Amazon, Apple, Facebook and Google grilled on Capitol Hill over their market power
“Our founders would not bow before a king. Nor should we bow before the emperors of the online economy,” said Rep. David N. Cicilline (D-R.I.).
Cicilline, the chairman of the antitrust panel, opened a congressional investigation of Amazon, Apple, Facebook and Google last year, aiming to explore whether the tech industry’s most influential quartet of companies had attained their status through potentially anti-competitive means. In response, the four chief executives — Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg and Google’s Sundar Pichai — took the witness stand to fiercely defend their businesses Wednesday as rags-to-riches success stories, made possible only through American ingenuity and the sustained support of their ever-growing customer bases.
But lawmakers repeatedly presented a different vision at their hearing, one in which Silicon Valley’s myriad advancements in commerce, consumer electronics, communication and a vast array of online services had come at an immense cost to the people who use those tools and the companies that seek to compete against the tech giants.
In exchanges likely to have lasting resonance, Democrats repeatedly confronted Facebook’s Zuckerberg with his own past emails. Rep. Jerrold Nadler (D-N.Y.), the top lawmaker on the House Judiciary Committee, brought up a 2012 message in which Zuckerberg apparently said he sought to acquire Instagram, which at the time was a rival photo-sharing app, out of fear that it could “meaningfully hurt us.” Later, Rep. Joe Neguse (D-Colo.) pointed to other Facebook communications that described the company’s acquisition strategy generally as “a land grab.”
“Mergers and acquisitions that buy off potential competitive threats violate the antitrust laws,” Nadler charged. “In your own words, you purchased Instagram to neutralize a competitive threat.”
“We compete hard. We compete fairly. We try to be the best,” Zuckerberg said earlier in the hearing.
Amazon, meanwhile, faced withering scrutiny over allegations it may have misled the committee. The e-commerce giant previously told lawmakers it does not tap data from third-party sellers to boost sales of its own products. But Democratic Rep. Pramila Jayapal (Wash.) brought up public reports that indicated to the contrary, prompting Bezos — delivering his first-ever testimony to Congress — to offer a striking admission of potential fault.
“What I can tell you is we have a policy against using seller-specific data to aid our private label business,” he said. “But I can’t guarantee you that policy has never been violated.”
For all four executives, the afternoon offered an abundance of additional uncomfortable clashes, laying bare the broad, bipartisan frustrations with the way Silicon Valley puts users’ privacy at risk, polices content online and hurts competitors, including small businesses that have told lawmakers they cannot hope to compete with these tech giants. On several occasions, lawmakers cut off or talked over the tech executives when they offered vague or long answers, seeking to hold them to account for the evidence investigators had gathered from their probe.
Republicans, meanwhile, largely used their time during the hearing to attack some tech companies for engaging in perceived political censorship against conservatives, a charge that the industry vehemently denies.
“We all think the free market is great. We think competition is great. We love the fact that these are American companies,” said Rep. Jim Jordan (Ohio), the top Republican on the House Judiciary Committee. “But what’s not great is censoring people, censoring conservators and trying to impact elections. And if it doesn’t end, there has to be consequences.”
Despite scattered outbursts of political theater, the hearing could carry immense weight at a time when Amazon, Apple, Facebook and Google have lost support among both political parties — while also facing a slew of investigations around the world. In the United States, the Department of Justice may file an antitrust lawsuit against Google as soon as this summer, The Washington Post has previously reported, with cases against other companies potentially further on the horizon.
Cicilline, for his part, is expected to issue a report in August outlining the case for updating federal competition rules that would give regulators more power to probe and penalize the industry. The fruits of his investigation could offer Congress one of the first major actions it can take if it aims to rein in big tech.
The four companies’ leaders began Wednesday by raising their right hands and taking the customary oath to deliver truthful testimony from the west coast. Videoconferencing software helped beam the typically made-for-television moment into a sparsely attended, windowless congressional committee room thousands of miles away from the country’s tech heartland.
