Antitrust showdown: Apple, Amazon, Facebook, and Google CEOs report to Capitol Hill

Alongside his Big Tech counterparts, Amazon CEO Jeff Bezos made his first-ever appearance before Congress, telling lawmakers that "just like the world needs small companies, it also needs large ones."

After years of getting overlooked in Washington, the technology industry has finally become too big for lawmakers to ignore. 

For the past year, a bipartisan group in Congress has zeroed in on the outsized influence of a few key industry giants. On Wednesday, the leaders of those companies -- Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai (also chief executive of Alphabet subsidiary Google) -- collectively appeared before Congress for the first time to defend their market dominance.  

"I love garage entrepreneurs—I was one," Bezos said in written remarks, prepared for his first-ever appearance before Congress. "But, just like the world needs small companies, it also needs large ones. 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."

During Wednesday's hearing before the House Judiciary Antitrust Subcommittee, Bezos did not deny allegations, as reported by the Wall Street Journal earlier this year, that Amazon has used data about the third-party sellers on its e-commerce platform to give a competitive advantage to its own, competing products. 

Amazon has an internal policy against such practices, Bezos said in response to questioning from Democratic Rep. Pramila Jayapal of Washington. However, he said, "I can't guarantee you that that policy has never been violated." He added that Amazon is continuing to investigate the matter "very carefully."

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The hearing -- which included substantive debate, as well as some lines of questioning completely off-course -- could prove to be a pivotal moment for the tech industry. After the subcommittee's 13-month probe into tech antitrust issues, the testimony from the four CEOs will critically inform Washington's next move. If the CEOs don't win over lawmakers, Congress could be compelled to disrupt the industry with more robust and modern antitrust laws. 

While Congress may take action based on Wednesday's hearing, the testimony delivered could also influence other government officials. State attorneys general could feel more empowered to take action against tech giants on behalf of consumers. Federal agencies, already mulling whether to break up Big Tech, will also be paying close attention. 

Right out of the gate, legislators on Wednesday suggested change must happen. Americans should not bow to "the emperors of the online economy,"  antitrust subcommittee Chairman David Cicilline (D-R.I.) declared. 

Later on, speaking specifically about Amazon, Cicilline said the company's dual role as a platform operator and seller is "fundamentally anti-competitive, and Congress must take action."

Cicilline said the four companies represented in the hearing have three problems in common. First, they each control a "bottleneck for a key channel of distribution" with the "incentive and ability to exploit this power" and the ability to "extract valuable data from the people and businesses that rely on them."

Second, they "surveil other companies" to determine "whether they might pose a competitive threat." Third, they "abuse their control over current technologies" to maintain their dominance. 

"Simply put, they have too much power," Cicilline said. 

Republicans on the panel initially focused on allegations of censorship of conservative views on various platforms. "Big tech's out to get conservatives," GOP Rep. Jim Jordan said.

In a befitting twist, the four CEOs testified via videoconference. 

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Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai are virtually sworn in before testifying before Congress on July 29, 2020. 

Like Bezos, the other CEOs argued that their size isn't a problem. It has not stopped them from innovating, has not stifled the competition, nor has it kept them from serving consumers well. They also suggested that their market dominance has helped the US maintain its technological and cultural dominance globally. 

"As Congress and other stakeholders consider how antitrust laws support competition in the U.S., I believe it's important to maintain the core values of openness and fairness that have made America's digital economy a force for empowerment and opportunity here and around the world," Zuckerberg's prepared remarks said. 

However, facing a slew of issues that have drawn the ire of Congress -- far beyond antitrust matters -- the CEOs, particularly Zuckerberg, also displayed some contrition. 

"While we are making progress" on a range of problems, Zuckerberg's prepared remarks said -- "for example, we have dramatically improved our ability to proactively find and remove harmful content and prevent election interference – I recognize that we have more to do."

Cicilline's first question of the hearing was a pointed attack on Google: "Why does Google steal content from honest businesses?" he asked Pichai. 

He went on to give examples, citing an allegation that Google years ago "stole restaurant reviews from Yelp." When Yelp complained, Cicilline said, "Google's response was to threaten to delist Yelp entirely." Effectively, the lawmaker said, Google's response was, "Let us steal your content or effectively disappear from the web."

Google, Cicilline said, has turned from a "turnstyle to the rest of the web to a walled garden that increasingly keeps users within its sites."

Republicans also quickly began questioning Google's market dominance -- as well as its patriotism. Rep. Ken Buck of Colorado and other Republicans questioned why Google in 2018 pulled out of the Pentagon's Project Maven but -- according to allegations Pichai called "absolutely false" -- works with the Chinese military. 

"What values do Google and Communist Red China have in common?" Buck asked. 

He suggested that such a company "wouldn't think twice" about using their market dominance to steal from competitors. 

Pichai responded, "We are not working with the Chinese military" and told lawmakers that Google's AI work in China "is limited to a handful of people working on open source projects."

The Google chief executive added that the company is "deeply committed" to supporting the military and the US government and has multiple contracts with branches of the US Defense Department. 

The CEOs' prepared remarks underscored some of the specific antitrust allegations they're facing. In response to criticism about its dual role as a platform operator and retailer, Bezos pointed to the success small businesses have had on the Amazon marketplace. He highlighted the stories of moms-turned-entrepreneurs. 

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"We have helped many thousands of sellers grow their businesses on Amazon," Bezos' statement said. "Our success may help explain the wide proliferation of marketplaces of all types and sizes around the world. This includes US companies like Walmart, eBay, Etsy, and Target, as well as retailers based overseas but selling globally, such as Alibaba and Rakuten. These marketplaces further intensify competition within retail." 

Tim Cook, meanwhile, challenged the notion that the Apple App Store has used its market dominance to push around third-party app developers. 

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When it was created, the App Store a "revolutionary alternative" for distributing software, Cook's prepared remarks said. The commissions Apple takes are comparable to those of competitors and vastly lower than what developers paid to distribute software prior to the App Store's existence, he argued. After beginning with 500 apps, today the App Store hosts more than 1.7 million. "Clearly, if Apple is a gatekeeper, what we have done is open the gate wider," Cook's statement said. 

Google is facing scrutiny for its dominance in several markets, including the market for online search tools and digital advertising. Google's Pichai, in his prepared remarks, argued that "Google operates in highly competitive and dynamic global markets, in which prices are free or falling, and products are constantly improving." 

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In search, for example, Google faces growing competition "outside the context of only a search engine. Often the answer is just a click or an app away: You can ask Alexa a question from your kitchen; read your news on Twitter; ask friends for information via WhatsApp; and get recommendations on Snapchat or Pinterest. When searching for products online, you may be visiting Amazon, eBay, Walmart, or any one of a number of e-commerce providers, where most online shopping queries happen."

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Zuckerberg, meanwhile, uses his prepared testimony to defend the many acquisitions that have made his company a social media powerhouse. 

"Facebook has made Instagram and WhatsApp successful as part of our family of apps," he said. "Instagram and WhatsApp have been able to grow and operate their services using Facebook's bespoke, lower-cost infrastructure and tackle spam and harmful content with Facebook's integrity teams and technology."