Society

“Question Technology”

Introduction

Tech giants such as Facebook, Google, Apple, or Amazon are huge companies that can wield their power in many different ways. Our daily lives are heavily influenced by the behaviors and actions taken by these companies, making it of utmost importance that they do not become monopolies of their industries. This is the challenge that Congress and the CEOs of these 4 powers discussed in the Big Tech antitrust trial.

Source: https://images.barrons.com/im-80427?width=620&size=1.5 

Congressional Hearing

Source: https://venturebeat.com/wp-content/uploads/2020/07/bezos-zuckerberg-pichai-cook-virtual-hearing.png?fit=2000%2C1000&strip=all 

Antitrust laws are policies implemented by the United States that can regulate the actions of companies to promote competition in different industries and businesses, which prevents the abuse of power by monopolies. Monopolies are quite negative for the economy in several ways, such as the possibilities of price fixing, declining product quality, a lack of creativity, and inflation. In order to prevent this from ever happening, the Sherman Antitrust Act of 1890 was passed. 

How does this affect big tech today? Facebook, Google, Apple, and Amazon are all the leading companies in their respective domains. These companies each make up 55.9, 90.46, 48.5, and 44% of their market shares. To put this into context, Walmart has 7% market share compared to Amazon’s 44%. This is a huge disparity, prompting Congress to put their CEOs on trial among the 1+ million documents they have gathered in their intense investigation.

Starting off the hearing, David Cicilline(D-RI) warned the audience of the influence and power wielded by these tech companies. “Because these companies are so central to our modern life, their business practices and decisions have an outsized effect on our economy and our democracy. Any single action by any one of these companies can affect hundreds of millions of us in profound and lasting ways.” He then laid out the similarities among the four tech giants. Each is a gatekeeper of a distribution channel, such as the app store or an ad market. They all collect data and track other companies in order to protect their power through eliminating potential competitors. And, they “abuse their control over current technologies to extend their power” through pricing schemes, and preference of their own products. Cicilline closed by comparing these companies to King George and how “America should not bow before the emperors of the online economy.”

America should not bow before the emperors of the online economy

Google

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In time, the questioning began. Cicilline kicked things off by querying about Google’s search practices, including scraping content such as restaurant reviews. Pichai denied the use of this data as malicious and said this was aligned with Google’s goal of sending people to relevant websites. Rep. Matt Gaetz(R-FL) made Pichai pledge that “Google will not adopt the bigoted anti-police policy” of ending relationships with law enforcement. This was most likely prompted by an open letter by 1650+ Google employees asking that Pichai end these partnerships. Pichai replied that Google will still work with law enforcement. Rep. Pramila Jayapal(D-WA) questioned the Google CEO on the situation with Google’s advertising and how they are running the entire figurative marketplace. Google is the mediator, the seller, and the buyer all at once for advertisements, which puts them in a unique position where they can set ad rates low when they buy and sell ad spaces at high prices to small businesses. Pichai acknowledged this and said Google has the exposure and journalism of this as a priority and that Google’s sole mission is still to provide users with the information they are searching for.

Facebook

The antitrust case against Facebook — Quartz

Source: https://cms.qz.com/wp-content/uploads/2019/09/fb-2.jpeg?quality=75&strip=all&w=1600&h=900&crop=1 

Zuckerberg was first questioned by Rep. James Sensenbrnner(R-WI) asking if Facebook filtered out political viewpoints and why it had removed a certain video promising a coronavirus cure. Zuckerberg clarified that this incident had happened on Twitter, but that posts contained false claims about coronavirus would be removed due to their possibility to cause harm. Jerrold Nadler(D-NY), the House Judiciary Committee Chair, produced emails collected through the investigation showing a Facebook discussion of acquiring Instagram, a potential competitive threat. Zuckerberg defended the acquisition, saying that the acquisition was a major part of Instagram’s uncertain success, and the infrastructure built by Facebook had played a prominent role in this. Then, Rep. Jamie Raskin(D-MD) questioned Zuckerberg on the Russian election interference and Facebook’s response to the promotion of racist and anti-Semetic content on its platform. Zuckerberg assured Raskin that fighting election interference and hate speech was a major goal for Facebook, and that they have created sophisticated systems to remove hate speech. Finally, Jayapal asked Zuckerberg about internal company documents. Instagram had apparently been scared of Facebook’s threats and that Zuckerberg would go into “destroy mode” if Instagram was not sold. Zuckerberg disagreed with this, and that clearly it was just competition between the two businesses, not a directed threat. 