Each of the tech executives took great pains to stress their contributions to the U.S. economy. Amazon described itself as one of the most popular consumer brands, where consumers can get their goods quickly and cheaply. Apple said it had enabled a wildly popular ecosystem of apps and widely prized, high-end phones to match. Facebook said it had stood for free expression and speech against a rising tide of international censorship, pointing to new competitors including TikTok. And Google said its tools made it possible for people to find information and businesses worldwide to grow.
Quickly, though, Democrats on the House’s top antitrust committee sought to unspool the circumstances behind the four tech giants’ successes.
Some lawmakers specifically accused Google of weaponizing its popular search engine to put rivals at a disadvantage. Cicilline specifically charged Google had “stolen content to build your own business,” citing its practice of culling and displaying information at the top of users’ search results.
Google historically has said its approach to search helps people find the answers they need or the products they’re looking for. In the case of Yelp, though, Cicilline questioned Google’s motives, stressing the search giant had stolen its restaurant reviews and threatened to “delist” the site when it complained. Cicilline also accused Google of monitoring web traffic to “identify competitive threats.”
“Our documents show that Google evolved from a turnstile to the rest of the web to a walled garden that increasingly keeps users within its sights,” he said.
Pichai, for his part, disputed the characterization that Google had stolen content and put rivals at a disadvantage. “Today, we support 1.4 million small businesses supporting over $385 billion in their core economic activity,” he said. “We see many businesses thrive, particularly even during the pandemic.”
Cook, the head of Apple, received fewer questions than his counterparts. But several lawmakers peppered him with questions about the way the company handles its App Store — and the companies that have developed competing products or services that Apple also offers.
Some lawmakers repeatedly raised the company’s policy to take up to a 30 percent commission on in-app sales and subscriptions, a fee that has chafed prominent companies including Spotify, who fear they have no choice but to surrender critical revenue to Apple. The iPhone giant maintains the fee essentially funds the entire app ecosystem, and Cook at one point Wednesday told lawmakers the company has not raised its rates since it opened the store in 2008.
But lawmakers later produced a document showing one of Apple’s executives, Eddy Cue, in 2011 had proposed requiring developers to pay more. They posted it online, while in the hearing, Cook generally stressed Apple had no desire to harm developers.
“We do not retaliate or bully people,” he said. “It is strongly against our company culture.”
Below are updates from the Congressional hearing.
July 29, 2020 at 6:55 PM EDT
The Post’s Robin Givhan’s take on the virtual hearing
At Wednesday’s hearing, subcommittee members gave soliloquies while the CEOs sometimes could barely get a word in — even when the audio wasn’t delayed.
The CEOs of the biggest tech companies in the United States spoke of their companies’ modest beginnings, of achieving the American Dream and of the unique wonders of capitalism. Because they didn’t march into the wood-paneled committee room with its high ceiling and leather chairs where they would have been swarmed by a phalanx of photographers and trailed by a clutch of attorneys, the men seemed less consequential than they actually are.
Technology, which has brought them outsize wealth and influence, had the effect of making them appear small and, ultimately, more human. Each was just a lone man in a room talking into a microphone and dealing with audio delay. And even a tech wizard like Jeff Bezos, who owns The Washington Post, sometimes forgot to unmute himself.
Google’s Sundar Pichai was the sleekest of the lot in both appearance and setting. He wore an elegant charcoal suit and matching tie and was well-framed behind a desk that sat in an office that looked like it had been inspired by the West Elm catalogue. He sat with perfect posture, and when he spoke, his gestures were emotive but not frantic. He tended to steeple his fingers as he attempted to answer the House Judiciary subcommittee members’ meandering questions that teetered between privacy issues and conspiracy theories.
Amazon’s Bezos sat in front of a wall of honey-colored shelves with a distinctly mid-century modern feel; Tim Cook of Apple was backed by a low row of green house plants; and Facebook’s Mark Zuckerberg had a plain white background that glowed so brightly it looked as though he were delivering his testimony from the interior of a nuclear reactor.
