Heads Of Amazon, Apple, Facebook And Google Testify On Big Tech's Power
Heads Of Amazon, Apple, Facebook And Google Testify On Big Tech's Power
Updated at 6:35 p.m. ET
Are Facebook, Google, Amazon and Apple "emperors of the online economy" that stifle competition and hurt consumers? Not surprisingly, the tech giants' chief executives told Congress: absolutely not. The concern that too much power is concentrated in too few companies is unfounded, they said Wednesday.
Does Apple punish its rivals on the App Store to score more customers?
Democratic Rep. Lucy McBath of Georgia drew attention to Apple's Screen Time app, a service allowing parents to limit their kids' phone use.
When Apple introduced the app in 2018, competing parental control apps, such as OurPact, were booted from the App Store for not meeting Apple's safety requirements.
Apple CEO Tim Cook told McBath those fears were justified.
"We were concerned, congresswoman, about the privacy and security of kids," Cook said, noting the app was vulnerable to third-party takeovers. "So we were worried about their safety."
But McBath said House investigators discovered that rival parental control apps that were kicked out of the App Store were readmitted six months later without making significant privacy overhauls.
"Of course, six months is truly an eternity for small businesses to be shut down, even worse if all the while a larger competitor is actually taking away customers," she said.
McBath pointed to an email in which an Apple employee responded to a mother complaining about the removal of parental control apps. The Apple representative suggested that the mother download Apple's Screen Time.
Documents from the Hearing on “Online Platforms and Market Power: Examining the Dominance of Amazon, Apple, Facebook and Google" pic.twitter.com/cNgZ8Zs1Zz— House Judiciary Dems (@HouseJudiciary) July 29, 2020
Cook said that "there are many reasons why" an app may not meet the App Store's guidelines, dismissing the suggestion that Apple squashed its competition to favor its own service.
McBath referenced a second example, this one involving the publisher Random House, which said Apple held back the introduction of its app while pushing its own similar product.
"Even some of the largest companies in the country fear your power. Our evidence suggests that your company has used its power to harm your rivals and boost your own business," McBath said.
"This is fundamentally unfair," she said. "Ultimately, it reduces the competition and the choices made to consumers, and that's a great concern to all of us."
— Bobby Allyn
CEO vows Google won't play favorites in 2020 election
Google CEO Sundar Pichai faced a barrage of questions from Rep. Jim Jordan. The Ohio Republican said he's concerned that Google will tailor its search engine to give a leg up to presumed Democratic presidential nominee Joe Biden over President Trump in searches related to the November election.
When Jordan asked Pichai for a promise to Americans that Google will not favor Biden in the 2020 election, Pichai said, "We don't do any work to politically tilt anything one way or another."
Jordan persisted with the same question.
Pichai eventually agreed to make a commitment that Google will not tilt its features to help Biden and that the search engine will not be used to silence conservatives.
"Yeah, you have my commitment. It's always been true, and we'll continue to conduct ourselves in a neutral way," Pichai said.
That line of inquiry was far afield from the purpose of the hearing, noted Rep. Mary Gay Scanlon, D-Pa., saying she'd like to turn the focus back to antitrust, rather than "fringe conspiracy theories."
This remark incited Jordan, who interrupted Scanlon, and led to a screaming match between Jordan and the Democratic leadership about following the rules of the hearing.
"When someone comes after my motives for asking questions," Jordan shouted, "I should get a chance to respond."
— Bobby Allyn
Does Amazon use sellers' data to help itself?
The first inquiry for Amazon CEO Jeff Bezos finally arrived from Rep. Pramila Jayapal, D-Wash., some two hours into the hearing. Jayapal zeroed in on the subcommittee's central concern about Amazon: Does the company use the data it collects from other sellers on the platform for its benefit?
"I can't answer that question yes or no," Bezos said. "We have a policy against using seller-specific data to aid our private label business, but I can't guarantee you that that policy has never been violated."
