The CEOs of Amazon, Google, Facebook and Apple testified in front of the House Judiciary antitrust subcommittee today for nearly 6 hours as part of its yearlong investigation, the first time all four chief executives did so jointly. It was also Amazon CEO Jeff Bezos’ first appearance. Given that these companies have a market capitalization of almost $5 trillion and represent nearly a fifth (16% weight) of the S&P 500, it’s important to recap as this hearing could lead to new and historic regulations.
First, here are the main points from each CEOs’ opening statements (link with their full remarks at the end):
Amazon’s Jeff Bezos
- “Amazon’s success was anything but preordained. Investing in Amazon early on was a very risky proposition. From our founding through the end of 2001, our business had cumulative losses of nearly $3 billion.”
- “…Amazon’s success depends overwhelmingly on the success of the thousands of small and medium-sized businesses that also sell their products in Amazon’s stores.”
- “When customers shop on Amazon, they are helping to create jobs in their local communities.”
Google’s Sundar Pichai
- “People have more ways to search for information than ever before — and increasingly this is happening outside the context of only a search engine. Often the answer is just a click or an app away…”
Facebook’s Mark Zuckerberg
- “China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries. As Congress and other stakeholders consider how antitrust laws support competition in the U.S., I believe it’s important to maintain the core values of openness and fairness that have made America’s digital economy a force for empowerment and opportunity here and around the world.”
- “Companies aren’t bad just because they are big. Many large companies that fail to compete cease to exist.”
Apple’s Tim Cook
- “Apple is a uniquely American company whose success is only possible in this country.”
- “The smartphone market is fiercely competitive… Apple does not have a dominant market share in any market where we do business.”
- “Clearly, if Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the Store, not keep them off.”
Next, each CEO fielded many questions from lawmakers. We watched the entire hearing, so here are a few highlights for each company:
- Newly public emails from 2012 on how Facebook viewed Instagram before the company bought it caught a lot of attention. Mark Zuckerberg said the photo-sharing app could “hurt us meaningfully without becoming a huge business.” Facebook’s then-CFO also asked in an email if the company was “trying to ‘neutralize a potential competitor’ or ‘integrate their products with ours’.” Zuckerberg responded, “Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”
Zuckerberg noted that the deal was approved by the Federal Trade Commission and that “we compete hard. We compete fairly. We try to be the best.”
- When asked if Facebook has copied competitors’ apps and features, Zuckerberg admitted that the company has “certainly adapted features that others have led in.”
- Amazon allegedly misled the committee by previously telling lawmakers that “it does not tap data from third-party sellers to boost sales of its own products.” Testimony from employees reported that “there is ‘nobody enforcing’ policies, resulting in ‘a candy shop’ of seller data.”
- Jeff Bezos replied: “I can tell you we have a policy against using seller-specific data to aid our private label business but I can’t guarantee you that that policy has never been violated.”
- Tim Cook was challenged about the way the company manages its App Store and its policy to collect up to a 30% commission on in-app sales and subscriptions. Cook said Apple has never tried to raise that rate and that “we do not retaliate or bully people.”
- Google was accused of stealing digital content from smaller companies and that it threatened to delist Yelp when the company complained about it. Sundar Pichai responded: “When I run the company, I’m really focused on giving users what they want. We conduct ourselves to the highest standard.”
- Pichai also fielded questions about how Google manages user information, its relationship with China and censorship.
In sum, as much as Americans have relied on these four companies’ products and services over the past few months, lawmakers are concerned that the pandemic has made Big Tech even more powerful. They were accused of everything from stifling innovation by acquiring or copying competitors to forcing smaller firms to use their platforms. The CEOs defended their companies by saying they encounter many competitors, benefit consumers, help small businesses and create American jobs.
The question now will be if actual legislation comes out of both the subcommittee’s yearlong investigation and this historic hearing. House Judiciary Antitrust panel Chairman David Cicilline said he expects to complete a report on updating federal antitrust rules next month. We will keep you updated.
Other source links:
Transcripts to opening statements: https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=110883
Video of the hearing: https://www.youtube.com/watch?v=WBFDQvIrWYM