Congress Grills Big Tech Companies 07/17 06:08
(AP) -- Big Tech faced tough questions Tuesday as federal lawmakers focused
on issues of potentially anticompetitive behavior by technology giants and
expressed bipartisan skepticism over Facebook's plan for a new digital currency.
Companies such as Apple, Google, Facebook and Amazon have long enjoyed
nearly unbridled growth and a mythic stature as once-scrappy startups --- born
in garages and a dorm room and a road trip across the United States --- that
grew up to dominate their rivals. But as they've grown more powerful, critics
have also grown louder, questioning whether the companies stifle competition
and innovation, and if their influence poses a danger to society.
Both Democrats and Republicans had grievances to air, even if there wasn't
much consensus on what to do about them.
An afternoon panel of the House Judiciary Committee focused on whether it's
time for Congress to rein in these companies, which are among the largest on
Earth by several measures. Central to that case is whether their business
practices run afoul of century-old laws originally designed to combat railroad
and oil monopolies.
For some legislators, mostly Democrats, those laws are in need of updates or
at least more stringent enforcement. Ultimately such action could lead to
breaking up big online platforms, blocking future acquisitions or imposing
other limits on their actions.
Subcommittee chairman David Cicilline, a Rhode Island Democrat, charged that
technology giants had enjoyed "de facto immunity" thanks to current antitrust
doctrine, which typically equates anticompetitive behavior with higher prices
for consumers. That allowed them to expand without restraint and to gobble up
potential competitors, he argued, creating a "startup kill zone" that prevents
smaller companies from challenging incumbents with innovative services and
A panel of four mid-level executives from the companies countered that their
firms continue to innovate, that they face vigorous competition on all fronts
--- including from one another --- and, perhaps most of all, that they were not
monopolists in any way, shape or form.
Facebook, for instance, has argued that it is not a monopoly because it has
many competitors in businesses as diverse as private messaging, photo sharing
and online advertising.
So Democratic Rep. Joe Neguse of Colorado asked Facebook's head of global
policy development, Matt Perault, to name the world's largest social network by
active users. (It is Facebook.) When Perault said he couldn't, Neguse ticked
off four of the six largest --- Facebook, Facebook Messenger, Instagram and
WhatsApp --- and had Perault verify that all are owned by Facebook.
"We have a word for that and that word is monopoly, or at least monopoly
power," Neguse said.
The company representatives didn't help their case by pleading ignorance on
multiple occasions. Google's director of economic policy, Adam Cohen, said he
was "not familiar" with how much Google pays Apple for the right to supply the
default search engine for Safari on iPhones. (Rep. Jamie Raskin, a Democrat
from Maryland, said It was $9 billion in 2018 and $12 billion in 2019.) Cohen
also said he was "not familiar" with allegations of widespread fraudulent
listings on Google Maps.
Amazon also faced some pointed questioning. Cicilline asked Nate Sutton, an
associate general counsel at the online retailer, whether it uses the data it
collects about popular products to direct consumers to Amazon's own in-house
Sutton said the company doesn't use third-party sellers' data to "directly
compete" with them. Cicilline, affecting disbelief, twice reminded Sutton that
he was under oath. "Amazon is a trillion-dollar company that runs an online
platform with real-time data," he said.
Expert witnesses suggested it might be time to reassess antitrust policy.
Timothy Wu, a law professor at Columbia University who has advocated for more
expansive antitrust enforcement, noted concerns about a fall in the number of
startups being formed, and wondered aloud whether the U.S. will remain a place
where startups thrive and launch new industries.
Fiona Scott Morton, a Yale economics professor, argued that stifled
competition has hampered innovation and hurt both smaller businesses and
consumers, who have no choice but to surrender their privacy and watch more
Others, mostly Republicans, rejected what they described as a big-is-bad
approach in favor of keeping antitrust enforcers narrowly focused on protecting
consumers when there's clear evidence of harm such as price gouging.
Attorney Maureen Ohlhausen, a former Republican commissioner and acting
chairwoman of the Federal Trade Commission, said the government can still
protect against anticompetitive behavior without "reducing the focus on
consumer welfare." She warned against "drastic" steps such as breakups that
carry "serious risk of doing more harm than good for competition and consumers."
Earlier in the day, a Facebook executive appeared before a Senate panel to
defend the company's ambitious plan to create a digital currency and pledged to
work with regulators to achieve a system that protects the privacy of users'
data. David Marcus, who leads the Libra project, faced sharp criticism from
both Democrats and Republicans.
"Facebook is dangerous," asserted Sen. Sherrod Brown of Ohio, the
committee's senior Democrat. Like a toddler playing with matches, "Facebook has
burned down the house over and over," he told Marcus. "Do you really think
people should trust you with their bank accounts and their money?"
Republican Sen. Martha McSally of Arizona said "the core issue here is
trust." Users won't be able to opt out of providing their personal data when
joining the new digital wallet for Libra, McSally said.