Committee lawmakers have previously accused Amazon of "lack of candor" about how it might be using other sellers' data to give an edge to its own business, something Amazon executives have, until now, denied was happening.
Critics have made the case that Amazon employees may have used such data to create the retailer's own private-label products, which Bezos told lawmakers the company was still investigating.
Jayapal noted that Amazon has access to information about consumer habits, sellers' pricing and inventory data, a trove of details that could be ripe for abuse if used to make business decisions about Amazon's own products.
"You can set the rules of the game for your competitors, but not actually follow those same rules for yourself," Jayapal said.
"You have access to data that your competitors do not have," she continued, adding that if Amazon was "continuously monitoring" such data to make sure that other sellers "are never going to get big enough that they can compete with you — that is actually the concern that the committee has."
— Alina Selyukh
Google's Pichai is pressed on being "the gateway to the Internet"
Rep. David Cicilline, D-R.I., the subcommittee chairman, spent all of his first five-minute block of questions on Google — the company at most immediate risk of antitrust action. The Department of Justice is reportedly preparing to sue the company over its advertising business, and could be joined by state attorneys general who have also been investigating Google.
Cicilline pressed CEO Pichai on whether Google's business model presents a conflict of interest, because it has an incentive to give search results that keep users on its own site rather than anywhere else on the Internet.
"As Google became the gateway to the Internet, it began to abuse its power," Cicilline said.
Pichai responded that Google "always focuses on providing users the most relevant information." Cicilline appeared annoyed at Pichai's answers, cutting him off several times to move on to another question.
— Shannon Bond
A long wait for Bezos
Over an hour and a half into the hearing, Bezos — appearing in Congress for the first time, whose company employs 1 million workers and has more than 150 million paying subscribers — had yet to receive a single question.
His presence was slated to become a powerful accomplishment of the House Judiciary Committee, but the early questioning had left him muted on the live video feed, reaching for some snacks.
Jeff Bezos hasn't been asked a single question by Congress yet, so the world's richest man is having a snack... pic.twitter.com/zMZ4iEuHyY— Claire Reilly (@reillystyley) July 29, 2020
The hearing, meanwhile, took a 10-minute break to fix a technical problem "with one of our witnesses."
— Alina Selyukh
Did Facebook buy Instagram to neutralize a competitor?
Judiciary Committee Chairman Jerry Nadler, D-N.Y., pressed Facebook CEO Mark Zuckerberg on why his company bought Instagram for $1 billion back in 2012. That's a key part of competition questions facing the social media giant. Critics accuse Facebook of buying or copying rivals — such as Instagram and WhatsApp — to squash competition.
Nadler said in its investigation, the committee got documents from Facebook in which Zuckerberg discussed "neutralizing a competitor" as a reason to pursue Instagram.
Documents from the Hearing on “Online Platforms and Market Power: Examining the Dominance of Amazon, Apple, Facebook and Google" pic.twitter.com/b14sEfZkBJ— House Judiciary Dems (@HouseJudiciary) July 29, 2020
"Facebook saw Instagram as a threat that could potentially siphon business away from Facebook. And so rather than compete with it, Facebook bought it," Nadler said.
Zuckerberg pointed out that the Federal Trade Commission OK'd the merger at the time. "With hindsight it probably looks obvious that Instagram would have reached the scale that it has today, but at the time it was far from obvious," he said.
Cicilline interjected to say that the "failures" of the FTC in 2012 do not mean it was not a violation of antitrust law.
— Shannon Bond
Panel chairman: Under coronavirus, Big Tech "likely to emerge stronger and more powerful"
Up first was Cicilline, chairman of the antitrust subcommittee that was holding the hearing. He has been the driving force behind the yearlong investigation of Big Tech.
In his opening remarks, he described the dominance of each company: Amazon in online shopping, Apple in smartphones and apps, Facebook in social media and Google in search and ads. And he pointed out that thanks to the coronavirus pandemic, all four "are likely to emerge stronger and more powerful than ever before."
