Five takeaways as panel grills tech CEOs

Lawmakers have collected a lot of info from Big Tech’s competitors

The subcommittee’s in-depth information gathering – which involved reviewing more than a million documents and hours of interviews – paid dividends during Wednesday’s testimony.

Internal communications were brought up multiple times to stop the executives from dodging topics and to paint them into corners.

In one early exchange, House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) questioned Zuckerberg over internal emails with former Chief Financial Officer David Ebersman discussing Facebook’s potential acquisition of Instagram in 2012.

According to the emails, first reported by The Verge, Zuckerberg wrote that his motivation for acquiring Instagram was a “combination” between goals Ebersman had previously listed to “neutralize a potential competitor” and to “integrate their products with ours in order to improve our service.”

Rep. Lucy McBath (D-Ga.) at another point during the hearing used an internal document from Apple executive Phil Schiller to press Cook on promoting the company’s proprietary screen time app while removing competitors.

Several questions aimed at Amazon cited interviews with third party sellers on the platform, while Rep. Mary Gay Scanlon (D-Pa.) hit Google on ad targeting children, citing several reports.

The targeted questioning points toward a well crafted case by the subcommittee, and illustrated Congress’s tightened focus on tech companies.

Bezos’s first hearing

Wednesday was Bezos’s first appearance before Congress, and despite not being asked questions early on, he came under heavy questioning.

Bezos faced repeated questions about Amazon’s dual role as a marketplace and a provider of goods, as Democrats on the panel zeroed in on whether the company used third-party seller data to make competing products.

The most critical questioning came from Rep. Pramila Jayapal (D-Wash.), whose Seattle-area district contains Amazon’s headquarters. In response to a repeated line of question on its use of nonpublic third-party seller data, Bezos said that Amazon had a policy prohibiting such practices.

“But I can’t guarantee you that that policy has never been violated,” Bezos added.

Bezos later acknowledged that Amazon may use “aggregated” data from as few as two sellers while facing questioning from Rep. Kelly Armstrong (R-N.D.).

Rep. David Cicilline (D-R.I.), the chairman of the subcommittee, also questioned whether it was an inherent conflict of interest for Amazon to produce and sell products that compete directly with third-party sellers, “particularly when you, Amazon, set the rules of the game.”

“No, I don’t believe it is,” Bezos responded. “We have … the consumer is ultimately the one making the decisions about what to buy, what price to buy it at, who to buy it from.”

Bezos, the world’s richest man, argued that Amazon was a mere competitor in a “strikingly large” global retail market. He also argued that Americans benefited from small companies and big companies like his own.

“There are things small companies simply can’t do. I don’t care how good an entrepreneur you are, you’re not going to build an all-fiber Boeing 787 in your garage,” Bezos said.

But lawmakers pressed Bezos on whether Amazon was performing in anti-competitive ways while continuing to grow in size. Rep. Hank Johnson (D-Ga.) said that as part of the committee’s probe, some third-party sellers had told lawmakers the company used knockoff products to make other businesses do what “Amazon wants.” Bezos said he would look into the allegations.

The Amazon CEO also acknowledged that the Amazon Echo, its smart home device, may sometimes be sold below cost, which Rep. Jamie Raskin (D-Md.) said made it “nearly impossible” for other businesses to compete.

The questions from the representatives suggested that lawmakers are most focused on allegations that Amazon has used third-party seller data to make competing products. Bezos said during his testimony that the company was looking into the matter and committed that he would share its findings with the committee, including circumstances regarding when it uses aggregated data.

Republicans steer discussion away from antitrust

Rep. Jim Sensenbrenner (Wis.), the top Republican on the antitrust subcommittee, said in his opening statements that “being big is not inherently bad” and he was more concerned with the potential censoring of conservatives on their platforms.

Nearly every other Republican member of the subcommittee followed suit.

