The House antitrust subcommittee just concluded the highest-profile hearing into antitrust and competition since the 1970s. I wrote on Tuesday that the long-awaited hearing with the CEOs of Amazon, Apple, Facebook, and Google was more a test of Congress than of the tech leaders. So, how’d they do? Now that the hearing is over—it lasted some five and a half hours—I’m inclined to give the lawmakers something like a B-minus. With the notable exceptions of Republicans Jim Jordan and Matt Gaetz, who relentlessly flogged the hobbyhorse of supposed anti-conservative bias on the tech platforms, the committee proved that this is a serious and legitimately bipartisan investigation. But the hearing also illustrated how complicated the cases against these companies are, and how difficult they are to make in the brief sound bites that form the basic currency of American political debate.
The hearing was the last step before the subcommittee issues its final report, capping an investigation that began in June 2019, and it provided the first substantial taste of the fruits of that investigation. The members hit the CEOs with powerful evidence of alarming conduct by their companies, culled from explosive internal documents that are now part of the congressional record.
It took the lawmakers an oddly long time to get to Amazon founder and CEO Jeff Bezos, who was giving his very first congressional testimony. But once they did, they landed some of their hardest hits. The subcommittee presented internal emails showing that, in 2009, the company deliberately began selling diapers at a loss in order to price Diapers.com out of the market and force the company to accept a takeover—after which Amazon raised diaper prices back up. One email baldly declared that “these guys are our #1 short term competitor … [W]e need to match pricing on these guys no matter what the cost.” The documents revealed that Amazon was willing to lose an astounding $200 million to execute the strategy. Temporarily selling products at a loss in order to drive out the competition is illegal.
Lawmakers also grilled Bezos over myriad allegations of Amazon mistreating third-party sellers on its platform. In a particularly awkward exchange, Washington congresswoman Pramila Jayapal got Bezos to admit that he can’t guarantee that the company hasn’t violated its policy against using third-party seller data to inform and market its own private-label products. Like Amazon, Apple also took heat for alleged unfair treatment of third parties, specifically developers who are at Apple’s mercy if they want to reach iPhone customers through its App Store. But because the juiciest revelations concerned the other companies, Tim Cook mostly managed to fly under the radar.
Overall, the subcommittee managed to highlight a number of clear instances of the four companies buying up the competition to make themselves stronger or discriminating against rivals on their own platforms. Where they struggled, however, was in linking those two things—making the case that the rise of monopolies and the loss of genuine competition have broadly harmful consequences.
The starkest example of this came with Facebook. It was clear heading into the hearing that the main line of attack against Mark Zuckerberg’s company was going to be the way it has bought up growing rivals to secure its market dominance. On that score the subcommittee could hardly have nailed Facebook more. It introduced some truly stunning documents, including emails in which Zuckerberg openly discussed buying Instagram and WhatsApp in order to keep them from eating into Facebook’s business. “One thing about startups,” he wrote back in 2012, “is that you can often acquire them.”
Legally speaking, this is damning stuff. The Clayton Act of 1914, the main federal antitrust statute, explicitly prohibits corporate acquisitions if “the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.” As Jerrold Nadler, the chairman of the House Judiciary Committee of which the antitrust subcommittee is a part, put it, referring to the Instagram deal, “This is exactly the type of anticompetitive acquisition that the antitrust laws were designed to prevent.” (Zuckerberg, for his part, pointed out correctly that the Federal Trade Commission waved the Instagram acquisition through. Subcommittee chairman David Cicilline retorted, “I would remind the witness that the failures of the FTC in 2012, of course, do not alleviate the antitrust challenges the chairman described.”)
But while the subcommittee made a devastating case that Facebook deliberately suppressed competition, what was less clear was why it matters. One goal of a public hearing is to win over the public, and the average American might not care one way or the other whether Instagram is a part of Facebook or a rival to it. By the same token, the subcommittee members raised a litany of issues, but didn’t always tie them back to questions of size or competition. If Google encourages YouTube advertisers to microtarget children, or Amazon allows counterfeit goods on its platform—to pick two of the many accusations made against the companies—well, those are bad things, but they don’t obviously stem from the companies’ size. Small companies do bad things, too.
There were a few moments, however, when the subcommittee members did manage to draw out the link between monopoly power and more direct harms. One of the most impressive lines of questioning came from Florida congresswoman Val Demings. Demings noted that when Google bought DoubleClick, at the time the largest publisher-side digital ad platform, in 2007, it promised the government that it would never merge its own data on users with DoubleClick’s. In 2016, however, the company reneged on that promise—“essentially destroying anonymity on the internet,” according to Demings. Then she carefully drew the connection between that move and Google’s unrivaled place in the digital market.
“In 2007, Google’s founders feared making this change because they knew it would upset their users—but in 2016 Google didn’t seem to care,” she said. The difference, she argued, was that by 2016, Google controlled so much of the market that it could afford to violate customers’ preferences. “Isn’t it true that what changed between 2007 and 2016 is that Google gained enormous market power, so that while Google had to care about user privacy in 2007, it no longer had to in 2016?” Pichai had no real answer for this, other than to repeat the company line that users have control over how their data is used.
Demings’ question was the clearest articulation of the theory of the case underlying the entire investigation. The basic premise of antitrust is that, in a capitalist economy, we want businesses to get ahead by competing to offer some combination of the best products, the best service, and the best price. What we don’t want is for a company to get so big, to crush or absorb the competition so thoroughly, that it can stop caring as much about what the customer wants without jeopardizing its profits.
At another moment, Cicilline zeroed in on the link between Facebook’s monopoly power and its controversial content moderation track record. “Facebook hosts or enables countless pages and ads that are dedicated to conspiracy theories and calls to violence, including content that led to the white supremacist rally in Charlottesville in 2017,” he said. “And Facebook gets away with it because you’re the only game in town. There’s no competition forcing you to police your own platform.”
Let’s not get carried away: These rhetorical attacks didn’t necessarily land. The format of the hearing—15 members of Congress trying to make various cases against four separate, sprawling business empires, trading off in five-minute intervals—made it hard to build momentum and easy for the executives to blather vaguely until they were saved by the bell. At one point, Jayapal heroically tried to explain how Google’s dominance of the digital advertising ecosystem harms publishers and advertisers. The fact that she cited a 437-page report and a 74-page law review article gives you a sense of how impossible that was to accomplish in five minutes.
So far I’ve been focusing on Democratic subcommittee members, but there were moments when Republicans shined as well. Kelly Armstrong, a freshman congressman from North Dakota, bowed briefly at the altar of anti-conservative bias, but he also zeroed in with highly substantive questions, including a detailed inquiry about Google’s decision to close YouTube’s advertising platform to any non-Google ad buying tools—a move Pichai claimed was about protecting user privacy. Armstrong accused Pichai of using privacy as a rhetorical shield. “What your company is really doing,” he said, “is using it as a cudgel to beat down the competition.” It’s the sort of thing that may be too wonky for the evening news, but it revealed real, in-the-weeds knowledge about how Google might be using its control of digital advertising to advantage itself.
Wednesday’s hearing was a major milestone for the House’s investigation, but far from the finale. Given the chaotic nature of the four-way hearing, it would be great to see separate one-on-one hearings with each CEO. But that’s unlikely. The next step is most likely the subcommittee’s final report, due out sometime in August or September. Wednesday’s hearing made clear that the report will have some real substance to it. Whether it will fire up the American public—or spur real governmental action—remains to be seen.