Why were the Tech Giants Rapped?
Online Platforms and Market Power, Part 6: Examining the dominance of Amazon, Facebook, Google and Apple
The hearing as titled above was called an evidentiary hearing. It’s a part of the Committee’s ongoing investigation of competition in the digital marketplace. Allegations like anti-competition practices and abuse of dominant positions in the digital marketplace were levied. The Antitrust Subcommittee of the US Congress has been gathering evidence since last year. The CEOs’ testimonies are “essential to complete this investigation”, Jerrold Nadler and David Cicilline have said. They are the chairmen to the Judiciary Committee and the Antitrust Subcommittee respectively.
Amazon is a Seattle-based company. It came under the radar for a multitude of anti-competitive activities. Even the European Union is to impute strong antitrust charges to the company. The incriminations range from side-lining its smaller rivals to stifling competition. The company used data of independent sellers on its platform so that it could manufacture its competing products. It would then give those products better visibility and promotion. This was the most solemn accusation. The company’s stance was that it didn’t entertain such practices. Bezos said that the company continues to compete against “large established players”. Amazon has tried to satisfy both the customers and third-party sellers. He clarified in his opening statement.
A top bookseller had been blocked on Amazon for no apparent reason. Bezos was also arraigned for the same. He answered embarrassingly to the accusation saying, he would like to speak to the seller. He agreed that it was no way to treat someone. This was after the audio was played where the seller herself narrated her ordeal.
Apple has been the subject of criticism for its App Store policies for a long time now. These are mostly allegedly aimed at fending off competing Software. The Company boasts of a 30% cut that it takes from the revenue of apps that sell digital goods. These also include apps that directly compete with Apple. This has nothing but disconcerted both the developers and customers. The Company was rapped for being the sole decision-maker about apps being made available to users through the Apple Store. It was accused of wielding “an enormous amount of power”. It is the only App Store available on 900 million I-phones worldwide. Tim Cook, who has been the CEO since 2011, defended the Company by saying it’s not a monopolist. He further argued that Apple does not have a domineering market presence regardless of where it does its business.
Facebook was dissected for its abuse of dominance in advertising. It was pulled up for slashing small outlets’ revenues or taking over start-ups to ward off competition. Not to mention that the company is already undergoing separate former investigations. Zuckerberg cryptically answered when he was asked about Facebook’s threats of cloning the products of the company it attempted to acquire. The company is referred to here was ‘Instagram’. The Committee placed reliance on the Company’s true documents for its accusations. Zuckerberg was accused of threatening Instagram’s Founder Kevin Systrom. Similar allegations were raised during the hearing with regards to ‘Snapchat’. Facebook had warned the Company’s Founder of cloning its features. This was again done while Facebook was attempting to buy it.
The largest online search engine was pulled up on several accounts. For instance, its dominance in search allowed it to regulate and watch the web traffic of competitors. Such information was dangerous. This is because its competitors then ended up ranking lower in search results. The Committee also discussed the 2010 incident of Google pocketing Yelp’s restaurant reviews. Google had used the same to bootstrap its own rival local search business. When asked by Yelp to stop doing so, Google threatened to de-list the company entirely.
Pichai addressed the concerns presented by the Committee in his opening statement. He said that competition has only helped lower the online advertising costs. The same has gone down by 40% over the last 10 years. These savings were only passed down to consumers through lower prices.
What does the future hold now?
The Digital leaders certainly took a crude political whipping on July 29. The Congress armed with millions of documents dissected the Big Fours of the online world. Democrats and Republicans alike arraigned the executives for weaponizing their omniscient online presence. The lawmakers firmly argued throughout the issues of self-preferencing and predatory pricing. These employed tactics made it difficult for small businesses to thrive. Much less succeed. They criticized. The bipartisan investigation is seeking an answer to the following question:
“Do U.S. Antitrust laws need to be overhauled?”
After what seemed like a never-ending confrontation, the Committee decided to publish a final report in a few weeks. This report will enunciate how these tech titans infringe anti-trust laws. It will also serve as a guide to these firms on how to fix all the violations. The report is expected to be released this fall.
“Our founders would not bow before a king. Nor should we bow before the emperors of the Online economy”, said Mr. David N. Cecilline, the Chairman of the Antitrust Panel.
Watch Full Senate Anti-Trust Hearing
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