Theft, censorship and the ’emperors of the online economy’: Tech CEOs go on defense – POLITICO


The virtual testimony, in a hearing of the House Judiciary Committee’s antitrust subcommittee, comes at a time of rising legal jeopardy for the major tech companies, who are the subject of antitrust and consumer-protection probes in Washington, multiple U.S. states and Europe.

Subcommittee Chairman David Cicilline (D-R.I.) set the tone early, with an opening statement vowing to check the power of the “emperors of the online economy.” But so did Ohio Rep. Jim Jordan, the top Republican on the full Judiciary panel, who laid out a long series of alleged slights against conservatives by top social media companies — and later got into a shouting match after a Democrat accused him of promoting “fringe conspiracy theories.”

See live highlights from the hearing below.

3:44 P.M.

Sensenbrenner: No need for Congress to change antitrust law

House Judiciary Democrats lost a big potential GOP ally if they had any hopes of bipartisan recommendations to update antitrust law as part of their probe into tech giants.

“I have reached the conclusion that we do not need to change our antitrust laws,” Rep. Jim Sensenbrenner (R-Wis.), the top Republican on the antitrust subcommittee, said hours into the hearing on alleged bad behavior by Google, Apple, Amazon and Facebook. “They’ve been working just fine. The question here is the question of enforcement of those antitrust laws.”

The subcommittee’s probe has been led by Chairman David Cicilline (D-R.I.), who has been preparing a report to conclude the long investigation. GOP buy-in would strongly bolster its conclusions, including potential recommendations for updates to antitrust law.

Notably, Sensenbrenner seemed to support the probe itself and said he’s “been working with the chairman for over a year on this bipartisan investigation.” His support runs counter to some Republicans who have disparaged Democratic handling of the probe.

But Congress shouldn’t toss out a century of precedent, added the retiring House Republican. He said lawmakers should instead pressure antitrust regulators like the Federal Trade Commission, an agency that has faced accusations of going lightly on companies like Facebook and Google.
— John Hendel

3:20 p.m.

‘Mr. Jordan, you do not have the time!’

Tempers flared more than two hours into the hearing after Rep. Mary Scanlon (D-Pa.) began her questioning with a dismissal of what she called “fringe conspiracy theories” of House Judiciary ranking member Jim Jordan (R-Ohio).

That prompted an outburst from Jordan, who had just pressed Google on whether it’s biased toward Democratic presidential hopeful Joe Biden and said he had internal evidence of the search giant’s interest in encouraging Latino voters in 2016.

The only problem: It was no longer Jordan’s time to speak, as Democrats immediately reminded him as they shouted him down.

“Mr. Jordan, you do not have the time!” antitrust subcommittee Chairman David Cicilline (D-R.I.) declared amid gavel slamming.

When someone told him to wear a mask, Jordan sought to bring up the “unmasking” — in the surveillance sense — of former Trump White House national security adviser Michael Flynn.

“When someone comes after my motives for asking questions, I get a chance to respond,” Jordan said before letting the hearing proceed.

For the record, Google CEO Sundar Pichai maintained that his company is apolitical.
— John Hendel

2:56 P.M.

Bezos doesn’t totally resolve questions on misleading Amazon testimony

Amazon CEO Jeff Bezos said the company is still investigating whether employees may have used data it acquires from its third-party sellers to launch competing products — an issue that has prompted allegations that the company misled House lawmakers a year ago.

“We have a policy against using seller-specific data to aid our private label business. I can’t guarantee you that that policy has never been violated,” Bezos said in response to questions from Rep. Pramila Jayapal (D-Wash.), whose district includes Amazon headquarters. “If we found someone violated the policy, we would take action against them.”

The Wall Street Journal reported this year that Amazon employees frequently looked at seller data to help determine what products the company should offer, contrary to what an Amazon executive told the House a year ago. Jayapal also quoted a former Amazon employee as telling the panel that seller data is “a candy shop. Everyone can have access to anything they want.”

Bezos also acknowledged that while company policy might prevent employees from looking at a specific seller’s information, they could look at aggregate data. Jayapal and The Wall Street Journal story noted that Amazon workers took advantage of that by pairing a successful seller with one who had little business to gain insights into particular products.

“You have access to data that other sellers do not have,” Jayapal said. “The whole goal of this committee’s work is to make sure that there are more Amazons, that there are more Apples, that there are more companies that get to innovate and small businesses get to thrive. …That is why we need to regulate these marketplaces so that no company has a platform so dominant that it is essentially a monopoly.”
— Leah Nylen

2:42 P.M.

