, three hearings took place on Tuesday, with the principal proceedings concerning the online ad industry overseen by the House Judiciary’s antitrust subcommittee. Meanwhile, two others focused on Facebook’s planned cryptocurrency and alleged censorship across Google search, with politicians leveling criticism against the tech behemoths—an attitude that seems to be gaining steam throughout Capitol Hill.

“Congress and antitrust enforcers allowed these firms to regulate themselves with little oversight,” said Rep. David Cicilline, D-R.I., the antitrust committee’s chairman, in his opening remarks. “As a result, the internet has become increasingly concentrated, less open, and growingly hostile to innovation and entrepreneurship.”

The tech giants, for their part, repeatedly refuted the notion of having a chokehold on online commerce, arguing that they still compete for ad dollars along with the rest of the web. In one notable exchange, Facebook’s head of global policy development, Matt Perault, flatly denied his company was monopolistic, pointing out that it brings in less than a quarter of total digital ad spend in the U.S.

Statistics appear to back this claim up, albeit with nuances.

According to eMarketer estimates for 2018, the platform captured about 22% of overall digital U.S. ad spend, which eclipses the combined 2.3% of competing social networks Twitter, Snapchat and Pinterest.

The company’s real strength is in social advertising where, as the Interactive Advertising Bureau recently noted, “growth continues to outpace the overall industry.” Thanks in part to its blockbuster Instagram acquisition in 2012, Facebook controls nearly 85% of social ad spend, according to another eMarketer report released this year. For context, Pinterest barely breaks 2%, while Snapchat and Twitter control 2.5% and 4.3%, respectively.

In spite of the platform’s seemingly endless privacy pitfalls of late, Facebook’s iron grip on advertisers is only expected to get tighter. As eMarketer predicted in its Facebook advertising forecast this week, “precise targeting, abundant reach—and a heavy amount of inertia—will keep advertisers locked in for the next couple of years.” Meanwhile, recent data from Sprout Social found 97% of social marketers saying Facebook is their “most used” and “most useful” platform.

The only company that challenges Facebook’s dominance in the ad market is Google. Though recent months have seen the search giant’s share in the American ad spend market take a slight dip, it still controls more than 37% of U.S. media spend, more than any other tech company. Taken together, the duopoly dominates roughly 60% of the total ad market, according to eMarketer.

Amazon faced similar scrutiny during the hearing, with Cicilline pressing Amazon’s associate general counsel Nate Sutton on the digital ad dominance of the ecommerce giant. Sutton insisted the company’s share of the advertising market is quite small—barely 4% of U.S. ad spending.

It’s another point that, while technically accurate, discounts Amazon’s position as the third largest advertiser online and a stalwart competitor to Facebook and Google. Meanwhile, that digital business is expected to bump up to roughly 7% of the U.S. market by 2020, earning the company $15 billion. This growth will undoubtedly be bolstered by Amazon’s recent acquisition of Sizmek’s ad server and Dynamic Creative Optimization (DCO) suite.