The hearing has ended after more than 5 hours of testimony. Here are 5 takeaways.
Chairman Cicilline closed the hearing by comparing the four CEOs to historical monopolists like John Rockefeller and Andrew Carnegie, and saying some of the companies should be broken up.
“Their control of the marketplace allows them to do whatever it takes to crush independent business and expand their own power,” Cicilline added. “This must end.”
Rep. Scanlon cited testimony from Amazon employees who said that Amazon continued to ship non-essential items during the pandemic even after the company said it would prioritize essential items.
Did Amazon designate its own products as essential during the pandemic? Scanlon asked. “I don’t know the answer to that,” Bezos said.
“What I can tell you is there was no playbook for this,” Bezos said. “We had to make a lot of decisions very rapidly; our goal was to limit it to essential supplies, but I’m sure we did not do that perfectly.”
Jeff Bezos took a swipe at social media, calling it a “nuance destruction machine” as Rep. Jordan pressed the four CEOs to address “cancel culture.”
Zuckerberg reiterated a point he has long articulated, which is that he sees “forces of illiberalism?… in this country that are pushing against free expression.” Facebook has been criticized for failing to moderate its platform enough, and also criticized for allegedly censoring conservatives.
Jordan raised a famous 1984 Apple Super Bowl ad urging consumers to “Think different,” invoking the ad to argue that “mob think, cancel culture, group think is not what this country is about, and we are seeing it play out every single [day].”
“I remember it very well,” Cook said, referring to the ad and steering clear of the political discussion. “It was Apple versus IBM at the time.”
Pichai, for his part, said he had a “momentary difficulty hearing” Jordan’s question, but said Google builds platforms that allow for freedom of expression.
You can watch some of the Apple Super Bowl ad if you skip to 2:15 in the video below.
Rep. Johnson zeroed in on Facebook’s use of Onavo, a VPN app that Facebook acquired in 2013, to gather competitive intelligence on potential future competitors. Critics have said the tactic could have given Facebook the information it would need to identify and snuff out new threats to its business.
Zuckerberg defended the practice as merely an attempt at consumer research.
“Every company engages in research to understand what their customers are enjoying so that they can learn and make their products better,” he said. “That’s what we were trying to do, that’s what our analytics team was doing, and I think in general, that allowed us to make our services better for people…?which is our goal.”
“Did you use that capability to purchase WhatsApp?” Johnson asked.
“Congressman,” Zuckerberg replied, “it was one of the signals that we had about WhatsApp’s trajectory, but we didn’t need it?— without that, it was pretty clear that WhatsApp was a great product.”
It only took four and a half hours, but as the hearing neared its close, it finally happened: “Mr. Bezos, I believe you’re on mute.”
Tech titans, they’re just like us!
Zuckerberg was pressed on a video that went viral this week containing false and misleading claims about coronavirus. Though Facebook eventually took it down, the video racked up millions of views.
“Doesn’t that suggest, Mr. Zuckerberg, your platform is so big that even with the right policies in place, you can’t contain deadly content?” Rep. Cicilline asked.
Zuckerberg said he didn’t think so.
“We have, on Covid misinformation in particular, a relatively good track record of fighting and taking down lots of false content,” Zuckerberg said, “as well as putting up authoritative information. We have built a Covid information center with authoritative information from health officials.”
A Facebook spokesperson acknowledged on Tuesday that it took “several hours” for the company to enforce its standards and remove the video. The spokesperson said Facebook will conduct “a review to understand why this took longer than it should have.”
Rep. Demings cited an employee who said: “I am 100% in favor of removing [Facebook’s API access] from Pinterest, but I am not recommending removing it from Netflix going forward.”
“Why would Facebook product managers want to restrict Pinterest’s access to Facebook, but not Netflix?” Demings asked Zuckerberg.
Zuckerberg responded that Facebook “used to have a policy that restricted competitors from using our platform, and Pinterest is a social competitor with us.”
Demings said Zuckerberg’s reply seemed to indicate that Facebook is willing to use its platform policies to discriminate against and undermine competitors.
Rep. Kelly Armstrong asked Jeff Bezos a series of important questions about how Amazon uses data from third-party sellers.
