- On July 29th, the House Judiciary's antitrust subcommittee held a hearing with four of the biggest figures in tech.
- The CEO's were grilled during a five-hour congressional hearing. The hearing was followed by an antitrust investigation into the power and size of the Big Tech companies.
- The four were hammered by both Democrats and Republicans who unleashed a host of documents on alleged antitrust abuses.
The headlines read loud and clear, “Trump says he’ll ‘bring fairness’ to Big Tech via an executive order if Congress doesn’t take action.” But can an Executive Order really bring a sudden change? Can it deter people from browsing Google, from buying Apple products, from ordering groceries, books etc from Amazon, or stop using Facebook, Whatsup or Instagram?
I am quite positive that most of the Congressmen and Congresswomen who interrogated all the 4 heads of Amazon, Google, Facebook and Apple in the Judicial hearing must have checked Facebook or used Whatsup or Instagram to speak to their family member or browse Google to know what the public was talking about, or found their ordered packages from Amazon on their front porch, using their iPhone’s GPS as they drove home.
I just want to bring home the point that life seems unimaginable without Facebook, Apple, Amazon or Google. How can an executive order suddenly bring everything to a complete stop? Bottom line is we can’t wish away these 4 Tech Giants, they’re here to stay and will stay. Nailing them down is an epic task!
At least Democrats and Republicans have something in common. Both brutally lashed the leaders of Amazon, Apple, Facebook and Google. Both parties confronted the executives for wielding their market power to crush competitors and amass data, customers and sky high profits. Democrats brought up their concerns about misinformation on social media. Republicans focused their concern on liberal bias at the silicon valley companies and accuse that conservative voices are censored.
I watched with keen interest the live telecast of the tech antitrust hearing. House Judiciary Antitrust, Commercial and Administrative Law Subcommittee Chair David Cicilline opened the hearing and gave 5 minutes to each of the CEO’s to briefly give their opening comments. Both Alphabet’s CEO Sundar Pichai and Amazon’s CEO Jeff Bezos talked about their humble beginning. Apple’s Cook described Apple as ‘a uniquely American Company’ while Facebook CEO Mark Zuckerberg promised that his company would stand for ‘American values’ in a competitive global market. Both Cook and Zuckerberg hit a patriotic note.
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Laws that protect competition are called antitrust laws. The law guarantees a fair fight among businesses in order to protect consumers in the market. The best example of tech antitrust is the Department of Justice’s anti-bundling case against Microsoft in the 90’s, which argued that Microsoft was using its control over the PC market to force out competing operating systems and browsers. AT&T faced an antitrust lawsuit over its $84.5 billion Time Warner deal.
Cicilline laid out common patterns across the four companies. Each is a bottleneck for a ‘key channel of distribution’, like an ad market or app store. Each uses data and surveillance of other companies to protect its power by ‘buying, copying or cutting off’ potential competition. And the platforms all ‘abuse their control over current technologies to extend their power’ by preferencing their own products or creating predatory pricing schemes.’
It was a bizarre spectacle, with Pichai, Bezo, Zuckerberg and Cook running companies worth a total of around $4.85 trillion – and who include two of the world’s richest individuals – arguing that their businesses were not really that powerful, that they were not in anyway trying to stifle competition. But lawmakers had collected hundreds of hours of interviews and obtained more than 1.3 million documents to prove them otherwise!
Cicilline said, “we would not bow before the Emperors of online economy.” When Cicilline interrogated Pichai with “why does Google steal content from honest businesses?” Pichai offered a nonspecific denial. To another question of Cicilline, “whether Google used its web traffic surveillance capabilities to identify and crush competition,” Pichai responded with, “Congressman, just like other businesses we try to understand trends from, you know, data which we can see, and we use it to improve our products for users.”
Bezos was asked by Cicilline, why Amazon poaches products of third-party sellers. Bezo pleaded ignorance. When asked if Alexa was programmed to recommend Amazon products, he said, “I don’t know if (Alexa has) been trained in that way.”
Apple was accused of making its App store rules unavailable to developers, arbitrarily enforcing those rules, changing them at will, enforcing rules that benefit Apple, and discriminating between smaller and larger app developers. In response, Cook claimed that Apple treats all developers the same, with open and transparent rules, saying “We care deeply about privacy and quality. We look at every app, but the rules apply evenly to everyone.”
Cicilline confronted Facebook’s Zuckerburg about the spread of misinformation on his platform, questioning whether the company was doing enough to suppress unfounded claims about the corona virus pandemic. Cicilline cited a video posted on multiple social media platforms that featured false claims about the corona virus outbreak. It racked up roughly 20 million views in 5 hours. Zuckerburg pushed back arguing that Facebook has a “good track record” when it comes to policing misinformation, including on topics related to the current health crisis. Finally, after five and half hours, Cicilline ended by saying the judiciary committee will publish a report with conclusions and next steps.
Let’s look at the example of Standard oil. On May 15,1911, the Supreme Court ordered the dissolution of Standard Oil Company, ruling it was in violation of the Sherman Antitrust Act. The Supreme Court ruled against Standard,’ on the ground that it is a combination in unreasonable restraint of inter-State Commerce’. The court’s decision forced Standard to break into 34 independent companies spread across the country and abroad. Many of these companies have since split, folded or merged; today, the primary descendents of Standard include Exxon Mobil, Chevron and Conoco Phillips. .
“Ultimately, we think a legislative fix is the only one that creates a potential for limitations on these companies’ ability to conduct business, whether that takes the form of higher taxes or new rules regarding market concentration,” Ives wrote. “Absent a legislative fix, we don’t see meaningful change in regulation, although future acquisitions will most certainly be scrutinized and more difficult to close (see Alphabet’s proposed acquisition of FitBit FIT, -2.85% , still unsettled after 9 months).”
Amazon is now worth $1.5 trillion, and Bezos is the world’s richest man. Along the way, media and regulatory scrutiny has intensified. The Federal Trade Commission has been probing various Amazon business practices over the last year to see if Amazon has violated existing antitrust laws. And the House antitrust subcommittee will next issue its own report concluding its investigation that could argue for new or modified antitrust legislation that can account for the harm to innovation and competition that some legislators say is done by tech giants like Amazon, even while they seemingly treat consumers well.
Federal and state antitrust investigations are proceeding. The House committee that held Wednesday’s hearing is expected to release its final report by early September. That could include recommendations for new or updated legislation. “It was sort of long on problems and short on solutions. Although you know you would expect that at this stage as well,” said Allensworth, the law professor. “It’s the solutions that are the really hard part.”
“Today we had the opportunity to hear from the decision makers of four of the most powerful companies in the world. 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.” There’s more to his closing statement by Congressman David N. Cicilline and you should and could hear every word in the video below starting at the appropriate moment he begins.