“Since the start of this investigation we’ve heard grumblings from people who say your companies have grown too large,” the Wisconsin congressman said. “[W]hile I find these complaints informative, I don’t plan on litigating these complaints today.”

Rep. Jim Jordan (Ohio), the Republican ranking member of the House Judiciary Committee, also began his opening statements by asserting “Big Tech is out to get conservatives.”

The lawmaker listed a series of cherry-picked instances where social media companies, primarily Twitter, have removed certain content that violated their user guidelines, arguing that they are participating in systemic censorship.

Twitter CEO Jack Dorsey was not present at the hearing, as the company has faced less scrutiny over antitrust than those that were present, though Jordan pushed for him to testify.

Jordan later asked all four CEOs what they thought about so-called cancel culture, using the example of Bari Weiss, a former New York Times opinion editor who resigned after the newspaper’s opinion section faced scrutiny.

The executives skirted the question, with Zuckerberg saying he’s worried about forces “pushing against free expression” and Bezos calling social media a “nuance destruction machine.”

Jordan responded by saying “it sure would help” if the CEOs publicly denounced the behavior.

Rep. Greg Steube (R-Fla.) suggested that Google’s Gmail service was biased against his campaign and those other Republicans, telling Google’s Pichai that sometimes his campaign emails arrive in spam folders.

Steube later asked Pichai why he was unable to immediately reach the conservative news site Gateway Pundit on Google search two months ago, but was able to reach it this week after the hearing was scheduled.

Reps. Matt Gaetz (R-Fla.) and Ken Buck (R-Colo.) both asked Google about why it pulled back from consideration for a Pentagon contract.

While some questions about market power were posed, Republicans appeared less interested in gathering evidence for the upcoming antitrust report than their colleagues across the aisle.

CEOs get different levels of attention

The hearing Wednesday marked the first time Bezos testified before Congress, with many predicting he would be a focus of questioning.

However, according to The New York Times, Zuckerberg was questioned just slightly more than the other tech CEOs, with Cook questioned the least.

Pichai was questioned almost as many times as Zuckerberg, with Bezos a close third. Zuckerberg was heavily questioned by lawmakers despite having appeared before Congress during a House Financial Services hearing that focused on Facebook cryptocurrency project Libra in late 2019.

Pichai and Zuckerberg fielded most of the early questions during the hearing, with Pichai questioned over Google’s content policies and potential ties to the Chinese government, and Zuckerberg questioned over allegations of conservative censorship.

The majority of Pichai’s questions came from Republicans, including those around potential anti-conservative bias, while Bezos faced almost exclusively questions from Democrats.

Zuckerberg also faced more questions from Democrats, including those on how Facebook has taken steps to limit foreign election interference and root out hate speech.

Cook received the least questions, with a few more Democrats than Republicans raising concerns about whether apps were approved fairly across the board.

This could be a turning point

Congress’s previous attempts to question tech companies have been derided for lawmakers’ lack of subject knowledge.

Zuckerberg’s response to former Sen. Orrin Hatch’s (R-Utah) question about how Facebook is free – “Senator, we sell ads” – has been printed on shirts, while other lawmakers have been ridiculed for asking questions about other company’s products.

Wednesday’s hearing was a big break from that tradition. Members of the subcommittee asked pointed, well-researched questions and gave CEOs minimal opportunities to dodge touchy subjects with strong follow-ups and use of documents collected during the investigation.

Sarah Miller, director of the anti-monopoly American Economic Liberties Project, noted Wednesday that the hearing “has been one of the most remarkable things I’ve witnessed in politics.”

“Members are deeply educated about complex issues of market structure and corporate behavior,” she tweeted.

The subcommittee is likely to release its report last this year, which could come around the same time that the Department of Justice, Federal Trade Commission and state attorneys general all also wrap up their investigations into Big Tech companies.

The next few months could represent a sea change in how Washington interacts with Silicon Valley.

Courtesy/Source: The Hill