Congress grills Big Tech over competition, money and power

Politics
David Cicilline, Jim Sensenbrenner

Rep. David Cicilline, D-R.I., left, chair of the House Judiciary antitrust subcommittee, speaks alongside ranking member, Rep. Jim Sensenbrenner, R-Wisc., during a House Judiciary subcommittee hearing with representatives from major tech companies, Tuesday, July 16, 2019, on Capitol Hill in Washington. (AP Photo/Patrick Semansky)

Big Tech faced tough questions this week as federal lawmakers focused on issues of potentially anticompetitive behavior by technology giants and expressed bipartisan skepticism over Facebook’s plan for a new digital currency.

Companies such as Apple, Google, Facebook and Amazon have long enjoyed nearly unbridled growth and a mythic stature as once-scrappy startups — born in garages and a dorm room and a road trip across the United States — that grew up to dominate their rivals. But as they’ve grown more powerful, critics have also grown louder, questioning whether the companies stifle competition and innovation, and if their influence poses a danger to society.

Both Democrats and Republicans had grievances to air, even if there wasn’t much consensus on what to do about them.

A Tuesday afternoon panel of the House Judiciary Committee focused on whether it’s time for Congress to rein in these companies, which are among the largest on Earth by several measures. Central to that case is whether their business practices run afoul of century-old laws originally designed to combat railroad and oil monopolies.

For some legislators, mostly Democrats, those laws are in need of updates or at least more stringent enforcement. Ultimately such action could lead to breaking up big online platforms, blocking future acquisitions or imposing other limits on their actions.

Subcommittee chairman David Cicilline, a Rhode Island Democrat, charged that technology giants had enjoyed “de facto immunity” thanks to current antitrust doctrine, which typically equates anticompetitive behavior with higher prices for consumers. That allowed them to expand without restraint and to gobble up potential competitors, he argued, creating a “startup kill zone” that prevents smaller companies from challenging incumbents with innovative services and technology.

A panel of four mid-level executives from the companies countered that their firms continue to innovate, that they face vigorous competition on all fronts — including from one another — and, perhaps most of all, that they were not monopolists in any way, shape or form.

Facebook, for instance, has argued that it is not a monopoly because it has many competitors in businesses as diverse as private messaging, photo sharing and online advertising.

So Democratic Rep. Joe Neguse of Colorado asked Facebook’s head of global policy development, Matt Perault, to name the world’s largest social network by active users. (It is Facebook.) When Perault said he couldn’t, Neguse ticked off four of the six largest — Facebook, Facebook Messenger, Instagram and WhatsApp — and had Perault verify that all are owned by Facebook.

“We have a word for that and that word is monopoly, or at least monopoly power,” Neguse said.

The company representatives didn’t help their case by pleading ignorance on multiple occasions. Google’s director of economic policy, Adam Cohen, said he was “not familiar” with how much Google pays Apple for the right to supply the default search engine for Safari on iPhones. (Rep. Jamie Raskin, a Democrat from Maryland, said It was $9 billion in 2018 and $12 billion in 2019.) Cohen also said he was “not familiar” with allegations of widespread fraudulent listings on Google Maps.

Amazon also faced some pointed questioning. Cicilline asked Nate Sutton, an associate general counsel at the online retailer, whether it uses the data it collects about popular products to direct consumers to Amazon’s own in-house products.

Sutton said the company doesn’t use third-party sellers’ data to “directly compete” with them. Cicilline, affecting disbelief, twice reminded Sutton that he was under oath. “Amazon is a trillion-dollar company that runs an online platform with real-time data,” he said.

Expert witnesses suggested it might be time to reassess antitrust policy. Timothy Wu, a law professor at Columbia University who has advocated for more expansive antitrust enforcement, noted concerns about a fall in the number of startups being formed, and wondered aloud whether the U.S. will remain a place where startups thrive and launch new industries.

Fiona Scott Morton, a Yale economics professor, argued that stifled competition has hampered innovation and hurt both smaller businesses and consumers, who have no choice but to surrender their privacy and watch more advertising.

Others, mostly Republicans, rejected what they described as a big-is-bad approach in favor of keeping antitrust enforcers narrowly focused on protecting consumers when there’s clear evidence of harm such as price gouging.

Attorney Maureen Ohlhausen, a former Republican commissioner and acting chairwoman of the Federal Trade Commission, said the government can still protect against anticompetitive behavior without “reducing the focus on consumer welfare.” She warned against “drastic” steps such as breakups that carry “serious risk of doing more harm than good for competition and consumers.”

Earlier Tuesday, a Facebook executive appeared before a Senate panel to defend the company’s ambitious plan to create a digital currency and pledged to work with regulators to achieve a system that protects the privacy of users’ data. David Marcus, who leads the Libra project, faced sharp criticism from both Democrats and Republicans.

“Facebook is dangerous,” asserted Sen. Sherrod Brown of Ohio, the committee’s senior Democrat. Like a toddler playing with matches, “Facebook has burned down the house over and over,” he told Marcus. “Do you really think people should trust you with their bank accounts and their money?”

Republican Sen. Martha McSally of Arizona said “the core issue here is trust.” Users won’t be able to opt out of providing their personal data when joining the new digital wallet for Libra, McSally said.

Marcus returned to Capitol Hill on Wednesday to face grilling from House lawmakers.

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AP Business Writer Marcy Gordon contributed to this article from Washington.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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