Four CEOs of the biggest tech companies testified before the US Congress antitrust panel. They were grilled by the House Antitrust Subcommittee for their business practices. Unsurprisingly, the executives from Facebook, Apple, Amazon, and Google were portraying their products as American success stories. Nevertheless, Congressmen were not convinced of their innocence.
“Emperors of the online economy,” said House antitrust chair David Cicilline. Congressmen were ruthless and accused the Big Four of censorship, surveillance, and anti-competitive behavior.
Google’s Sundar Pichai was repeatedly accused of aiding China and silencing conservatives, Jeff Bezos was questioned about “bullying behavior,” Tim Cook fought accusations against anti-competitive demeanor when operating the App Store, and Mark Zuckerberg answered questions about mergers while fighting criticism of harming competitors.
Since last June, lawmakers have been carrying an investigation into big tech’s acquisitions, mergers, and possible anti-competitive behavior. You can learn more about the troubles of the Big Four here.
Ahead of the hearing, Donald Trump threatened to take action himself should the Congress fail to do so.
Facebook and Google sell ads, Amazon is a retailer and operates a digital marketplace, while Apple makes money from hardware and software. The Big Four are accused of monopolistic behavior both in the US and the European Union.
Unsurprisingly, the tech company executives emphasized how they are helping to build a greater America and are working in a highly competitive environment. Each of them underlined their willingness and commitment to partnering with lawmakers.
CEOs were given 5 minutes each for their opening statements, then the Q&A session began. The antitrust hearing went on for almost six hours. The Antitrust Subcommittee is expected to conclude the 13-month-long investigation in the following weeks. It may result in new regulations for the biggest technology companies.
Is China stealing American technology?
Concerns about Chinese surveillance had come up a lot during the antitrust hearing. The issue of the possible China threat was mostly raised by the Congressmen. In the fifth hour of the hearing, all of the CEOs were asked whether they believe that China is stealing American technology. Here are the answers.
Tim Cook. “I don’t know specific cases where we have been stolen from by the government.”
Sundar Pichai. “I have no knowledge of any information stolen from Google.”
Mark Zuckerberg. “I think it is well documented that the Chinese government steals technology from American companies.”
Jeff Bezos. “I have heard many reports of it but I have never seen it personally.”
Later on, they were asked how Congress can help protect US firms. None of the CEOs had any suggestions.
“Emperors of the online economy”
House antitrust chair David Cicilline started the hearing by pointing out major concerns about Amazon, Facebook, Google, and Apple.
“We’ve observed common patterns and competition problems,” said chairman Cicilline. He named three major concerns.
- Each platform is a bottleneck for a key channel of distribution. If they control access to information or the marketplace, they have the ability and incentive to exploit this power.
- Each company uses its control over digital infrastructure to surveil its competitors, business activity, and whether they might pose a competitive threat. Each platform has used this data to protect its power.
- These platforms abuse control over current technology to extend their power.
Mr. Cecilline said that companies’ dominance causes economic damage: “Simply put, they have too much power. (...) Their dominance is killing small businesses.”
He closed his speech by stating that this investigation will hopefully lead to a stronger economy.
“As gatekeepers of the digital economy, these platforms enjoy the power to pick winners and losers, to shake down small businesses, and enrich themselves while choking off competitors. Their ability to dictate terms, call the shots, upend entire sectors, and inspire fear represents the power of private government. Our founders would not bow before the king, nor should we bow before emperors of the online economy,” said Mr. Cicilline.
Amazon: Bullying, fear and panic
The CEO of Amazon prepared an 8-page written testimony. We got to learn a lot about his family - Mr. Bezos briefed the audience about his mom Jackie, his dad Miguel, even his grandparents. He went on explaining how he came up with the initial idea of Amazon, where he got the money for his business (parents), how he walked away from a steady job to start his own business.
Jeff Bezos said that Amazon has invested more than 270 billion dollars in the US over the last decade. He also had a lot to say about the competitiveness of the market: “The global retail market we compete in is strikingly large and extraordinarily competitive.”
As Amazon is being accused of boxing out smaller competitors out of the market, Jeff Bezos went on explaining how it relies on the success of the thousands of small and medium-sized companies that also sell their products in Amazon’s stores.
“There are now 1.7 million small and medium-sized businesses around the world selling in Amazon stores,” said Mr. Bezos. He also proudly stated that Amazon has created “more jobs in the United States over the past decade than any other company.”
He also paid tribute to how great the US is: “It’s not a coincidence that Amazon was born in this country. More than any other place on Earth, new companies can start, grow, and thrive here in the U.S.”
Read his full statement here.
Mr. Bezos was asked by congresswoman Pramila Jayapal whether Amazon can access and use third party seller data to promote its product. “I can’t answer that question as yes or no. We have a policy against using seller-specific data. But I can’t guarantee that policy has never been violated,” said CEO of Amazon.
