The chief executives of four of the most prominent technology companies in the world — Google’s Sundar Pichai, Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg and Apple’s Tim Cook — appeared remotely amid the pandemic and fielded questions about their business practices and market dominance. Though their companies represent new-age innovations — including search engines, smartphones and social media — the criticisms they faced recalled those lodged against late 19th-century industrial barons.
Subcommittee Chairman David Cicilline, D-R.I., set the tone in harsh opening remarks. “Many of the practices used by these companies have harmful economic effects. They discourage entrepreneurship, destroy jobs, hike costs and degrade quality. Simply put: They have too much power.”
Since June 2019, the House Judiciary Committee’s subcommittee on antitrust issues has been investigating the tech giants and the adequacy of existing antitrust laws to oversee them. Cicilline said the panel had received millions of pages of evidence from the four companies and conducted hundreds of hours of interviews. That research was on full display as subcommittee members repeatedly quoted from documents, including internal emails, to suggest the companies’ anti-competitive practices.
“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 one of these companies can affect hundreds of millions of us in profound and lasting ways,” Cicilline said.
Despite the differences between the companies, he said, the investigation had shown “common patterns and competition problems” among them, including bottlenecking distribution channels, using their digital platforms to surveil other firms, and abusing “control over digital infrastructure.” Cicilline said the subcommittee will publish a report and recommendations based on its investigation’s findings.
The panel is one of several fronts on which the tech industry is battling against the prospect of government regulations, and its investigation comes amid other actions at the state and federal levels and overseas. Although the Judiciary Committee is one of the most polarized in the House, its members were united against Big Tech — to a point.
Subcommittee members occasionally deviated from the topic of antitrust concerns, touching on other politically contentious issues, including alleged foreign interference in U.S. elections and the companies’ contracts with the U.S. military and local police. Several Republicans, in particular, focused on complaints that Google and Facebook are biased against conservatives, and censor their sites and posts.
As the hearing was about to get underway, President Donald Trump likewise lodged that allegation, which the companies deny. “We’re going to be watching the hearings today very closely, because there is no question that what the big tech companies are doing is very bad,” Trump told reporters as he left for a fundraising trip to Texas. Aboard Air Force One, he repeated his displeasure in a tweet.
The day’s uncommon accord between the parties broke at one point after Rep. Jim Jordan of Ohio, one of the most combative conservatives in the House, repeatedly pressed Pichai, unsuccessfully, to admit that Google is seeking to help Democrats in 2020 just as Jordan said it favored them in 2016. The next questioner, Democratic Rep. Mary Gay Scanlon of Pennsylvania, began by saying to the CEOs, “I’d like to redirect your attention to antitrust law rather than fringe conspiracy theories.” Jordan angrily objected.
All four companies face complaints of monopolistic behavior, though the practices in dispute vary greatly.
Facebook was criticized in particular for its acquisitions of other social media and messaging companies, including Instagram and WhatsApp.
Rep. Jerrold Nadler, D-N.Y., chairman of the Judiciary Committee, cited Facebook’s 2012 purchase of then-upstart Instagram, saying, “Rather than compete with it, Facebook bought it. This is exactly the type of anti-competitive acquisition that the antitrust laws were designed to prevent.”
Nadler read from Zuckerberg’s internal communications, among many the subcommittee got from Facebook, in which the CEO described Instagram as a threat that “could be very disruptive to us.”
Zuckerberg defended the Instagram and WhatsApp acquisitions, citing Facebook’s innovations to each platform’s infrastructure and features. He also reiterated past calls for more government regulation of the tech sector.
The chiefs of Google and Amazon were grilled about their companies’ domineering roles in specific online marketplaces — Google with its search engine and digital advertising services, and Amazon with its massive shopping platform, on which it also sells its own goods in competition with third-party retailers.
Pichai argued that Google faces stiff competition in its ventures, which promotes innovation and drives down prices. But Cicilline contended that Google’s business model is the problem.
“Emails show that over a decade ago, Google started to fear competition from certain websites,” he said. “Any traffic lost to other sites was a loss in revenue. One of Google’s memos observed that certain websites were getting, and I quote, ‘too much traffic.’ So Google decided to put an end to that.”
Bezos similarly came under fire during an exchange with Scanlon, who cited documents showing that Amazon sometimes sought to “destroy rivals rather than outcompete them.” For example, she said, in 2009 Amazon viewed online baby-care retailer Diapers.com as a competitor and sought to weaken the perceived threat.
“We saw one of your profit-and-loss statements, and it appears that in one month alone, Amazon was willing to bleed over $200 million in diaper profit losses” to undercut the competitor’s prices, she said. The strategy worked, Scanlon added. Amazon bought out a struggling Diapers.com and then raised the price of diapers.
Bezos said he didn’t “remember that at all” and argued instead that Amazon generally matched competitors’ prices. He came under more scrutiny for allegations that Amazon poached the products of third-party vendors on its platform, with Cicilline describing a small-business owner who one day “woke up and found that Amazon had started listing the exact same product, causing their sales to go to zero overnight.”
Cook was forced to defend Apple’s dual role in both selling hardware such as iPhones and operating the software marketplace for the devices. In May 2019, the Supreme Court cleared the way for lawsuits against Apple for compelling its users to buy apps through its App Store and taking a commission in the process.
Rep. Lucy McBath, D-Ga., pointed to Apple’s removal from the store of some third parties’ apps allowing customers to monitor their phone usage, and their children’s, after Apple introduced its Screen Time app in 2018. Cook defended the move, saying Apple was concerned about privacy and security issues on some apps but that other competitors’ products remain in the App Store.
“There’s vibrant competition for parental controls,” he said, referring to a primary use of such apps.
As concern has grown among Democrats and Republicans about the power and scale of the tech giants, the House Judiciary Committee has not been the only governmental body hinting at aggressive regulations of the industries.
This year, the Federal Trade Commission issued orders to all four companies as well as Microsoft for information on their acquisitions of start-ups from 2010 to 2019, suggesting concern that the tech giants bought up potential competitors early to keep the playing field clear.
Last summer the Department of Justice began another antitrust investigation, citing widespread concerns about reduced competition and innovation in the online “search, social media, and some retail services” sectors. And state attorneys general across the country also have opened joint investigations into potentially monopolistic behavior by Google and Facebook specifically.
©2020 Los Angeles Times, Distributed by Tribune Content Agency, LLC.
