Tech giants CEOs grilled by US Congress ahead of possible SMP declaration

Over the course of a nearly six-hour grilling on Wednesday, the CEOs of FacebookAmazonApple and Google had to fend off inquiries from the US Congress about their data collection practices, disinformation miscues and efforts to stomp out competitors.

Mark ZuckerbergJeff BezosTim Cook and Sundar Pichai took turns in the hot seat, in an unprecedented hearing, and the questions came fast and sometimes furiously, chiding the companies for their offenses.

Now the real work begins, where the US government will sit and decide on potential regulations and laws to clip the wings of the tech giants in an effort to allow other industry players to survive.

Government will decide whether to name the four as significant market powers (SMPs) and then apply the necessary antitrust regulation to curtail their growth and give room for the small players to also come up.

This is similar to what happened in Ghana, where the Communications Ministry, after deliberating with MTN Ghana, decided that their size and growth compared to other players, require the need to ensure some balance in the market, hence the recent declaration of MTN Ghana as an SMP.

The hearing in the case of the four top global tech giants, was conducted by Congress’ Judiciary antitrust subcommittee, and the drama was dampened by the hearing’s virtual format amid the coronavirus pandemic, but it was still a lively political theater.

Rep. Jim Jordan questioned the CEOs about “cancel culture.” Rep. Jim Sensenbrenner mistakenly grilled Zuckerberg about an incident that happened on Twitter. Bezos committed the teleconferencing faux pas of talking while on mute.

Beyond the spectacle, though, regulatory and legislative reforms are tricky because there’s no silver bullet. All four companies are massively successful, but the competition issues they create are vastly different. With Facebook, officials are examining the company’s acquisitions of competitors like Instagram and WhatsApp. For Amazon, the big issue is the company’s private-label business, which sells Amazon brands of clothing, food and consumer goods. Apple has been scrutinized for the cut it takes from software developers on its App Store. For Google, the focus is mainly on the search giant’s dominance in digital advertising. No single rule, law or action will likely fix them all.

“The question is what can these hearings do to assist prosecutors — either state AGs, federal antitrust agencies or even private enforcers,” said Hal Singer, a senior scholar at the George Washington Institute of Public Policy. “What kind of evidence covered in this hearing could support those sorts of cases?”

‘A knife to a gunfight’

High-profile congressional hearings usually make good television, at least for policy wonks. The nitty-gritty, however, is conducted behind the scenes. Subcommittee aides have touted how deeply lawmakers have probed the tech ecosystem over the past year. The subcommittee sent out 93 requests for information and in response amassed a trove of more than 1.3 million documents from the four tech giants, their competitors and antitrust enforcement agencies. The lawmakers racked up more than 385 hours of calls, meetings and briefings. And they’ve held five other hearings, albeit without the star power of Wednesday’s gathering.

With the marquee hearing over, the subcommittee expects to finalize its report and release it in the coming months. The tech companies will also have to submit responses in writing to all the questions their CEOs couldn’t answer in the moment.

Of the various antitrust probes — from the Justice Department, states and lawmakers — the congressional investigation is the most important, says Andy Yen, CEO of ProtonMail, an encrypted email service based in Switzerland. ProtonMail has been battling Apple and Google over the 30% cut they take from services on their app stores. Yen said the subcommittee asked his company for documents during the Big Tech investigation.

Congress’ probe is critical, Yen says, because the only way to create meaningful change would be to pass new antitrust laws or update existing ones for the internet era. That way, federal and state officials would have a better framework for holding the tech giants accountable.

“Otherwise you leave the DOJ with very outdated weapons,” Yen said in an interview. “It’s like bringing a knife to a gunfight.”

Going forward, US lawmakers and regulators could follow the lead of European officials, who have aggressively tried to rein in the tech giants, says Frank Pasquale, a professor at Brooklyn Law School who studies antitrust law.

For example, the European Commission three years ago hit Google with a $2.7 billion fine for anticompetitive practices, especially when it came to the placement of Google’s shopping ads. Officials in the US could take similar action. Or they could adapt the model for other tech giants, he said, like when dealing with Amazon’s alleged preferred treatment of its own brands and products.

A looming challenge is actually enforcing competition regulations, Pasquale says. Part of that is a financial issue. Regulators would have to be at least as technically adept as people who work for the tech companies, which would require high salaries competitive with what they could make in Silicon Valley. Fines from the tech companies could help pay those salaries, Pasquale said. “There’s an appetite,” he said, adding that it will require resources and effort.

Rep. David Cicilline, who chairs the antitrust subcommittee, indicated that the panel’s work would continue, and he left little doubt that something needs to be done.

“These companies as they exist today have monopoly power,” Cicilline said at the close of the marathon session. “Some need to be broken up, all need to be properly regulated and held accountable. We need to ensure the antitrust laws, first written more than a century ago, work in the digital age.”


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