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Laurie Clarke

Reporter

What to expect in Big Tech’s antitrust trial

Today, Big Tech’s four horseman of the advancing apocalypse – Facebook, Amazon, Google, Apple – will stand before Congress and attempt to argue that they have not become too big to fail.

The hearing is the culmination of a year-long investigation carried out by the antitrust panel of the House Judiciary Committee, during which time it has accumulated 1.3 million documents from the testifying companies and conducted hundreds of hours worth of interviews. Facebook CEO Mark Zuckerberg, Alphabet CEO Sundar Pichai and Apple CEO Tim Cook have already faced Congress under different circumstances, while CEO of Amazon Jeff Bezos is making his Congressional debut.

Big Tech has repeatedly been lambasted over potentially anti-competitive behaviour – mergers, acquisitions and stifling the little guys. For the past few years there have been calls to break up the bloated oligopoly that dwarfs and dominates the technology sphere. But this is the first time the executives will face a public interrogation over their organisations’ alleged abuse of market dominance.

Ahead of the hearing, the four companies’ CEOs released prepared statements that they will read to Congress. Some chose to tug on heart strings with a personal sob story (Pichai and Bezos), while others cleaved closer to their company’s heroic origin story. All had to execute the balancing act of championing their wild success with the caveat that they are actually also smaller and more harmless than we might think.

In addition to antitrust matters, American commentators have predicted that Republican representatives on the committee will try to manoeuvre the conversation to the matter of online speech, and level the charge that companies like Facebook and Google exhibit an anti-Republican bias in their speech moderation policies.

Following this hearing, the committee will publish a report outlining how the companies have avoided liability under current antitrust laws because those laws are inadequate to police the tech industry’s behaviours today.

While unlikely to directly lead to any further regulation, the Congressional hearing could be an important step towards introducing greater antitrust regulation for the four giants.

Amazon

The name ‘Amazon’ crops up a lot in antitrust circles. The company’s treatment of third party sellers on its platform has repeatedly been denounced. Last year, Amazon’s associate general counsel Nate Sutton denied that the company accesses sales data from sellers. However, a few months ago, the Wall Street Journal tore this denial apart. An investigation reported that in fact, employees used independent seller data (like sales and profit margins) to inform the development of Amazon’s competitor products.

In his eight page prepared testimony, Jeff Bezos starts off seemingly eager to play the sympathy card. In a lengthy address that could be confused for an X-Factor introduction speech, he spoke at length about his “mom” who had him at 17 years old and his adoptive dad, a Cuban immigrant. “She would show up with two duffel bags – one full of textbooks, and one packed with diapers, bottles, and anything that would keep me interested and quiet for a few minutes,” he writes of his mum’s pursuance of academia following his birth.

The rose-tinted personal history gives way to a gushing monologue about Amazon, stuffed with empty platitudes like “we try to make Amazon the best place in the world to fail”. Even one star reviews are recast as the glowing affirmations of the company’s opportunity to evolve: “customers are always beautifully, wonderfully dissatisfied”, Bezos writes.

But while championing Amazon’s success and apparent $270bn investment in the US over the last decade, Bezos also outlines why Amazon shouldn’t face antitrust action. “The global retail market we compete in is strikingly large and extraordinarily competitive,” he says. “Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, there’s room in retail for many winners. For example, more than 80 retailers in the U.S. alone earn over $1 billion in annual revenue.”

He also claims that Walmart is much larger – “a company more than twice Amazon’s size”, adding “customers are increasingly flocking to services invented by other stores that Amazon still can’t match at the scale of other large companies, like curbside pickup and in-store returns”, as well as “new competition from the likes of Shopify and Instacart”.

Bezos notes that “Amazon’s success depends overwhelmingly on the success of the thousands of small and medium-sized businesses that also sell their products in Amazon’s stores”,  but doesn’t address the WSJ‘s reporting – an area he will likely be probed on.

Apple 

Apple is facing US and EU antitrust probes over its app store policies, that see it collect a flat 30 per cent rate from payments made through the store – a figure that House Committee chair David Cicilline has called “unconscionable”. He told the Verge: “It’s crushing small developers who simply can’t survive with those kinds of payments. If there were real competition in this marketplace, this wouldn’t happen.”

Tim Cook will attest that 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,” he writes in his opening statement.

Cook claims that for a “vast majority of apps”, developers keep all of the profits for each sale, and “the only apps that are subject to a commission are those where the developer acquires a customer on an Apple device and where the features or services would be experienced and consumed on an Apple device”.

“Apple’s commissions are comparable to or lower than commissions charged by the majority of our competitors,” Cook writes. “And they are vastly lower than the 50 to 70% that software developers paid to distribute their work before we launched the App Store.”

Alphabet

Alphabet, which owns Google and YouTube, has faced scrutiny over promoting its own services and products over others in areas such as shopping, mapping, and local review services. It’s also been alleged that Google exploits its dominance in search to distort the adjacent market of display advertising – damaging publishers, advertisers and consumers in the process.

Like Bezos, Pichai will begin with a personal introduction, writing in his pre-prepared statement: “I didn’t have much access to a computer growing up in India. So you can imagine my amazement when I arrived in the U.S. for graduate school and saw an entire lab of computers I could use whenever I wanted.”

Pichai champions Google’s role as “the world’s biggest investors in research and development” but cautions that “Google’s continued success is not guaranteed”. 

“Google operates in highly competitive and dynamic global markets, in which prices are free or falling, and products are constantly improving. Today’s competitive landscape looks nothing like it did 5 years ago, let alone 21 years ago, when Google launched its first product, Google Search.

“For example, people have more ways to search for information than ever before — and increasingly this is happening outside the context of only a search engine.”

He argues: “A competitive digital ad marketplace gives publishers and advertisers, and therefore consumers, an enormous amount of choice. For example, competition in ads — from Twitter, Instagram, Pinterest, Comcast and others — has helped lower online advertising costs by 40% over the last 10 years, with these savings passed down to consumers through lower prices.”

Facebook

Facebook’s routine acquisitions of companies perceived to be competitors – for example, Instagram, WhatsApp and Giphy – is likely to come under the spotlight in today’s hearing.

In the company’s defence, Zuckerberg plans to say: “Our acquisitions have helped drive innovation for people who use our own products and services and for the broader startup community. Acquisitions bring together different companies’ complementary strengths.”

He’ll also tap into the groundswell of fear over China and its fast-track to tech dominance: “China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries,” his statement reads. “As Congress and other stakeholders consider how antitrust laws support competition in the U.S., I believe it’s important to maintain the core values of openness and fairness that have made America’s digital economy a force for empowerment and opportunity here and around the world.”