Undermining FAANG Companies; Tell-Tale
What’s the Deal?
Governments around the world are looking to cease business malpractices by the “FAANG” companies. They are determined to handle what they see as a ruthless business practice, tax evasion and misuse of data coming from excessive corporate power.
Let’s take a detailed look at these problems and how the government is looking to stop these practices.
Firstly, what are FAANG Companies?
FAANG is an acronym for the big tech giants, namely: Facebook, Amazon, Apple, Netflix and Alphabet (Parent company of Google). These companies need no introduction and have been dominating the digital world for years.
Amid the coronavirus pandemic throughout 2020, the world has increasingly been using digital solutions. Online shopping, online meetings and excessive social media are just a few examples of it. On the back of this, FAANG companies have seen their share prices increase by nearly 50% in 2020. Amazon, Apple and Alphabet have already become trillion-dollar companies.
Problems with FAANG and Actions Being Taken
● Predatory & Anti Competition Business Practices
- 38 state Attorneys Generals (AG) in the US have sued Alphabet Inc., accusing it of antitrust violations. The regulators contend that the company leverages its market dominance in the search-engine market to favour its own offerings over smaller competitors to maintain its monopoly. In June 2020, the European Union (EU) had imposed a fine of $2.7 billion on the company for the same.
- In October 2020, the US justice department launched an investigation into Alphabet’s deals with its partner companies (such as Apple) to block the distribution of rival search engines.
- Recently, the Texas AG filed a lawsuit against Alphabet, alleging a deal with Facebook to rig auctions for internet ad space.
- The Federal Trade Commission (FTC) and 48 states have sued Facebook for “illegal monopolization”. They are aiming to potentially force the company to divest Instagram and WhatsApp.
- The EU has been investigating Amazon for its unfair trade practices where they use third-party merchant data
● Tax Avoidance
FAANG companies have been redirecting profits through tax haven countries. The EU is looking at proposals to charge additional tax from these companies. Further, any future misconduct might have strong implications such as a penalty percentage on global revenue.
● Misuse of Data
Misuse of data has been a controversial topic for many years. Facebook has been under scrutiny for years by US legislators who are investigating secretive political ads.
How is the Indian Government Dealing with this?
While governments around the world are looking to stop the malpractices performed by FAANG companies, India has its own version of FAANG companies- Reliance Jio. Further, recently, FAANG companies have been tying up with Jio pumping significant investments to expand into different businesses and services (such as retail) in India. There have been talks on data localization, data privacy boundaries and a Data Privacy Act in India that will pose a question mark over the investments from the coveted tech firms.