The tech industry’s “Big Tobacco moment”, where the bosses of four of the biggest companies – Apple, Amazon, Facebook and Google – are giving evidence to the US Congress in Washington today.
The House of Representatives’ Antitrust Subcommittee is investigating whether the power, size and tactics of the four companies has crushed competition, reduced innovation and harmed consumers.
It is the first time tech’s most well-known bosses have appeared together in front of a committee and their performance could well decide whether US politicians decide to introduce new laws curbing Big Tech’s power.
See below for the latest updates:
Now we can take a breather, it’s worth reflecting on some of the comments made which weren’t strictly related to competition.
Moments ago both Zuckerberg and Pichai were accused of harming the country’s foreign policy and meddling in democracy.
Congress brought up Project Maven, a military project Google pulled out of it, pledging not to build AI weapons after employee uproar. Republican congressmen are concerned that Google seemed not to want to help with US defence yet were very interested in working in China.
Pichai says that Google is working with the US military on different projects, and what it does in China is very limited in nature “compared to our peers” adding that its AI centre in China “is limited to a handful of people working on open source projects”.
Mark Zuckerberg was also quizzed on Russian interference ahead of the 2016 presidential election and what the company has done since.
“We routinely now collaborate with law enforcement and intelligence agencies, and are able to sometimes identify threats coming from other countries before governments are even able to,” Zuckerberg said.
Would it be a web conference if it weren’t for a technical glitch? We’re taking a break while one of the tech bosses gets their streaming set-up sorted.
Let’s hope they aren’t doing any last minute research to win over Congress.
Tim Cook: ‘It’s a street fight to get developers to build apps for us’
A common complaint about Apple is the power it wields over what appears on people’s iPhones.
Apple has control over which apps are marketed to Apple users, and therefore has a lot of control over who prospers.
App developers have raised concerns that the rules governing the App Store review process are patchy, and sometimes unfair. Developers say they have no choice but to go along with the changes, or they must leave the App Store. This is particularly problematic for smaller app developers.
Tim Cook says there is plenty of competition for developers pointing to Android or Windows or Xbox or PlayStation.
“It’s so competitive I would describe it as a street fight for market share in the smartphone business,” he says.
But, not everyone agrees.
Cook describing App store and competitors: “It’s a street fight”
More like two mob families who split the market–I get Jersey, you get the city.
— Scott Galloway (@profgalloway) July 29, 2020
‘We bought Instagram because it was a threat’
Zuckerberg confirms that he bought Instagram, in part, because it was a competitor (this is something he has said in the past on several occasions).
The house says this is exactly the kind of anti-competitive move the law is supposed to prohibit.
But Zuckerberg says that the Federal Trade Commission had “documents” and never made a complaint, and that the merger should be seen as an “American success story”.
Meanwhile, emails between Zuckerberg and chief financial officer David Ebersman, discussing how much of a threat Instagram was and the need to “neutralise” potential rivals, have been released by the committee.
Facebook bought Instagram for $1bn in 2012. Instagram’s founders left in 2018, amid disagreements with their parent.
‘Google stole Yelp reviews’
It is time for the question and answer session and Pichai has been hit with a real stinker straight off the bat.
The chairman accuses Google of “stealing” Yelp reviews and a “multi-pronged attack” against its rival.
“For example in 2010 Google stole restaurant reviews from Yelp to bootstrap rival local search businesses.”
He asks Pichai what Google did when Yelp complained, to which Pichai has no answer.
“Our investigation shows that Google’s response was to threaten to de-list Yelp entirely,” Cecilline says,
“In other words, the choice Google gave Yelp was let us steal your content or effectively disappear from the web.”
‘There needs to be new regulation for the internet’
Now it is time for Mark Zuckerberg, who is looking a little more freckled than usual (perhaps thanks to a recent holiday in Hawaii?) to share his thoughts.
Similarly to Bezos, he played on the ideals of the American dream, stating that “Facebook is a successful company now, but we got there the American way: we started with nothing and provided better products that people find valuable.”
But he took the time to talk about internet regulation – not strictly a topic of the hearing – and how it is not Big Tech’s place to modify speech.
