Lawmakers warned Amazon and Google on Tuesday that they don't want to see the companies take over the smart home device market.
"In home technology we see some of the most powerful firms that dominate tech today poised to dominate platforms of the future," said Democratic Sen. Amy Klobuchar, the chair of a subcommittee holding a hearing on competition among voice assistants, smart speakers, connected TVs, thermostats and other devices.
She and other lawmakers on the panel said the session was an effort that could result in legislation to get ahead of potential problems in a rapidly expanding market rather than waiting for those issues to become dire. Concern came from Democrats and Republicans that the giant companies could use their power to keep rivals off of devices, boost their own offerings and squash upstarts.
The hearing came at the beginning of a new moment in tech antitrust in the United States: Earlier on Tuesday, the Senate confirmed Lina Khan, a critic of competitive practices in Big Tech who helped build a movement to reform antitrust law, to serve on the Federal Trade Commission in a bipartisan vote. Klobuchar announced during the hearing that President Joe Biden had designated her the agency's chair.
Last week, the leaders of the House's antitrust subcommittee that probed competition by Apple, Amazon, Facebook and Google also released a long-awaited set of bipartisan bills that represent some of the most serious proposals to alter antitrust law in decades. Perhaps the most controversial bill would allow government enforcers to seek to break up big digital platforms when "conflicts of interest" exist between its business lines.
European regulators also signaled earlier in June that they had concerns about competition among IoT devices that could soon lead to the opening of new competition cases.
"Big Tech already controls nearly everything we do online," said Sen. Mike Lee, the top Republican on the subcommittee, during the hearing. "Are we now willing, for the sake of some minor convenience, to give them control over our homes as well?"
"Surely we already know enough to know that this isn't going to end well," Lee added.
Firewalls and restrictions
Among the concerns that senators raised at the hearing was that Amazon or Google could erect technical barriers to competitors' services working on devices, or that the companies could stop devices from working together. Amazon could theoretically block competitors to its Alexa voice assistant from working on its Echo devices, for instance, or could have the speakers push owners to replenish their empty refrigerators with Whole Foods groceries rather than wares from a supermarket that Amazon doesn't own.
The lawmakers also worried that the dominant firms could use their financial might to subsidize subpar offerings, or extract information on rivals working on their platforms and use the data to compete against them.
"It's an environment, as a result of that conflict, that is rife with exploitation and appropriation every bit as serious as in the days of the oil well titans or the railroad behemoths," said Democratic Sen. Richard Blumenthal, who called for "lines-of-business restrictions and data firewalls to prevent Big Tech from weaponizing those troves of sensitive data to further their own business interest and squash competition."
In many ways, the lawmakers appeared to worry that Amazon, Google and other big tech companies would repeat the steps that have already led them to become dominant in other digital markets. Google in particular faces government antitrust lawsuits over its distribution of search and its giant ad tech operation. It says it faces tough competition and focuses on improving its offerings for users.
In the hearing, representatives for Amazon and Google touted their efforts to try to ensure that devices and services could work together and cited the variety of other companies seeking to make devices and services for smart home systems.
"There's a robust conversation happening across the industry to try to address some of these issues," said Wilson White, a senior policy official at Google, calling openness a corporate "north star." Yet White admitted that their company's approach to working with rivals and partners is evolving, and he alluded to worry that fully-open digital platforms could raise privacy concerns.
The senators also heard from a representative from smart speaker maker Sonos, a longtime Google critic and competitor.
Eddie Lazarus, the company's chief legal officer, said consumers should be able to use the biggest voice assistants on the same device. He added that Amazon's current partnerships with other companies are "just an on-ramp into the Amazon ecosystem now, because you can't mix-and-match between the big companies."
Following the hearing, Lazarus told Protocol that he was encouraged by nonpartisan nature of the hearing. "They came well prepared," he said. "They were sending a signal that they intend to craft some legislation." Lazarus said that he walked away believing that it could lead to real action. "I think this is a singular moment in time from a legislative standpoint," he said.
Klobuchar has previously introduced her own detailed proposals to rein in Big Tech's power and published a book on the subject earlier this year. Her bill to boost fees for mergers also recently passed the Senate.
While Klobuchar's proposals didn't go as far as those in the House, lawmakers from both chambers are working together to advance legislation, and Lee also unveiled his opening legislative bid on Monday. His bill would tighten rules around mergers while codifying that antitrust cases should focus on harm to consumers in the form of increased prices, restricted output and other economic measures.
The hearing represented a sequel to earlier testimony on mobile app stores in April. During that hearing, Klobuchar and Lee expressed bipartisan frustration with Google and Apple as developers spilled their longtime allegations of bullying in public testimony.
"It's time to get moving, and we're ready to go," Klobuchar said at the end of Tuesday's session.
Janko Roettgers contributed to the reporting.