By Robin Givhan
July 29, 2020 at 6:46 PM EDT
Cicilline accuses all four tech companies of having monopoly power
Cicilline said that all four companies that testified today are monopolies at the conclusion of a more than five-hour grilling of some of the top technology titans.
“These companies, as they exist today, all have monopoly power,” he said during closing statements. “Some need to be broken up.”
He also suggested that all of the companies need to be regulated. He compared the four chief executives who testified to the modern day versions of Gilded Age tycoons.
“Their control of the marketplace allows them to do whatever it takes to crush independent businesses and expand their own power.”
While speaking to reporters after the hearing, he added that the companies are clearly violating antitrust laws. He said Wednesday’s hearing confirmed evidence that the committee collected in its year-long probe into the companies’ power.
“They’re engaged in behavior that’s anticompetitive, which favors their own products and services, which monetizes and weaponizes data, which compromises the privacy of their users and which creates a competitive disadvantage for companies attempting to enter the marketplace,” he said.
By Cat Zakrzewski
July 29, 2020 at 6:36 PM EDT
Cook denies copying apps on its platform
In response to a question from Neguse, Cook denied that Apple uses data on its App Store to create competing apps of its own. “We would never steal somebody’s IP,” Cook said.
Apple continues the practice to this day, something generally accepted as normal in the software development industry. As Steve Jobs once said: “We have always been shameless about stealing great ideas.”
By Reed Albergotti
July 29, 2020 at 6:33 PM EDT
Essential items, worker safety trumped profitability at pandemic’s start, Bezos testifies
Amazon chief executive Jeff Bezos said profits were not as important as getting essential items to customers and protecting its warehouse workers as the coronavirus first raged.
Rep. Mary Gay Scanlon (D-Pa.) questioned Bezos on Amazon’s decision to delay shipment of nonessential products in March, noting that the committee heard from “several employees” that Amazon continued to ship nonessential items like hammocks, fish tanks and pool floaties. She asked Bezos if the company designated Amazon devices such as its Fire TV, Echo speakers and Ring doorbell as essential.
Bezos said he didn’t know the answer.
“What I can tell you is that we had there was no playbook for this,” Bezos said. “We moved very quickly. Demand went through the roof, was like having a holiday selling season but in March, and we had to make a lot of decisions very rapidly.”
And Bezos said profit wasn’t a factor in making those decisions.
“We were working to achieve two objectives. One was to get essential products to customers, and the second was to keep our front-line employees safe,” Bezos said. “We were not focused on profitability that time.”
By Jay Greene
July 29, 2020 at 6:29 PM EDT
‘Of course we care’ about advertisers, Zuckerberg says of the advertising boycott
In an exchange with Jayapal, Zuckerberg appeared to grow a bit frustrated with a question about the advertiser boycott Facebook is facing. The lawmaker pointed to a report that Zuckerberg was flippant about the impact of the boycott. She asked whether he was saying he didn’t care about it.
“No, Congresswoman, of course we care” about the advertising boycott, he said. But he said the company would not let advertisers dictate the company’s content policies.
Facebook has conceded to some of the demands of the boycott, including hiring a high-level senior executive dedicated to civil rights, but the organizers say the company has much further to go.
By Elizabeth Dwoskin
July 29, 2020 at 6:18 PM EDT
Pichai says he doesn’t know how big Google’s ad share is
Rep. Pramila Jayapal (D-Wash.) dug into Google’s advertising business during the last round of questions in the hearing, kicking it off by asking CEO Pichai what share of the ad exchange market Google controls.
Pichai said he didn’t know.
“I’m not exactly familiar, I’ve seen various reports, but you know, we are a popular choice,” he said.
Jayapal went on to show a report outlining how Google controls a majority of both sell-side advertising and buy-side. Lawmakers have expressed concern about Google’s dominance in the ad market because the company controls a platform for advertisers to buy ad space as well as many of the websites where those ads appear.
