This article briefly discusses some of the key issues that were raised in the hearings held by the U.S. Antitrust Sub-Committee with the CEOs of Amazon, Apple, Facebook and Google.
The Antitrust Sub-Committee (“Sub-committee”) of the U.S. House Judiciary Committee conducted a hearing to examine the alleged dominance by Amazon, Apple, Facebook and Google (“GAFA Companies”) today. C.E.O.s of the GAFA Companies: Sundar Pichai (Google), Tim Cook (Apple), Mark Zuckerberg (Facebook), and Jeff Bezos (Amazon) were interrogated by the Sub-committee.
The hearings have been compared with the 1994 ‘Big Tobbaco’ hearing, where CEOs of US tobacco companies had controversially testified before a Sub-Committee on Health and Environment that ‘nicotine is not addictive’.
Key highlights of the hearing:
- On Amazon’s relationship with third-party sellers – Many instances of Amazon competing with third-party sellers on its platform were brought forth by the Sub-Committee. It was alleged that Amazon “undercuts the prices set by sellers” in order to promote its own products on its platform. Jeff Bezos stated that Amazon has helped many third-party sellers to grow over the years, he denied the use of such practices by Amazon.
- On acquisition of start-ups – Allegedly, Mark Zuckerberg designed a policy to acquire competitor companies and new entrants in the market by: (i) launching a rival product, and (ii) threatening them of “consequences” if they refused to be acquired by Facebook. Facebook’s acquisition of Instagram in 2012 was put under scanner. The Sub-Committee noted that instead of competing with Instagram, Facebook decided to acquire it. Zuckerberg stated that Instagram outperformed its potential, and achieved significant growth after partnering with Facebook.
- On Google’s advertisement business – It was alleged that Google enjoys a monopoly in the online ad space. Sundar Pichai agreed that Google made most of its revenue through advertising. It was alleged that Google had a 50-60% share in the ad-exchange market; and that Google controlled all entities relating to an ad-exchange. A member of the Sub-Committee stated that Google has been “running the (ad) marketplace, it’s acting on the buy side, and it’s acting on the sell side at the same time” which was a major conflict of interest. Allegedly, this allows Google to set extremely low ad rates, and this deprives newspapers and independent journalist of their ad revenue. Sundar Pichai stated that Google has been deeply committed to journalism and that it pays out 69% of its revenue to publishers.
- On Apple’s App Store – the Sub-Committee alleged that Apple gave preferential treatment to certain app developers by charging lesser commissions from them. Tim Cook denied the allegation, however, he agreed to the mandatory use of ‘Apple Pay’ for app listings on the App Store. Members of the Sub-Committee stated that the app developers are given ‘take-it or leave-it’ options by Apple, which is detrimental to the developer’s interests.
- On Google Search – It was alleged that several online businesses have accused Google of stealing content and benefitting from the stolen content. Sundar Pichai responded by stating that Google has been a supporter of small businesses and supports 1.4 million small businesses supporting over $ 385 billion in economic activity. The Chairperson of the Committee stated that Google claims to filter results as per “relevance”, however it shows whatever is most profitable for Google, via Google ads or Google’s own websites. Sundar Pichai stated that Google focuses on providing users the most relevant information according to users’ preferences. The Chairperson also alleged that Google used surveillance to identify its competitors, and ranked them down in search results. Sundar Pichai stated that Google understands trends from data, and it uses search data to improve user experience, he maintained that Google works according to user preferences.
- On Facebook’s ‘fact-check’ – Members of the sub-committee stated that platforms should not become “arbiters of truth”. Facebook’s take-down of information relating to COVID-19 treatment claims was questioned. Zuckerberg stated that Facebook has adopted flexible community standards, and it endeavours to stop the spread of misinformation through its platform. He also stated that Facebook has engaged independent fact checking agencies and has created its own team to curb misinformation.
- On Google’s presence in China – It was alleged that Google was aiding Chinese propaganda through its AI centre in China, and by collaborating with various Chinese universities. Sundar Pichai responded by stating that Google has a “limited presence” in China, and that it does not offer its primary products like Maps, Gmail, etc. to the Chinese market. The conservatives in the Sub-Committee came down heavily upon Google opting out of ‘Project Maven’ a U.S. defence project to integrate AI and defence operations. Pichai stated that Google has not been aiding the Chinese in any manner. Its decision to opt-out from Project Maven was based on ethical considerations.
- On Amazon’s use of third-party seller data – Jeff Bezos admitted that Amazon has a policy that prohibits the use of third-party seller data for supporting its own products. However, he acknowledged that the policy may have been violated in the past. The members of the Sub-Committee stated that this was unfair to third-party sellers as they do not have access to Amazon’s data.
About the sub-committee:
The Sub-Committee has been investigating the conduct of the GAFA Companies for more than a year. The Sub-Committee consists of 15 members of the U.S. Congress. It is chaired by Congressman David Cicilline. The Sub-Committee includes Congress members from both the Democrats and the Republicans. As part of its investigations, the Sub-Committee has examined more than 1.3 million documents and conducted hundreds of hours of interviews.
Authored by Aditya Sharma, Associate and Saumya Jaju, Associate.
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