While Bezos had previously said it is against the rules for employees to?give?Amazon’s own products an advantage using data from?individual?sellers, they are not prohibited from using “aggregate” data —?that is, data compiled from multiple sellers.
Armstrong drilled down, getting Bezos to concede that “aggregate” could mean as few as two sellers —?implying that it might be possible for employees to guess at which data was whose when trying to position Amazon products more advantageously.
We’re back for a third round of questions after a brief recess.
When pressed by Rep. Hank Johnson about counterfeit goods available on Amazon – from bogus medicine to car tires and dangerous kids products – Bezos said the company does “a lot” to prevent the issue, including investments of “hundreds of millions of dollars” into systems to prevent it and a team of more than 1,000 people who address what he described as a “scourge.”
Johnson said third-party sellers and brands have said the company has used knockoffs as leverage to pressure sellers into doing what “Amazon wants.” For example, the founder of PopSockets testified in January that Amazon itself was selling knockoffs of its product. The company reported the issue, but said it wasn’t until PopSockets committed to spending $2 million on ads that Amazon appeared to stop diverting sales to the knockoffs. Bezos responded: “That’s unacceptable. … I will look into that.”
Bezos also said he would rather “lose a sale than lose a customer” when Johnson pointed out that Amazon profits from counterfeit sales.
As the hearing enters its third hour, here are a few quick impressions of which CEOs are having the best and worst day so far:
Jeff Bezos has done himself the fewest favors. He acknowledged, albeit earnestly and transparently, that Amazon may have improperly used third-party seller data – a key concern over the company’s approach to competition.
Tim Cook has gotten off pretty lightly. Despite some earlier questions about whether Apple favors certain developers on its App Store, there have been relatively few questions about Apple’s App Store guidelines for developers, which have been a main complaint among critics.
Mark Zuckerberg has received much of the lawmakers’ attention, particularly on Facebook’s acquisition strategy. There have also been some damning documents and emails introduced that could pose problems for Facebook in the months ahead. But Zuckerberg, who has been grilled by Congress before, appears comfortable and eager to engage.
Sundar Pichai’s performance has been marked by a struggle with how to deflect conservative lawmakers’ allegations of anti-conservative bias – an issue that is not directly relevant to the antitrust probe.
On the lawmakers’ side, some of the most effective questioning has come from Reps. Cicilline, Jayapal, Raskin and Neguse, who have demonstrated a clear grasp of the economic issues and how they may relate to antitrust law and competition.
Rep. Jamie Raskin sought to show that Amazon enjoys dominance in the market for smart assistants.
Several companies, Raskin said, told the committee that Amazon prices its Echo devices below cost, “making it nearly impossible for them to compete” and making it likelier that Amazon will “own the smart home.”
Bezos acknowledged that Amazon Echoes may sometimes be sold below cost, particularly if they are on sale.
Mark Zuckerberg came under fire on Wednesday over whether he used Facebook’s power to pressure Instagram to agree to an acquisition.
Rep. Jayapal cited Zuckerberg’s dealings with Instagram co-founder Kevin Systrom. “In a chat, you told Mr. Systrom that Facebook was, quote, ’developing our own photo strategy, so how we engage now will also determine how much we’re partners versus competitors down the line.’”
Jayapal then added that Systrom interpreted the remarks as a threat, telling an investor that he worried Zuckerberg would go into “destroy mode” if he didn’t agree to sell Instagram.
Zuckerberg denied that that was his intent. “It was clear that this was a space we were going to compete in one way or another,” he said. “I don’t view those conversations as a threat in any way.”
Jayapal also pressed Zuckerberg over his company’s acquisition strategy more broadly, saying he has “used Facebook’s power to threaten smaller competitors and to ensure you always get your way.”
Rep. Joe Neguse turned up the heat again on Facebook’s acquisition strategy, citing an email by David Wehner, the company’s chief financial officer. The email, Neguse said, described Facebook’s merger strategy as a “land grab.”
