TR Daily Cicilline: Some Platform Firms ‘Need to Be Broken Up’
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Wednesday, July 29, 2020

Cicilline: Some Platform Firms ‘Need to Be Broken Up’

During a hearing today before the House Judiciary subcommittee on antitrust, commercial, and administrative law, the chief executive officers of Amazon, Inc., Apple, Inc., Alphabet, Inc., and Facebook, Inc., parried an onslaught of questions about their companies’ market power and use of it, as well as their content-mediation efforts.

The hearing, which was winding down in its sixth hour at TR Daily’s news deadline, was the sixth in a series of hearings on online platforms and market power, part of an investigation launched last year (TR Daily, June 3, 2019).

Democratic members focused more on the antitrust issues, and repeatedly brought up examples of information gathered from competitors to the large platform companies represented at the hearing that they viewed as anticompetitive actions.

In concluding remarks, subcommittee Chairman David Cicilline (D., R.I.) said that the companies represented at the hearing “have monopoly power. Some need to be broken up. All need to be properly regulated and held accountable.”

He said that the next step will be for the committee to “publish a report on the findings of its investigation.”

At one point while questioning Amazon CEO Jeff Bezos that “this investigation makes clear that Amazon’s operation of its platform is anticompetitive and Congress should do something about it.”

During his opening statement, Rep. Cicilline said that the investigation has revealed “common patterns and competition problems over the course of our investigation. First, each platform is a bottleneck for a key channel of distribution. Whether they control access to information or to a marketplace, these platforms have the incentive and ability to exploit this power. They can charge exorbitant fees, impose oppressive contracts, and extract valuable data from the people and businesses that rely on them.

“Second, each platform uses its control over digital infrastructure to surveil other companies—their growth, business activity, and whether they might pose a competitive threat. Each platform has used this data to protect its power, by either buying, copying, or by cutting off access for any actual or potential rival,” Rep. Cicilline continued.

“Third, these platforms abuse their control over current technologies to extend their power. Whether it’s through self-preferencing, predatory pricing, or requiring users to buy additional products, the dominant platforms have wielded their power in destructive, harmful ways in order to expand,” he said.

He also said that the effects of the COVID-19 pandemic could be greater concentration and consolidation of the economy. “As American families shift more of their work, shopping, and communication online, these giants stand to profit. Locally-owned businesses, meanwhile—mom-and-pop stores on Main Street—face an economic crisis unlike any in recent history,” he added.

In his opening statement, full Judiciary Committee Chairman Jerry Nadler (D., N.Y.) said, “While ultimately it is the responsibility of the antitrust enforcement agencies to enforce the law, Congress has an obligation to assess whether existing antitrust laws and competition policies—and the will to enforce those laws and policies—are adequate to address the competition issues facing our country, and to take action if they are found to be lacking.”

Subcommittee ranking minority member Jim Sensenbrenner (R., Wis.) took a different view.

In his opening statement, he said, “Being big is not inherently bad. Quite the opposite. In America you should be rewarded for success.”

“I want to leave here today with a more complete picture of how your individual companies use your power and what means for the American consumer,” he said during his opening statement,” he added.

During the question period, Rep. Sensenbrenner said, “Congress does a poor job in picking winners and losers.” He added, “I don’t think we need to change antitrust laws. What needs to change is enforcement of those laws.”

However, like many of his Republican colleagues, Rep. Sensenbrenner expressed concern about “reports that views, often conservative views, are censored” on social media platforms.

Rep. Jim Jordan (R., Ohio), ranking member of the full Judiciary Committee, voiced that concern more strongly. “Big tech is out to get conservatives. If it doesn’t end, there have to be consequences,” he said.

The CEOs emphasized in their prepared testimony the competition that they face and argued against the idea that they unfairly preference their own products, services, and content.

In his opening statement, Mr. Bezos said, “The global retail market we compete in is strikingly large and extraordinarily competitive. Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S.”

Sundar Pichai, CEO of Alphabet, parent of Google LLC, said, “Nearly one-third of small business owners say that without digital tools they would have had to close all or part of their business during COVID.”

Apple CEO Tim Cook said, “Apple does not have a dominant market share in any market where we do business. That is not just true for iPhone; it is true for any product category.”

Facebook CEO Mark Zuckenberg said, “For every dollar spent on advertising in the U.S., less than 10 cents is spent with us. … If we don’t keep innovating, some upstart will replace every company testifying here today.”

During the question period, Chairman Cicilline brought up allegations from the investigation that Google “systematically stole content” from various websites.

Chairman Nadler raised issues about Facebook’s acquisition of competitors and potential competitors.

This morning, former House Judiciary Committee ranking minority member Doug Collins (R., Ga.) sent a letter to committee Chairman Jerry Nadler (D., N.Y.) and antitrust subcommittee Chairman David Cicilline (D., R.I.) asking that the hearing be elevated to the full committee level so that committee members not on the subcommittee could question the tech CEOs.

“At the very least, those Members—like myself—who have been a part of this investigation from the start should be afforded the opportunity to continue participating on behalf of their constituents,” Rep. Collins said. “Therefore, as one of four Committee members that launched the Committee’s investigation into Big Tech’s dominance and its role in market competition, I am formally requesting that the Subcommittee allow me to question the witnesses at today’s hearing."

In a statement released this morning ahead of the hearing, Consumer Technology Association President and Chief Executive Officer Gary Shapiro said, “The companies testifying today have ushered an era of vibrant innovation—they are our nation’s newest crown jewel companies and the envy of the world.”

He added “These American companies deliver immense value to our nation—from developing products that American consumers love, to bolstering a vibrant industry responsible for record levels of R&D, to offering solutions to the COVID-19 crisis. And as their market values grow, so does the wealth of everyday Americans who own their stock through retirement plans, pensions or stock purchases. To be clear, these are companies that perpetuate the pro-consumer, antitrust values that have fueled U.S. innovation leadership and will help lead us out of this recession.”

Also commenting ahead of the hearing, TechNet President and CEO Linda Moore emphasized “the good work tech is doing that benefits our country. Most recently, tech has worked hard to provide job opportunities, telehealth and telelearning capabilities, and has kept businesses, families, and friends connected during the COVID-19 pandemic. Many of the large companies we see today started from humble beginnings and have gone on to create opportunities for thousands of employees and small businesses and serve millions of customers. In a dynamic economy, tech has empowered countless individuals to create new products that are shaping our future.”

Ahead of the hearing, FreedomWorks and the Committee to Unleash Prosperity submitted a joint brief arguing that U.S. dominance in the digital economy is essential to American prosperity and that “using antitrust to break up tech giants would be a terrible mistake.”

As the hearing was winding down, Sarah Miller and David Segal, the co-chairs of the group Freedom From Facebook & Google, said in a statement, “We applaud Chairman Cicilline, and Members on both sides of the aisle, for a serious and substantive hearing following a year-long investigation that has gathered over a million documents and emails. The hearing strongly advanced the case that Facebook and Google’s monopolies need to be broken up as members posed extremely detailed questions, based on collected evidence and documents, making clear that these companies knowingly violated antitrust laws. We look forward to the subcommittee’s full report and it is critical that today’s testimony and evidence is fully utilized by the DOJ, FTC, and state attorneys general in their investigations.” —Lynn Stanton, [email protected]

MainStory: FederalNews Congress InternetIoT MergersAntitrust Covid19

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