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Historic hearing portends new era for Tech Titans

The government has awakened. No matter which mega-wealthy tech power broker you think did best at yesterday’s U.S. House Antitrust Subcommittee hearing, the central message to take away is that the era of disregard is over. Congresspeople, at least those on the now-ascendant Democratic side, showed consistently in their questions that they now have a deep understanding of the risks posed by many aspects of the behavior of Amazon, Apple, Facebook, and Google/Alphabet. Change is in the wind, and it won’t just be, as in the past, a fingers-crossed hope that self-governance will improve.

Up until now, Americans from kids to Congresspeople have generally been in awe of these digital colossi. And it remains true that almost all of us appreciate and depend on a vast range of their services. While that will not change, the questions and answers yesterday demonstrated that these companies, no matter their virtues, are engaging in systematic abuses of power which must, and will, be regulated.

Many of us knew of the abuses already. But what we witnessed in the past from Congress, notably in the Senate’s fitful grilling of Mark Zuckerberg in 2018, did not give assurance that our leaders had what it took to counterbalance the enormous power of these 21st century robber barons. Most famously, then 84-year-old Senator Orrin Hatch’s question about how Facebook makes money became symbolic of an out-of-touch government.

A lot has changed since then. The Obama administration’s overly-indulgent approach is gone. But probably more importantly, the power and reputation of the Republican Party has dramatically waned. In general, that party has been both forgiving of anything even remotely “businessy,” and recently dominated by either too-old or too-ideological leaders, many of whom even now appear incapable of focusing on the real risks posed by tech giants. The questions posed by Republicans during the hearings were mostly off-topic–focusing relentlessly on the supposed suppression of conservative speech–and often ludicrously shrill and even rude, in the case of Rep. Jim Jordan. With only a couple momentary exceptions, pretty much the only Republican who took a thoughtful stance and kept remarks on real antitrust topics was Ranking Member Rep. Jim Sensenbrenner of Wisconsin, a 41-year congressional veteran who is retiring at the end of this year. (The committee includes eight Democrats and five Republicans. The chair and ranking member of the House Judiciary Committee, Reps. Jerrold Nadler and Jordan, also participated.)

Now these House Democrats, many young and savvy, have studied up on what is really happening on these so-vast digital platforms. Since all four of these companies serve as conduits where buyers meet sellers in various ways, the central antitrust questions revolve around whether or not they are abusing the power that comes with that role. In all four companies, to one degree or another, yesterday we heard that the answer was yes.

The issue of how these companies use proprietary data they accumulate in the course of operating their platforms was front and center throughout the questioning by Democrats. It was, for example, very striking to see the role played by 54-year-old Rep. Pramila Jayapal, a longtime human rights activist whose district includes Amazon. She probed her constituent, CEO Jeff Bezos, with deft expertness, and little sympathy. She and others accused him of mistreating marketplace sellers so Amazon could benefit at their expense, often by copying or underpricing their products. Jayapal also skewered Facebook CEO Zuckerberg. In what for me was the single most compelling exchange of the day, she essentially got him to admit that Facebook both “copies” features of other companies in efforts to compete with them, and directly wields the threat that it will do so as a cudgel to try to induce competitors to sell to Facebook. Emails released by the committee substantiated the point. Rep. Nadler embarrassed Zuckerberg by citing some that showed him and colleagues seeking to acquire Instagram because they feared it could hurt Facebook, exactly the kind of thing antitrust law should restrict.

I was amazed that in The Information, writer Alex Heath opined that Zuckerberg fared best and Bezos worse. My impression was the opposite. While Bezos, too, faced solid and compelling evidence of his company’s unethical and probably illegal competitive behavior, especially regarding marketplace sellers and companies hosted on AWS, his manner was engaging and relatively undefensive. For him, so-secretive and almost never probed in public, this was a personal branding exercise for the world’s richest man as much as a chance to defend his company. While Amazon did not fare well, and almost certainly will eventually face new regulations to address harms identified here, Bezos made himself seem human and willing to engage with his critics. The same cannot be said of Zuckerberg, who came off, as he often does, as both wooden and intransigent.

I have generally not thought of Apple as a predatory monopolist, partly because I more or less agree with CEO Tim Cook’s point during the hearings that it does not dominate any market in which it operates. However, the evidence presented here, accumulated during the year of hearings and investigations leading up to yesterday’s session, was sometimes damning. Apple seems to have at least periodically abused its unilateral ability to approve or disallow any of the over 1.5 million apps in the company’s app store.

In general, the dings on Google presented here were generally not that compelling, though CEO Sundar Pichai’s low-key and sometimes too-deferential attitude did not always play well. One frequent line of questioning for him by Democrats was that Google’s search prioritization often hurts American businesses, notably larger ones like Yelp. Yelp’s complaints are legitimate. But Pichai replied, with some success, that the direct marketing opportunity Google offers for a vast number of small companies is a critical lifeline, especially now.

Major kudos go to Subcommittee Chair Rep. David Cicilline of Rhode Island, who has overseen a well-organized, methodical, and despite vastly divergent priorities, quite bipartisan investigation that turned up extensive evidence of harms.

Next is the question of what to do about it. That issue has and remains supremely vexing, given the central and often indispensable role these companies play in the American economy and the lives of Americans, and especially given how much Americans approve of them. Bezos’ opening statement noted that in 2018 Amazon was found to have more brand trust than any institution in the country aside from the military. (And among Democrats, even more than the military!)

Cicilline, in a short Axios podcast interview recorded immediately after the conclusion of the hearings, argued that Facebook needs to be broken up, and probably Amazon and Google do, too. Appealing as that may sound to some, it is both a non-starter and, for me, wrong-headed. What we need is oversight and regulation. One of the key issues I expect to emerge is the need for better rules and far more transparency relating to how these companies treat platform participants. One of the central outcomes of the long antitrust action against Microsoft in the 1990s was the imposition of a government-sponsored “special master” with access to internal deliberations. Some version of that may be needed at all these companies, possibly permanently.

Or maybe we need a new regulatory body specifically tasked with regulating and overseeing “digital platforms.” One issue that jumped out at me from the hearings was the problem of access—those who feel wronged by these platforms seldom have any recourse, or ability to even reach a human being, to complain or inquire. That applies to Amazon marketplace sellers as much as to Facebook users or Gmail customers. Apple is a dramatic exception. The ability to reach someone to help with problems may be, at least indirectly, one of the biggest reasons why it receives less opprobrium from pundits and the press than the other three.

But the time has passed when our love for these companies’ services blinds us to the risks they pose to capitalism and to democracy. This subcommittee’s work will resonate globally, as do the myriad impacts of these companies, both good and bad.

One Response to “Historic hearing portends new era for Tech Titans”

  1. Excellent synthesis and perspective. Thank you!

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