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In facing these questions together, the four CEOs are getting off easy.

Photo: Louis Velazquez/Unsplash
Politics

The Big Tech CEOs testify today. Here’s what they have to answer for.

Lawmakers will have plenty to probe when Jeff Bezos, Tim Cook, Mark Zuckerberg and Sundar Pichai testify before Congress.

Jeff Bezos, Tim Cook, Mark Zuckerberg and Sundar Pichai will testify Wednesday before the House antitrust subcommittee, where they'll be grilled about how their monolithic businesses have shut out rivals and acquired the competition on their rise to the top.

In facing these questions together, the four CEOs are getting off easy. Their testimony will be virtual, for one thing, eliminating the bad optics of having them stand before the committee in suits, hands in the air as they swear to tell the truth. And by testifying as a group, not only will they share the brunt of the committee's contempt, they'll also benefit from the fact that, given the time constraints and the number of witnesses, lawmakers will never be able to probe all of the potential antitrust violations these companies are individually accused of.

So, where will the committee members focus their attention? Protocol's Emily Birnbaum and Issie Lapowsky break down the issues surrounding each company that lawmakers will have a hard time ignoring.

Amazon: Spying on sellers

This will be Jeff Bezos' first appearance before Congress, and it's certain to be contentious. Members of the committee have already threatened Amazon with a subpoena and perjury referral. The feisty chairman of the House antitrust subcommittee, Rep. David Cicilline, has waged perhaps his loudest battle against Amazon, frequently raising concerns that the company tips the scales in its favor by both operating a powerful online retail platform and selling competing products on that platform.

In testimony before the House Judiciary Committee last year, Amazon's general counsel, Nate Sutton, denied that Amazon uses independent seller data to shape its own product offerings. But his promises were contradicted shortly after by a Wall Street Journal report that found that Amazon employees have tapped into that proprietary information to create new products that edged competitors out of the market.

The European Union is set to bring antitrust charges against Amazon for this very issue. Amazon has said this conduct is a violation of its policies and launched an internal investigation into the issue.

"Obviously, what will come up is the question about whether Amazon spies on sellers," said Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, a nonprofit that advocates against Amazon on behalf of small businesses.

But Mitchell also named lesser-known pressure points for Amazon, including the steep demands it makes of the businesses that rely on its site. Online merchants have accused Amazon of forcing sellers to pay for its expensive warehousing and shipping services, thus allowing Amazon to leverage its power in online retail to dominate the separate industry of logistics.

While the hearing is ostensibly focused on antitrust, Democrats, including progressive Seattle Rep. Pramila Jayapal, will likely bring up concerns around how Amazon treats its workers amid a swell of allegations about unsafe conditions in its warehouses, particularly during the pandemic, and especially with regard to people of color.

Matt Stoller, an antitrust expert and research director at the American Economic Liberties Project, said Bezos' testimony will serve as a "credibility-enhancer" for the final report that the committee will put out about the yearlong antitrust investigation. "If you say, "Amazon does …,' that's one thing," Stoller said. "But if you say, 'Jeff Bezos said …,' that's more credible."

— E.B.

Apple: App Store woes

The bulk of Apple's antitrust woes revolve around its App Store and whether it intentionally and unintentionally disadvantages apps that could rival any of Apple's own products. Critics have said Apple's iOS and Google's Android make up a "duopoly" in the app store market — and that Apple makes it particularly difficult for certain apps to succeed on its platform.

Apple is facing two new antitrust investigations in the European Union over its App Store and Apple Pay products, and scrutiny is building in the U.S. In recent weeks, software company Basecamp claimed that Apple was unfairly leveraging its power over the App Store to disadvantage Hey, a new email service. Basecamp, whose co-founder and CTO David Heinemeier Hansson testified against Apple before the House Judiciary Committee last year, told Protocol that the upcoming hearing will show that Congress is not going to accept "trite excuses" from Big Tech any longer.

"Think 1994: 'I do not believe nicotine is addictive,'" said Hanson in an email, referring to the tobacco company CEOs testifying before Congress. "So we'll have 'I do not believe we have a monopoly.' That'll then be on the record, that these [four] horsemen are stating the obvious what's plain for everyone else to see."

Companies, most prominently Spotify, have accused Apple of extorting developers by taking a 30% cut of their revenue from paid apps. Developers have claimed Apple wields its complicated and strict rules to crush apps that rival Apple's own products, such as Apple Music.

"Anyone that wants to compete with Apple by selling products in the App Store may be subject to some disadvantage because of App Store rules," said Chris Sagers, a professor at Cleveland-Marshall College of Law who has written extensively about antitrust issues around Apple.

Sagers added that Cook may also have to respond to allegations about Apple's "Sherlocking," or copying, popular apps, products and services. Developers for years have claimed that Apple frequently incorporates popular features from others' apps into its iOS updates, thus rendering those third-party apps useless. For example, flashlight apps were made obsolete when Apple introduced its own Flashlight service.

