Tech giants on defensive at antitrust hearing

Four of the nation’s largest tech companies sought to reassure skeptical lawmakers over their market power as the House ramps up its antitrust investigation into Silicon Valley.

Executives from Apple, Amazon, Facebook and Google testified before the House Judiciary Committee’s antitrust subcommittee Tuesday in a hearing examining the effect that their size has had on small businesses and their ability to innovate.

{mosads}Each insisted that their platforms help smaller businesses reach customers and that they face stiff competition.

Amazon — the largest of the four, with a market cap just shy of $1 trillion — pointed to an “ever-broadening array of competitors” that they face in the retail market and touted their efforts to help third-party sellers on their platforms.

But Nate Sutton, Amazon’s associate general counsel, was forced to repeatedly insist to incredulous lawmakers that the company does not use the consumer data it collects to give its own products an advantage over those of third-party sellers.

Rep. David Cicilline (D-R.I.), who as chairman of the subpanel is leading the antitrust investigation, forcefully pressed Sutton about Amazon’s conduct toward those vendors.

“Amazon is a trillion-dollar company that runs an online platform with real-time data on millions of purchases and billions in commerce and can manipulate algorithms on its platform and favor its own products,” he said

Reminding Sutton that he was under oath, Cicilline asked, “So you collect all of this data of the most popular products and where they’re selling, and you’re saying you don’t use that in any way to change an algorithm to support the sales of Amazon-branded products?”

“Our algorithm such as the buy box is aimed to predict what customers want to buy, and we apply the same criteria whether you’re a third-party seller or Amazon to that because we want customers to make the right purchase regardless of whether it’s a seller or Amazon,” Sutton responded.

Matt Perault, Facebook’s head of global policy development, similarly said that the company does not research social media trends in order to find and buy out potential competitors to maintain its dominance, despite a 2017 Wall Street Journal story that reported it had used a surveillance app that tracked user behavior to influence its acquisitions.

He also told the panel that the social network is not a monopoly, but Rep. Joseph Neguse (D-Colo.) pointed to the popularity of its platform and of several services it owns including Instagram, WhatsApp and Facebook Messenger.

“So you can understand skepticism because when a company owns four of the largest six entities measured by active users in the world in that industry, we have a word for that and that’s monopoly — or at least monopoly power,” Neguse said.

Google’s director of economic policy, Adam Cohen, also insisted that it faced competition in the internet search industry from the privacy upstart DuckDuckGo, Microsoft’s Bing and Yahoo. And he said that users turn to other platforms when searching for things like retail products and travel arrangements.

For its part, Apple faced questions about the fees it charges apps on its App Store.

Spotify, which competes with Apple Music and has filed an antitrust complaint against the iPhone maker in Europe, pressed its case with the committee in a letter arguing that Apple stifles competition by “essentially acting as both a player and referee to deliberately disadvantage other app developers.”

But lawmakers were skeptical of the defenses.

“By virtue of controlling essential infrastructure, these companies appear to have the ability to control access to markets,” said House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.).

“In some basic ways, the problem is not unlike what we faced 130 years ago, when railroads transformed American life — both enabling farmers and producers to access new markets, but also creating a key chokehold that the railroad monopolies could exploit,” he said.

But Cicilline, who has become one of the most outspoken tech critics in Congress, also criticized U.S. antitrust enforcers — specifically the Department of Justice and Federal Trade Commission — for not challenging the tech giants during their years of explosive growth.

“In the two decades since the Justice Department filed its landmark monopolization case against Microsoft, there has not been a single complaint filed by either agency alleging anti-competitive conduct in this market,” he said. “Together, these enforcement decisions have created a de facto immunity for online platforms.”