Committee members came out swinging, often catching CEOs flat-footed

The first batch of questions saw the CEOs collectively struggle to directly answer lawmakers, who came armed with well-researched questions and strong opinions — a shift in gear from previous congressional tech hearings.

The one exception was Jeff Bezos, who escaped all questions for the first hour.

As Facebook CEO Mark Zuckerberg defended his company’s management of Instagram, citing the Federal Trade Commission’s original decision not to challenge the company’s 2012 merger with Instagram, hearing chairman David Cicilline (D-R.I.) dismissed Zuckerberg, saying the “failures” of the FTC in 2012 “do not alleviate” Facebook’s current antitrust challenges.

Google CEO Sundar Pichai tried to fend off questions by citing examples of individual vendors using Google to grow their business, before Cicilline cut him off for not answering the question.

Rep. Ken Buck (R-Colo.) reeled off a list of possible links and alignment between Google and the Chinese Communist Party, leaving Pichai to say only that Google had only a “very limited presence” in China. He repeated that answer to Rep. Matt Gaetz (R-Fla.), who repeated charges by tech investor Peter Thiel that Google’s China links are “treason,” and concerns from Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, who said in 2018 that Google’s artificial intelligence work in China puts the U.S. military at a competitive disadvantage.
— Ryan Heath

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2:19 P.M.

Apple’s App Store treats developers fairly, Cook says

Apple CEO Tim Cook rejected allegations that the company’s App Store rules for developers are enforced arbitrarily and argued that the company must compete with rivals to interest developers in building apps for its iPhone and iPad.

“We treat every developer the same. We have open and transparent rules,” Cook said under questioning from Rep. Hank Johnson (D-Ga.). “Those rules apply evenly to everyone.”

Cook said the majority of apps sold through the App Store, 84 percent, pay no fees. The remainder pay either a 30 percent or 15 percent commission, he said.

Johnson noted that Amazon has an agreement with Apple to allow users to bypass the iPhone’s in-app payment service, and its 30 percent fee, and instead use the credit card on file in their Amazon account for the Amazon Prime Video app. Cook said that would be “available to anyone meeting the conditions,” though he didn’t outline what those conditions are.

The Apple CEO also argued that the company must compete to attract developers, who could offer apps for Google’s Android, Microsoft’s Windows or XBox or Nintendo’s Playstation.

“There’s a competition for developers just like there’s a competition for customers,” Cook said. “It’s so competitive I would describe it as a street fight for market share in the smartphone business.”
— Leah Nylen

2:15 P.M.

Zuckerberg: Buying Instagram was ‘buying time’

We’re starting to see some fruits of the subcommittee’s year-plus investigation, and it’s got Zuckerberg on the defensive.

The Facebook CEO and New York Democrat Jerry Nadler went back and forth over internal company emails in which, Nadler said, Zuckerberg told a colleague back in 2012 that it was buying the photo-sharing Instagram because it could “meaningfully hurt us without becoming a huge business.”

Zuckerberg’s thinking at the time could become a critical piece of evidence if it bolsters the idea that Facebook was abusing its dominance — and deep coffers — to eliminate budding rivals. Facebook’s buying up of Instagram has become a key focus for critics of the company, with Sen. Elizabeth Warren (D-Mass.) and others saying the deal should be unwound. That’s a threat for Facebook: Instagram has become wildly popular in its own right, and is central to Zuckerberg’s plan to keep a toe hold with younger generations who are otherwise flocking to sites like TikTok.

“Did you mean that consumers might switch from Facebook to Instagram?” Nadler asked.

“Congressman…,” started Zuckerberg, attempting to make the case that no one at the time saw Instagram has a general social network app, rather than a really good photo-sharing app. Nadler pressed on: “Yes or no: Did you mean that?”

Then Nadler went for the kill, asking what Zuckerberg meant when he wrote that “what we’re really buying is time,” adding, “Mr. Zuckerberg: Mergers and acquisitions that buy off potential competitive threats violate the antitrust laws.”

Zuckerberg tried again, insisting that the Federal Trade Commission knew how Facebook was thinking about Instagram back when it signed off on the merger almost a decade ago. That’s when antitrust subcommittee David Cicilline (D-R.I.) jumped in: “I would remind the witness that the failures of the FTC in 2012 of course do not alleviate the antitrust challenges that the chairman described.”

Translation: Don’t think this is over just because that agency down the road said it was.
—Nancy Scola

2:04 p.m.

Sensenbrenner presses Zuckerberg over Twitter’s Don Jr. call

A top House Republican used his questioning to press Facebook CEO Mark Zuckerberg over a recent content moderation squabble involving Donald Trump Jr., the president’s son, with Twitter.

