Tech Execs Face Congress: 9 Big Takeaways
Apple’s Tim Cook, Google’s Sundar Pichai, Amazon’s Jeff Bezos, and Facebook’s Mark Zuckerberg beamed into a congressional hearing via video chat today to face 4+ hours of questions about whether they abuse their dominant positions in the market. Spoiler: they said everything’s cool.
By Chloe Albanesius & Michael Kan
The CEOs of Apple, Amazon, Google, and Facebook faced the House Judiciary Committee virtually today, where they fielded questions about whether their respective tech companies take advantage of their dominant positions in the market to enhance their bottom lines.
Spoiler: They all said they don’t.
As you’d expect, Apple’s Tim Cook, Google’s Sundar Pichai, Amazon’s Jeff Bezos, and Facebook’s Mark Zuckerberg offered rosy assessments of their platforms during opening statements. But the limited time each member of Congress got to ask questions didn’t allow for much additional explanation from the CEOs, many of whom are used to answering questions with winding speeches full of Silicon Valley platitudes.
Members on both sides of the aisle had bones to pick with the CEOs. The Democrats largely focused on the antitrust issues at hand: whether Amazon keeps its third-party sellers on a tight leash; if Google favors its own products in search; whether Facebook’s acquisitions served only to thwart competition; and if Apple’s fabled walled-garden approach persists.
Some Republicans did, too, but a few veered off course to quiz the execs on pet projects: Google allegedly discriminating against conservatives; Google pulling out of the Pentagon’s JEDI project; and why a certain member’s campaign emails keep ending up in his father’s spam folder.
The four-hour-plus hearing covered a lot of ground, and some topics were more interesting than others. Here are some of the highlights.
Facebook-Instagram: Illegal Merger or a Savvy Dealmaking?
Rep. Jerry Nadler (D-NY) accused Facebook of breaking antitrust laws by acquiring Instagram back in 2012 because it knew Instagram posed a potential threat to its hold over the social media market.
“In your own words you bought Instagram to neutralize the competitive threat. This was an illegal merger at the time of the transaction,” Nadler claimed, citing internal documents provided by Facebook. “Why should Instagram not be broken off into a separate company?”
Zuckerberg acknowledged he saw Instagram as a competitor, but only in the mobile-photo sharing space. The FTC also scrutinized and approved the acquisition in 2012. “I think with hindsight, it probably looks obvious that Instagram would’ve reached the scale it has today, but at the time it was far from obvious,” he said, citing other top platforms of the time, like the now-defunct Path.
According to Zuckerberg, Instagram’s success is largely due to Facebook’s investment. “I think this has been an American success story,” he added.
Nadler disagreed. “Rather than compete with [Instagram], Facebook bought it. This is exactly the type of anticompetitive acquisition that the antitrust laws were designed to prevent. This should have never happened in the first place,” he said.
Are You Threatening Me?
Nadler and Rep. Pramila Jayapal, (D-Washington), both brought up Zuckerberg’s negotiations with Instagram co-founder Kevin Systrom ahead of the merger.
“In a chat you told Mr. Systrom that Facebook ‘was developing our own photo strategy, so how we engage now will also determine how much we are partners versus competitors down the line,’” Rep. Jayapal noted. “Instagram’s founder seemed to think that was a threat. He confided in an investor at the time that he feared you would go into ‘destroy mode’ if he didn’t sell Instagram to you.”
Zuckerberg denied it was a threat and characterized his email as a negotiating tactic. “I think it was clear this was a space where we were going to compete in, one way or another,” he said.
Preventing Imminent Risk of Life
Twitter was not present at today’s hearing, but its policies came up nonetheless. Rep. Jim Sensenbrenner, a Wisconsin Republican, asked Zuckerberg why it had temporarily banned Donald Trump Jr. this week for sharing a COVID-19 conspiracy theory. Zuckerberg noted that it was Twitter, not Facebook, that took action against the president’s son. But Zuckerberg explained why the move was probably the correct one.
The video shared by Trump, Jr. featured a doctor who said that hydroxychloroquine cures COVID-19, which it does not. So while Facebook allows discussion around trials for drugs or personal experiences with experimental drugs, it does not allow people to definitively state that there is a cure for a disease when there isn’t one, Zuckerberg said.
“In general…we do not want to be the arbiters of truth,” Zuckerberg continued. But if “someone is going to go out and say that hydroxychloroquine is proven to clear COVID and that statement could lead people to take a drug … we think that we should take that down. That could cause imminent risk of life.”
Later in the hearing, Pichai agreed with that line of thinking when Rep. Greg Steube, a Florida Republican, asked why the video in question was also removed from YouTube.
“We believe in freedom of expression and there’s a lot of debate on effective ways to deal with COVID. But during a pandemic, we look to local health authorities [and] the CDC for guidelines around medical misinformation and [how it] might cause harm in the real world,” Pichai said.
Amazon
No One Company Should Dominate
Questions for Amazon CEO Jeff Bezos mainly focused on the company’s relationship with third-party sellers. Last year, Amazon’s general counsel told Congress that Amazon does not scrape data from third-party sellers to develop competing products. But in April, the Wall Street Journal reported that it does, in fact, do that.
Bezos today acknowledged that there might be some truth to the Journal story, but he wasn’t entirely sure. “We have a policy against using seller-specific data to aid our private label business, but I can’t guarantee you that that policy has never been violated.”