“There are other serious issues related to the internet, including questions about elections harmful content and privacy…We build platforms for sharing ideas and important debates play out across our services.
“I believe that this ultimately leads to more progress but it means we often find ourselves in the middle of deep disagreements about social issues and high stakes elections. I personally don’t believe that private companies should be making so many decisions about these issues by themselves. And that’s why last year. I made the case that there needs to be new regulation for the internet.”
Tim Cook takes the stage
Tim Cook is given five minutes to share why Apple shouldn’t be broken up. His focus is on the app store, where we download our apps for different Apple devices from.
“The app stores economic contributions are significant, the ecosystem is responsible for 1.9 million jobs in all 50 states, and it facilitated 130 8 billion in commerce in the US in 2019 alone,” he says.
‘Online has been a lifeline for so many businesses during the pandemic’
Sundar Pichai is up, and recalls his career at Google, where he was responsible for creating Chrome, one of the most popular internet browsers in the world, and went on to work at Android, the mobile operating system Google runs.
He details Google’s competitors and attempts to prove that Search, despite hosting 90pc of all searches in the world, is not as powerful as everyone thinks, and is at risk from its rivals.
“You can ask Alexa a question from your kitchen; read your news on Twitter; ask friends for information via WhatsApp and get recommendations on Snapchat or Pinterest,” he says.
‘Just like the world needs small companies, it also needs large ones’
We will be hearing prepared testimony from each of the witnesses for the next few minutes, and first up is Jeff Bezos.
The billionaire founder, who famously started Amazon in his Seattle garage, tells the story of his upbringing by a teenage mother and a Cuban immigrant.
He details the struggle Amazon, now a $1.5 trillion (£1.2 trillion) company, has but how he has focused on being the most “customer-centric” company on earth.
“The trust customers put in us every day has allowed Amazon to create more jobs in the United States over the past decade than any other company – hundreds of thousands of jobs across 42 states,” he says.
You can read more about the prepared witness statements here.
‘Put your mask on’
Republican committee member Jim Jordan has been told off for not wearing his mask after finishing his speech which focused on conservative bias on Twitter and at Google, stating that Republicans and Trump had repeatedly been censored and that Jack Dorsey had been invited to attend the hearing but apparently refused.
He seemed to suggest that a response from Mr Dorsey, that there was no intentional censoring of Republican voices, was not plausible.
“If I had a nickel for every time I heard it was just a glitch, I wouldn’t be as wealthy as our witnesses, but I’d be doing all right”.
Expect to hear more on conservative bias throughout the hearing.
And we’re off
The hearing has begun, with a quick run-through why Washington has taken an interest in these four companies.
For some context, the committee launched an investigation into digital markets just over a year ago, looking at whether there were competition issues and if the current antitrust laws were equipped to deal with them. They have been collecting information from the four companies in question, including millions of pages of evidence, hours of interviews, as well as documents and submissions from more than 100 rivals.
Chairman David Cicilline says the committee has found that, “although these four corporations different important in meaningful ways we’ve observed common patterns and competition problems over the course of this investigation”.
(The chart above might help put the companies’ revenue into perspective.)
Cicilline says: “Amazon runs the largest online marketplace in America, capturing 70pc of all online marketplace sales. It operates across a vast array of businesses from cloud computing and movie production to transportation logistics and small business lending. Amazon’s market valuation recently hit $1.5 trillion, more than that of Walmart, Target, SalesForce, IBM, eBay, and Etsy combined.
“Apple is a dominant provider of smartphones, with more than 100 million iPhone users in the United States alone. In addition to hardware, Apple sells services and apps, including financial services, media, and games.
“Facebook is the world’s largest provider of social networking services, with a business model that sells digital ads. Despite a litany of privacy scandals and record-breaking fines, Facebook continues to enjoy booming profits – $18 billion last year alone.
“Lastly, Google is the world’s largest online search engine, capturing more than 90pc of searches online. It controls key technologies in digital ad markets and enjoys more than a billion users across six products—including browsers, smartphones, and digital maps.”
Looks like Trump might be making time to squeeze the hearing – due to start in five minutes – into his viewing schedule.
