The internet has become “increasingly concentrated, less open, and growingly hostile to innovation and entrepreneurship,” adding to a perceived “kill zone” related to the tech giants that prevents new companies from competing, said Rep. David Cicilline (D-R.I.), chairman of the Subcommittee on Antitrust, Commercial and Administrative Law.
Tech executives rebutted those ideas in their written testimony and in answers to lawmakers’ inquiries, arguing that their organizations face robust competition from a variety of entities and that their products and platforms allow other businesses to be successful.
The antitrust hearing comes more than a month after federal regulators divided up oversight of Google, Facebook, Amazon and Apple in a move that suggests possible formal probes in the future. (Amazon founder Jeff Bezos owns The Washington Post.)
Witnesses included Adam Cohen, director of economic policy at Google; Matt Perault, head of global policy development at Facebook; Nate Sutton, associate general counsel of competition at Amazon and Kyle Andeer, vice president of corporate law at Apple.
House lawmakers said they were launching an antitrust investigation focusing on Silicon Valley in June, a rare bipartisan effort targeting the "dominant, unregulated platforms have extraordinary power over commerce, communication and information online.” The effort aims to review the government’s own tools and agencies — as well as the tech giants — in an effort to determine whether the industry has entered monopoly territory.
The House investigation adds to widening woes for Silicon Valley, as both Democrats and Republicans seem to find agreement in their problems with big tech. President Trump has been a frequent critic, last week suggesting the U.S. government “should be suing Google and Facebook,” potentially on antitrust grounds. A number of candidates for the Democratic nomination for president have echoed concerns about the power the industry wields. Sen. Elizabeth Warren (D-Mass.), for example, has called repeatedly for breaking up major tech companies and pledged she would apply a tougher hand to the industry if she’s elected president.
At Tuesday’s hearing, that bipartisan agreement was apparent. Lawmakers asked about a range of topics from digital piracy to the disappearance of Facebook competitor MySpace to Amazon’s competition with sellers that do business on its website -- all with the aim of uncovering how the big tech companies have become so dominant.
Cicilline in his opening remarks criticized federal agencies for not scrutinizing the tech sector's power enough, warning the absence of regulatory action has created “defacto immunity” for online platforms. He slammed the Federal Trade Commission and Department of Justice for not bringing forward antitrust complaints in the technology sector since the landmark Microsoft case nearly two decades ago, and he criticized federal enforcers for not more closely scrutinizing hundreds of the acquisitions that the tech giants have made in recent years.
“This trend is not the inevitable consequence of technological progress,” Cicilline said. “It is the result of policy choices we are making as a country.”
Setting the tone for the hearing, Cicilline also read aloud from testimony submitted by one of the tech giants’ top critics, Tim Wu, a Columbia University law professor who has said Facebook should be broken up. Wu warned lawmakers that the current concentration of power in the tech industry poses a risk to U.S. innovation.
“We are becoming a country of giant concerns, admirable in their way, but where incremental improvement is the norm, where bureaucracy rules, and stagnation may be inevitable,” Wu wrote in testimony submitted to the committee. “We will become a country where inventors and entrepreneurs dream of being bought, not of building something of their own.”
Legislators targeted Facebook and Amazon with the most questions, while Google and Apple faced fewer inquiries. Lawmakers asked targeted questions, including how often the companies change their terms of service -- something that might prove difficult for users to track how their data is used or what they’re agreeing to. They also probed whether the companies are targeting potential competitors with their acquisition strategies.
In one of the most pointed inquiries, Joseph Neguse (D-Colo.) mentioned that Facebook owns four of the top six social networks by active users. "Is Facebook, in your view, a monopoly?” he asked.
Facebook’s Perault denied it’s a monopoly. He also defended the social media giant, saying it faces fierce competition for advertising revenues, bringing in less than a quarter of total U.S. online ad spending.
Addressing similar concerns, Amazon’s Sutton said the online retail giant’s share of the retail space as comparatively tiny —still just 4% total in the U.S. and smaller globally — and touted the positive effects it has had for the third-party businesses that sold $160 billion worth of products on its site last year.
Lawmakers also asked the tech executives to agree to certain conduct standards during the House’s investigation. Cicilline told the organizations not to engage in opposition research activities; Rep. Jamie Raskin (D-Md.) asked that the companies not retaliate against organizations or individuals involved in the review. In both cases, each executive gave their word that their respective company would comply.
Still, while bipartisan support for greater antitrust scrutiny of the tech industry has been mounting in Washington — the panel’s top Republican called lawmakers to take a “fair and balanced” approach in their investigation. Rep. F. James Sensenbrenner Jr. (Wis.) warned against “misguided” calls to break up tech companies like Facebook, which have become increasingly common among Democrats.
“Just because a business is big doesn’t mean it is bad,” Sensenbrenner said. “Antitrust laws focus on the conduct of companies and whether that conduct is bad. They do not exist to punish companies just because they’re big.”
The criticism of tech’s power at the antitrust hearing reflected a broader skepticism of Silicon Valley companies on the Hill at a trio of key hearings on Tuesday. Facebook executive David Marcus faced a beating from lawmakers as he testified about the social network’s plans to launch a digital currency, known as Project Libra. Sen. Sherrod Brown (D-Ohio), the top Democrat on the Senate Banking Committee, launched his opening remarks at the hearing by calling Facebook “dangerous.”
“Now Facebook may not intend to be dangerous, but surely they don’t respect the power of the technologies they’re playing with," Brown said. "Like a toddler who has gotten his hands on a book of matches, Facebook has burned down the house over and over and called every arson a learning experience.”
Meanwhile Karan Bhatia, Google’s vice president for public policy, was in the hot seat at the Senate Judiciary Committee, as Republican senators slammed the company for allegedly censoring conservative voices online. Sen. Josh Hawley (R-Mo.), a freshman senator who has emerged as one of the tech industry’s top critics in Congress, dug into the company on a host of issues—including how the company protects children from pedophiles on YouTube and the company’s business plans in China.
“Clearly trust and patience in your company and the behavior of your monopoly has run out,” Hawley said. “It has certainly run out with me, and I think it’s time for some accountability.”