Google came under fire for limiting other websites’ traffic, Facebook faced questions about its purchase of Instagram and Amazon was accused of raising diaper prices as lawmakers on Wednesday opened a rare congressional hearing into whether tech executives have harmed the economy by operating monopolies.
Four major tech CEOs, also including Apple’s chief executive, are testifying before a House antitrust subcommittee in a mostly virtual, marathon hearing that is examining their power in the marketplace.
Subcommittee Chairman David Cicilline, D-R.I., began the hearing by calling the CEOs “emperors.”
“Our founders would not bow before a king. Nor should we bow before the emperors of the online economy,” Cicilline said. He said the companies have too much power, limiting innovation and choking consumer choice.
Cicilline focused his initial questions on Google, alleging that the search engine company had evolved over the years “from a turnstile for the rest of the web to a walled garden,” keeping users on Google’s own pages rather than sending them elsewhere.
Google CEO Sundar Pichai pushed back, saying there was vigorous competition among webpages and that users’ needs come first. “We have always focused on providing users with the most relevant information,” he said.
Rep. Jerry Nadler, D-N.Y., raised questions about Facebook’s 2012 purchase of Instagram. He quoted from emails ahead of the deal in which Facebook CEO Mark Zuckerberg worried that startups including Instagram could be “very disruptive.”
Though the Federal Trade Commission cleared the acquisition at the time, Nadler said that decision looks wrong now. “It should never have been permitted to happen, and it cannot happen again,” he said.
Zuckerberg said that Instagram is a popular app now in large part because of Facebook. “It was not a guarantee that Instagram was going to succeed,” he said.
A third CEO, Amazon’s Jeff Bezos, faced questions about how his company uses sensitive data from third-party sellers. Bezos said Amazon was investigating a report by the Wall Street Journal this year that Amazon employees had used such data to develop competing products, despite a company policy against that.
“I can’t guarantee you that that policy has never been violated,” Bezos said, in response to questions from Rep. Pramila Jayapal, D-Wash. “If we found that someone violated it, we would take action against them,” he said.
Rep. Mary Gay Scanlon, D-Pa., said she was concerned that Amazon had driven up the price of diapers online after buying its primary competitor in that market, Diapers.com, in 2010 and later shutting it down. She said that hurt consumers.
“How would they benefit by the fact that prices were driven up after you eliminated your main competitor?” she asked. Bezos responded that there are still many places to buy diapers.
Apple CEO Tim Cook faced questions about the power of the Apple app store and said the company treats all app developers the same.
The hearing before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law is expected to go on for several hours, as up to 15 members of the subcommittee have a chance to question the executives under oath.
The U.S. rivalry with China was another consistent theme to start the hearing, as lawmakers expressed concern that the tech companies could be inadvertently helping China. The executives, meanwhile, described their companies as bulwarks of American values. The tech industry is an “American success story,” Zuckerberg said.
The hearing is an unusual collection of wealth and influence. Two of the four CEOs, Bezos and Zuckerberg, are among the wealthiest people in the world, with more than $265 billion in accumulated wealth between them, according to the Bloomberg Billionaires Index.
Their presence alone makes the hearing likely the biggest concentration of corporate wealth ever to appear before Congress.
The corporations they lead are among the world’s most valuable and influential, touching the daily lives of billions of people and piling up huge profits even during a pandemic. Apple is currently valued at $1.6 trillion, Amazon $1.5 trillion, Google’s parent Alphabet at $1.04 trillion and Facebook at about $656 billion.
President Donald Trump said in a tweet that he was considering executive orders if Congress does not act.
“In Washington, it has been ALL TALK and NO ACTION for years, and the people of our Country are sick and tired of it!” he said.
Trump has tangled at times with Bezos, attacking the executive over negative coverage of him in the Bezos-owned Washington Post. Amazon has blamed Trump’s personal attacks for its failure to land a major government contract last year, and it’s suing over the lost deal.
Trump has had somewhat warmer relationships with Zuckerberg, whom he has hosted for a White House dinner, and with Cook, whom he once called “Tim Apple.” But Trump’s Justice Department is also reportedly preparing an antitrust lawsuit against Pichai’s company.
“We’re going to be watching the hearings today very closely,” Trump said Wednesday. “But there’s no question that what the big tech companies are doing is very bad.”
Cicilline has been investigating the tech industry for more than a year and is preparing a report on possible anti-competitive practices. That report could later serve as the basis for legislation.
Cicilline’s report will “likely call for Congress to change antitrust laws to make it easier to sue dominant tech companies,” Paul Gallant, an analyst with the investment bank Cowen, said in a note to clients this week. “If Democrats sweep in November, that bill has a reasonable chance of enactment” in late 2021, he said.
The nation’s major antitrust laws, including the Sherman Antitrust Act of 1890, were all written more than a century ago. The Sherman Act, which led to a wave of trustbusting, was the first major U.S. law to restrict monopolies.
Apple’s Cook told lawmakers that their scrutiny of the industry was reasonable and appropriate, but like the other executives, he said, “We make no concession on the facts.” He said Apple had acted lawfully.
Republican lawmakers on the subcommittee said they were concerned about tech companies censoring conservatives, although in many cases conservative media flourishes on those services.
“Conservatives are consumers, too, and they need the protection of the antitrust laws,” said Rep. Jim Sensenbrenner, R-Wis.
The four executives are testifying virtually because of the coronavirus pandemic, and some lawmakers are also appearing virtually. Of the four, Bezos is the only one who has never testified previously before a congressional panel.