Amazon

Amazon reportedly faces EU antitrust charges over use of third-party seller  data - The Verge

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Jeff Bezos was also grilled by the committee with many questions about Amazon. Rep. Jayapal first questioned Bezos about Amazon’s collection of seller data to develop and launch competing products. Bezos did not outright deny the allegation, saying that “Amazon has a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated.”

Amazon has a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated.

Then, Rep.Lucy McBath(D-GA) referenced a bookseller on Amazon saying that it has systematically blocked them from selling books. Bezos was confused and asked to contact the seller to help them, but McBath was aiming for Bezos to listen to third-party sellers in general. Bezos said this was not an issue, as “Third-party sellers in aggregate are doing extremely well on Amazon.” 

Apple

Apple's antitrust fight turns Epic - Axios

Source: https://images.axios.com/dvUETFiw1GKzH6QkeKNEex4_Vkk=/0x0:1920×1080/1920×1080/2020/08/25/1598338013646.jpg 

Rep.Val Butler Demings(D-FL) questioned Tim Cook about Apple removing third-party parental control apps, which raised questions about silencing competition with the release of Apple’s new screen time feature. Cook replied that this move was simply due to data privacy reasons and that this is not a revenue source for Apple, and it has over 30 apps for competition. Rep. Nadler proceeded to ask Cook about claims from Airbnb and ClassPass that Apple had been demanding them to pay commissions for launching virtual experiences, making Apple suspicious of simply profiteering off of the pandemic. Tim Cook maintained that Apple would never engage in this behavior and that this pandemic is a tragedy for everyone but protocols must still be followed, leading to the commission model.

Bill Gates’ Thoughts

In March of 1988, Bill Gates was in a very similar position to these CEOs. Gates was summoned to Congress to discuss Microsoft’s immense market power and its potential abuse of it. Bill Gates made his case by saying Microsoft would continue to help the United States as a whole to advance technologically at breathtaking paces if innovation is not restricted by the government. Gates also tried his best to downplay the idea of Microsoft being a software monopoly and painted the industry as an open opportunity. 

Shortly after the congressional hearing, the Department of Justice ruled that Microsoft had violated the antitrust act and ordered that Microsoft to be broken up into 2 separate companies. However, Microsoft appealed and instead of splitting the company, Microsoft agreed to let go of a substantial amount of its power(forcing PC-makers to work exclusively with them, not sharing APIs with developers, etc.). 

With this background, Bill Gates had several thoughts on the antitrust hearing. Gates believes that these tech giants deserved the harsh scrutiny faced at Congress.

If you’re as successful as I am or any of those people are, you deserve rude, unfair, tough questions.

Bill Gates

Sources:

https://www.statista.com/statistics/265773/market-share-of-the-most-popular-social-media-websites-in-the-us/#:~:text=Market%20leader%20Facebook%20accounted%20for,U.S.%20social%20media%20site%20visits.

https://seotribunal.com/blog/google-stats-and-facts/#:~:text=1.,second%20on%20any%20given%20day.&text=That’s%20the%20average%20figure%20of,5.6%20billion%20searches%20per%20day.

https://www.idc.com/promo/smartphone-market-share/vendor

https://finance.yahoo.com/news/latest-e-commerce-market-share-185120510.html#:~:text=Bank%20of%20America%20estimates%20Amazon%20currently%20has%20about%2044%25%20of,and%20Target%20at%20just%202%25.

https://www.theverge.com/2020/7/28/21344920/big-tech-ceo-antitrust-hearing-apple-facebook-amazon-google-facebook

https://www.theverge.com/2020/7/29/21335706/antitrust-hearing-highlights-facebook-google-amazon-apple-congress-testimony

https://www.businessinsider.com/bill-gates-microsoft-antitrust-case-history-outcome-2020-7#while-the-case-ultimately-had-a-better-outcome-for-microsoft-than-it-could-have-it-still-had-long-lasting-impacts-on-the-gates-and-on-microsofts-business-6

https://www.theverge.com/2020/8/22/21397105/bill-gates-tech-companies-questions-microsoft-apple-steve-jobs#:~:text=%E2%80%9CIf%20you’re%20as%20successful,It’s%20fine.%E2%80%9D

https://www.consumerreports.org/competition-mergers-antitrust/what-consumers-need-to-know-about-big-tech-antitrust/

https://www.thebalance.com/monopoly-4-reasons-it-s-bad-and-its-history-3305945

https://www.theverge.com/2020/6/22/21299736/google-employees-cut-ties-police-law-enforcement-black-lives-matter

Categories: Society