By Jeffrey May, J.D.
Democratic lawmakers question whether competitors exist for tech giants.
Representatives from Google, Amazon, Facebook, and Apple appeared before the House Judiciary Committee's Antitrust Subcommittee today to discuss competition in the tech sector. The hearing is the second in a series on the topic of online platforms and market power. The first hearing was held in June, and that hearing focused on a free and diverse press.
Rep. David N. Cicilline (D., R.I.), chairman of the House antitrust subcommittee, kicked off the hearing, entitled "Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship." He contended that Congress and antitrust enforcers allowed these companies to operate with little oversight in recent years, thereby preventing new tech start-ups from entering the market. Cicilline also expressed concern that the antitrust agencies have closely scrutinized only a handful of the hundreds of acquisitions in the sector and that the agencies’ policy decisions have created a de facto immunity for online platforms.
Cicilline asked each company representative to pledge that their firms would cooperate with the subcommittee’s efforts to investigate the sector. The chairman suggested that there were reports that an unnamed company had engaged in efforts, including the hiring of an opposition research firm, to aggressively impede the investigation.
Acknowledging that there might be genuine antitrust issues in the tech sector, Rep. Jim Sensenbrenner (R., Wis.), ranking member of the House Judiciary Committee’s antitrust subcommittee, said that it was necessary to take a serious look at allegations of wrongdoing. Responding to calls in some circles for breaking up the tech giants, Sensenbrenner cautioned against rushing to break up the tech companies simply because they were big.
First up to testify was Adam Cohen, Director of Economic Policy at Google. Cohen said in opening remarks that "sound regulatory frameworks help ensure our societies and economies continue to benefit from new technologies." Cohen pointed out that former Google employees have gone on to create thousands of tech start-ups that compete with established tech firms. He noted that Google faces competition from these emerging firms as well as large tech firms in a wide range of business activities.
Matt Perault, Head of Global Policy Development at Facebook, said Facebook faces intense competition for all the products and services that the company provides, including competition from Twitter, Snapchat, Apple, iMessage, Pinterest, Skype, Telegram, Viber, Google, YouTube, and Amazon. However, Rep. Hank Johnson (D., Ga.) took issue with this statement. Congressman Joe Neguse (D., Colo.) followed up pointing out that Facebook owned or controlled most of the top social media platforms, including WhatsApp and Instagram.
On hand to speak for Amazon, was Nate Sutton, the company’s Associate General Counsel for Competition. Like the other witnesses, Sutton said that his company faces intense competition from well-established competitors. Sutton drove home the point that "the technology used to provide a service, or the business model a company deploys, is not the primary consideration in determining the scope of relevant markets in antitrust analysis or a jumping off point for sectoral regulation." He added that "any legislation to regulate the relationship between suppliers and retailers should be done with the involvement of all relevant stakeholders and careful consideration for how each may be affected."
Sutton faced tough questioning about Amazon’s treatment of its sellers. Cicilline questioned whether Amazon’s "steady fee hikes" imposed on sellers reflect a pure exercise of Amazon’s buyer power. Sutton contended that fees had remained steady or slightly declined. Rep. Lucy McBath (D., Ga.) suggested that Amazon might be pricing below cost because it can absorb the losses.
Kyle Andeer, Chief Compliance Officer at Apple, said that Apple was a device company at the end of the day. He said that Apple competed with all of the companies on the panel in addition to dozens of others. A number of lawmakers’ comments about Apple focused on Apple’s App Store. In his opening statement, Andeer said the "App Store has been vibrant, competitive and ever-growing."
All of the company representatives, including Andeer, disagreed with a suggestion from Rep. Raskin (D., Md.) that tech companies have the ability to pick winners and losers. According to Andeer, there were more successful competitors "in each and every single market in which we compete, whether it’s music or books or video, there are companies that are far more successful on our platform than we are."
After a recess, a second panel featuring antitrust experts, including former officials from the antitrust agencies, was scheduled to continue providing testimony on the topic of the current state of competition in the digital marketplace.
Companies: Apple Inc.; Amazon Inc.; Facebook, Inc.; Google
MainStory: TopStory Antitrust
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