11 MINUTE READ | July 30, 2020
How the CEOs of Big Tech Fared Before Congress
Wednesday’s Big Tech congressional hearing provided considerable insight into the inner workings of the largest tech companies in the US. The hearing, at which the CEOs of Amazon, Apple, Facebook, and Google participated in virtually, lasted for almost six hours and covered topics ranging from Chinese intelligence to cloud computing, political donations, and app store practices, counterfeits sales, social issues, and spam folder algorithms.
In a word, it was a spectacle.
In his first appearance before members of Congress, Amazon’s Jeff Bezos faced intense scrutiny over his company’s alleged use of third-party competitor data to create its own products. Facebook and Google were locked in heated discussions with lawmakers in which they attempted to explain their company’s position on any number of issues, including digital advertising products, user privacy, and market power, only to be interrupted and unable to finish their responses to the questions. On the other side of Silicon Valley, Tim Cook made perhaps the most impassioned opening statement and endured significantly fewer questions than his peers.
As a result of the wide array of subject matter in question, there were few incendiary soundbites by tech’s most powerful leaders, but the hearing still served its purpose in laying the groundwork for future action as lawmakers sought to substantiate patterns of anti-competitive behavior within each technology firm. Furthermore (and at least for our purposes), it resulted in beneficial clarifications on how these companies and their decision-makers see themselves in the market and interpret their practices and policies internally.
Between the four CEOs, Jeff Bezos had perhaps the toughest time in the hot seat, with technical difficulties restricting his audio and video capabilities, which caused an unanticipated recess and awkward interruptions leading to a few tense moments. From a public image perspective, Bezos also suffered from the most damaging moment as he appeared to not know the finer details of his company’s business dealings, such as whether sellers on Amazon.com are required to submit their phone number or an email address in order to verify their identity.
Concerning more recent allegations, in response to The Wall Street Journal reports of Amazon’s use of third-party seller data, Bezos shared that an internal investigation was being conducted as a result, but he was unable to guarantee whether policies against using partner data had been violated or not.
Right from the beginning, Chairman David Cicilline (D-RI) shared that the ultimate objectives of the subcommittee’s investigation were to document the companies’ power over the digital marketplace as well as evaluate the current antitrust framework and determine whether or not it could address modern-day anti-competitive challenges such as these.
In his opening statements, Chairman Cicilline set the stage, claiming that each of these four companies:
Held a bottleneck on the distribution and access to information and marketplaces online.
[Their] digital and massive infrastructure allows for the surveillance of competitors and the opportunity to stifle competing businesses and ideas.
[They] abuse their control to extend their power via predatory pricing, preferential services, as well as buying, copying, and cutting off competitors.
The Chairman also purported the four companies’ market power and influence by the numbers:
Apple: With 100 million iPhone users, Apple is the most profitable company in the US at $57 billion, $12 billion more than its closest competitor (Microsoft). Apple serves as the sole arbiter of its App Store and mobile app ecosystem.
Amazon: Revered as the largest online marketplace, reportedly controlling 38 percent of US online sales and 70 percent of online marketplace sales.
Facebook: Has 2.6 billion monthly users, which is 34 percent of the global population, and maintains its position as the largest social network platform despite data privacy scandals, and most recently, an advertiser boycott.
Alphabet (Google): Google is the largest search engine in the world processing 90 percent of global searches with one billion users across hardware and software.
Throughout the year-long investigation, the subcommittee has reportedly collected over 1.3 million internal documents from all four companies. Based on the line of question and number of follow-ups, that figure is sure to grow. Soon after opening statements ended, the House Judiciary Committee began sharing citations of those documents on Twitter to supplement lawmakers’ questioning.
Source: House Judiciary Twitter
The CEOs’ prepared remarks and opening statements provided plenty of context clues and material into how the companies argue against allegations of anti-competitive behavior and market power dominance.
For Google: During his submitted statement, Sundar Pichai outlines that Google’s products and services improve millions of people’s lives, and the company faces fierce competition in the advertising and search industry, only obtaining any dominance as a result of its high quality of service.
For Facebook: In Mark Zuckerberg’s opening remarks, he posits the social media platform should be revered as a success story of American innovation while the company’s size is to the benefit of America’s democracy and people as Facebook helps people connect and businesses grow. Meanwhile, the company’s sheer scale enables it to invest heavily in content moderation and tools that can mitigate social issues and challenges such as hate speech and misinformation. In his opening statement, Facebook’s Zuckerberg re-emphasized his long-held desire for federal internet regulation.
For Amazon: Jeff Bezos’ prepared testimony included an impassioned story of his upbringing, and concentrated on Amazon’s customer-focused approach to business, leveling that Amazon is one of the most trusted businesses of the world, utilizing its scale to employ thousands, help millions, and invest billions in local economies.
For Apple: Tim Cook’s opening statement focused on Apple’s market share, doubling down on the fact that Apple does not have a dominant market share in any market it operates in. Of course, given that the investigation focuses almost exclusively on the Apple App Store, Cook reiterated the benefits of its App Store policies and discoverability for developers, emphasizing Apple’s laser focus on user privacy and providing the best experience for its users, not the biggest.
The line of questioning throughout the hearing swayed from anti-competitive issues, such as Facebook’s acquisition strategy, to partisan issues, including claims of anti-conservative bias by social media platforms and Pentagon contracts. As it relates to advertisers and our industry, the following subjects were topics of conversation:
How much of a priority is child safety on Google’s platforms? What about via Apple’s App Store? Pichai and Cook affirmed that child safety is of the utmost importance for their respective companies.