"As American families shift more of their work, shopping, and communication online, these giants stand to profit," Cicilline said. "Locally owned businesses, meanwhile — mom and pop stores on Main Street — face an economic crisis unlike any in recent history."
House antitrust chair Cicilline notes through-lines uniting the four different tech giants:— Alina Selyukh (@alinaselyukh) July 29, 2020
-"bottleneck for a key channel of distribution"
-use "control over digital infrastructure to surveil other companies"
-"abuse ... control over current technologies to extend their power"
The committee's investigation has turned up a pattern among the tech giants, he said. They control access to information and marketplaces, use that control to "surveil" rivals and protect their power, and favor their own businesses.
"Simply put: They have too much power," Cicilline said. For consumers, he said, this is reminiscent of previous American monopolies: railroads, oil and telephone companies, and even another tech giant — Microsoft.
"This investigation also goes to the heart of whether we, as a people, govern ourselves, or whether we let ourselves be governed by private monopolies," he said. "Our founders would not bow before a king. Nor should we bow before the emperors of the online economy."
— Shannon Bond
Jordan: "Big Tech is out to get conservatives"
Wednesday's hearing was supposed to be about Big Tech's power and market dominance. But Republicans tried to make it about something else: accusations that online platforms are biased against conservatives.
"Big Tech is out to get conservatives," Jordan, the Ohio Republican, said in his fiery opening statement.
Jordan then rapidly read aloud headlines making claims that conservative-leaning publications and voices had been suppressed or censored on Facebook and Google.
He also mentioned Twitter, even though it was not part of the hearing. Jordan said conservative members of Congress were "shadow banned" on Twitter. He said Twitter CEO Jack Dorsey said it was a glitch.
"If I had a nickel for every time I heard it was just a glitch, I wouldn't be as wealthy as our witnesses, but I'd be doing all right," Jordan said.
"We all think the free market is great. We think competition is great. We love the fact that these are American companies. But what's not great is censoring people, censoring conservatives and trying to impact elections," Jordan said. "If it doesn't end, there has to be consequences."
Before Jordan's remarks, Rep. Jim Sensenbrenner, R-Wis., also mentioned the belief, strongly contested by large tech companies, that conservatives do not get a fair shake by the online platforms, calling reports of conservative censorship troubling.
"Conservatives are consumers, too, and they need the protection of antitrust laws," Sensenbrenner said.
The hearing erupted in chaos after Jordan asked that Rep. Mike Johnson of the House Judiciary's Constitution subcommittee be allowed to participate in the hearing. The request was denied.
Jordan then repeatedly interrupted Cicilline, the antitrust subcommittee chairman, who was attempting to introduce Bezos.
"We're talking about people's liberties here," Jordan said over Cicilline.
"Put your mask on," Jordan was told.
— Bobby Allyn
Trump tweets: "Bring fairness to Big Tech"
The hearing got underway after an hourlong delay. First up were opening statements from the top members of the committee and the four CEOs. Then lawmakers each got five minutes to question Bezos, Cook, Pichai and Zuckerberg. All four joined remotely via video.
The focus of the hearing, and the committee's investigation, was meant to be about competition — but lawmakers seemed unable to resist bringing up other complaints about tech companies, from the spread of misinformation to alleged anti-conservative bias.
That also was the message coming from the White House, where President Trump repeatedly has accused tech companies of treating him unfairly. Shortly after noon, he tweeted: "If Congress doesn't bring fairness to Big Tech, which they should have done years ago, I will do it myself with 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!"
— Shannon Bond
Our original story by Bobby Allyn continues:
Amid a time of rising tensions with China, some of the powerful CEOs will suggest that too much regulation could provide an opportunity for Chinese tech firms to gain a global toehold, according to opening remarks from the tech leaders released by the House Judiciary antitrust subcommittee.
