May 24, 2024


Unlimited Technology

Tech Talk on Capitol Hill

Does Big Tech stifle competition? Answering that was the main purpose of Wednesday’s Congressional hearing, which hauled in the top executives from America’s biggest technology companies.


But when the chiefs of Alphabet, Amazon, Apple and Facebook actually appeared in front of the House Judiciary Committee — albeit virtually, via Webex video call — the proceedings veered into a free-for-all.

Maybe the unprecedented opportunity to grill the leaders of four of the biggest technology platforms all at once was too irresistible to pass up. Either way, committee members wound up airing a mixed bag of political grievances, concerns about the upcoming presidential election, privacy and other issues, alongside inquiries into allegedly anticompetitive business practices.

A technical glitch kept Jeff Bezos out of the hot seat for the first hour or so following the executives’ opening remarks. But once resolved and he appeared, he clearly had a target on his back.

The questions sounded like a greatest hits compilation of well-publicized Amazon complaints, inquiring if the company uses data on third-party sellers to create an unfair advantage for itself, or whether it weaponizes the rampant counterfeits on its platform as a bargaining tool, withholding help to battle them unless brands acquiesce to advertising deals. Rep. Jamie Raskin (D., Md.) asked about Alexa-enabled smart speakers and whether they push the Amazon marketplace.

But a particularly notable moment happened when Rep. Pramila Jayapal (D., Wash.) invoked an online textbook bookseller, who claimed that her business was restricted by Amazon when its sales began to chip away at the giant’s market share.

“Mr. Bezos, we increased our sales on Amazon by five times in the past three years.…We followed all the rules that were set up by you,” a recording played. “Please, you know, just help us in earning our livelihood. We beg you. There are 14 lives at stake.”

Bezos asked to be put in touch with her, so he could look into the matter. Another notable Bezos reaction happened after this question from Rep. Hank Johnson (D., Ga.):

“The founder of PopSockets testified in January that Amazon itself was selling knockoffs of its product,” he said. “After reporting the problem, it was only after his company committed to spending $2 million on advertisements that Amazon appears to have stopped diverting sales to these knockoffs. What is your explanation for that business practice?”

Bezos replied, “That’s unacceptable. If those are the facts and that if someone, somewhere inside Amazon, said, ‘Buy X dollars in ads and then we’ll help you with your counterfeit problem,’ that is unacceptable, and I will look into that and we’ll get back to your office with that. What I can tell you is that we have a Counterfeit Crimes Unit [and] we attempt to prosecute counterfeiters.”

It was a perfect example of how these celebrity business leaders were caught flat-footed in many cases. Because some representatives drilled into examples from a specific seller, a particular app or individual news story, when platforms in this echelon deal with literally tens of thousands of participants, integrations or algorithms. As a result, answers often came down to a less satisfying pledge to look into this or that matter and get back to the committee.

Congressmen, such as Reps. Matt Gaetz (R., Fla.) and Jim Jordan (R., Ohio), took more issue with Google and Facebook and what they view as attacks on conservative voices and de-ranking of right-wing media sources, including stories touting the de-bunked notion that hydroxychloroquine could treat COVID-19.

In a bizarre moment, criticism by Rep. Greg Steube (R., Fla.) that Google was unfairly sending campaign e-mails to spam led to Sundar Pichai, Alphabet’s chief executive officer, to explain how Gmail works.

“In Gmail, we are focused on what users want, when users have indicated they want us to organize their personal e-mails, e-mails they receive from friends and family separately,” Pichai said. “And so all we have done is we have a tabbed organization…[with] the primary tab as e-mails from friends and family and the secondary tab has other notifications and so on.”

Others criticized what they saw as Google’s pilfering of content from other sources for its own benefit, whether it’s streaming music, lyrics or other content.

Google, Facebook and Amazon have become politicians’ favorite punching bags, often justifiably, which meant that the line of questioning often skipped over Apple.

Not that Apple ceo Tim Cook didn’t have to face a question regarding his company’s App Store and whether it treats developers fairly.

Johnson pointed out that Apple is the “sole decision maker” on an app’s availability to the iPhone-using public, and questioned whether the rules were arbitrarily interpreted and enforced, or “subject to change whenever Apple sees fit….That’s an enormous amount of power.”

Apple also negotiates exceptions to its 30 percent commission rates for some apps, such as Amazon Prime. Johnson wanted to know if others could negotiate this rate, and what would stop the company from suddenly boosting the charge to 50 percent.

“There’s a competition for developers, just like there’s a competition for customers,” Cook explained. “And so the competition for developers, they write their apps for Android or Windows or Xbox or Playstation. So we have a fierce competition on the developer side and the customer side…it’s so competitive, I would describe it as a street fight for market share in the smartphone business.”

Naturally, Facebook received questions regarding its policy and treatment of hate speech and other content. But it also had to answer to a line of inquiry from Rep. Joe Neguse (D., Colo.) that the social giant clones features from rivals, even as it attempts to acquire them, all to squelch competition.

The congressman brought examples, such as Instagram, which the company bought, and Snapchat, which refused.

“In early 2012, when Facebook contemplated acquiring Instagram, a competitive startup, you told your cfo that ‘Instagram could be very disruptive to us.’ And in the weeks leading up to the deal, you described Instagram as a threat, saying that ‘Instagram can meaningfully hurt us without becoming a huge business,’” Neguse said. “Mr. [Mark] Zuckerberg, what did you mean when you described Instagram as a threat?”

For Zuckerberg, that’s because it was. “I’ve been clear that Instagram was a competitor in the space of mobile photo sharing. There were a lot of others at the time they competed with,” he said. “It was a subset of the overall space of connecting that we exist in. And by having them join us, they certainly went from being a competitor in the space of being a mobile camera to an app that we could help grow.”

In other words, it was business as usual. But maybe not for long.

“When the dominant platform threatens his potential rivals, that should not be a normal business practice,” said Jayapal. “Facebook is a case study, in my opinion, in monopoly power because your company harvests and monetizes our data, and then your company uses that data to
spy on competitors, and to copy, acquire and kill rivals.

“You’ve used Facebook’s power to threaten smaller competitors, and to ensure that you always get your way. These tactics reinforce Facebook’s dominance, which you then use in increasingly destructive ways,” she continued. “So Facebook’s very model, makes it impossible for new companies to flourish separately, and that harms our democracy. It harms mom-and-pop businesses, and it harms consumers.”

What all four ceo’s could agree on was to avoid the use of slave labor across vendor relationships, all of which have agreements with companies in China and other regions. All vowed to address it whenever they’re aware of such conditions, even if means terminating those suppliers.

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