Was Facebook’s acquisition of Instagram predatory? How about Google’s acquisition of DoubleClick? Zuckerberg and Pichai both denied predatory acquisitions.
Does Amazon steal third-party partners’ data to build their own competing products? An internal investigation has been launched due to recent allegations, but Bezos couldn’t guarantee it hasn’t happened before.
Does the Facebook #StopHateForProfit boycott’s minimal impact signify monopoly power? Zuckerberg says no.
Despite its prominence in national headlines, the #StopHateForProfit boycott was only the topic of discussion a handful of times. With each line of questioning, Zuckerberg remained Facebook’s position:
Facebook does not benefit from hate speech’s presence on the platform and is working diligently to remove all instances of it via AI and other moderation tools.
Facebook has met with the organizers to hear their demands but persists that Facebook’s policies will not be shaped by revenue-based pressure but instead via consumer interests and needs.
It’s no secret that Big Tech companies are facing a multitude of complex challenges across social and political bounds, including threats of election interference, misinformation, predatory business practices, alleged bias, IP theft, and content moderation concerns, to name a few. While important issues, lawmaker questions circling these unrelated issues took up a considerable amount of time during the hearing, muddying the waters for spectators on what constitutes anti-competitive practices and what does not.
(It’s for this very reason (tech’s influence across varying aspects of society) that these same companies are facing numerous investigations by the Federal Trade Commission, Department of Justice, state governments, and antitrust investigators).
According to an analysis by The Information, over a third of the questions by congressional lawmakers concerned subjects other than antitrust. Out of the 216 questions, Zuckerberg took on the most, while Cook had only 31 directed his way.
Source: The Information
By the numbers
30 questions regarding alleged political bias
17 questions about misinformation or hate speech
Six questions directed to the collective group of CEOs
One such example of unrelated commentary occurred early in the hearing as heated discourse ensued for several minutes around the role Twitter plays in information accessibility and potential bias against conservative voices. Despite being invited to attend, representation from Twitter was not present at the hearing to address the concerns/questions.
In comparison to confusing assertions in previous Big Tech antitrust hearings, lawmakers have grown substantially in their knowledge and comfortability in speaking to the digital landscape, with many Congressional representatives, such as Pramila Jayapal (D-WA), challenging the CEOs with questions around ad exchanges, copying competitors, and third-party seller data.
As detailed by Stratechery, public perception surrounding technology companies is vastly different than critics might believe, further complicating investigations and attempts for lawmakers to interfere (regulate or undo prior acquisition or mergers) on the grounds of anti-competitive practices.
“Tech is popular, has proven to be indispensable over the last six months in particular, and [as we see with allegations surrounding TikTok] is a critical national security concern.” — Ben Thompson, Stratechery
In its annual survey, The Verge outlines how influential Big Tech companies are within society as well as their favorability ratings.
Source: The Verge
And Big Tech knows this and made a point to reference public perception and consumer interests throughout the hearing plenty of times. Directly from Amazon’s opening statement, “eighty percent of Americans have a favorable impression of Amazon overall, according to leading independent polls. Who do Americans trust more than Amazon “to do the right thing?” Only their primary physicians and the military, according to a January 2020 Morning Consult survey.”
Delving further into maintaining the overtly positive public perception of Amazon, Apple, Facebook, and Google, each company made critical arguments identifying how its market position was the result of America’s innovation and is good for American consumers. These matters were underpinned by geopolitical tensions surrounding Chinese technology companies, counterfeit and stolen goods from national and international markets, allegations surrounding the theft of IP and company data, and international labor rights.
Diving into this issue further, interestingly enough, tech’s favorability hasn’t changed public opinion around these companies’ perceived market power.
Source: The Verge
All that to say, public trust and opinion are important to lawmakers but, as we know, are not the governing authority in matters concerning antitrust law. For this reason, the learnings from this hearing will serve as a determining factor in establishing whether or not the current framework surrounding US antitrust laws could be used to address the issues facing technology companies.
Unsurprisingly, public interest and conversation surrounding the issues in question swelled significantly leading up to the event, with total mentions up 1027 percent from 17k to 189k compared to the previous period, according to BrandWatch. Sentiment concerning the Big Tech hearing was largely neutral, with 52 percent categorized as neutral, 42 percent as negative, and six percent as positive.
Each company vehemently defended its practices and policies, but frustration around the technology companies was on full display, and lawmakers largely showed eagerness and support to continue their bipartisan work in identifying the best way to curb Big Tech’s power and influence on American society.
The pressures of the CEOs testifying jointly made it difficult for lawmakers to dig into any specific topic or issue. Instead, this testimony strategy was likely done to provide a sweeping analysis of how these companies operate at scale. Many of these companies’ biggest competitors are each other, providing lawmakers with further evidence that Big Tech may dominate certain corners of the digital market, but making a Big Tech ‘breakup’ that much more difficult.
In his closing remarks, Chairman Cicilline confirmed that based on the subcommittee’s yearlong investigation and the findings of the day’s hearing, each big company (Amazon, Apple, Facebook, and Google) holds monopoly power. Some, he says, will need to be broken up, but all will need to be regulated.
Above all, he says, it’s evident that the current US antitrust framework is no longer operable. The committee will soon release a report on their findings from the investigation and outline its recommendations for what should be done next.
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An ever-present challenge to lawmakers and investigators alike will be untangling issues that stem from these companies varying business units and identifying swimlanes for addressing concerns around free speech and libel, anti-competitive practices, and consumer privacy via the multiple investigations being conducted. PMG teams are keeping a close eye on the developments and implications surrounding these issues and will continue to share updates as we learn them in the months to come.
Posted by Abby Long
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