Tech CEOs Testify On Capitol Hill: Top Democrat Says Companies “Do Whatever It Takes” To Crush Competition

By Ted Johnson, Jill Goldsmith

C-SPAN screenshot

UPDATED, 3:49 PM PT: The CEOs of Google, Facebook, Apple and Amazon are testifying on Capitol Hill on Wednesday, in an unusual hearing that reflects the extent to which lawmakers have focused their scrutiny on tech platforms.

Hollywood’s lobby in D.C. is mainly watching from the sidelines, even as it has a vested interest in a number of issues, but this hearing’s focus is on antitrust as a House Judiciary subcommittee continues its investigation of competition among the major platforms.

While studios have been critical of Google in particular for not taking greater action to curb piracy, and lately have called for more “platform accountability,” taking a public stance on the issue of antitrust is a bit of a wild card that actually may end up backfiring.

Still, if the investigation leads to changes in antitrust laws, that will be of keen interest to traditional media players who have lamented the Google and Facebook dominance in digital advertising.

In their prepared remarks, Google’s Sundar Pichai, Facebook CEO Mark Zuckerberg, Apple CEO Tim Cook and Amazon CEO Jeff Bezos each tried to make the case that they face robust competition. Pichai, for example, contended that Google’s search engine also faces competition from Amazon’s Alexa devices and search functions on Facebook and Twitter.

While Democrats on the House want the hearing to focus on antitrust, Republicans are likely to use the hearing to complain about what they see as bias against conservative voices.

A lot of the spotlight also is likely to be on Bezos, who is the world’s richest man and has never testified before Congress before. In his prepared remarks, he argued that Amazon “competes against large, established players like Target, Costco, Kroger, and, of course, Walmart — a company more than twice Amazon’s size,” he said.

The hearing will be chaired by Rep. Dave Cicilline (D-RI) who, in addition to being a frequent guest on cable news, also received a Screen Actors Guild card for playing himself on the TV series Providence.

Follow along for updates.

3:57 PM PT: “These companies as they exist today have monopoly power.” Cicilline concluded the hearing by giving a pretty clear idea of what the subcommittee will conclude when it completes its report on competition in the tech industry.

“This hearing made one fact clear to me — these companies as they exist today have monopoly power,” he said in his closing remarks. “Some need to be broken up; all need to be properly regulated and held accountable.”

He contended that Apple, Google, Facebook and Amazon have a “control of the marketplace” that “allows them to do whatever it takes to crush independent businesses and expand their own market power.”

The hearing veered off into all sorts of different issues, and not only because Republicans wanted to focus on alleged platform bias. Democrats also queried the CEOs extensively on the proliferation of hate speech.

As all over the map as the hearing could be, the CEOs were pressed, sometimes in specific detail, about their business practices. Zuckerberg and Pichai were most often on the defensive, Cook faced far less grilling and Bezos was the smoothest in his answers.

Lawmakers were most effective when drilling down on documents and testimony that the subcommittee already has obtained, some of which has been posted here. An example: Brian Warner, founder of a site called CelebrityNetWorth, said that Google’s dominance of search has made it impossible to innovate. “Run as far away from the web as possible,” he said. He said that his traffic has plunged as Google has “scraped” the information from the CelebrityNetWorth database so that it shows up in its search results with no attribution.

The CelebrityNetWorth example was the source of one of the more interesting moments of the hearing, particularly for independent content creators in the entertainment industry.

“Why does Google steal content from honest businesses?” Cicilline asked Pichai.

“With respect, I disagree with that characterization,” Pichai said, arguing that they see many businesses “thrive” on its platform.

But Cicilline said that there were “consistent” reports where Google “has stolen content to build your own business.”

3:49 PM PT: Jeff Bezos calls social media “a nuance destruction machine”: Rep. Jim Jordan (R-OH) tried to put the four CEOs on the spot — do they agree that so-called “cancel culture” is a problem? President Donald Trump and conservatives have emphasized what they see as an effort by those on the left to stifle alternative voices, whether it be on college campuses, at media outlets or on social media.

Jordan cited Bari Weiss’ resignation letter from opinion section of The New York Times, in which she wrote that “everyone lives in fear of the digital thunder dome.”

He said that Weiss was not even conservative but “center left,” and “the targets are anyone who disagrees with the mob.”

“I am very worried about the forces of illiberalism in this country that are pushing against free expression,” Zuckerberg said.

Bezos, meanwhile, took aim at social media, a sector in which Amazon has not been able to establish a significant footprint. “It appears to me that social media is a nuance destruction machine, and I don’t think that is helpful for democracy,” he said.