Neguse then said that Instagram’s success reflects that strategy. Asked for a response, particularly on Instagram, Zuckerberg acknowledged that Instagram “has certainly grown beyond our wildest expectations” but that Instagram was part of a much larger market for “the global space of how people connect, more broadly.”
Rep. Joe Neguse referenced an email Zuckerberg sent in 2012 saying Facebook had reached a deal to acquire Instagram. A Facebook employee, who is redacted from the email, responded: “Well played.”
Zuckerberg wrote back: “Thanks. One reason people underestimate the importance of watching Google is that we can likely always just buy any competitive startups, but it’ll be a while before we can buy Google.”
When asked about the email in the hearing, the Facebook CEO said he didn’t recall the email, but that it “sounds like a joke.”
While Democrats have largely gone after the tech CEOs for their use of data and behavior toward other competitors in the marketplace, Republicans during the hearing have consistently alleged a pattern of anti-conservative bias by the tech companies, despite little more than anecdotal evidence.
GOP lawmakers’ strategy seems clear: To encourage the media to cover claims of ideological bias as equivalent in gravity and stature to antitrust issues. But researchers have consistently failed to turn up evidence of systemic bias on the part of the platforms’ technology.
At one point, Rep. Gregory Steube, a Florida Republican, confronted Pichai, portraying as an example of bias what may have been a simple technical problem.?Steube said that his congressional campaign emails to supporters, including his parents, have often been blocked or sent to Gmail’s spam folder.
As if to underscore the point, Rep. Val Demings added, “for the record,?I’m a Democrat from Florida and I’ve had heard complaints about my email going to spam as well.”
Jeff Bezos got his first question at the tech hearing.
Rep. Pramila Jayapal pressed Bezos to respond to claims that Amazon uses third-party seller data to advantage itself, a potential antitrust concern for the e-commerce company.
Jayapal cited an anonymous Amazon employee’s testimony that there is a rule against using such data, but that it is not enforced, describing the situation as a “candy shop.”
Bezos acknowledged that there is a policy that prohibits the use of third-party seller data to support Amazon’s own private-label business. But, he admitted, “I can’t guarantee you that policy has never been violated.”
Bezos said that Amazon was looking into reports about violations of the policy. “I’ll take that as you’re not denying it,” Jayapal said.
After a short recess, the hearing has resumed. The committee did not elaborate on the technical difficulty.
The committee has gone into a quick recess to deal with a witness having technical difficulties.
Facebook CEO Mark Zuckerberg was confronted Wednesday about internal company emails he sent in 2012 about buying Instagram.?The emails were acquired by the House Judiciary Committee as part of its antitrust investigation into large technology companies.?
In one email, Zuckerberg said Instagram could be “very disruptive” to Facebook. An email from Facebook’s chief financial officer referenced neutralizing a potential competitor, which Zuckerberg replied was part of the motivation.
Rep. Jerry Nadler said the emails showed Facebook viewed Instagram as a threat and, rather than compete with it, his company bought it.
In response, Zuckerberg did not deny he viewed Instagram as a threat, but pointed out that the deal was approved by the FTC at the time.
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All the tech executives sought to drive home the point that their companies are by America, for America.
Amazon CEO Jeff Bezos referenced the “trust” Americans have in Amazon. “We need American workers to get products to American customers,” he said in his prepared remarks.
“Apple is a uniquely American company whose success is only possible in this country,” the company’s chief executive Tim Cook said in his remarks, touting the number of US jobs it has helped create.
The US battle with China for tech supremacy informed part of Mark Zuckerberg’s argument.
“If you look at where the top technology companies come from, a decade ago the vast majority were American,” the Facebook CEO said. “Today, almost half are Chinese.”
Of the four tech CEOs appearing at today’s hearing, none was more highly anticipated than Jeff Bezos, who has never appeared before Congress before.
And yet, nearly 90 minutes into the hearing, the world’s richest man was essentially ignored – other than his opening remarks. The House members instead focused their initial round of questions on the other CEOs.
In his opening remarks, Bezos focused on his upbringing and parents, and noted that 80% of Americans have a favorable opinion of Amazon.
At one point, Bezos, even appeared to have a snack during the hearing.