Amazon continues “to look into that very carefully,” Bezos continued. “I’m not yet satisfied that we’ve gotten to the bottom of that,” citing the fact that some of the Journal’s sources spoke to the paper anonymously.
Rep. Jayapal, who represents Amazon’s homestate of Washington, argued that such behavior could prevent the next big tech giant from emerging. “The whole goal of this committee is to make sure there are more Amazons [and] Apples and small businesses get to thrive”; no one company should dominate, she said.
Customer Service Nightmare
Rep. Lucy McBath (D-Georgia) played testimony from a book seller who claims she was delisted from selling on Amazon without any explanation. “As we grew, we were shrinking Amazon’s market share in the textbooks category,” the unnamed seller said. “So now in retaliation, Amazon started restricting us from selling.” According to McBath, the seller messaged Amazon over 500 times, but never got a response.
Bezos said: “I don’t even understand what’s going on in that anecdote, because we love for third-party sellers to sell books.”
However, McBath said numerous third-party merchants have told the Congressional committee about similar instances involving Amazon undermining their businesses. “There are more sellers who have exhausted all of their options before finally reaching out to you as last resort. But they are still waiting for your response,” she said.
“I do not think systematically that’s what’s going on,” Bezos responded, arguing that even allowing third parties on Amazon.com was a “very controversial decision” 20 years ago. “We did that because we were convinced it would be better for the consumer. And I think we were right.
However, Rep. David Cicilline, D-Rhode Island, claimed the company was creating an “inherent conflict of interest” with its third-party merchants, especially since “Amazon can set the rules of the game.”
“This investigation makes clear that Amazon’s dual role as a platform operator and a competing seller on that platform is fundamentally anti-competitive, and Congress must take action,” Cicilline claimed.
Stealing Content
Cicilline quizzed Pichai about why Google was “stealing content” from businesses to bolster its own and only displaying content in search results that’s most profitable for Google. Not surprisingly, Pichai took issue with that characterization, arguing in part that most product searches originate on Amazon, not Google.
Pichai’s style, however, did not really lend itself to the rapid-fire nature of today’s hearing, and he didn’t really get to complete many thoughts before time-limited members were forced to move on.
‘Big Tech Is Out to Get Conservatives’
Republicans also took aim at Google, with allegations that it censors conservative viewpoints on Google Search and via YouTube.
“I’ll just cut to the chase: Big tech is out to get conservatives,” said Rep. Jim Jordan (R-Ohio) in his opening statement. He later demanded Google pledge to avoid siding with the Democratic presidential candidate Joe Biden during the ongoing election.
“Can you assure us today, you are not going to try and silence conservatives?” Jordan asked. Pichai said: “You have my commitment, it’s always been true. And we’ll continue to conduct ourselves in a neutral way.” (After the exchange, Rep. Mary Scanlon, a Pennsylvania Democrat, dismissed Jordan’s line of questioning as “fringe conspiracy theories,” prompting a fiery back and forth between both sides of the aisle.)
China’s Corporate Espionage Playbook
Republicans also quizzed Pichai about why Google was willing to work with China, but not with the Pentagon?
In 2018, Google pulled out of a US Defense Department project following internal protests from company employees. It later said it would not allow Google AI technology to be used as a weapon or for surveillance and that it would refuse to develop any AI projects that will “cause or are likely to cause overall harm.”
In the same year, however, news emerged that Google was secretly developing a search engine for China that would not only censor content, but also potentially allow government authorities to track people’s website lookups. Google later abandoned the search engine. But today, Rep. Ken Buck (R-Colorado) questioned whether the company was following “China’s corporate espionage playbook.
Google CEO Sundar Pichai said: “First of all we are proud to support the US government,” while citing the company’s recent partnership with the US Defense Department to secure the Pentagon from cyber attacks.
“We have a very limited presence in China,” Pichai added. “We don’t offer any of our services — Search, Maps, Gmail, YouTube, etc. — in China.”
Apple
‘A Street Fight for Market Share’
Apple CEO Tim Cook got off relatively easy during today’s hearing. However, Rep. Henry Johnson (D-Georgia) did grill him about the iOS App Store, the sole way iPhone owners can download mobile apps. (Last month, the European Union launched its own antitrust investigation into the store’s policies.)
Currently, Apple takes a 30 to 15 percent cut of all in-app purchases on the store. “What’s to stop Apple from increasing its commission to 50 percent?” Johnson asked, to which Cook noted that commissions have never increased in the App Store’s 12-year history.
“There’s nothing to stop you from doing so, is it?” Johnson then asked.
“No sir, I disagree strongly with that,” Cook replied. “There’s a competition for developers, just like there’s a competition for customers.” Those same developers can choose to write apps for other platforms, such as Android, Windows, and Xbox. “So we have fierce competition on the developer side, and the customer side, which is essentially so competitive, I would describe it as a street fight for market share in the smartphone business,” Cook said.
He went on to say that Apple never retaliates or bullies iOS developers for complaining about its policies. However, Johnson said the company still holds sole discretion over which apps get allowed on the iOS App Store. “Developers have no choice but to go along with the changes, or they must leave the App Store. That’s an enormous amount of power,” Johnson added.
What’s Next?
Rep. Cicilline said House Judiciary will publish a report on the Antitrust Subcommittee’s finding, which will propose solutions. but “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 concluded.
Originally published at https://www.pcmag.com.
