The beginning of the end for Big Tech? Congress grills Facebook & Amazon over abuse of market power


ional hearing on Big Tech CEOs, much of what they said was predictable: We’re not that big; competition is fierce; consumers love us.

FILE PHOTO: Google CEO Sundar Pichai speaks via video conference before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on "Online Platforms and Market Power" in the Rayburn House Office Building on Capitol Hill in Washington, DC on July 29, 2020. Graeme Jennings/Pool via REUTERS/File Photo

What they didn’t say might be more interesting. Given the opportunity to dispute that they used their enormous power to outmaneuver smaller challengers, the tech titans repeatedly demurred.

“All of them indicated that they use their massive data advantages to peek into what their competitors or people who rely on their platforms are doing,” said Gene Kimmelman, an adviser with the Washington-based nonprofit Public Knowledge. “So while they didn’t really want to admit it, they couldn’t deny it.”

One of the first to be quizzed was Google Chief Executive Sundar Pichai, who was asked by Democratic Congressman David Cicilline whether the search giant used its surveillance of web traffic to see what its competition was up to.

Pichai came out with a vague statement that didn’t sound like he disputed the question.

“We try to understand trends from data we can see,” he said.

Quizzed by Washington Congresswoman Pramila Jayapal, Amazon founder Jeff Bezos said that Amazon had a policy against using the data harvested from its sellers to boost its own business “but I can’t guarantee that that policy has never been violated.”

Bezos said he’d read reports of that happening at his company but that he was “not yet satisfied that we’ve gotten to the bottom of it.”

“I’ll take that as a you’re-not-denying that,” Jayapal said.

When Jayapal turned her attention to Facebook, she pushed founder Mark Zuckerberg on whether the company had ever copied its competitors.

“We’ve certainly adapted features that others have led in,” he said.

Even when there were denials - or something like them - they weren’t particularly forceful. When Georgia Congresswoman Lucy McBath quizzed Apple Chief Executive Tim Cook on whether his company had blocked Random House’s e-book app from its online marketplace after the publisher declined to participate in Apple’s competing iBookstore, Cook said there was any number of reasons why an app might have been frozen out.

“It may not work properly,” Cook told her. “There may be other issues with it.”

When McBath responded to Cook, she could easily have been addressing his colleagues.

“Our evidence suggests that your company has used its power to harm your rivals and boost your own business,” she said.

“This is fundamentally unfair.”

As Apple Inc and Amazon.com Inc worked toward a high-profile distribution deal at least a couple of years ago, one proposal on the table was for Apple to have “competing ads removed from search” results on Amazon, according to documents released on Wednesday from a U.S. House of Representatives investigation.

The document, which is not dated but shows Apple products released in late 2017, offers a rare insight into how two of the world’s most valuable companies considered using their size for special treatment from one another.

For years, Amazon, the world’s largest online retailer, carried only a limited set of Apple products. Users often found used Apple products, and in some cases, knockoffs.

That changed in 2018 when the two announced a deal for Apple and some approved resellers to market iPhones to Amazon customers in several countries in exchange for a promise from Amazon to rid its site of Apple products from third-party merchants not authorized by Apple.

Investigators for the House Judiciary Committee’s antitrust panel asked for documents related to the deal, turning up a slide presentation marked “Apple Confidential” that appeared to discuss principles and proposed terms.

Among them was that Amazon would have a “Differentiated Apple Customer Experience” that would include “competing ads removed from search,” product detail pages, and checkout pages, according to the document. It proposed that ad treatment would be the same “as for Amazon products.”

Another way that Amazon’s “Buy Box” would be turned off “for limited Apple-agreed situations.” The Buy Box is Amazon’s automated recommendation for which merchants out of several selling the same item should get the sale and whose non-public algorithms bear heavily on the success of independent sellers.

It was unclear if the proposals were ultimately discussed or part of the final agreement.

Amazon and Apple did not immediately comment.

Google and Facebook took particularly sharp jabs for alleged abuse of their market power from Democrats and Republicans on Wednesday in a much-anticipated congressional hearing that put four of America’s most prominent tech CEOs in the hot seat.

The chairman of the U.S. House of Representatives antitrust panel holding the hearing said afterwards that the four CEOs had acknowledged concerning behavior.

“What we heard from witnesses at the hearing confirmed the evidence that we have collected over the last year,” Representative David Cicilline, a Democrat, told Reuters.

