In an antitrust hearing on Wednesday, the House Judiciary Committee grilled the Chief Executive Officers of Amazon, Facebook, Google and Apple over their substantial market power and anti-competitive actions.
Lawmakers from the antitrust subcommittee came prepared with millions of documents, transcripts of interviews and even once-private messages sent by CEOs, collected in an investigation that spanned 13 months.
Democratic Chairman of the antitrust subcommittee, Representative David Cicilline, who led the investigation, said, “Any single action by one of these companies can affect hundreds of millions of us in profound and lasting ways. Simply put: They have too much power.
“Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.”
Amazon CEO questioned over relationship with third-party sellers
Amazon CEO Jeff Bezos, the richest man in the world, made his first appearance in Congress on Wednesday where he was asked about Amazon’s relationship with the third-party sellers on its site.
Lucy McBath, the Democratic representative for Georgia, said that sellers used “words like bullying, fear, and panic to describe their relationship with Amazon.” Cicilline added that one seller compared Amazon to a drug dealer.
Pramila Jayapal, the Democratic representative for Washington, said that former Amazon employees confessed to the company using seller data to mine it and develop Amazon-owned products, effectively harming the businesses of third-party sellers on the site.
Third-party sellers are faced with little choice but to host their products on Amazon because according to data presented by Cicilline in the hearing, the company controls 75% of all online marketplace sales.
Bezos responded that “third party sellers in aggregate are doing extremely well on Amazon adding that Amazon has “a policy against using seller-specific data to aid our private label business.”
However, he admitted, “I can’t guarantee you that that policy has never been violated.”
Instagram acquisition questioned
The documents obtained by the antitrust committee included those about Facebook’s intention to buy Instagram as a way to neutralize the threat it posed to Facebook’s business.
Facebook bought Instagram in 2012 in a US$1 billion cash and stock deal. According to the documents, in company emails, Facebook’s chief financial officer outlined Instagram as a “competitive threat”.
Jim Sensenbrenner, Republican representative for Wisconsin, said that Facebook saw Instagram as a “powerful threat that could siphon business away from Facebook. Rather than compete with it, Facebook bought it.”
Facebook CEO Mark Zuckerberg responded that in 2012, Instagram was not the success it has become today and had many competitors, so Facebook was not in potential violation of antitrust laws. He added that the deal was approved by the Federal Trade Commission.
Jerry Nadler, Democratic representative from New York, disagreed, saying, “Mergers and acquisitions that buy off potential competitive threats violate the antitrust laws. In your own words, you purchased Instagram to neutralize a competitive threat.”
Zuckerberg also admitted that Facebook has “certainly adapted features” from competing social media sites.
Apple app store in spotlight
McBath and Val Demmings, the Democratic representative for Florida, asked Apple CEO Tim Cook why his company removed third-party parental control apps from its app store after introducing its own parental control app that monitors screen time.
Qustodio and Kidslox, two parental control apps, have filed a complaint with the European Commission about their removal.
“We were worried about the safety of the kids,” Cook said in response, citing privacy concerns.
McBath then showed an email in which Phil Schiller, Apple’s senior vice president of worldwide marketing, told a parent that they could use Apple’s parental control app ScreenTime instead when the parent asked about the removal.
Cook said he could not see the email on his screen.
McBath noted that Apple allowed the apps back on its store after six months.
Apple was also accused of demanding a heavy commission from companies who sell their apps on the store, especially companies such as Airbnb and Classpass, which have had to sell their apps after making business changes during the pandemic.
Nadler asked, “Isn’t this pandemic profiteering?”
Cook stated that Apple has to be competitive in its commission charges as there is “fierce competition at the developer side and the customer side.”
Sundar Pichai questioned over Google’s search engine
Sundar Pichai, CEO of Google’s parent company Alphabet, was grilled over how Google lifts information from websites to be displayed on the “walled garden” of its search engine so that it can earn money from advertising.
Cicilline said, “The evidence seems very clear to me as Google became the gateway to the internet, it began to abuse its power and use its surveillance over the web traffic to identify competitive threats and crush them.”
According to an online research tool Stat Counter, Google has global market share of 92% of search.
Pichai said in his defense that Google has many competitors in different categories, such as Amazon for shopping. He added that Google’s search results carried no ads and that it was considering the best interests of users by displaying content on the search platform.
Because websites rely on Google for traffic, Google’s decision to provide its own information, especially in relation to hotels, flights and local businesses, has harmed traffic.
What happens next?
Cicilline, the chair of the antitrust subcommittee, is expected to submit a report by August which will indicate how federal competition rules can be modified to give government regulators more power to probe and control tech companies from becoming a monopoly and thus harming small businesses and free competition.
However, it remains to be seen if any potential legislation that is drafted after this investigation will have bipartisan support.
Top Republican on the antitrust subcommittee Jim Sensenbrenner said in the hearing, “I have reached the conclusion that we do not need to change our antitrust laws.
“They’ve been working just fine. The question here is the question of enforcement of those antitrust laws.”
He suggested that lawmakers should pressure antitrust regulators like the Federal Trade Commission to be more strict with these tech giants.
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