Jordan then referred to Apple’s famous 1984 ad, which ran during the Super Bowl that year.

“The point was, mob think, cancel culture, group think was not what this country was about, and we are seeing it play out every single day,” Jordan said, citing, as an example, attacks on Drew Brees for standing during the National Anthem.

He suggested that the tech CEOs could help in criticizing “what the cancel culture is doing to this country.”

“I thought we had a First Amendment, yet they constantly get attacked,” Jordan said.

But Jordan was equating “cancel culture” with the First Amendment, which protects citizens from government limits on speech and expression, not criticism from the Twitter mob.

3:02 PM PT: Zuckerberg pressed on why Facebook kept up coronavirus “cure” video: Republicans have been hammering tech CEOs for alleged platform bias against conservatives, and even citing the decision this week to pull a video in which a group of doctor tout hydroxychloroquine as a coronavirus “cure,” violating policies to curb misinformation related to the pandemic.

But Cicilline took an opposite approach. He asked what took Facebook so long to pull the video? He said that in the first five hours on Facebook, it racked up 20 million views and over 100,000 comments.

“We did take it down because it violates our policies,” Zuckerberg said.

“After 20 million people saw it over the period of five hours?” Cicilline responded. “Doesn’t that suggest…that your platform is so big that even with the right policies in place, you can’t contain deadly content?”

Zuckerberg said that he thinks they have a “relatively good track record” in taking down COVID-19 misinformation.

But Cicilline said that such misinformation was “only the tip of the iceberg,” suggesting that Facebook’s dominant market power has reduced the incentive for it to police misinformation, including conspiracy theories and threats of violence.

“Facebook gets away with it because you are the only game in town. There’s no competition forcing you to police your own platform,” he said.

2:30 PM PT: Zuckerberg questioned about Facebook ad boycott. Civil rights groups have waged a campaign to pressure advertisers to boycott Facebook, decrying what they see as insufficient action to remove hate speech from the platform.

The Stop Hate for Profit campaign has so far drawn more than 1,100 advertisers and organizations to forgo spending on the platform this month, according to Politico.

Rep. Pramilla Jayapal (D-WA) asked Zuckerberg whether the number of companies who have backed away from the platform concerns him.

“Of course we care, but we also are not going to set our content policies because of advertisers. I think that would be the wrong thing for us to do,” Zuckerberg said. He said that they are now at 89% of the hate speech removed “before anyone reports it to us.”

1:45 PM PT: Facebook targeted for undermining journalism jobs: The newspaper industry has long pinned part of the blame for its decline on the dominance of Facebook and Google in digital advertising.

In questioning Zuckerberg, House Judiciary Committee chairman Jerry Nadler (D-NY) went a step further. He said that a 2015 Facebook report showing high rates of video consumption cost hundreds of journalist their jobs, as publishers tried to “pivot to video” as a way to gain traction on the platform.

The problem is that the Facebook metrics were inflated. Nadler asked Zuckerberg whether he knew that before the initial figures were publicly released.

“No I did not, and we regret that mistake and put in place other measures since then,” Zuckerberg said.

Then Nadler asked, “What do you say to the journalists who lost their jobs because of Facebook’s deception?”

“Congressman, I disagree with that characterization,” he said.

1:24 PM PT: Bezos Says It “Wouldn’t Surprise Me” If Alexa Favored Amazon’s Own Products: Lawmakers ignored Jeff Bezos in the first part of the hearing, but he was much more of a target in the second.

That was especially the case when it comes to the issue of whether Amazon favors its own products at the expense of third party sellers on its platform.

Rep. Jamie Raskin (D-MD) asked Bezos whether Alexa, Amazon’s virtual assistant, has been trained to favor Amazon’s own products. He cited a New York Times report that when users place an order for batteries, they are asked if they want the Amazon brand.

“I don’t know if it has been trained that way,” Bezos said. “I am sure there are cases where we promote our own products. It wouldn’t surprise me if Alexa sometimes does promote its own products.”

More problematic for Amazon was a Wall Street Journal report in April that its employees used sales information from third party sellers on its platform to create their own private label products.

Bezos told Rep. Pramilla Jayapal (D-WA) that while they have a policy against using “seller specific data to aid our private label business, I can’t guarantee you that that policy has never been violated.”

Asked about the Journal report, Bezos said that they continue to look into it and “I am not satisfied that we have gotten to the bottom of it.”

He later faced contentious questions from Cicilline, who said that the committee had interviewed a number of small business owners who found themselves being burned by selling products on Amazon. He cited an apparel company that initial believed that Amazon was benefiting them but then realized that it was “ultimately going to be your downfall.”