— E.B.

Facebook: Buy, buy, buy

Of all of the CEOs testifying Monday, Zuckerberg has the most experience sitting for Congressional hearings. But that doesn't mean the committee will spare him. Facebook is a favorite target for Congress, particularly during political seasons when the decisions the company makes on political ads and speech can have a material impact on lawmakers themselves.

The committee members will likely zero in on Facebook's acquisition history, including the purchases of WhatsApp and Instagram, two would-be competitors that now drive so much of the company's growth. In an op-ed calling to break up Facebook in 2019, Chris Hughes, the company's co-founder and Zuckerberg's college roommate, said the Federal Trade Commission's decision to approve these acquisitions was its biggest mistake.

"The Instagram acquisition guaranteed Facebook would preserve its dominance in photo networking, and WhatsApp gave it a new entry into mobile real-time messaging," Hughes wrote. "Now, the founders of Instagram and WhatsApp have left the company after clashing with Mark over his management of their platforms. But their former properties remain Facebook's, driving much of its recent growth."

In questions submitted for the record last year, Cicilline paid special attention to the WhatsApp acquisition, asking about the company's decision to transfer WhatsApp data to Facebook, despite early promises to WhatsApp users that the acquisition wouldn't change anything about how their data was used.

Cicilline also submitted questions to Facebook last year regarding its acquisition of Onavo, a VPN app that court documents later showed the company used to monitor user behavior for potential acquisition targets, including WhatsApp.

In a paper published by the Omidyar Network, laying out an antitrust case against Facebook, researchers called Facebook's use of a privacy protective app to spy on users a "bitter piece of irony."

"The knowledge was then used by Facebook to identify and acquire high-performing companies and possible competitors," the authors wrote.

Court documents have also shown that Facebook has a history of kicking potential competitors off of its platform when it sees them as a threat. As soon as Twitter launched its Vine video app in 2013, Zuckerberg personally instructed his team to cut off access to an API that would allow people to find their Facebook friends on Vine. This, too, was the subject of several of Cicilline's questions last year.

One key question with regard to Facebook's family of apps is, of course, how it uses data among them. The company recently acquired Giphy, for example, a directory of GIFs that integrates with everything from iMessage to Slack. The purchase prompted questions about what kind of access Facebook would now have to data from other platforms — questions lawmakers will no doubt want to hear Zuckerberg answer himself.

— I.L.

Google: Search, ad tech and Android

Google faces antitrust exposure along three main fronts: its dominance in search, its control of the ad tech market, and the way it forces its own products onto Android devices.

When it comes to search, lawmakers will likely be interested in Google's history of prioritizing its own services in search, which antitrust hawks say has the effect of shutting out competitors. In a separate paper laying out a path to antitrust enforcement of Google, researchers working on behalf of the Omidyar Network pointed to Google's Local Services product as a prime example of this; when users search for, say, plumbers nearby, Google returns its own list of plumbers at the top of the page, pushing competing recommendation sites like Yelp and Angie's List down the page.

"Google therefore has the choice to foreclose its specialized search rivals either through quantity (place the link far down the results list) or through raising rivals' costs (require the rival to buy an expensive ad in order to be seen by customers)," the authors write. "Both tend to exclude the rival from the marketplace."

This issue has gotten Google into trouble in Europe, where, in 2017, the European Commission fined the company $2.7 billion for surfacing its own shopping results first over results from other competing services.

In questions submitted to Google last year, Cicilline asked about how Google drives traffic to YouTube videos, giving them priority over videos from competing platforms like Vimeo. Cicilline also asked pointed questions about Google's practice of scraping content from publishers and other third parties to display within search, which can prevent users from clicking through to the original source.

On the advertising front, Google's past acquisitions of ad tech firms including DoubleClick and AdMob are likely to draw scrutiny from members of the committee. It's these and other acquisitions that allowed Google to place ads not just on its own properties, but on publisher sites across the open web and the app ecosystem. Attorneys general in every state are already probing the company's advertising business, as is the U.S. Department of Justice. No doubt, Monday's hearing will be loaded with calls to "break up" Google's stranglehold on the ad market.

Then there's the question of whether Google has engaged in anticompetitive practices by forcing device makers and mobile carriers to make Google the default search engine on Android devices. In 2018, the European Commission decided that it had, slapping Google with a $5 billion fine. Google responded to that ruling by giving Android users in Europe the ability to choose from a list of competing search engines. But users in the U.S. still don't have that option.

Meanwhile, Google continues to have an exclusive contract with Apple, through which it pays billions of dollars to be the default search engine on Apple devices. In a recent report published by the U.K.'s Competition and Markets Authority, regulators called this deal "a significant barrier to entry and expansion for rivals."

— I.L.

This story was updated at 8:45 a.m. PDT on July 25 to reflect the fact that the hearing was rescheduled.

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