Tech executives to take hot seat at antitrust hearing

Silicon Valley is bracing for a high-stakes hearing on Tuesday as executives from the nation’s largest tech companies are summoned before a House investigation into their market power for the first time.

The House Judiciary Committee is hauling in some of tech’s fiercest critics and defenders for a hearing that will be a critical moment in the panel’s bipartisan antitrust probe.

{mosads}For the executives from Apple, Amazon, Facebook and Google it’s an opportunity to publicly defend their business practices amid intensifying questions from Congress and regulators over their enormous market power and whether they actively disadvantage smaller competitors.

For lawmakers and industry critics who have been accusing tech giants of monopolistic behavior for years, it will be an opportunity to make their case to the public and put those executives on the hot seat.

“This is not a fire drill,” said Stacy Mitchell, who will be testifying Tuesday in her role as co-director of the Institute for Local Self-Reliance, a group that researches Amazon’s competition practices.

“Congress often responds to concerns by holding hearings that, in many cases, don’t go anywhere,” Mitchell said. “This is different. This is a months-long investigation that involves not only hearings but deep research. … The nature of this is much more substantial than what I think the public is typically used to seeing with some of the hearings.” 

Lawmakers on the House Judiciary Committee have been holding closed-door meetings with tech critics and experts for the past month, including many from rival companies who say they have been heard by the industry’s biggest players.

The chairman of House Judiciary’s antitrust subcommittee, Rep. David Cicilline (D-R.I.), last week met with Yelp CEO Jeremy Stoppelman, who has railed against Google’s stranglehold over online search. Members of the committee also held a private meeting with Facebook co-founder Chris Hughes, who has called for the company to be broken up. 

According to witnesses and advocates who spoke to The Hill ahead of the meeting, the antitrust subcommittee members have been calling in academics, critics and company representatives to offer expertise about the largest tech companies’ potentially monopolistic practices.

It’s unclear so far how the investigation will play out along party lines. As of right now, members of both parties have indicated an interest in antitrust questions, and the investigation has been touted as “bipartisan.” 

Cicilline in a statement to The Hill raised serious concerns about the tech giants’ domination and raised the possibility that the hearing would offer “possible paths forward” for addressing those issues.

“In recent years, the Internet has become increasingly concentrated, less open, and growingly hostile to innovation and entrepreneurship,” Cicilline said. “The combination of high network effects, switching costs for consumers, and the accumulation of immense amounts of consumers’ data can result in ‘winner take all’ markets that shield dominant firms from competitive threats.”

“This trend is not the inevitable consequence of technological progress,” he added. “It is the result of policy choices we are making as a country.”

But Rep. Doug Collins (R-Ga.), the ranking member of the full House Judiciary Committee, emphasized the enormous “success” and “innovation” from companies like Facebook, Apple, Amazon and Google and warned against criticism going too far.

“Large tech companies are a critical part of our economy, and they represent some of America’s best innovation,” Collins said in the statement to The Hill. “I hope the subcommittee hearing on Tuesday focuses on ways we can encourage innovation and competition because the two are far from mutually exclusive.”

“I look forward to a productive conversation with some of the most successful companies in the world, and I encourage my colleagues to use this opportunity to gain answers to questions they have about innovation and competition, rather than using this as an opportunity to criticize companies and individuals,” he said.

A House Judiciary aide added the investigation “does not include bipartisan agreement to subpoena, compel testimony from, or start a critical investigation into any individual or large tech company.” 

The hearing will likely offer insight into the daylight between Democrats and Republicans on the issue. While left-leaning members are likely to slam the enormous companies, which offer services to billions of people, some members on the right — who traditionally eschew government intervention and promote free-market ideals — could be more hesitant.

“Our subcommittee has a responsibly to scrutinize the business practices of this industry, but must do so with a fair and balanced approach,” Rep. Jim Sensenbrenner (R-Wis.), the ranking member of the antitrust subcommittee, said in a statement to The Hill. 

Despite those potential divisions, tech companies are bringing in their big guns for the hearing.

Google is sending Adam Cohen, its director of economic policy who fought hard against antitrust charges against Google in the European Union, while Facebook will offer head of global policy Matt Perault, who has been defending the company’s privacy practices for years.

{mossecondads}Also testifying will be Apple’s vice president of corporate law, Kyle Andeer, a tough former Federal Trade Commission and Justice Department litigator who has defended the company in antitrust cases, and Nate Sutton, Amazon’s associate general counsel for competition. 

On Monday, the committee announced that Carl Szabo, the vice president and general counsel of tech trade group NetChoice — which counts Facebook, Google and eBay as members — will be testifying.

All of the companies declined to comment but pointed The Hill to previous public statements they have made on antitrust issues. 

Apple stressed it has paid out $120 billion to developers since it launched the App Store, anticipating it will face criticism over how it runs the platform. 

Amazon argued that it competes directly with a number of brick-and-mortar stores, pointing out it has “retail competitors that are larger than us in every country where we operate.” The company also sought to get ahead of arguments about its acquisition of Whole Foods by pointing out Amazon controls less than 4 percent of the grocery market. Amazon controls about 37.7 percent of online sales in general.

Google pointed to previous comments by its CEO Sundar Pichai, who said the company is not “surprised” by the antitrust scrutiny but warned against government action against big tech only “for the sake of regulating.” 

The antitrust subcommittee’s investigation kicked off last month with a hearing on how tech giants have harmed the media industry. It is unclear if there will be any more public action in the probe before the August recess, which is only a few weeks away.

But the probe, which is expected to last 18 months, has ambitious plans, with lawmakers floating more intensive oversight of the federal agencies regulating big tech or even updates to antitrust law to account for how online monopolies function. 

It is one of the most significant congressional probes into market power issues since the 1970s, Mitchell said. 

Tim Wu, a Columbia University academic and leading tech antitrust expert who is testifying on Monday, said the larger probe signals a “change in consciousness” as the country becomes more anxious about economic consolidation and private companies amassing too much power. 

“I think there’s an ideological change coming on,” Wu told The Hill. “People are looking for answers. They’re trying to get at this question about, ‘How do you make an economy that’s … a little more widespread in its allocation of prosperity?’

“I think it helps beat the drum.”