In November, the Federal Trade Commission issued a policy statement reactivating its authority under Section 5 of the Federal Trade Commission Act to rein in unfair methods of competition. This was the latest example of Chair Lina Khan making a clean break from the agency’s hands-off approach toward competition, which has enabled a handful of tech giants to effectively crush competition in the markets for search engines, social media, and adtech.
As the FTC works to hold Big Tech companies accountable in the months ahead, it should use its powers under Section 5 to scrutinize one of the tech giants’ latest targets for expansion: the auto industry. In August, Fight for the Future petitioned the FTC to initiate rulemaking in response to Big Tech’s efforts to dominate the auto industry, noting that it poses a clear threat to competition, our basic right to privacy, and our very control over our vehicles. With Section 5, the FTC has new tools to address Big Tech’s inroads into our vehicles, and it ought to use them before it’s too late.
In a nation where an estimated three out of four people drive, Big Tech’s auto encroachment represents an intrusion into millions of people’s “third space.” Over the past two decades, the tech giants’ reach has extended to most aspects of our daily lives, from how we shop to how we connect with loved ones. We know how this will go. If Big Tech is allowed to take over the car industry, their addiction to data hoarding and proprietary software means that drivers of the future will be constantly monitored and watched, and will be locked into a “walled garden” of heated seat subscriptions and insecure digital car keys.
Big Tech’s push to dominate the auto industry is in its early stages, and that makes immediate action by the FTC especially critical. In a letter to the agency on the subject, Senator Elizabeth Warren echoed Khan’s acknowledgement that it’s far easier to prevent anti-competitive behavior than to roll it back when the market has already consolidated. A coalition of representatives led by Jamie Raskin have similarly highlighted the dangers posed by Big Tech’s “looming domination of the auto industry” in a letter to the FTC.
Domination is a powerful word, but these concerns are not hyperbole. Research by consulting firm Gartner predicts that around 70% of cars will use the Android operating system by 2028, even as the number stands at less than one percent as of 2022. Considered something of a “final frontier” for the tech giants, taking over the automotive sector will allow Big Tech to expand its surveillance apparatus and corner emerging markets like those for autonomous and electric vehicles.
While the FTC can act now to get ahead of a bigger problem, the reality is that Big Tech is already leveraging its monopoly power to take over our cars. As noted by CNBC, Apple’s CarPlay technology increasingly resembles a “trojan horse into the automotive industry.” After all, developers looking to distribute apps through CarPlay need Apple’s permission — just like they do with the iOS App Store. CarPlay helps Apple cement itself as an auto industry mainstay and act as an app marketplace gatekeeper. At the same time, Google’s Waymo self-driving service continues to expand and Apple’s car project looks closer to an official debut.
In an op-ed for ProMarket, Adam Levitin of the Georgetown University Law Center writes that Apple’s habit of locking out competitors in the payments sector, a strategy already subject to global antitrust scrutiny, has disturbing implications for Big Tech’s auto venture.
As Levitin notes, Apple is already replicating this “lockout” behavior in the realm of digital key agreements with car companies like Hyundai and BMW. Levitin argues that Apple could leverage its control of the NFC chip that powers digital keys to “to pry open other markets, such as by requiring an automaker to use an unrelated Apple product in a future digital key negotiation.” The FTC should act on its statutory responsibility to police unfair, anti-competitive conduct and make it clear that this type of coercive behavior is unacceptable.
Agency intervention should be a slam dunk, because cracking down on Big Tech’s auto incursion enjoys overwhelming public support. Polling by Data for Progress in April found that voters across party lines are alarmed by Big Tech’s encroachment into the auto industry. By a 59 to 28 percent margin, voters agreed that the tech giants’ presence in the sector “is likely to be bad for consumers, workers, and the economy.”
By an even wider margin, 75 percent of respondents agreed that regulators should increase scrutiny of Big Tech’s merger activity in the auto sector, compared to just 16 percent who said they disagreed. Notably, this number includes 80 percent of Democrats, 71 of Republicans, and 70 percent of independents, showing once again that Americans of all political stripes are concerned about Big Tech’s monopoly power.
While Big Tech’s efforts to dominate the auto industry face headwinds in the court of public opinion, the tech giants’ ambitions are unlikely to be thwarted without a proactive approach to antitrust enforcement. After all, tech companies aren’t bound by polling results — so federal regulators need to take initiative. The FTC has made major strides toward reinvigorating competition after decades of declining antitrust enforcement, and it should set its sights next on auto.
Sarah Roth-Gaudette is the Executive Director of Fight for the Future.