By Rachel Lerman
July 29, 2020 at 6:01 PM EDT
Cook denies ‘profiteering’ during pandemic
Congressman Nadler accused Cook of profiteering as the novel coronavirus spread around the world by forcing commissions on companies that have had to switch to digital models during a pandemic that has forced much of the business world online.
Cook denied that accusation. “We would never do that,” Cook said, acknowledging two cases in which companies have complained about Apple’s behavior. Cook said Apple was working with those companies on a solution.
Nadler accused Apple of changing its policies about commissions, or changing the way it enforces those policies, to extract more revenue out of developers. He pointed to the email app Hey, which has complained publicly and testified in front of the House Judiciary Committee, about Apple’s alleged behavior.
But Cook denied any change in policy or behavior. He acknowledged that Apple may have made errors in the past due to the high number of apps submitted to the store.
By Reed Albergotti
July 29, 2020 at 5:58 PM EDT
Zuckerberg said it is ‘well documented’ the Chinese government steals from U.S. companies
Three of the tech CEOs walked carefully around a question from Rep. Greg Steube (R-Fla.), but Facebook’s Zuckerberg addressed it head on.
“Do you believe the Chinese government steals technology from U.S. companies?” Steube asked.
Pichai and Cook both said first they were not aware of the Chinese government stealing from Google and Apple, respectively. Zuckerberg spoke more generally.
“I think it’s well documented that the Chinese government steals technology from U.S. companies,” the Facebook CEO said.
Several lawmaker questions have revolved around concerns about Chinese ties, especially targeted toward Google CEO Pichai. The U.S. government is facing escalating tensions with the country, and tech has often been caught in the center because of manufacturing plants and business partners in China.
The question also revealed a downfall of holding the hearing virtually. When it was Bezos’s turn to answer, his words were silent.
“Mr. Bezos, I believe you’re on mute,” the lawmakers reminded him.
By Rachel Lerman
July 29, 2020 at 5:54 PM EDT
Facebook is accused of digital ‘surveillance’ against its competitors
Rep. Hank Johnson (D-Ga.) asked Zuckerberg about tools that Facebook uses to get insights into the competition.
He mentioned Facebook’s 2013 acquisition of an Israeli security app called Onavo Protect, which the company used to gain visibility into how consumers were using many apps that were installed on their phones. That helped Facebook monitor potential competitors and pounce on fast-growing new businesses.
The use of Onavo led to the acquisition of WhatsApp for $19 billion in 2014, The Washington Post reported.
The Onavo service offered consumers a virtual private network that disguises the traffic of smartphone users as they browse the Internet and use apps. But while it advertised itself to users as a way to “keep you and your data safe,” Facebook was able, on the back end, to glean detailed insights about what consumers were doing when they were not using Facebook’s own apps, which include Messenger, WhatsApp and Instagram.
Moreover, Onavo’s terms of service did not make it clear to users that the app enabled its owner, Facebook, to collect their information for that purpose, and the fact that the app was owned by Facebook was not easily findable on the terms of service, The Post previously reported.
Before Facebook acquired Onavo, the venture capital community used it to monitor fast-growing companies that might be worth investing in. Facebook shut down that access when it bought Onavo, which it shuttered last year.
Johnson asked Zuckerberg about acquiring WhatsApp. Zuckerberg said there were many reasons for the acquisition.
By Elizabeth Dwoskin
July 29, 2020 at 5:35 PM EDT
Cook confronted with internal document in Screen Time controversy
Apple executive Phil Schiller, who oversees the Apple App Store, promoted Apple’s Screen Time app to customers who complained to the company about the removal competing services, according to a document cited by Rep. Lucy McBath (D-Ga.).
Cook again defended the company’s decision to remove kids’ tracking apps, claiming it was for privacy reasons, but McBath questioned the timing. “If Apple wasn’t attempting to harm competitors and help its own app, why did Phil Schiller promote the Screen Time app to customers who complained about the removal?” she asked.