Congresswoman Lucy Kay McBath briefed the committee how she has interviewed a lot of small businesses, and they described partnership with Amazon with such words as bullying, fear, and panic.
Mr. Bezos tried to fight accusations of abusive behavior, saying that it is not a systematic approach for the company.
Amazon was also compared to a drug dealer during the hearing.
Google: China and election concerns
“Our work would not be possible without the long tradition of American innovation, and we’re proud to contribute to its future,” Sundar Pichai said in his opening statement.
He put Google’s contribution to the American economy in numbers: “We now employ more than 120,000 Googlers around the world. (...) In 2018 alone, we invested more than 20 billion dollars across the US, citing us as the largest capital investor in America that year. It’s also ranked us in the top five US investors for the last three years.”
“Our teams of engineers are helping America solidify its position as the global leader in emerging technologies like artificial intelligence,” said Mr. Pichai.
He emphasized how Google’s success is not guaranteed as the company’s environment is highly competitive and dynamic, and “prices are free or falling and products are constantly improving.”
Read the full testimony here.
Sundar Pichai was the first to face tough questions from the chairman Cecilline. “Why do you steal content from small businesses?” asked Mr. Cecilline. Mr. Pichai, naturally, disagreed with the statement.
Mr. Cecilline went on asking why Google was stealing content, for example, Yelp reviews. According to him, Yelp approached Google and asked to “stop stealing content,” to which Google supposedly responded by threatening to delist Yelp from Google. Sundar Pichai heard accusations of content theft more than once during the antitrust hearing.
Republican representative Ken Buck accused Google of following China’s espionage playbook. Representative Matt Gaetz from Florida has also raised concerns about Google and China relations. He pointed out that Google has an Artificial Intelligence unit in China, and is working closely with local universities. He also accused Google of aiding China's military. “We are not working with the Chinese military. And our Artificial Intelligence unit is limited to a handful of people,” replied Mr. Pichai.
Republican representative Jim Jordan indicted Google and Mr. Pichai for trying to help Hillary Clinton during the 2016 presidential election. The interrogation of Mr. Pichai went on for quite a while. Mr. Jordan repeatedly asked for assurance from Mr. Pichai not to silence conservatives (it was reported that some of their mail goes straight to spam) and not to help Joe Biden in the 2020 presidential election.
“You have my commitment, it has always been true, and we need to conduct ourselves in a neutral way,” replied Mr. Pichai.
Apple: Questions revolved around the App Store
“Apple is a uniquely American company whose success is only possible in this country,” said Tim Cook in his opening statement.
He went on how Apple does not have a dominant market share in any market and how it faces fierce competition from companies like LG, Samsung, Huawei, and Google.
Apple is accused of intentionally disadvantaging apps that could rival any of its products. Tim Cook addressed this issue, emphasizing that for the vast majority of apps on the App Store, developers keep 100% of the money they make. Only some of the apps are subject to a commission.
“In more than a decade since the App Store debuted, we have never raised the commission or added a single fee,” said Tim Cook.
He also highlighted the economical value of the company - around 1.9 million American jobs are attributed to the App Store ecosystem.
Read his full testimony here.
Representative Hank Johnson of Georgia voiced concerns that Apple controls its App Store by participating in anti-competitive behavior.
Tim Cook answered by repeating his claims that the App Store does not charge the majority of its app developers. He also repeated that the App Store has not raised commissions since 2008.
Facebook: Competitors hurt, jobs at stake
“Facebook is part of an industry that has changed the world,” said Mark Zuckerberg in his opening statement. He organized his testimony under eight sections, covering the company's value, innovation, scale, the responsibility to the community, etc.
“Facebook is a successful company now, but we got there the American way: we started with nothing and provided better products that people find valuable. As I understand our laws, companies aren’t bad just because they are big. Many large companies that fail to compete cease to exist,” said Mr. Zuckerberg.
He explained that Facebook is competing as vigorously as it can within the rules because of fear of failure: “The history of technology is often the history of failure, and even industry-leading tech companies fail if they don’t stay competitive.”
Read Zuckerberg’s full testimony here.
Mr. Zuckerberg faced the first round of questions from Republican representative Jim Sensenbrenner of Wisconsin. He asked why the Donald Trump Jr. post was removed from the platform for sharing false information. Mark Zuckerberg responded by saying that he can’t comment on what happened on Twitter.
Representative Jerry Nadler addressed the issues caused by Google and Facebookin the media industry. She explained how the behavior of these platforms forced some journalists out of jobs as multiple newspapers were shut down. Facebook overstated the success of the videos on the platform, which made some media houses fire their video teams. Mr. Zuckerberg said he regrets the mistake but does not have any numbers illustrating how big this problem is.
Mark Zuckerberg was repeatedly grilled for buying or otherwise hurting the competitors.