Should Instagram be broken off from Facebook? That’s the question House Judiciary Committee Chairman Jerry Nadler posed to Mark Zuckerberg.
While Instagram is currently a giant platform with more than one billion monthly users, Zuckerberg noted that it was far from that when Facebook bought the startup for $1 billion in 2012.
“In hindsight, it looks obvious that Instagram reached the scale it has. At the time, it was far from obvious,” he told the committee.
Zuckerberg pointed out that at the time of the Instagram acquisition, the Federal Trade Commission voted not to challenge the deal, implying that there was no anticompetitive concern. But today’s FTC is actively reviewing the last decade of tech acquisitions, and it could easily arrive at a different conclusion based on the way history played out.
Just because regulators did not perceive a competitive issue at the outset does not rule out future antitrust enforcement.
Chairman Cicilline cited documents from Google that he said showed company officials fretting about other websites.
“Google evolved from a turnstile to the rest of the web to a walled garden that increasingly keeps users within its sites,” Cicilline said.
He added: “Google’s staff discussed the ‘proliferating threat’ that these web pages posed to Google,” citing allegations that Google “stole content” from rivals such as Yelp. Yelp has long argued to policymakers that it has been negatively affected by Google’s business practices in search.
“Congressman, when I run the company, I’m really focused on giving users what they want,” said Pichai, who professed not to be familiar with the specifics of the allegations.
In his opening remarks, Facebook CEO and founder Mark Zuckerberg pushed back at antitrust scrutiny by detailing the “intense competition” he says his company faces.
He ticked off a number of competitors, including from Apple’s iMessage messaging platform, short-form video platform TikTok and YouTube. Zuckerberg also said the company competes with Amazon and Google in the advertising space.
Apple CEO Tim Cook began his testimony Wednesday by recognizing the late Rep. John Lewis, before arguing that Apple faces fierce competition in the smartphone market.
“Our goal is the best, not the most,” Cook said.
That’s not the main complaint that Apple critics have leveled against the company, though. What many app developers have complained about are Apple’s tough app store rules.
Amazon (AMZN) CEO Jeff Bezos told Congress that “no force in the world should be able to move” a company that reflects on criticism and still decides it is doing the right thing.
In his prepared testimony?posted to Amazon’s website, Bezos began with a personal appeal, telling the story of his mother and father, before explaining how they invested their life savings in Amazon, and the internet. It was “something they didn’t understand,” Bezos will say, but “they were making a bet on their son.”
Bezos claims that Amazon faces a crowded marketplace in online retail – namedropping brands like Target, Costco and Walmart. The CEO will also note that his company deserves to be scrutinized:
Along with what they are saying, another subject of (some) scrutiny is bound to be the four billionaire tech CEOs’ videoconferencing backgrounds.?
Mark Zuckerberg went with the neutral white wall that he has used previously, while Tim Cook?also chose a neutral background, albeit with what appeared to be a few plants on either side of him.?
Amazon CEO Jeff Bezos, the world’s richest man, joined the hearing from in front of a classic wooden bookshelf, albeit with few books on it.?
Google’s Sundar Pichai, meanwhile, was seated in what appeared to be a boardroom, with a stack of books to his left and a plant, vase and some ceramic items on his right.?
Rep. Jordan sparked a fight with Chairman Cicilline when he requested that Rep. Mike Johnson, the top Republican on the committee’s constitution subcommittee, be allowed to participate in the hearing.
After being denied due to an objection by another member, Jordan continued to insist that Johnson be allowed to join —?prompting a tense moment with Cicilline, who ultimately reminded all lawmakers that they must wear a mask when it is not their turn to speak.
Watch:
In a pandemic twist, the four tech CEOs raised their right hands and took their oaths remotely over video conferencing software Webex before testifying.
Ohio Republican Rep. Jim Jordan set the tone early for how the GOP will engage with the CEOs, immediately launching into a rapid fire series of complaints alleging that the tech companies are biased against conservatives.
Tech companies have denied that their technology is biased against right-wing viewpoints.
As House Judiciary Committee Chairman Jerry Nadler presented his opening remarks, there was audible background noise, which appeared to come from someone else on Webex, the video conference software being used for this hearing.
