The New FTC Investigation May Curb Big Tech’s Intellectual Property Theft

February 28, 2020 Updated: March 2, 2020
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Commentary

The Federal Trade Commission (FTC) announced on Feb. 11 that it would look more closely at America’s five Big Tech companies—Amazon, Apple, Facebook, Microsoft, and Alphabet (including Google).

The commission ordered each of the five firms to submit for review information relating to their acquisition of smaller companies over the last decade.

The FTC’s decision to initiate this investigation is certainly a welcome one and much needed in understanding the business activities of Big Tech. This move represents a substantial step forward in understanding, and perhaps ultimately addressing anti-competitive aspects of Big Tech’s business model that have been going on for years.

Congressional testimony from many companies has found that Big Tech giants have only grown more belligerent and anticompetitive in their tactics to maintain and expand their market share. Specifically, they’ve used their dominant market presence to act as a gatekeeper for any potential competition.

Apple’s app store tax of 30 percent provides the company with a massive inherent advantage, as app competitors are forced to use Apple’s platform. Likewise, Google’s ban on third-party cookies in Chrome only further consolidates Google’s own control over the digital ad market.

However, as mentioned in the committee hearing, perhaps the most egregious of Big Tech’s anti-competitive practices has been its deliberate theft of patented technology and copyrighted materials from its smaller competitors to unfairly increase its market share.

Not surprisingly, Big Tech has utilized its influence to recruit the best intellectual property (IP) attorneys, plowing their way through competitors’ legal defenses and securing numerous favorable rulings within the federal court system.

Take Apple, for example. As I previously pointed out, in 2018, Apple painted Qualcomm as a bully in the media when Qualcomm simply tried to enforce its patent rights, attempting to keep Apple from taking Qualcomm’s patented iPhone chips without permission and without paying.

Apple certainly isn’t alone in violating another innovative company’s IP rights for its own gain. The Supreme Court recently announced it will hear arguments in Google v. Oracle—a case in which, following a round of failed negotiations over the licensing of Oracle’s Java program, Google decided to engage in blatant copyright infringement and steal thousands of lines of declarative code from the software.

While the Obama administration in 2015 and the Trump administration in 2019 provided official statements condemning Google’s abuse of IP, their statements lack an enforcement mechanism. And though the Supreme Court has jurisdiction to handle the particular case of Google v. Oracle, the FTC has the tools needed to prevent Big Tech’s continued anti-competitive approach to freely taking others’ IP.

The FTC has the power to bring administrative actions and seek remedies if it finds that Big Tech has misbehaved. By imposing substantial fines and handing down enforcement orders, the FTC has the capacity to punish Big Tech’s bad behavior and institute preventative rules. That way, companies such as Google and Apple are no longer incentivized to abuse IP to gain an anti-competitive edge in the market.

After all, most companies that fall victim to Big Tech are not as big as Qualcomm and Oracle. Many of the victims are small businesses or individuals who don’t have the same resources to litigate through the courts—let alone the Supreme Court. Consequently, this concern with Big Tech can’t be solved on a case-by-case basis in court. Rather, the FTC should address the tech companies’ systemic influence by imposing restrictions on predatory behavior.

Without a doubt, Big Tech’s anticompetitive behavior has only increased with time—and that’s what makes the FTC’s new investigation into the tech giants so essential.

For the sake of small business and competition within the industry, that behavior must be uncovered and fully investigated. If warranted, enforcement actions against Big Tech should follow. This in turn will pave the way for innovation and competition to flourish once again within the industry.

Professor Kristen Jakobsen Osenga teaches and writes in the areas of intellectual property, patent law, law and language, and legislation and regulation at the University of Richmond School of Law.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.