WASHINGTON (CN) — In the sixth iteration of congressional oversight hearings and investigation into big tech companies and their threat to competition, a House Judiciary subcommittee grilled the CEOs of Amazon, Apple, Facebook and Google — the first time they had testified before lawmakers simultaneously.
Wednesday’s combined in-person and virtual hearing comes more than a year after the Justice Department’s Antitrust Division launched a review of “market-leading online platforms” and how they are “engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”
That investigation, still ongoing, focuses on market-based competition and how digital platforms become unresponsive to consumer demands.
Regulators from the Federal Trade Commission in February also ordered the companies — adding Microsoft to its list — to turn over information related to their unreported acquisitions, in order to examine if those purchases raised competitive concerns.
Facebook’s Mark Zuckerberg, Jeff Bezos of Amazon, Tim Cook of Apple and Google’s Sundar Pichai — also founder of the search engine’s parent company Alphabet Inc. — all recognized the legacy of the late John Lewis, who laid in state at the U.S. Capitol until Wednesday morning. The Judiciary subcommittee’s hearing with the tech CEOs was delayed due to ceremonies for Lewis on Monday.
The subcommittee’s chairman, Democrat David Cicilline, put the issue with big tech companies plainly in his opening statement: “They have too much power.” This control over rival markets restricts creativity, innovation and competition, he said, their dominance killing American small businesses and manufacturing firms.
“As gatekeepers to the digital economy, these platforms enjoy the power to pick winners and losers, shake down small business and enrich themselves while choking off competitors,” Cicilline said. “Their ability to dictate terms, call the shots, upend entire sectors and inspire fear represent the powers of a private government. Our founders would not bow before a king. Nor should we bow before the emperor of the online economy.”
For example, Cicilline said, some of that power is contained in the 85% of total internet searches that funnel through Google. Members have heard from online businesses during their investigation, who say the company steals content in order to build its own brand.
In addition, when Google shows search results, often the website puts links like Google advertisements that adversely impact their profits before other results, Cicilline said, noting the practice seemed monopolistic.
Pichai testified the site only showed ads on a select number of searches, normally when those queries were geared towards commercial desires, like purchasing a new television. The value of that ad revenue was more than $100 billion, he said, but searches often validated competition, as they originated on other companies’ sites.
“Definitely, when we look at vertical searches, it validates the competition we see,” Pichai said. “For example, when users come looking to shop online, independent studies show that over 55% of product searches originate with Amazon and over 70% originate with the major ecommerce companies.”
Jim Sensenbrenner, the subcommittee’s ranking Republican member, zeroed in on Facebook’s policies for removing hate speech and disinformation. A video that bounced around the social media giant Twitter after its genesis on Facebook — which promoted the drug hydroxychloroquine as a Covid-19 cure — had landed Donald Trump Jr. with a Twitter shadow ban. Sensenbrenner asked why the video was removed if the jury was still out on the drug.
“We do prohibit content that would lead to imminent risk of harm and stating that there is a proven cure for Covid, when there is in fact none, might encourage someone to go take something that might have some adverse effects, so we do take that down,” Zuckerberg said. “We do not prohibit discussion around trials of drugs, or people saying that they think that things might work, … But if someone is going to say that something is proven, when in fact it is not, that could lead people to make a decision with their health.”
Jerry Nadler, Democratic chairman of the Judiciary’s full committee, noted the Facebook acquisition of Instagram, Inc. in 2012. Then, Zuckerberg had noted the possibility of Instagram’s growth and threat, saying those platforms could be disruptive to Facebook and “meaningfully hurt us, without becoming a huge business,” Nadler said.
Zuckerberg admitted Instagram had been a competitor in the space of mobile photos and camera applications, but said the company was a “subset of the overall space of connecting that we exist in.” In 2012, the FTC also concluded an investigation into that acquisition, noting there was no action to be taken against Facebook, Zuckerberg said, in defense of the acquisition.
“And by having them join us, they certainly went from being a competitor in the space of being a mobile camera, to an app that could help grow and help get more people to be able to use and be on our team and I think that’s been valuable and successful,” he said.
Hank Johnson, a Georgia Democrat, noted Apple was the sole decision maker on whether a software would be made available on its platform, along with being the arbiter of commission percentages offered to its web developers. For example, Johnson said, the Amazon Prime application available on the App Store, had a reduced amount it would pay in commission, as opposed to other developers.
Cook said Amazon’s application met certain requirements that made them eligible for a discount. Additionally, 84% of apps don’t pay anything for a subscription service and only do so after a number of years. The Apple Store also hasn’t increased commission prices since it’s 2008 inception.
“There is a competition for developers just like there’s a competition for customers,” Cook said. “And so the competition for developers they can write their apps for Android, or Windows, or Xbox or PlayStation so we have fierce competition at 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.”
Pramila Jayapal, a Democratic Washington representative, examined Amazon’s availability to access private data of third-party sellers it hosts on its website. Bezos said the company has a policy, “against using seller-specific data to aid our private label business.” Bezos said he could not guarantee that policy hadn’t been violated, only that Amazon was the only retailer to include that voluntary language about private data.
“You have access to data that your competitors do not have, so you might allow third party sellers onto your platform, but if you’re continuously monitoring the data to make sure that they’re never going to get big enough that they can compete with you, that is actually the concern that the committee has,” Jayapal said.
President Donald Trump also chimed in on tech company fairness Wednesday, threatening in a tweet before the hearing began, he would bring that equality through Executive Orders.
“In Washington, it has been ALL TALK and NO ACTION for years, and the people of our Country are sick and tired of it!” Trump tweeted.
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