ANTITRUST

Big Tech CEOs Didn’t Win Over Congress At Hearing

The big day finally came — the CEOs of Amazon, Apple, Facebook and Google‘s parent, Alphabet, sat in front of lawmakers (at least virtually) and spent four hours getting grilled by a House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law.

Lawmakers demanded answers to a range of accusations, like whether Big Tech uses monopolistic practices to annihilate all possibility of competition.

The CEOs denied such claims over the course of many hours, while also defending their business practices as competitive but not in ways that violate U.S. antitrust laws. The conversation ranged the gamut from app store rules to search algorithms, acquisitions, cancel culture, social commerce, data harvesting and when ecosystems’ walls become so high as to become a barrier to competition.

How did Big Tech do in defending itself?

Well, subcommittee Chairman David Cicilline of Rhode Island ended the hearing by saying that all firms “have monopoly power.”

So, the CEOs’ testimony did little to put the issue to bed for Big Tech once and for all. But the hearing did highlight how the firms view their own positions in the market and what they think the future of oversight will look like.

Here’s a look at some of their key points:

Amazon CEO Jeff Bezos’ First Time Out

The most highly anticipated testimony came from Amazon CEO Jeff Bezos — the world’s richest man — who was making his first ever appearance on Capitol Hill.

Bezos opened his remarks by talking about his parents’ investment in Amazon despite not really knowing what the internet was, and the “trust” Americans have in Amazon.

“We need American workers to get products to American customers,” he said in his prepared remarks.

The consensus view of Bezos’ performance among market watchers is that he was more transparent and authentic than the other CEOs, but also potentially more likely to create issues for his firm down the line thanks to his comments.

Consider what he said when pressed by committed member Rep. Pramila Jayapal of Washington to respond to accusations that Amazon uses third-party seller data to advantage itself (a potential antitrust concern).

Bezos said Amazon policy forbids using seller data directly that way, but it doesn’t ban use of “aggregate” data — that is, data compiled from multiple sellers to inform the company’s product choices. And when pushed on the topic, he conceded that “aggregate” could mean a set of two sellers, making it fairly easy for Amazon to guess which firm’s data it’s using.

And the more head-turning admission was Bezos noting that it’s possible the company’s policy on seller data isn’t scrupulously upheld.

“I can’t guarantee you that policy has never been violated,” he said.

Also consider what Bezos said when pressed on accusations that Amazon essentially forces merchants to purchase ads or sign on for its fulfillment services program by making it hard for them to sell on the platform without them.

Bezos forthrightly addressed such accusations made by the CEO of PopSockets in January. PopSockets has criticized Amazon for refusing to crack down on counterfeit versions of its products sold on Amazon until the company committed to a hefty advertising spend.

Bezos didn’t automatically deny the accusation, but said that “if those are the facts, and if someone somewhere inside Amazon said, ‘Buy X dollars in ads and then we’ll help you with our counterfeit problem,’ that’s unacceptable.”

And while Bezos did admit to the possibility of problems on the platform anecdotally, he reiterated repeatedly that he didn’t believe they were systematic. And unlike other CEOs who testified, Bezos concluded his remarks by reaffirming his enthusiasm for oversight.

“Let me close by saying that I believe Amazon should be scrutinized,” he said. “We should scrutinize all large institutions, whether they’re companies, government agencies or non-profits. Our responsibility is to make sure we pass such scrutiny with flying colors.”

Apple’s Cook Denies His Firm Has Any Monopoly Positions

The remaining Big Tech CEOs, all of whom have previously testified before Congress, pushed back on claims that they’re creating an anticompetitive environment.

“Our goal is the best, not the most,” Apple CEO Tim Cook said, claiming that there’s no market or product category where Apple holds a dominant share, making it a poor candidate for antitrust violations.

But lawmakers pushed back, citing antitrust allegations about iPhone app management features that seem to favor Apple’s own products. They also raised issues about the Apple App Store’s rules.

Cook countered that if customers don’t like the Apple experience, there’s a massive rival Android ecosystem out there for them to defect to.

“If you’re a customer, and you don’t like the setup [or] the curated experience of the App Store, you can buy a Samsung,” Cook said.

Facebook’s Zuckerberg Claims He Was Only Joking

Facebook CEO Mark Zuckerberg, who attracted the lion’s share of legislator attention, spent much of the hearing defending Facebook’s acquisition of Instagram.

He characterized it as a natural extension of Facebook’s global social media business and not purely as an attempt at removing a potential competitor from the marketplace.

“It was not a guarantee that Instagram was going to succeed,” Zuckerberg said. “In hindsight, it looks obvious that Instagram reached the scale it has, [but] at the time, it was far from obvious.”

Zuckerberg also got a grilling on an email in which he wrote: “One reason people underestimate the importance of watching Google is that we can likely always just buy any competitive startups, but it’ll be awhile before we can buy Google.”

When questioned as to whether that was an admission of Facebook’s plan to clear the market of competition, Zuckerberg claimed the email sounded a lot more like “a joke” since the odds of Facebook buying Google are basically zero.

Google Answers Tough Questions About Privacy

Sundar Pichai, CEO of both Google and its parent company Alphabet, faced questions from Cicilline as to whether Google has “evolved from a turnstile to the rest of the web to a walled garden that increasingly keeps users within its sites.”

For example, Cicilline cited accusations that Google has stolen content from rivals like Yelp and arbitrarily docked traffic to sites it deemed a threat.

“Congressman, when I run the company, I’m really focused on giving users what they want,” Pichai replied, saying he wasn’t familiar with specifics of the allegations.

Pichai also faced a tough line of questions from Rep. Val Demmings on Google’s 2007 acquisition of ad tech platform DoubleClick and its 2017 decision to merge DoubleClick’s data with user account data.

“Google… committed to Congress and to the antitrust enforcers that the deal would not reduce user privacy,” she explained. “Google’s chief legal advisor testified before the Senate Antitrust Subcommittee that Google wouldn’t be able to merge this data even if it wanted to, given contractual restrictions. But in June of 2016, Google went ahead and merged this data anyway — effectively destroying anonymity on the internet.”

Pichai confirmed he approved the decision, but went on to note the myriad data privacy controls Google has also since added to its platform

“We today make it very easy for users to be in control of their data,” claimed Pichai. “We have simplified their settings, they can turn ads personalization on or off — we have combined most of activity settings into three groupings. We remind users to go do a privacy checkup. One billion users have done so,”

Pichai also claiming that the additional data is largely not harvested for the purposes of generating revenue but for building “personalized experiences back” for users.

The Hearing’s Main Outcome Will Probably Be … More Hearings

What happens now?

If congressional tradition is any indication, there will probably be many more hearings by many more subcommittees. There will also be more appeals to patriotism by Big Tech CEOs, along with more allegations that the companies are too big for any other firm to really compete against.

“This hearing has made one fact clear to me: These companies as they exist today have monopoly power,” Cicilline said. “Some need to be broken up; all need to be properly regulated and held accountable.”

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