As Google, Facebook, Amazon & Apple Testify Today, This Is What Happened At The Last Antitrust Hearing
As we head to another congressional hearing on antitrust later today, it is expected that representatives from four of the world’s largest tech companies will have some defending to do. Amazon, Facebook, Apple and Alphabet’s Google are expected to answer some tough questions about business practices. Earlier this month, the four big tech companies were part of another hearing. On July 16, top-ranking executives from Amazon, Apple, Facebook and Google made their way down to the US Capitol for the House Judiciary Hearing, chaired by Congressman David N. Cicilline. The hearing stretched for nearly two hours, with questions from US Congress representatives including aspects such as company policies, predatory pricing, favouring own services, and more. Representating the companies were Amazon’s associate general counsel Nate Sutton, Apple’s vice president of corporate law and chief compliance officer Kyle Andeer, Facebook’s head of global policy development Matt Perault, and Google’s economic policy director Adam Cohen. For those familiar with the format, the hearing brought back memories of the Congressional hearings of Facebook chief Mark Zuckerberg, and his Google counterpart Sundar Pichai. The questions, however, remained more pointed towards the issues at hand, that of the power of the Big Tech quartet getting out of hand. The hearing, as it proceeded, reflected upon the blatant powerhouse that these corporate giants have become, leading to questions of anti-competitive practices, predatory pricing, deliberate favouring of own services and a murky failure of identifying misleading information in suspicious circumstances. We have the key takeaways from the responses by the big tech companies from the July 16 hearing, just as a refresher ahead of today’s expected hearing. 1. The main theme of the hearing remained in identifying whether these companies really had competition in the industry — an aspect that is key to checking misuse of a dominant market position. One of the key points here came up when Representative Joe Neguse told Facebook’s Perault, “You can understand the skepticism, because when a company owns four of the six largest entities measured by active users in the world in that industry, it works as a monopoly, or at least as monopoly power.” He further highlighted that under the Sherman Antitrust Act, whether or not a company engages in monopolistic practices depends on whether or not there is anti-competitive conduct at play. In response, Perault acknowledged that the documentary evidence that Neguse produced on Facebook’s anti-competitive policy was indeed a part of the company once, which has since been altered “to suit the constantly evolving nature of the industry”. However, in related questions through the hearing, when asked if he could produce a list of companies that Facebook considers is big enough to be counted as “competition”, there was no conclusive answer drawn, much like how the affairs went down at Zuckerberg’s hearing. The others, meanwhile, did have competitors of note in their associated industries, and although their market dominance on paper is lesser than that of Facebook, the extent of the impact of competition remains to be answered. For instance, when Amazon’s Sutton was asked by Representative Jamie Raskin about his company’s market share, the figures he produced were of 1 percent market share in the global retail space, and 4 percent of the same industry in USA. When asked about who he identified as a competitor, he claimed to have data of Walmart being several times larger in volume of business. The extent and specific market filters in this case remained unanswered, and hence, inconclusive. 2. Apple faced the least intensity of the questioning, but aspects of its App Store practices and who it favours as its third party partners came up in the hearing. Apple executive Andeer stated on record that “84 percent of all apps on the App Store are not subjected to the 30 percent tax that Apple imposes on developers marketing their services on the Apple ecosystem.” He further claimed, “Over 2 million apps available in the App Store pay nothing to Apple. It’s only a very small percentage that pays a commission.” When asked to elucidate specifically about Spotify, he said, “They’re one of our most successful developers, but they pay a commission on less than 1 percent of their subscribers to Apple.” Taking a dig at the lawsuit that Spotify filed against Apple, Andeer concluded by saying that the music streaming service has built a “very successful business, thanks to the App Store,” before adding that Apple is “very proud of their success.” He denied claims of preferential treatment of Apple Music on the App Store, stating, “we make it very easy for competitors to access each and every iOS user through the App Store, so Spotify, Google Play Music and dozens of others offer apps that compete with Apple Music.” 3. Amazon’s Sutton faced a rough time explaining the process of using their own technology on a retail platform where they also sell their own hardware. He claimed that Amazon sells their own products because they do so at good quality and cheap pricing, in line with what consumers want. He further added that the “The data on popularity of products — like much retail data — is actually public data. For each of our products, you can see where it’s ranked, how popular it is. We do not use any of that specific seller data in creating our own private brand products.” He further added, “In fact, there are so many marketplaces that there’s a billion-dollar industry that has grown up to provide services to sellers so that they can use them to list across all marketplaces at the same time.” His responses were in answer to Amazon deliberately adopting policies that stifle retailers with smaller commercial power, thereby killing competition across multiple sectors of retail. However, the answers did not seem to satisfy the Representatives in their investigation of the fact that Amazon’s hardware and platform integration is, in fact, designed to keep a user within their own ecosystem. 4. Google defended through its representative Cohen that “you are free to use any other service, if you want to.” The allegations against Google stated that their massively overpowering ‘Search’ platform has evolved in design to become one that keeps a user within their ecosystem. Cohen also answered in non-committal denial to Representative Lucy McBath’s inquiry on non-removal of misinformation on the Google Maps platform, by stating that he was not aware of either the quoted WSJ article, or that there are 11 million fake locations registered within a particular region on Maps. Cohen also defended Google’s monopolistic position in the search engine industry as “incorrect”, stating that a lot of people use in-website search tools, thereby counting as competition to Google. There were also suggestions of some sort of a monopolistic collaboration between Apple and Google, and why Apple’s Safari web browser used Google as the default search engine. In response, Apple’s Andeer noted, “We gathered data that most of our users prefer using Google to search for information, and hence the decision. However, we offer an easy way for any user to choose any alternative of their liking.” Above all other factors, what the hearing truly implicated is the sheer might and the common theme of murky policies that have a soundly reasoned backdoor for each of the Big Tech companies. These backdoors lie in properly defining a particular sector, and what “competition” really stands for. It is important to note what each company primarily deals in, and given that each of Amazon, Apple, Facebook and Google dabble with multiple industries at the same time, it raises, yet again, the unresolved question of whether these companies should be broken down into individual entities for competition’s sake. As an umbrella, it is difficult to tie them down to one particular industry, thereby giving them the power to define their own rules by virtue of creating their own niche. The hearing’s conclusion also calls for significantly stronger regulations in the technology sphere, where governments need to impose far more stringent laws in terms of defining terms such as “anti-competitive practices”, “misuse of market dominance” and so on. This, however, is tied to the foremost implication of how these companies are involved in multiple industries, which makes regulations more difficult to be imposed.