Facebook Inc’s Mark Zuckerberg, Amazon.com Inc’s Jeff Bezos, Google owner Alphabet Inc’s Sundar Pichai, and Apple Inc’s Tim Cook - whose companies have a combined market value of about $5 trillion - parried a range of accusations that they crippled smaller rivals in their quest for market share.

The videoconference hearing was the first time the four CEOs have appeared together before lawmakers.

Though it was Bezos’ first congressional testimony, he appeared the least fazed. Cook drew fewer barbed questions than Bezos and handled them efficiently. Zuckerberg suffered the most damage, stumbling at times when confronted with internal emails.

Pichai, CEO of both Alphabet and Google, took the most heat from conservatives on the panel and looked the worse for it, as he repeatedly told lawmakers he would be happy to look into various situations and get back to them.

The Big Tech hearing triggered scorn from viewers over its own tech issues. Bezos escaped questioning for about an hour in what may have been a tech issue and was caught on screen reaching for what appeared to be a snack.

Poor audio, flat-screen televisions switching off, and chief executives appearing together as thumbnails on a large screen led to the mockery of the virtual set-up on Twitter.

Lawmakers descended into shouting at each other at points, with a pandemic twist. One yelled: “Put your mask on!”

Witnesses Amazon CEO Jeff Bezos, Facebook CEO Mark Zuckerberg, Google CEO Sundar Pichai, and Apple CEO Tim Cook are sworn-in before a hearing of the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on "Online Platforms and Market Power", in the Rayburn House office Building on Capitol Hill, in Washington, U.S., July 29, 2020. Mandel Ngan/Pool via REUTERS

THEFT, COPYING, CONTENT MODERATION

Cicilline set the tone for the hearing when he began by accusing Google of theft. “Why does Google steal content from honest businesses?” he asked. He alleged Google stole reviews from Yelp Inc and threatened to delist Yelp from search results if it objected.

Pichai responded mildly that he would want to know the specifics of the accusation. “We conduct ourselves to the highest standards,” he added, disagreeing with the characterization.

Facebook’s Zuckerberg took a series of questions about the company’s purchase of Instagram in 2012 and whether it was acquired because it was a threat, as he dubbed it in an email obtained by the committee.

Zuckerberg responded that Instagram at the time was a tiny photo-sharing app rather than a social-media phenomenon.

In one of the more notable exchanges, Representative Pramila Jayapal, a Democrat, pushed Zuckerberg on whether Facebook had ever copied its competitors. “We’ve certainly adapted features that others have led in,” he said.

“How many companies did Facebook end up copying?” she asked. “Is it less than five? Less than 50?”

“Congresswoman, I don’t know,” Zuckerberg said.


Jayapal pressed Amazon’s Bezos on whether the company used data from third-party sellers in making sales decisions. An Amazon executive previously had denied the practice under oath and was contradicted by a news report.

Bezos answered cautiously that the company had a policy against such actions. “If we found that somebody violated it, we would take action against them,” he said.

On the Republican side, Representative Jim Jordan accused the companies of hampering conservatives from reaching their supporters. Jordan pressed Pichai on whether Google would help former Vice President Joe Biden, the presumptive Democratic presidential nominee, win in November.

“We support both campaigns. We approach our work in a nonpartisan fashion,” Pichai responded.

Representative Matt Gaetz asked Facebook’s Zuckerberg whether content moderators disadvantaged conservative content. Zuckerberg said they were trained to be neutral.

“STREET FIGHT”

Apple’s Cook rejected the notion there is nothing to stop his company from raising the commissions it charges in the App Store.

“I disagree strongly with that,” he said. “The competition for developers - they can write their apps for Android or Windows or Xbox or PlayStation. We have fierce competition at the developer side and the customer side, which is essentially so competitive I would describe it as a street fight.”

A detailed report with antitrust allegations against the four tech platforms and recommendations on how to tame their market power could be released by late summer or early fall by the committee, senior committee aides said.

Two years after Facebook Inc Chief Executive Mark Zuckerberg’s explanation to U.S. lawmakers - “Senator, we run ads” - exploded as a meme, online viewers again ridiculed moments of a tech antitrust showdown on Wednesday.

Amazon CEO Jeff Bezos testifies remotely by videoconference during a U.S. House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law hearing on "Online Platforms and Market Power" in this screengrab made from video as the committee meets on Capitol Hill, in Washington, U.S., July 29, 2020. U.S. House Judiciary Committee via REUTERS

The chief executives of the country’s largest tech companies - including Zuckerberg, Amazon Inc’s Jeff Bezos, Sundar Pichai of Alphabet Inc’s Google and Apple Inc’s Tim Cook - gave virtual testimony before the U.S. House Judiciary Committee’s antitrust panel.

