The CEOs of Amazon, Apple, Facebook and Google are set for a rare turn in the congressional spotlight this week, with lawmakers expected to pose a critical — and potentially perilous — question for the technology titans: Are you too powerful?
For the executives, the issue of the companies’ market dominance comes at a delicate time — amid an economic catastrophe that has wiped out businesses large and small while adding billions to the coffers of an industry that critics have dubbed Big Tech. In addition, the hearing on Wednesday culminates a year-long investigation by the House Judiciary Committee into the foursome, which were America’s largest companies by market value even before the coronavirus pandemic reached U.S. shores in February.
“How they interact with smaller vendors and rivals on their platforms, the practices that they use to maintain their market position — all of that is now under the microscope,” said Diana Moss, president of the American Antitrust Institute. “The last hearing was in January, pre-COVID, and I will be particularly interested in how the COVID pandemic will weave through the conversation.”
First appearance for Bezos
For Amazon chief Jeff Bezos, it will be his first time appearing before Congress, while Apple’s Tim Cook, Facebook’s Mark Zuckerberg and Google’s Sundar Pichai will be making repeat appearances. Although each faces slightly different issues, they will all have to answer charges that their companies reduce competition and harm consumers.
“All four feel free to crush anyone on their platform that’s offering very good competition against them. This has happened again and again,” said Eleanor Fox, a law professor at New York University who specializes in antitrust and competition policy, in summarizing the case against Big Tech. “They get huge amounts of data from the businesses on the platform, they take more data than they need to conduct business, and they use that to find out what is the new best thing and then they appropriate that thing. They use it to suppress innovative competition of the businesses using the platform.”
Of late, meanwhile, Amazon has been lifted by the pandemic. The online retailer notched record sales in the first quarter, pulling in the equivalent of $10,000 a second as Americans shunned physical stores.
And for years, more than half of its sales have come from products other people sell on Amazon’s platform — not products it sells itself. That has led to accusations that Amazon plays hardball with small businesses, extracting high fees and using data it gleans from third-party sellers to undermine them.
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A coalition of labor unions last week filed a complaint against Amazon with the Federal Trade Commission, alleging that the ecommerce company controls prices on its platform, ties product rankings to whether sellers purchase other products and uses their data to promote its own products. The FTC is reportedly investigating Amazon, as are at least two states, according to media reports.
“Amazon’s ability to mine information from sellers that gives it a competitive advantage is a dynamic that’s just not in keeping with the notion of a fair and open market,” Stacy Mitchell, co-director at the Institute for Local Self-Reliance, said in a recent phone call. Mitchell is calling for Amazon to split its marketplace from its direct-sales platform.
For its part, Amazon maintains that it does not compete with its sellers, last week releasing a report highlighting the number of small businesses that use and benefit from its platform.
Advertising and privacy
The last time Sundar Pichai, the head of Alphabet-owned Google, spoke before Congress, the questioning focused on allegations of political bias in the search company’s products and whether Google planned to launch a product in China, which the CEO denied.
This time, the focus is likely to be on the company’s role in advertising. That’s the main thrust of a lawsuit the Department of Justice is reportedly considering against the search giant. Google controls about 80% of the market for search advertising, according to eMarketer, and has been accused of stifling competition from other ad placement services.
“It’s like a broker for advertising next to the search results, and it won’t let anyone else be that broker,” Fox said.
Google has rebutted such assertions, noting that there are “thousands” of companies that sell advertising.
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Facebook, too, will likely have to answer lawmaker questions about advertising. The company takes in more than 80% of social-media ad spending and nearly 60% of political spending, according to eMarketer.
Facebook has also drawn fire for declining to fact-check political ads on its platform, instead pointing out that such spots aren’t as popular as other types of ads. It has recently flagged several posts by the Trump reelection campaign after major advertisers joined a boycott.
Lawmakers will also likely scrutinize Facebook’s recent acquisitions, including the GIF-sharing platform Giphy, which it purchased for $400 million in May, as well as its user privacy practices.
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Unlike Amazon and Facebook, Apple has mostly managed to avoid allegations of unfair competition and abusive data collection practices. But software developers have accused the company of demanding heavy concessions in order to sell their products in its popular app store. Apple demands between 15% and 30% of a developer’s sales, although it maintains that cut is in line with market prices.
Congress’ investigation into Big Tech is running in parallel with probes by the Trump administration as well as efforts by state attorneys general.
Still, a wholesale breakup is unlikely because such an effort would likely end up in court, where the bar to prove market dominance is high, Fox said. Since the 1980s, courts have considered antitrust cases chiefly in terms of whether a company’s behavior harms consumers, in particular by raising prices — not whether it is too big. Without tangible proof that a company is doing so, showing that its behavior is anticompetitive becomes difficult.
“In court, [tech companies] have a really good chance of saying, ‘We don’t have any duties to people on the platform, let them go somewhere else,'” Fox said. “They have a chance of winning even on that point because of how conservative the Supreme Court is.”
Congress also could seek to more tightly regulate tech companies without breaking them up, said Moss of the American Antitrust Institute. “The most considered proposal would be something along the lines of creating a digital technology act.”
“What we’re seeing here is the emergence of a real multidimensional problem. The platforms raise not just economic problems, but social issues,” she said. “Antitrust is absolutely a tool when it comes to competition issues, but it may not be the best tool for privacy.”