Below Nadler on the screen there was a black box with the words “Jeff Bezos” on it, with an icon indicating video is turned off. Next to it, was another box that simply said “Facebook.”
The four tech CEOs are appearing at the hearing remotely via videoconference.
House Judiciary Chairman Jerry Nadler compared today’s tech titans to the railroad monopolies of yesteryear, saying that the industry exercises enormous power over markets.
“While the underlying technology is dramatically different of course, new digital intermediaries have the ability to control access to critical markets,” Nadler said at the start of the hearing.
The top Republican on the House antitrust subcommitee, Jim Sensenbrenner, reminded his colleagues that “being big is not inherently bad.
”Quite the opposite,” he argued. “In America you should be rewarded for success.” He said he is interested in “how your individual companies use your size, success and power and what it means to the American consumer.”
The pandemic could further entrench the dominance of large tech platforms such as Amazon and Google, Rep. David Cicilline, the chair of the House Judiciary Committee’s antitrust panel, argued at the start of the hearing.?
Cicilline’s opening remarks involved the CEOs of Amazon, Apple, Facebook and Google and took the tech industry to task, calling the tech companies “emperors of the online economy.”
“Each platform is a bottleneck for a key channel of distribution,” Cicilline said. “These platforms have the incentive and ability to exploit this?power. They can charge exorbitant fees, impose oppressive?contracts, and extract valuable data from the people and?businesses that rely on them.”
Cicilline also said that Americans “are stuck with bad options” and that the country “has always been at war against monopoly power.”
The companies “discourage entrepreneurship, destroy jobs, hike costs and degrade quality.”
When people think “antitrust,” the idea of breaking up a company may be the first thing that comes to mind. But a breakup isn’t the only or the most likely outcome. It’s far more common for regulators to turn to settlements and consent decrees.
For Congress, in particular, breaking up companies isn’t even an option. All Congress can do is issue a report, make legislation and pressure the relevant regulatory agencies.
Wednesday’s high-profile antitrust hearing with the CEOs of Amazon, Apple, Facebook and Google has been delayed by an hour to 1 p.m. ET, according to a spokesperson for the House Judiciary Committee.
The companies testifying before Congress are widely accused of violating antitrust law. But what is antitrust, exactly, and what makes for a violation?
Put simply, antitrust law is about ensuring a level playing field for competition. Think of it as a type of guardrail designed to keep markets fair. When it works correctly, antitrust law is supposed to prevent companies from abusing their dominance in the marketplace in order to gain an unfair competitive advantage.
This doesn’t mean that monopolies are inherently illegal, at least under US law. And a company doesn’t violate antitrust law simply for being big. But it can violate the law if it does things that harm competition. To determine if that’s happened, regulators like the Justice Department and the Federal Trade Commission gather economic evidence. Normally, that evidence comes in the form of data showing that prices have risen, or that rival businesses have been hurt, or that innovation has been stifled. Those investigations can lead to lawsuits, fines and, in the most extreme cases, corporate breakups.
But there are limits to antitrust law. It isn’t designed to address how platforms handle political speech or misinformation, for instance, or election security issues. While those topics may come up today, be careful not to conflate the two.
Once the event kicks off at noon, it is expected to follow the usual pattern for congressional hearings: Opening statements by members of Congress, followed by opening statements from witnesses and then rounds of questioning by the lawmakers.
Since it’s a subcommittee hearing and not a hearing of the full Judiciary Committee, expect about a dozen or so lawmakers to be involved in the questioning. It’s unclear how long it could go, but given the breadth and depth of the issues at stake, don’t be surprised if this hearing lasts all afternoon.
While Amazon, Facebook, Google and Apple will almost certainly push back against assertions that they are too big and hurt competition, it’s hard to argue with the fact that these businesses are staggeringly large and successful.
TikTok’s new American CEO addressed concerns about the app’s Chinese ownership and blasted Facebook in a?blog post published on Wednesday, just hours ahead of the antitrust hearing.
“The entire industry has received scrutiny, and rightly so. Yet, we have received even more scrutiny due to the company’s Chinese origins,” wrote Kevin Mayer,?TikTok’s CEO. Mayer, a former Disney executive, joined TikTok in May.?
