ANTITRUST

What To Expect From Big Tech’s Fab Four Capitol Hill Grill

And now, on a big digital stage, in real time — the fab four.

Of Big Tech, that is — so, perhaps, depending on what viewpoint you take, it may be the not-so-fab four.

Today (July 29) will mark the latest appearance of tech’s marquee names before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law. The hearing is titled “Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google.”

Broad title, to be sure, and it hints at a broad range of topics to be examined.

Expect some fireworks, as this is the latest installment (the sixth) in a series of grilling that have set sights on how commerce and competition have changed as the platform economy has taken root. The pandemic has reshaped how we interact and do business with one another.

Critics on the Hill have lobbed charges that these marquee tech companies have used scale and critical mass to stymie competition and innovation, particularly from relatively smaller players, and as a result, it is consumers who lose out.

Those criticisms, we think, may be misplaced.

As has been reported, the hearing will feature (virtual) testimony, and likely some finger-pointing from lawmakers, of Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai.

As previewed in this space, and in broad terms, each CEO will likely detail at least some of the ways their companies have been impacted by, and are impacting, the great digital shift.

Google's Pichai addresses that issue head-on in his prepared hearing statement, released ahead of the hearing, by pointing out 140 million students and teachers used G Suite for Education to remain connected and learning, among other examples. The committee released all four of the CEOs' prepared hearing remarks late Tuesday.

Amazon, we noted, will possibly give a nod to the explosion of eCommerce across a variety of channels. Bezos, in his prepared remarks, talks about his company's "obsessive customer focus."

Facebook may draw questions from Congressional representatives centered on advertising and social media. Zuckerberg, for his hearing statement, focuses on competition and its value.

Apple, of course, has been getting attention for the way it shapes competitive practices (or depending on how you view it, stymies competition) across its App Store — and Cook addresses those concerns in his hearing statement.

Drill down a bit, and at the heart of it all will be scrutiny on how Big Tech gets its customers, keeps them in place, and how, ostensibly, these juggernauts can leverage platforms to keep smaller rivals at bay — to the (supposed) detriment of everybody.

For Google, Facebook et al., the stakes are high. Today’s testimony can help inform congressional leaders’ report, likely to come by the end of the year, on how to regulate the technology industry.

At least some regulation certainly seems in the offing, as the hearings on the Hill are taking place as federal investigations are underway here in the states into these bellwether names. The Justice Department, for example, has been probing Alphabet (which owns Google), and the Federal Trade Commission has been examining Facebook. And a consortium of state attorneys general has been investigating Google, centering on ad technology.

Competition In Focus 

With Instagram and WhatsApp folded into its operations, Facebook will likely face assertions that it has muscled aside competition in social media, where it has billions of users. CEO Zuckerberg has in the past pointed to competition, particularly from China (a la TikTok) as proof positive that the playing field is anything but tilted. Might Libra also find its way into tomorrow’s discussion?

Across the pond, of course, Apple has been accused by Spotify and Rakuten of raking a 30 percent commission from product and services sales made through the App Store. At the heart of the matter is the way apps make their way into Apple’s store, which of course determines how those apps (and their developers) find their way onto Apple consumers’ screens as they compete with Apple apps.

A bit closer to home, last week, as reported, Texas Attorney General Ken Paxton is at the helm of a multi-state investigation into Apple, and whether deceptive trade practices may have violated consumer protection laws. The scope of the probe is as yet unclear.

Data And Delivery 

Data and privacy issues are going to be front and center, as are the ways in which search rankings are displayed, which of course connects consumers to the goods and services they seek across platforms. Google, of course, stands out here, with its strong standing in search and media and ads — a position cobbled in part through acquisitions (YouTube, etc.).

Amazon may be a key target here, as lawmakers may take a cue from testimony at a previous hearing, held last year, where in the summer of 2019, Nate Sutton, associate general counsel of Amazon, denied the eCommerce giant had harvested information from third parties in order to launch its own competitive offerings.

Beyond product development lie possible exploration of the ways in which Amazon has been building its logistics operations, bypassing, of course, the likes of FedEx and the U.S. Postal Service.

As recently as June, Amazon has poured as much as $60 billion since 2014 into planes, warehouses and other logistics infrastructure. Now, Amazon runs America’s fourth-largest shipping service. As estimated by Bank of America, Amazon delivers a bit more than half of all items that are shipped to end-users — 2.3 billion of an estimated 4.5 billion parcels annually.

What’s Really At Stake 

The above is by no means a soup-to-nuts menu of what’s on tap to be discussed Wednesday. But underpinning it all will be a common thread, woven by lawmakers and law enforcers:

Big Tech has gotten too big for its own good.

Consider the fact that beyond the hearings and beyond the probes, earlier this year, Pandemic Anti-Monopoly Act debuted on the Hill, sponsored by progressive lawmakers Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez.

That legislation would mandate that firms with more than $100 million in revenues (i.e. including Big Tech) would pause acquisitions until the economic landscape, darkened by COVID-19, has brightened a bit. We note, of course, that Big Tech (heck, any tech) faces a perennial “build vs. buy” debate, and “buy” means that innovation can come to market a bit more quickly.

That proposed legislation was the focal point of a May roundtable between Karen Webster and a half dozen experts on platform economies, M&A and how they are regulated, across the legal, regulatory, investor, business and academic realms.

As Lisa Ellis, partner at MoffetNathanson, told Webster, “The pandemic has only dramatically accelerated … urgency around building out [digital] capabilities. So, on one hand, strategic steps that companies might have been looking at taking over a 12- to 24-month time horizon are now suddenly capabilities that they urgently need right now in order to help their customers. But on the flip side, businesses also have to focus on their own operations any time there’s a massive economic disruption [in] business.”

There’s a side argument here, too, as the lure of successful, lucrative exit strategies (building a startup from scratch and selling it) provide incentives for smaller firms and entrepreneurs to come to market in the first place.

Then there’s the trust factor.

As PYMNTS' Webster noted in this space, last year, Morning Consult found that Amazon and Google were the second and third most trusted brands among consumers. PYMNTS’ own research has found that Big Tech (and smaller tech, for that matter), earns a significant level of trust from consumers.

Along the way, of course, platform firms have demonstrated value (not just in pricing but in selection) that has enabled consumers, by and large, to get what they need, when they need it, across untold millions of apps and items. No small thing in a pandemic.

Yes, today’s grilling of the Big Tech’s quartet may be contentious. Sidestepping the fireworks to come this week, Big Tech’s value — with a nod to a tune by a different Fab Four — is Here, There and Everywhere.

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