"We believe in values — democracy, competition, inclusion and free expression — that the American economy was built on," Facebook's Mark Zuckerberg will tell lawmakers, according to his prepared opening statement. "China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries."
Amazon's Jeff Bezos, the world's richest person who will be making his first appearance in front of Congress, will bring in his personal story of being adopted by an immigrant father when he was 4 years old and spending his summers on his grandparents' ranch in Texas, saying his upbringing instilled in him a work ethic that has helped Amazon prosper.
Amazon's rise to becoming the largest online retailer, Bezos will say, is an achievement only made possible in America. But Walmart, he will point out, is still twice the size of Amazon.
"We did not start out as the largest marketplace — eBay was many times our size. It was only by focusing on supporting sellers and giving them the best tools we could invent that we were able to succeed and eventually surpass eBay," Bezos says in his released testimony.
Google's Sundar Pichai will steer attention to the other ways people navigate the online world, even though 90% of Internet searches happen on Google.
"People have more ways to search for information than ever before — and increasingly this is happening outside the context of only a search engine," Pichai plans to tell the House panel. "You can ask Alexa a question from your kitchen; read your news on Twitter; ask friends for information via WhatsApp; and get recommendations on Snapchat or Pinterest."
Apple's Tim Cook will echo the appeals to patriotism raised among the other tech CEOs by touting how Apple's strength, becoming the most valuable company in the world, represents success "only possible in this country."
He will also join the other tech leaders by arguing that Apple has plenty of competition.
"The smartphone market is fiercely competitive, and companies like Samsung, LG, Huawei and Google have built very successful smartphone businesses offering different approaches," Cook will say in his opening statement to lawmakers.
Whether members of the House Judiciary Committee's antitrust subcommittee buy these arguments over the course of what is set to be an hours-long spectacle is another matter.
And it remains to be seen if the public will gain new insight into the tech companies, and whether lawmakers can pin down answers from the typically cautious technology executives.
The CEOs will be testifying via video at the same time, rather than one by one, a format seen as taking the heat off any individual executive and something the companies requested.
While the hearing centers on questions around market dominance, lawmakers are free to pepper the executives with questions about any topic.
The anything-goes format will likely divert the hearing away from antitrust and delve into issues such as perceived anti-conservative bias on social media platforms, a common Republican refrain. And Democrats, often raising concern about foreign election meddling, may inquire about possible efforts to influence the vote online ahead of the November election.
More on-topic probing could involve issues such as acquisitions that have grown the reach of Big Tech.
For instance, Facebook has acquired nearly 90 companies, including Instagram, WhatsApp and more recently, Giphy, a tool for creating animated images.
However it goes, one thing is certain: It will be a day for the history books.
The hearing is the first time all four technology leaders have testified together, as scrutiny over the companies' nearly $5 trillion market power draws intensifying scrutiny in Washington.
The CEOs will be on the defensive as House lawmakers grill them about whether the business empire each company has created has resulted in monopoly-like dominance that distorts the marketplace in their favor.
After enjoying more than a decade virtually free of federal regulation, House lawmakers are expected to make the case that it's time for the technology behemoths to be held to account.
The hearing caps a more than yearlong House investigation into the Big Tech companies, which has probed whether the industry leaders box out competition, discourage innovation and pose larger threats to society and American democracy.
If Washington can keep the bipartisan focus on Silicon Valley, the hearing could set the stage for historic regulations, but the tech CEOs will be making the case to lawmakers that laws aimed at reining in the scale and power of each company are not necessary, contending that competition among rivals has not been squashed and that consumers have benefited from the technology sector's success.
"You earn trust slowly, over time, by doing hard things well — delivering on time; offering everyday low prices; making promises and keeping them; making principled decisions, even when they're unpopular," Bezos will tell the subcommittee.
Unpopular among the four tech giants: the argument that the power each company has amassed over the years is being abused and needs to be held accountable by Washington.