McBath pointed out that the apps were allowed back on the platform six months later. “This is fundamentally unfair,” she said. Apple “stifles the innovation that is the lifeblood of our economy,” she said.
By Reed Albergotti
July 29, 2020 at 5:32 PM EDT
Zuckerberg is accused of bias against conservatives over and over
Zuckerberg was asked by Rep. Matt Gaetz (R-Fla.) about specific incidents in which the lawmaker alleged that Facebook executives may have used the service to downplay conservative viewpoints.
He cited an investigation by the right-leaning Project Veritas organization that showed interviews with content moderators for Facebook who claimed that the company censored content from people who wear “Make America Great Again” hats.
Zuckerberg said that the company aims “to be a platform for all ideas” and that he does not want Facebook to be ideologically biased.
Gaetz asked whether content moderators and other employees were ever fired because of their policies, and specifically why right-leaning Palmer Luckey, a top executive and creator of the Oculus virtual reality headset, was fired.
The Wall Street Journal reported that his politics were a reason for his being pushed out. Gaetz also referenced documents that he claimed suggested that Luckey was instructed to suppress his political beliefs.
Zuckerberg said that he would not comment on Luckey but that if anyone was fired for political beliefs it would be inappropriate and that mistakes happen in large companies.
By Elizabeth Dwoskin
July 29, 2020 at 5:25 PM EDT
Bezos pushes back on assertion that e-commerce is a relevant market to investigate
Bezos turned to a frequent refrain from company executives that Congress should look broadly at all retail sales as it considers antitrust regulation.
That’s important because it diffuses Amazon’s power in retail sales. The company accounts for roughly 4 percent of overall retail sales in the United States, a market that includes restaurants, bars and gas stations, noted Rep. Joe Neguse (D-Colo.). The lawmaker suggested a better market to focus on is U.S. e-commerce sales, a market in which Amazon holds a roughly 38 percent share.
Bezos pushed back on the distinction.
“I don’t accept that e-commerce is a different market, but it is a different channel,” Bezos said.
Defining the market so broadly, of course, means Amazon can’t be so powerful to merit antitrust action.
By Jay Greene
July 29, 2020 at 5:17 PM EDT
Pichai says YouTube is ‘investing rigorously’ in child safety
Pichai said Google is “investing rigorously” in child safety in response to concerns that the company’s streaming site YouTube improperly collected personal information about children.
Rep. Mary Gay Scanlon (D-Pa.) asked Pichai if the company is working with advertisers to target ads to children on YouTube. The federal government severely restricts the amount of information Internet companies can collect on minors.
Google reached a $170 million settlement with the Federal Trade Commission last year after an investigation into allegations YouTube violated federal data privacy laws about children.
“This is an area we take it very seriously. I am a parent, too,” Pichai told Congress on Wednesday.
Scanlon also asked Pichai about negotiations to buy YouTube in 2006, but Pichai sidestepped most of the questions by noting it was before he took over as CEO in 2015.
By Rachel Lerman
July 29, 2020 at 5:12 PM EDT
Cook grilled on getting rid of competitors to its in-house kid tracker
Rep. Val Demings (D-Fla.) also grilled Cook over its much-criticized decision to get rid of apps that allow parents to track their children.
Cook said the apps “placed kids’ data at risk, so we were worried about the safety of kids,” he said. That’s because the apps used “mobile device management,” a corporate tool for tracking employees.
Demings pointed out that Apple allowed an app created by the government of Saudi Arabia to remain on the app store. “Apple kicks one out that was helping parents but keeps the one that is owned by a powerful government,” Demings pointed out.
Cook said he wasn’t aware of the Saudi app but offered to get back to her office.
Demings pointed out that Apple’s removal of the kids trackers coincided with the launch of its own competing technology, called Screen Time.
By Reed Albergotti
