Four of the largest tech companies in the world are facing a battle with the antitrust laws of the United States and today the CEOs of Apple, Amazon, Facebook, and Google testified in the US Congress today in the process to convince the Judiciary Committee that the business practices used by these companies are against anti-competitive monopolies.
Notably, this hearing is one of the biggest at the Congress in recent years that involves a small part of a long-running antitrust investigation that has gathered hundreds of hours of interviews and more than a million documents from the companies questioned.
The CEOs of the companies laid out their claims in the public release for the initial statement, but many members of the Congress questioned those claims.
House Judiciary Antitrust, Commercial and Administrative Law Subcommittee Chair David Cicilline (D-RI) opened the hearing by warning about the influence wielded by America’s biggest tech companies. “Because these companies are so central to our modern life, their business practices and decisions have an outsized effect on our economy and our democracy. Any single action by any one of these companies can affect hundreds of millions of us in profound and lasting ways,” said Cicilline.
Cicilline laid out common patterns across the four companies. Each is a bottleneck for a “key channel of distribution,” like an ad market or app store. Each uses data and surveillance of other companies to protect its power by “buying, copying, or by cutting off” potential competition. And the platforms all “abuse their control over current technologies to extend their power” by preferencing their own products or creating predatory pricing schemes. “Their ability to dictate terms, call the shots, upend entire sectors, and inspire fear represent the powers of a private government,” he concluded. “Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.”
Ranking member James Sensenbrenner (R-WI) followed with a more conciliatory statement. “Being big is not inherently bad, quite the opposite. In America you should be rewarded for success,” he said. “We’re here to better understand your role your companies have in the digital marketplace and importantly the effect they have on consumers and the public at large.”
The hearing was peppered with signs of the coronavirus pandemic. After a one-hour delay to allow time for cleaning, the remote witnesses were asked to swear that they weren’t getting fed answers by staff, and Judiciary Committee Ranking Member Jim Jordan (R-OH) was chided for leaving his mask off while not speaking.
Bezos, Pichai, Cook, and Zuckerberg all delivered 5-minute opening comments that were published the night before, offering defenses of their platforms alongside broader emotional appeals. Amazon CEO Jeff Bezos and Alphabet CEO Sundar Pichai mentioned their humble upbringings — Bezos’ mother was in high school in the 1960s when he was born, and Pichai described computer access changing his life while he was growing up in India. Apple CEO Tim Cook described Apple as a “uniquely American company,” while Facebook CEO Mark Zuckerberg promised that his company would stand for “American values” in a competitive global market.
Cicilline began his questioning by asking Pichai about Google’s search practices, including its scraping of content like restaurant reviews. “Why does Google steal content from honest businesses?” he asked. When Pichai offered a nonspecific denial, he asked if there was a conflict of interest between Google’s goal of sending people to relevant websites and its incentive to sell ads and promote its own services — and cited a memo where Google complained some vertical search sites were getting “too much traffic.”
He also asked if Google used its web traffic surveillance capabilities to identify and crush competition. “Congressman, just like other businesses we try to understand trends from, you know, data, which we can see, and we use it to improve our products for users,” Pichai responded.
Sensenbrenner directed his questions to Zuckerberg, asking if Facebook filtered out political viewpoints and why it had temporarily suspended Donald J. Trump, Jr. for posting a video making false claims about face masks and the drug hydroxychloroquine. Zuckerberg pointed out that this incident actually happened on Twitter but said that posts making false medical claims related to coronavirus would be removed because they “could cause imminent risk of harm.”
House Judiciary Committee Chair Jerrold Nadler (D-NY) introduced emails collected for the investigation that seemingly showed Facebook discussing an acquisition of Instagram to prevent it from becoming a competitive threat. Zuckerberg still defended the acquisition, saying it was “far from obvious” that Instagram would have succeeded without Facebook’s help. “It was not a guarantee that Instagram was going to succeed. The acquisition has done wildly well not just because of the founders’ talent, but because we invested heavily in building up the infrastructure and promoting it and working on security and working on a lot of things around this.”
Rep. Matt Gaetz (R-FL) asked Pichai to pledge that “Google will not adopt the bigoted anti-police policy” of ending tech contrasts with law enforcement agencies, following a letter last month from over 1,650 Google employees alarmed by police brutality.
“Congressman, we have committed to working with law enforcement in a way that is consistent with law and due processes in the US,” said Pichai.
Rep. Jamie Raskin (D-MD) raised the question of Russian election interference on Facebook and asked about its role in promoting racism and anti-Semitism, as well as its response to the #StopHateForProfit campaign supported by organizations like Color of Change — which submitted a letter to Congress warning about disinformation that “jeopardizes the physical, social, and political health of our society at large — and Black communities specifically.”
“We’re very focused on fighting against election interference and we’re also very focused on fighting against hate speech,” said Zuckerberg, saying Facebook had built “really sophisticated” AI systems to remove hate speech.
Following Raskin, in another reminder of the hearing’s unusual circumstances, the committee took a break to troubleshoot technical difficulties with one of the witnesses. (It’s not clear which one, although it presumably wasn’t Zuckerberg.)
Rep. Pramila Jayapal (D-WA) posed the first query to Amazon’s Jeff Bezos after two hours of questions, asking about a Wall Street Journal report that Amazon had mined third-party sellers’ data to develop and launch its own competing products. “Does Amazon ever access or use third-party seller data when making business decisions?” Jayapal asked.
Bezos didn’t totally deny the report. “I can’t answer that question yes or no. What I can tell you is we have a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated,” he said, saying the report was still under investigation. “I’m very proud of what we’ve done for third-party sellers on this platform.”
