A rare public showdown between Congress and the CEOs of tech’s biggest companies in antitrust hearing took place on Wednesday, July 29 at 12 PM Eastern Time. The hearing, titled “Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google” saw the most powerful leaders in the field of technology face off with lawmakers.
This hearing is notable, as it heard testimony from four of them. In the hearing, Amazon’s Jeff Bezos, Apple’s Tim Cook, Google’s Sundar Pichai and Mark Zuckerberg of Facebook all faced questions. These questions were about their company practices and concerns that anti-competitive behavior is impacting some of tech’s key markets for the worse.
To explain, the hearing is part of the House Judiciary Antitrust Subcommittee’s ongoing 13-month Antitrust Investigation. Of course, the investigation targets many of tech’s largest, most powerful companies. The Investigation was first announced last year.
“Since last June, the Subcommittee has been investigating the dominance of a small number of digital platforms and the adequacy of existing antitrust laws and enforcement,”
“Given the central role these corporations play in the lives of the American people, it is critical that their CEOs are forthcoming. As we have said from the start, their testimony is essential for us to complete this investigation.”
– HOUSE JUDICIARY COMMITTEE CHAIRMAN JERROLD NADLER AND ANTITRUST SUBCOMMITTEE CHAIRMAN DAVID CICILLINE SAID IN A JOINT STATEMENT.
What is the big deal about this Antitrust Investigation?
The hearing was the government’s most aggressive show against tech power. That is, since the hunt to break up Microsoft two decades ago. Ironically, four men who run companies worth a total of around $4.85 trillion, including two of the world’s richest individuals, will argue that their businesses are not really that powerful after all.
In recent years, many Congressional hearings examining tech companies have took place; but usually those companies send their lead counsel and not their CEOs. A tech CEO appearing before Congress points towards a real enough threat to their business with regard to whatever they’re testifying about.
None of the leaders are taking any chances for the hearing to go against them. Zuckerberg, at his 750-acre estate on the Hawaiian island of Kauai prepared for his testimony with the law firm WilmerHale. Bezos worked with a small team for his testimony in Seattle.
Tim Cook, Sundar Pichai and Mark Zuckerberg have all testified before Congress before. Pichai in 2018, Zuckerberg in 2018 and 2019 and Tim Cook way back in 2013. However, this is the first time Jeff Bezos has agreed to come before Congress.
The Accusations unearthed by the Antitrust Investigation
Congress accuses Amazon of misusing its role as both a retailer, and a platform hosting third-party sellers on its marketplace. Apple is accused of unfairly using its clout over its App Store to block rivals. Additionally, it is accused of forcing apps to pay high commissions.
Whereas rivals have alleged that Facebook has a monopoly in social networking. On the other hand, Alphabet, the parent company of Google is handling multiple antitrust allegations. The reason being its dominance in online advertising, search and smartphone software.
Arguments By Apple
Cook clarified that the smartphone market is fiercely competitive. Additionally, he stated that companies like Samsung, LG, Huawei, and Google have built very successful smartphone businesses offering different approaches. In a prepared remark before his appearance, Cook defended the company’s 30 per cent fee of digital transactions on the App Store.
“Apple does not have a dominant market share in any market where we do business.. Apple’s commissions are comparable or lower than commissions charged by the majority of our competitors. And they are vastly lower than the 50 to 70 per cent that software developers paid to distribute their work before we launched the App Store,”
– Tim Cook.
Arguments By Facebook
Explicitly, Facebook acquired Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014. Of course, Zuckerberg defended these acquisitions of Instagram and WhatsApp in his prepared remarks.
“Facebook has made Instagram and WhatsApp successful as part of our family of apps. Instagram and WhatsApp have been able to grow and operate their services using Facebook’s bespoke, lower-cost infrastructure and tackle spam and harmful content with Facebook’s integrity teams and technology”,
“We have developed new products for Instagram and WhatsApp, and we have learned from those companies to bring new ideas to Facebook. The end result is better services that provide more value to people and advertisers, which is a core goal of Facebook’s acquisition strategy,”
– Mark Zuckerberg.
Arguments By Amazon
Unlike its counterparts, Bezos agreed that Amazon should face scrutiny.
“We should scrutinize all large institutions, whether they’re companies, government agencies, or non-profits. Our responsibility is to make sure we pass such scrutiny with flying colours,”
Jeff Bezos in his prepared remarks.
“However, Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, there’s room in retail for many winners,”
– bezos argued
For example, more than 80 retailers in the U.S. alone earn over $1 billion in annual revenue. Bezos argued that Amazon competes against large, established players like Target, Costco, Kroger, and, of course, Walmart – a company more than twice Amazon’s size. Notably, Walmart’s online sales grew 74 per cent in the first quarter.
Arguments By Google
Alphabet and Google CEO Pichai, in his prepared testimony, stated that the company’s services like Search offer major benefits for consumers and small businesses.
“We know Google’s continued success is not guaranteed. Google operates in highly competitive and dynamic global markets; in which prices are free or falling, and products are constantly improving. Today’s competitive landscape looks nothing like it did 5 years ago, let alone 21 years ago, when Google launched its first product, Google Search,”
– Sundar Pichai
Pichai added that Google builds platforms that support the innovation of others, referring to the Android operating system.
“Using Android – a product I worked on for many years – thousands of device makers and mobile operators build and sell devices without any licensing fees to us or any requirement to integrate our products. This greatly reduces device prices, and today billions of consumers around the globe are now able to afford cutting-edge smartphones, some for less than $50,”
Pichai emphasized.
Read all four statements in full here.
Did the Antitrust Investigation left out Twitter and Microsoft?
Last week, House Republicans led by Jim Jordan called on Twitter to appear at tech’s big antitrust hearing. He claimed that the day would be “incomplete” without an appearance from Jack Dorsey. Notably, Twitter CEO, Dorsey has made appearances before Congress before, but the Congress rightfully ignored the latest request.
While often likened to the status of rival companies like Facebook and YouTube, Twitter is a comparatively small company with a huge impact on society. However, it is not suspected of market-shaping practices that could throw competitors out. For instance, Twitter’s market capitalization is $29 billion; while Facebook’s market capitalization is $667 billion.
Whereas, compared to Twitter, Microsoft is massive and a more natural fit for the hearing, the company has a much more storied history of government scrutiny. Antitrust Subcommittee Chairman David Cicilline himself said that regulatory enforcement against Microsoft two decades ago “made space for an enormous amount of additional innovation and competition.”
The hearing was originally scheduled for Monday. However, the congressional hearing was postponed in the wake of the death of civil rights icon and Democratic Congressman John Lewis.