Mayer went on to note Facebook’s attempts to copy TikTok with a rival product from Instagram called Reels:
Facebook CEO Mark Zuckerberg is expected to defend his company from allegations of market dominance and antitrust violations on Wednesday by arguing that his company has helped “millions of businesses” and consumers, particularly during the pandemic, according to a copy of his prepared testimony obtained by CNN Business.
Zuckerberg will seek to dispel claims that the company has harmed competition by arguing that Facebook must constantly compete or face extinction, according to the prepared remarks. He will also point to the rising competitive threat posed by China, which he will claim is “building its?own version of the internet focused on very different ideas, and?they are exporting their vision to other countries.”?
Facebook’s acquisition of WhatsApp and Instagram did not choke off potential rivals, Zuckerberg will argue, but instead led to new features that those apps would not have introduced independently. Facebook’s merger strategy has been closely scrutinized amid claims that the company has pursued a strategy of acquiring potential threats to its dominance.?
“Facebook is a successful company now,” Zuckerberg’s testimony reads, “but we got there the American way: we started with nothing and?provided better products that people find valuable.”
A group of powerful figures who help set the rules for how we work, shop and communicate is about to get grilled by lawmakers in Washington who in theory do the same. And you can watch it unfold in real time on a platform built by one of the companies now in the hot seat.
The House subcommittee hearing with the four tech CEOs will be streaming live on Google-owned YouTube. If you happen to miss it there, you can probably find people sharing clips from it on Facebook, hawking fast self-published books about it on Amazon or talking about it on whatever passes for entertainment on Apple TV, if that’s still a thing.
Wednesday’s hearing will bring together four of the most powerful tech CEOs in the US, but there is a twist: They won’t actually be in the same place. Instead, they will appear together, on one panel, via videoconference.
And which videoconference platform will the tech titans be using? The answer is Cisco’s WebEx, which is the platform approved by the House.
The hearing on Wednesday is the culmination of the House’s year-long “top to bottom” antitrust review of the tech industry. But the four tech companies at the hearing face numerous other antitrust probes in the US and Europe.
Here’s a short list of just the US probes:
In the months leading up to hearing, some smaller tech companies came forward to publicly testify against businesses such as Apple and Google over their app store policies, claiming that the policies unfairly restrict innovation and entrench the platforms’ dominance.
The list includes speaker-maker Sonos and Tile, the company whose products help you find your misplaced items.
David Heinemeier Hansson, founder of collaboration software company Basecamp, is also among those critics. He expects Big Tech’s arguments to follow a certain pattern, as he told CNN earlier this month:
Of the four tech CEOs, much of the general public’s attention is likely to fall on Amazon’s Jeff Bezos.?
The world’s richest man has positioned himself in some ways as a DC power player by buying a home in the nation’s capital, establishing new Amazon (AMZN) headquarters a stone’s throw from Reagan National Airport, and with his ownership of The Washington Post. And yet Bezos has never testified before Congress.?
Indeed, it’s rare to see Bezos interviewed in an unscripted or unfriendly setting, leading many to wonder how he is likely to perform under questioning.
Amazon is under fire for allegedly using sales data from its third-party sellers to figure out what new products to sell and how to undercut those same independent shops on its platform.?
The event on Wednesday will be the first antitrust hearing of its kind since Bill Gates visited Capitol Hill in 1998 to respond to claims that Microsoft (MSFT) was unfairly muscling out its competition.?
Microsoft’s case focused on how the company was using Windows to gain an unfair advantage in Web browsers and other types of software. But the businesses taking the hot seat on Wednesday face a much wider range of complaints, reflecting how dramatically the tech industry has expanded to fill virtually every corner of our lives. Tech’s reach has gone far beyond computing to include groceries, health monitoring, transportation and other everyday activities.
Still, it’s possible the four CEOs may echo some of the same talking points Gates did more than two decades ago, including his claims that Microsoft had produced dazzling products at affordable prices; created more jobs and economic opportunity than any sector of the economy; and made the United States a leader in innovation.