If Congress doesn’t bring fairness to Big Tech, which they should have done years ago, I will do it myself with Executive Orders. In Washington, it has been ALL TALK and NO ACTION for years, and the people of our Country are sick and tired of it!
— Donald J. Trump (@realDonaldTrump) July 29, 2020
The president suggests that Big Tech has had unfair treatment for too long, and that he has plans up his sleeves regardless of the outcome of the hearing.
Once the hearing is wrapped, the members will draw up a report to be published at the end of the year, which will have suggestions for potential regulation of the technology companies.
But it looks like Trump wants to play a more powerful hand, and has already attempted to curtail social media in recent months.
In May, he signed an executive order in an attempt to penalise social media companies (this affects Google, Facebook and Twitter) for apparent conservative bias. While it did not make much impact, its intent reveals a potential uphill battle between Silicon Valley and the upper echelon of the Republican party.
Live streaming: An unfair advantage?
As mentioned, today’s hearing will be conducted virtually. The committee members who have not showed up to the hearing in person, plus the four executives, will be using Cisco’s Webex technology to join the web conference, rather than their own video conferencing tools.
This may feel a little unnatural, as Mr Pichai likes to appear on Google Meet and Jeff Bezos’ employees are barred from using video conferencing other than its bespoke streaming service, Chime. But we’re sure they were happy to make the exception when it came to the House Judiciary Committee.
Some have suggested that the ability to appear remotely gives the big bosses an upper hand. Could there be a group of communication executives and lawyers behind the laptop scribbling notes on a whiteboard?
We have been told that there is an hour long delay, pushing the hearing back to 6pm. We are hearing that it’s because someone forgot to factor in time needed to clean the room between hearings – a necessity during the pandemic.
In the meantime, those who are in it for the long haul might like to start preparing for a “antitrust drinking game” as suggested by former Facebook security chief, Alex Stamos.
Drink when a member of Congress:
-Uses 4.5 of their 5 minutes to rant about something completely unrelated to antitrust
-Asks a super-detailed question a CEO could never answer off-the-cuff
-Asks for two competing equities (like privacy and moderation) in one sentence
— Alex Stamos (@alexstamos) July 29, 2020
It’s a little early for a tipple here in California, but Stamos does raise some good points. A recurring critique of these hearings is a failure to nail the issue at stake. Often, the house veers into topics like bias, or privacy issues.
For example, massive structures like Google – which has complicated advertising mechanisms, plus sprawling business departments touching upon most industries – make investigations into its potential for a monopoly much more complicated.
Now is not the time for pontificating about misinformation on YouTube or Facebook adverts (although it is a very important topic) but truly grasping the company’s strategy both historically and going forward, and how this infringes on smaller businesses.
I am in @AirForceOne_HQ flying to the Great State of Texas. It is AMAZING in watching @FoxNews how different they are from four years ago. Not even watchable. They totally forgot who got them where they are!
— Donald J. Trump (@realDonaldTrump) July 29, 2020
Donald Trump, an avid social media user and longstanding accuser of Google, Facebook and Twitter of conservative bias, appears not to be tuning in today, as he tweeted he is currently flying over Texas while watching Fox News.
Trump has held several conversations with the executives, although has criticised them all publicly in some form or another during his tenure as president. In March, Trump said that Sundar Pichai called him to apologise – although we never learned what for – and then proceeded to claim that Google was helping screen for coronavirus. This appeared to catch the Google communications team off guard when a flurry of journalists called in asking to learn more. Later it emerged that Verily, a health company owned by Google parent Alphabet, was conducting tests in California.
Watching and waiting
We’re patiently awaiting the start of the hearing which is due to begin streaming on YouTube (yes, which Google owns) in ten minutes. Four of the world’s most powerful chief executives will be appearing on live stream to claim that their companies, Amazon, Apple, Google and Facebook, aren’t that domineering after all.
It is coming up to midday in Washington, although the day is just getting started on the US west coast where the four tech bosses due to give evidence today are based. The bosses of Google, Amazon, Facebook and Apple have been allowed to give evidence virtually, which avoids the pitfalls of an embarrassing photo opportunity, or the idea that they have been hauled to Washington.