“This is one of your partners. Why on earth would they compare you to a drug dealer?” Cicilline asked.

“”I completely disagree with that characterization,” Bezos said, insisting that their decision to allow third-party sellers on their platform was to benefit the consumer.

But Cicilline signaled that, when it comes to Amazon, the subcommittee was likely to find that it was “exploiting its monopolistic power” in a dual role as a seller and distributor.

12:21 PM PT: “Put your mask on!”: One of the more contentious moments of the day came as Rep. Jim Jordan (R-OH) made a show of trying to get Google’s Pichai to commit to not tailor its features to help Joe Biden and not try to use its search engine to silence conservatives.

Pichai tried to counter the premise of Jordan’s questions, before saying, “You have my commitment. It has always been true and we will continue to conduct ourselves in a neutral way.”

Then Rep. Mary Gay Scanlon (D-PA) took the floor and, in a jab at Jordan, said, “I would like to redirect your attention to antitrust law rather than fringe conspiracy theories.”

But Jordan then interjected, “Mr. chairman, we have the email, there is no fringe…”

Then Cicilline angrily banged the gavel and said, “You do not have the time. Please be respectful of the time. She controls the time.” Then Rep. Jamie Raskin (D-MD) yelled, “Put your mask on!” Jordan responded by saying, “Why would the deputy secretary of the treasury unmask Michael Flynn’s name.”

The hearing is supposed to be about antitrust, but at points it seems as if it has been anything but.

11:49 AM PT: Zuckerberg grilled on rationale for buying Instagram: The hearing has touched on issues of platform bias, misinformation and Russian election interference, so it may be easy to forget that the event is part of a House Judiciary antitrust investigation.

There was one noteworthy moment, though, when House Judiciary Committee Chairman Jerry Nadler queried Zuckerberg on Facebook’s intent when it bought Instagram, an acquisition that got the government’s green light but has been an ongoing source of concern that it only gave the social media site even greater market power.

Nadler cited documents from 2011 in which he described Instagram as a “threat” and that “Instagram can meaningfully hurt us without becoming a huge business.”

“Did you mean that consumers might switch from Facebook to Instagram?” Nadler asked.

“In the space of mobile photos and camera apps, which was growing, they were a competitor,” Zuckerberg said.

Then Nadler asked him about another comment that Zuckerberg made back then, that the purpose of the deal was to “neutralize” a competitor.

“Congressman, whose aren’t my words, but yes, I have been clear that Instagram was a competitor, in the space of mobile sharing,” he said, while defending the purchase as “wildly successful” given Instagram’s growth.

But Nadler insisted that Zuckerberg had said that he wanted to “neutralize” a competitor. “If this wasn’t an illegal merger at the time of the transaction, why shouldn’t Instagram be broken off into a separate company?”

Zuckerberg said that the FTC still approved the merger.

“With hindsight it probably looks obvious that Instagram would have reached the scale it has today, but at the time it was far from obvious,” he said, again citing the growth of the platform since it was acquired by Facebook.

But Nadler said that based on the documents obtained by the committee and “by Mr. Zuckerberg’s own admission, Facebook saw Instagram as a threat that could potentially siphon business away from it.

“So rather than compete with it Facebook bought it,” he said. “This is exactly the kind of antitrust acquisition that the antitrust laws were designed to prevent. This should not have happened in the first place. It cannot be permitted to happen and it cannot happen again.”

The committee posted the documents on Twitter.

Later, Rep. Pramilla Jayapal (D-WA) asked Zuckerberg has attempted to “clone” the products of another company while also attempting to acquire the company.

“Not that I would recall,” he said.

She then reminded him that he was under oath, and cited documents that shows that Facebook began developing a similar product called Facebook Camera.

Jayapal then asked him whether they used Facebook Camera to “threaten” Instagram’s founder, Kevin Systrom.

“I am not sure what you would mean by threaten,” he said, adding that it was not a secret what Facebook was creating.

But Jayapal, citing documents and testimony obtained by the subcommittee, said that Systrom took it as a threat and “felt you go into destroy mode if he didn’t sell Instagram to you.” She also cited a similar instance with Snapchat.

Zuckerberg said that he did not view the conversation as a threat.

“You have used Facebook’s power to threaten smaller competitors and ensure you always get your way,” Jayapal said.

 

10:36 AM PT: Republicans try to steer hearing to tech bias: Not much of a surprise that Republicans are trying to steer the topic of the hearing to claims that major platforms are biased against conservative voices.

