Info-tech

US anti-trust probe concludes Big Tech needs to be broken up and regulated: Here's all you need to know

Hemani Sheth Mumbai | Updated on July 30, 2020 Published on July 30, 2020

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In one of the biggest antitrust hearings by far, the United States House Judiciary Antitrust, Commercial and Administrative Law Subcommittee concluded that big tech as it exists today needs to be broken up.

As part of the historic antitrust probe, US lawmakers on Wednesday conducted a hearing with CEOs of four major big tech companies- Google, Facebook, Amazon and Apple.

Jeff Bezos, CEO, Amazon, Tim Cook, CEO, Apple, Sundar Pichai, CEO, Google and Mark Zuckerberg, CEO, Facebook were grilled for hours with multiple revelations and confrontations coming up in light of the committee’s year-long investigation.

“This hearing has made one fact clear to me: these companies as they exist today have monopoly power. Some need to be broken up, all need to be properly regulated and held accountable,” said Subcommittee Chair David N. Cicilline at the end of the hearing. “We need to ensure the antitrust laws first written more than a century ago work in the digital age.”

The committee had previously conducted multiple internal hearings and had investigated “ millions of pages of evidence from these firms” as part of its probe which is meant to decide the future of the country’s antitrust laws and the role of big tech in the economy.

"Many of the practices used by these companies have harmful economic effects. They discourage entrepreneurship, destroy jobs, hike costs, and degrade quality,” said Cicilline.

"Simply put: They have too much power. This power staves off new forms of competition, creativity, and innovation,” he said.

Here are the highlights from the hearing:

Google

Google CEO Pichai faced the most intense scrutiny as part of the hearing. Lawmakers zeroed in on Google’s practices in terms of search results and advertising.

Cicilline began by questioning Google if it stole content from small businesses.

“Numerous online businesses told us that Google steals their content and privilege for its own sites in ways that profit Google, but crush everyone else,” he said. “Why does Google steal content from honest businesses?” he asked.

He further alleged Google of stealing reviews from Yelp and threatening the company.

To which Pichai replied, “We conduct ourselves to the highest standards,” while disagreeing with the accusation.

“The evidence seems very clear to me as Google became the gateway to the internet, it began to abuse its power and use its surveillance over the web traffic to identify competitive threats and crush them,” Cicilline said.

The search giant was also questioned about its entry into the travel and real estate segment with listings of hotels and flight bookings As Google surfaces more information on its own search results, the offering has angered similar businesses.

Rep. Pramila Jayapal questioned the Google CEO regarding oversight concerns related to ad spaces.

“It’s running the marketplace, it’s acting on the buy side, and it’s acting on the sell-side at the same time — which is a major conflict of interest,” she said. “It allows you to set rates very low as a buyer of ad space from newspapers depriving them of ad revenue, and then also to sell high to small businesses that are very dependent on advertising on your platform. It sounds a bit like a stock market — except unlike a stock market, there’s no regulation on your ad exchange market.”

Pichai replied “we are deeply committed to journalism in this area,”

Republicans questioned Google about its reasoning for pulling out of a Pentagon project and accused the company of political biases which the Google CEO denied, stating that the company remains neutral. Questions were also raised regarding big tech aiding China’s military efforts which Pichai denied stating that the company has a very minor presence in China.

Amazon

Jayapal questioned Bezos on a recent Wall Street Journal report accusing the company of using third-party seller data for its own gains. The report further claimed that Amazon employees had access to this data in order to strategize for Amazon’s own product.

The Amazon CEO refrained from completely denying the report. “I can’t answer that question yes or no. What I can tell you is we have a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated,” he said. “If we found that somebody violated it, we would take action against them,” he said.

Rep. Lucy McBath questioned Bezos about its policies on “systematically” quashing businesses that thrive on the platform taking an example of a bookseller. The bookseller had claimed that the online retail giant had “systematically blocked” them from selling entire categories of books. “We were never given a reason, Amazon didn’t even provide us with a notice of why we were being restricted,” she said.

“Isn’t it an inherent conflict of interest for Amazon to produce and sell products that compete directly with third-party sellers, particularly when you, Amazon, set the rules of the game?” asked Cicilline.

“The consumer is the one making the decisions,” Bezos responded.

Talking about th smart home market and the role of Amazon Echo in promoting Amazon products, Bezos said that though the market should be analysed on a case-by-case basis, “It wouldn’t surprise me if Alexa does sometimes promote our own products.”

Facebook

Facebook faced a barrage of questions related to its strategy of acquiring competitors, primarily Instagram. Zuckerberg faced the heat in terms of its strategy to quash competition by acquiring them.

Jayapal specifically asked if the company copied features from its competitors and threatened. She cited a chat that Instagram’s Kevin Systrom found Facebook had threatened them and said that he feared that the company would go in “destroy mode” if they didn’t comply with the acquisition. She further said that Facebook had been working on its own version of a photo-sharing platform prior to the acquisition and had threatened Instagram stating that it would launch the product.

Zuckerberg said he disagreed with the characterization and said that it “adapted” certain features from the competition. When asked how many companies had Facebook copied, Zuckerrbrg refrained from giving an exact number. Certain old emails had also come into light where Facebook had decided to adopt a rather aggressive strategy in terms of competition.

Chairman Nadler noted a conversation Zuckerberg had with one of Facebook's senior engineers in 2012 where he said that the company was, “likely buy just by any competitive startup, but it'll be a while before we can buy Google.” Zuckerberg stated that the quote was meant to be a “joke.”

When questioned on the ideology of Facebook moderators, Zuckerberg said that the moderators were trained to be neutral.

Apple

Apple’s Cook perhaps faced the least amount of questions. When questioned about its power to increase commission for developers to place an app on its app stores, Cook said that they had not increased commission in years.

“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,” he said.

“Apple the ability to control which apps are allowed to be marketed to Apple users. You will the immense power over small businesses,” said Rep. Henry C. "Hank" Johnson.

All four tech CEOs further agreed on not associating with brands and companies using forced labour upon being questioned by Rep. Ken Buck who cited the example of China using Uighur slave labour.

The committee will now prepare its report based on its investigations and the testimonies with its recommendations on keeping these companies’ market power in check which could be released by summer or early fall.

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Published on July 30, 2020
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