BEZOS EATS A SNACK

Social media users jumped on the fact that Amazon’s Bezos received no questions for more than an hour in his first appearance before Congress. At one point, the world’s richest man appeared to reach off-screen for a snack, to the internet’s delight.

“someone calculate how much money he made during this nom,” tweeted @Bryson_M. Others did back-of-the-napkin calculations to figure out an answer.

It was not immediately clear if there were technical problems with Amazon’s feed.

“THE NET”

U.S. Representative James Sensenbrenner’s use of the phrase “the net” was mocked online for being outdated, with watchers posting about the 1995 film of the same name starring Sandra Bullock and sharing GIFs of retro computer icons and dial-up internet.

The Wisconsin Republican also grilled Facebook’s CEO on Twitter Inc’s decision to temporarily restrict Donald Trump Jr. from tweeting after he violated its coronavirus misinformation rules.

“I think what you might be referring to happened on Twitter, so it’s hard for me to speak to that,” said Zuckerberg.

Republican Representative Greg Steube was also roasted online for asking Google’s CEO why his campaign emails were going to spam folders in Gmail.

ROOM RATER

The chief executives initially appeared as thumbnail images on a large screen, frustrating viewers who mocked the virtual set-up on Twitter.

When the CEOs were later shown individually on large screens, the popular Twitter account @ratemyskyperoom pronounced its scores, saying Zuckerberg’s room set-up looked like a hostage video.

For Bezos? “Back off the soft focus. Add books. Remember books? Order a couple ring lights. Here’s one. You gave it 4.5 stars. You get 6/10,” it tweeted, with a screenshot of an Amazon product.

Later, some viewers commented after the Amazon boss was told: “Mr. Bezos, I believe you’re on mute.”

“Thank you 2020 for making it happen,” tweeted one viewer.

“PUT YOUR MASK ON!”

The lawmakers also descended into shouting at several points, with a pandemic twist. The refrain “put your mask on!” caught the attention of Twitter users.

“Can’t wait for the Jeopardy Q in 2022: This Congressional Hearing popularized “Put your mask on” as an insult,” wrote one user, referring to the popular American quiz show.

 Facebook Inc Chief Executive Mark Zuckerberg stumbled at a congressional hearing on alleged abuse of market power on Wednesday, as lawmakers confronted the social media titan with damaging internal emails about the company’s acquisitions.

Facebook CEO Mark Zuckerberg testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on "Online Platforms and Market Power" in the Rayburn House Office Building on Capitol Hill in Washington, DC on July 29, 2020. Mandel Ngan/Pool via REUTERS

The House Judiciary Committee’s antitrust panel appeared to draw on a rich trove of Facebook company emails, releasing numerous screenshots of correspondence from Zuckerberg and other Facebook executives.

Using the exchanges, lawmakers got Zuckerberg to acknowledge that he saw photo-sharing app Instagram and messaging app WhatsApp as competitors when Facebook acquired them.

“The businesses are nascent but...if they grow to a large scale they could be very disruptive to us,” Zuckerberg wrote in 2012, two months before the Instagram purchase.

In another email, written the same day Facebook announced the acquisition, Zuckerberg conceded that “Instagram was our threat,” adding: “one thing about startups though is you can often acquire them.”

Representative Joe Neguse, a Democrat, noted that a 2014 email showed Facebook’s CFO referring to the company’s acquisition strategy as a “land grab.”

“We have a name for this; it is a monopoly,” Neguse said.

The committee presented fewer such exchanges to the other executives testifying at the hearing, which also featured Amazon.com Inc’s Jeff Bezos, Alphabet Inc-owned Google’s Sundar Pichai, and Apple Inc’s Tim Cook.

Democratic Representative Pramila Jayapal used an email to grill Zuckerberg on whether Facebook copied competitors like Snapchat for anti-competitive reasons.

“How many competitors did Facebook end up copying?” she asked. “I don’t know,” Zuckerberg answered, stammering.

She asked if Facebook had ever threatened to clone a competitor’s feature while negotiating to buy them. “I would like to just remind you that you are under oath and there are quotes from Facebook’s own documents,” she told him.

The documents also shed new light on how the social media giant saw the competitive landscape. In a 2012 graphic, Facebook touted the company as “95% of all social media in the U.S.” The graphic was titled: “The industry consolidates as it matures.”