Congress turns up the heat on big tech’s big four
Four of the most powerful businessmen in the world – Jeff Bezos, Sundar Pichai, Tim Cook, and Mark Zuckerberg – are not used to having the tables turned. For more than five hours yesterday the tech barons, used to having much of the world at their beck and call, were grilled by the House Subcommittee on Antitrust, Commercial and Administrative Law of the US Congress in what turned into a highly political and combatative session.
The subject of the inquiry was whether these companies wielded monopoly power, something many on the committee made clear they saw as a threat not just to free markets but also free government and free speech.
With a report on the committee’s findings now due, this climactic set of testimonies gives a good indication of what we can expect.
There are five key takeaways.
The days of cloning or buying out challenger start-ups may be over
An accusation levelled against every company in some form was that they stifled innovation, leveraging their size to crush or copy potential rivals before they could get off the ground. Zuckerberg faced scrutiny over Facebook’s purchases of WhatsApp and Instagram. He also admitted that Facebook did, at some time, have a policy of burying content from rivals.
Cook, Pichai, and Bezos for their part mainly faced accusations that they pumped out carbon copies of rival tech companies’ products – something they were able to do in part thanks to their vast size and dominance over key chokepoints such as cloud computing or app stores.
Amazon is facing severe scrutiny over its treatment of third party-sellers
Bezos pushed back vigorously against suggestions he was a monopolist, claiming that Amazon was but a small fish accounting for only 1% of global retail and 4% of US retail (less than Walmart). He also touted the huge numbers of third-party sellers on Amazon as evidence that the company works well with smaller businesses.
Committee members, however, were less than convinced. Their line of questioning instead portrayed third party sellers as unhealthily dependent on, and at the mercy of, Amazon. Amazon has denied using individual sellers’ data to clone their products before crushing them. Under questioning, however, Bezos was forced to admit some product categories – whose data Amazon did use to strategise – could be as small as two sellers.
An admission that third-party sellers who purchased ancillary Amazon services saw their products favoured in vital ways was also dragged out of Bezos.
Ad-tech is in the spotlight, and so are Facebook and Google
Pramila Jayapal (D) and Kelly Armstrong (R) lead the charge here in a rare show of bipartisan coordination. Their focus was on the internet’s two great advertisement brokers, Facebook and Google.
Concerns about privacy and competition intertwined as committee members probed how these companies built up detailed profiles of their users. The specific data gathered here was clearly seen by committee members as a serious threat to user privacy. The committee scrutinised the fact that other companies were denied access to said data – Pichai, straight-faced, citing privacy concerns – provides a clear competitive advantage.
In both cases the questioners were keen to link these predatory practises with the companies’ growing markets shares. Early commitments to privacy by these companies were pointedly brought up as the congressmen hypothesised how the crushing of competition allowed Facebook and Google to move away from the early squeaky-clean principles that helped attract many users.
Free speech is a hot, and unwinnable, issue for tech companies
It was always going to be a bad day for these companies when Jim Jordan (R) opened his remarks by declaring “Big Tech is out to get conservatives.”
Throughout the hearing, most Republican committee members focused heavily on free speech issues and their belief that conservatives were being censored online, almost to the exclusion of other anti-trust issues.
Democrats for their part were openly contemptuous of Republican complaints, terming them “victimology”. Democrats did, however, have concerns of their own particularly over hate speech and disinformation. Facebook in particular was accused of promoting these messages algorithmically to drive user engagement, and profits. The pressure the Democrats were trying to exert ran directly across Republican complaints about creeping censorship.
On free speech the companies are in a no-win situation.
Big Tech is in trouble
In his closing remark the committee chair, David Cicilline, compared the CEOs arrayed before him today to robber barons of the past. He also made clear that he saw them as a political and commercial threat. Quoting Supreme Court Justice Louis Brandeis, Cicilline said: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
For Cicilline’s part his preferred choice was clear: “Some [of the companies] need to be broken up. All need to be properly regulated”.
The question is what this will entail. New laws seem unlikely. Jim Sensenbrenner, the senior Republican on the committee, expressed scepticism of such as solution – the alternative he seemed to prefer, renewed scrutiny by competition bodies, seems inevitable. With big tech’s reputational honeymoon drawing to close, it seems they will find the attention they receive much more sharply focused than before.