Rep. Lucy McBath (D-GA) also spoke to Bezos in the final question of the first round. She quoted a story from a bookseller on Amazon who alleges Amazon “systematically blocked us” from selling entire categories of books. “We were never given a reason, Amazon didn’t even provide us with a notice of why we were being restricted.”
Bezos said this wasn’t consistent with Amazon’s policies and asked to get in touch with the seller. “I’m concerned this is a pattern of behavior,” said McBath, telling Bezos he was “missing the point” of the story. “What do you have to say to the small businesses that are talking to Congress because you simply aren’t listening to them?”
“I do not think that’s systematically what’s going on,” Bezos said. “Third-party sellers in aggregate are doing extremely well on Amazon.”
Cicilline continued to question Bezos in the next round, saying third-party sellers had told Congress “heartbreaking stories” about having their products systematically poached by Amazon — with one source comparing the relationship with Amazon to that of a heroin dealer. “Mr. Bezos, this is one of your partners. Why on earth would they compare your company to a drug dealer?”
“Sir, I have great respect for you as a committee, but I completely disagree with that characterization,” said Bezos.
“Isn’t it an inherent conflict of interest for Amazon to produce and sell products that compete directly with third party sellers, particularly when you, Amazon, set the rules of the game?” asked Cicilline.
“The consumer is the one making the decisions,” Bezos responded.
Rep. Jayapal returned with questions for Zuckerberg about internal company documents. “Has Facebook ever threatened to clone the products of another company while also trying to acquire that company?” she asked.
“Congresswoman, not that I recall,” said Zuckerberg.
Jayapal asked specifically whether Facebook had threatened Instagram with development of a similar camera product, quoting a chat that Instagram’s Kevin Systrom found threatening — saying “he feared you would go into ‘destroy mode’ if he didn’t sell Instagram to you.” Zuckerberg said he disagreed with the characterization and that it was already clear Facebook was competing in the same space as Instagram.
“When the dominant platform threatens its potential rivals, that should not be a normal business practice,” said Jayapal.
All four tech CEOs promised Rep. Ken Buck (R-CO) that they would not tolerate the use of forced labor — or the sale of products manufactured with it on their platforms — after reports of China using Uighur slave labor. “Let me be clear: forced labor is abhorrent, and we would not tolerate it in Apple,” said Cook, who had previously spoken with Buck about the issue.
In response to a question about smart home products, Bezos told Rep. Raskin that the Echo was not priced below cost unless it was specifically on sale. Raskin also asked whether Amazon saw the smart home space as a “winner-take-all” market for it. “I would say no,” said Bezos. “Especially if we’re able to succeed in what we want. Our vision for this is that smart home speakers should answer to different wake words on a case-by-case basis, and if we could achieve that, I think you would get really good behavior on the part of competitive voice agents helping you.” But he said Amazon’s devices might still promote Amazon goods. “It wouldn’t surprise me if Alexa does sometimes promote our own products,” he said.
Rep. Val Butler Demings (D-FL) asked Cook about Apple removing third-party parental control apps that used mobile device management (MDM) tech, a move that raised questions about whether it was shutting out the competition for a newly launched feature. Cook maintained that the move was done purely for privacy-related reasons. “We apply the rules to all developers evenly,” he said. “There are over 30 parental controls on the App Store today, so there’s plenty of competition in this area. And I would point out this is not an area where Apple gets any revenue at all.”
Nadler asked Cook about a different report that broke recently: claims that Airbnb and ClassPass had been abruptly hit with demands for commissions after they launched virtual experiences. “Isn’t this pandemic profiteering?” he asked.
Cook said Apple would “never” engage in that. “The pandemic is a tragedy, and it’s hurting Americans and many people from all around the world and we would never take advantage of that,” he said. “I believe the cases that you’re talking about are cases where something has moved to a digital service, which technically does need to go through our commission model. But in both of the cases I am aware of, we are working with the developers.”
Jayapal questioned Pichai about whether Google digital advertising exchanges raised oversight questions. “It’s running the marketplace, it’s acting on the buy side, and it’s acting on the sell side at the same time — which is a major conflict of interest,” she said. “It allows you to set rates very low as a buyer of ad space from newspapers depriving them of ad revenue, and then also to sell high to small businesses that are very dependent on advertising on your platform. It sounds a bit like a stock market — except unlike a stock market, there’s no regulation on your ad exchange market.” She equated Google’s behavior to “insider trading.”
While Pichai said that “we are deeply committed to journalism in this area,” Jayapal questioned why a greater share of ad revenue was going to Google versus non-Google properties over time. “Is Google steering ad revenue to Google search?” she asked. Pichai said that “we are focused on providing users with the information they are looking for.”
She also asked Zuckerberg why he’d said Facebook wasn’t changing its approach to advertising based on the #StopHateForProfit boycott. “Are you so big that you don’t care how you’re impacted by a major boycott of 1,100 advertisers?”
“No, congresswoman, of course we care,” said Zuckerberg. “But we’re also not going to set our content policies because of advertisers. I think that would be the wrong thing for us to do. We’ve cared about issues like fighting hate speech for a long time.”
Finally, after five and a half hours, Cicilline ended by saying the committee will publish a report with conclusions and next steps. “This hearing has made one fact clear to me: these companies as they exist today have monopoly power. Some need to be broken up, all need to be properly regulated and held accountable,” he said. “We need to ensure the antitrust laws first written more than a century ago work in the digital age.”
Source: The Verge