“Ill just cut to the chase: Big tech is out to get conservatives,” Rep. Jim Jordan (R-OH), the top Republican on the Judiciary Committee, said before outlining a litany of instances where he said that platforms have stifled voices on the right.
But in previous hearings, executives from Google and Facebook have pushed back on the idea that their platforms are systemically biased in the way that they carry out their policies, even though Republicans have seized on individual examples. By one measurement, of the top performing links, conservative voices rank in the top ten.
One of Jordan’s recent examples was an instance in June, when Amazon-owned Twitch temporarily suspended a Donald Trump campaign account. At issue were clips of Trump that Twitch concluded was “hateful conduct.”
Jordan complained that Democrats on the committee rejected their request that the hearing also include the CEO of Twitter. When the platform began putting fact-check links on some of Trump’s tweets, the president issued an executive order aimed at limiting the scope of social media platforms’ liability protection for third-party content. Twitter was not invited, as it is much smaller than the other platforms.
In a contentious moment, Democrats blocked Jordan’s effort to let Rep. Mike Johnson (R-LA), participate in the hearing, even though he is not a member of the subcommittee.
Later, Rep. James Sensenbrenner (R-WI), the top Republican on the antitrust subcommittee, took issue with the decision by Facebook, Google’s YouTube and Twitter to remove a video this week in which a group of doctors claim that hydroxycholoroquine can be a “cure” for the coronavirus and that masks are not needed.
But Sensenbrenner asked Zuckerberg about a step that Twitter took, which was to temporarily suspend the account of Donald Trump Jr. for posting the video clips.
Sensenbrenner said that he personally would not take hydroxychloroquine, but said that it was a “legitimate matter of discussion” as to whether it is an effective coronavirus treatment.
“What you may be referring to happened on Twitter, so it is hard for me to speak to that,” Zuckerberg said. But he said that Facebook prohibits content when “there is a legitimate risk of harm,” and “stating that there is a proven cure for COVID when there is in fact none, might encourage somebody to take something that could have some adverse effects.”
CEOs open with patriotic stories: Opening statements posted before the hearing began laid out preemptive storylines the four top execs hoped against hope might defuse some rancor from both sides of the aisle — from hard-knock childhoods to tiny companies that grew big American-style through innovation and grit. Patriotism was theme.
Bezos focused on humble roots with his mother a high school student in Albuquerque, New Mexico and his father a Cuban immigrant who arrived in the States alone at 16.

He said time spend on his grandfather’s Texas ranch taught him self-reliance. “When you’re in the middle of nowhere, you don’t pick up a phone and call somebody when something breaks. You fix it yourself,” said. As a teenager he became a garage inventor and “the concept for Amazon came to me in 1994. The idea of building an online bookstore with millions of titles.” He said initial seed capital for Amazon.com came primarily from his parents, “who invested a large fraction of their life savings in something they didn’t understand.”

“I told them that I thought there was a 70% chance they would lose their investment, and they did it anyway. It took more than 50 meetings for me to raise $1 million from investors, and over the course of all those meetings, the most common question was, “What’s the Internet?” Unlike many other countries around the world, this great nation we live in supports and does not stigmatize entrepreneurial risk-taking. I walked away from a steady job into a Seattle garage to found my startup, fully understanding that it might not work. It feels like just yesterday I was driving the packages to the post office myself, dreaming that one day we might be able to afford a forklift. Amazon’s success was anything but preordained.”

Lawmakers only just called on Bezos for the first time after nearly two hours of questioning mostly directed at Facebook ad Google.

Pichai said that “expanding access to opportunity through technology is deeply personal to me. I didn’t have much access to a computer growing up in India.”

Zuckerberg’s opening statement played up “significant competition” his company faces. “We compete against the companies appearing at this hearing, plus many others that sell advertising and connect people. We also compete globally, including against companies that have access to markets that we aren’t in. Our story would not have been possible without U.S. laws that encourage competition and innovation.”

“I understand that people have concerns about the size and perceived power that tech companies have. Ultimately, I believe companies shouldn’t be making so many judgments about important issues like harmful content, privacy, and election integrity on their own. That’s why I’ve called for a more active role for governments and regulators and updated rules for the internet. If we do this right, we can preserve what’s best about this technology — the freedom for people to connect and express themselves and for entrepreneurs to build new things — while also protecting society from broader harms.”

Cook called it “a uniquely American company” and defended the app store, which is under fire in the U.S. and Europe for squeezing developers with commissions. “After beginning with 50 apps, today the App Store hosts almost 1.7 million – only 60 of which are Apple software. Clearly if Apple is a gatekeeper, what we have done is open the gate wider.”

This article was printed from https://deadline.com/2020/07/tech-hearing-antitrust-google-amazon-apple-facebook-1202998439/