“It was reported that Donald Trump Jr. got taken down for a period of time because he put something up on the efficacy of hydroxychloroquine,” Rep. Jim Sensenbrenner (R-Wis.), the top Republican on the Judiciary antitrust subcommittee. Although Sensenbrenner said he wouldn’t take the medication, the lawmaker said, “I think this is a legitimate matter of discussion.”

“Why has that happened?” Sensenbrenner asked Zuckerberg.

“Congressman, first, to be clear, I think what you might be referring to happened on Twitter, so it’s hard for me to speak to that,” the Facebook CEO said. “But I can talk to our policies about this.”

Zuckerberg said Facebook would take down any claim a proven cure for Covid-19 exists when there is none, given the potential imminent risk for harm, although he said the social platform would allow free discussion about drug trials and what people may think more generally about a treatment’s prospects.

“Our goal is to offer a platform for all ideas,” Zuckerberg told Sensebrenner. “Frankly I think we’ve distinguished ourselves as one of the companies that defends free expression the most.”
— John Hendel

1:58 P.M.

Google: We don’t steal

Google CEO Sundar Pichai denied that the search giant steals content from other websites and rejected reports alleging that the company steers users to its own products and sites rather than sources elsewhere on the web.

“We have always focused on providing users the most relevant information,” Pichai said in response to pointed questions from House Judiciary antitrust subcommittee chair David Cicilline (D-R.I.), who said the panel had seen evidence about Google taking content from other websites and placing more ads on its search results. “The vast majority of queries on Google, we don’t show ads at all.”

Cicilline cited an investigation by The Markup that showed Google has devoted more space on the first page of search results to its own products — which earn the company more revenue that if users go to other webpages. Pichai said that Google only shows ads when consumers are seeking to buy products and argued that they compete with other e-commerce platforms, like Amazon, where consumers often go directly to try to find products.

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“When I run the company I’m really focused on giving users what they want,” Pichai said. “We see vigorous competition, whether it be travel or real estate, and we are working hard to innovate.”

The Federal Trade Commission’s investigation into Google in the early 2010s found Google “scraped” content from other websites, including Yelp and TripAdvisor. The company agreed to allow other companies to opt out of having their content scraped through 2017.
— Leah Nylen

1:51 P.M.

Facebook: We’re an underdog — just look at the rest of this witness list

One surprise so far in the hearing: Facebook CEO Mark Zuckerberg, who generally likes to stick fairly religiously to a script in his public appearances, went far afield from his written testimony — including strongly arguing that his 2-billion-member social network is an underdog when you look at the behemoths he’s testifying alongside.

Zuckerberg pointed out that Facebook competes with other companies that, too, have hundreds of millions or even billions of users.

“Some are upstarts,” said Zuckerberg, “but others are gatekeepers with the power to decide if we can even release our apps in their apps stores to compete with them” — a seeming shot at Apple, with whom Facebook has no love lost. (Apple CEO Tim Cook was off-screen at the time.)

And it’s not just Apple, argued Zuckerberg, who added that Facebook has to battle with YouTube when it comes to video and Amazon when it comes to the online ads market.

“In many areas we’re behind our competitors,” said Zuckerberg. That’s not what you’d expect a CEO to a multibillion-dollar titan to say, but it’s a direct rebuke to the very premise of the hearing — that Facebook is so giant, so powerful, that Washington needs to step in.
— Nancy Scola

1:49 P.M.

Tim Cook delivers opening statement

Read his prepared testimony here.
— POLITICO staff

1:43 P.M.

Sundar Pichai delivers opening statement

Read his prepared testimony here.
— POLITICO staff

1:40 P.M.

Jeff Bezos delivers opening statement

“Just like the world needs small companies, it also needs large ones,” Amazon CEO Jeff Bezos told the antitrust subcommittee Wednesday — while arguing that his online commerce giant is not all that large when considered as a percentage of the global retail market.

Bezos, the world’s richest person, also pointed to his humble origins, noting that “my mom, Jackie, had me when she was a 17-year-old high school student in Albuquerque.”

Read the rest of his prepared testimony here.
— Bob King

1:35 P.M.

Jordan: They’re out to get us

“I’ll just cut to the chase: Big Tech is out to get conservatives,” Rep. Jim Jordan said at the hearing’s outset — a not-unexpected outburst from the top Republican on the full Judiciary Committee, who has become a public face of the complaints from some on the right that Silicon Valley is innately biased against them.

Jordan also brought up the fact that he’d hoped to have Jack Dorsey, the CEO of Twitter — a frequent target of Jordan, President Donald Trump, and other Republicans — testify at the hearing, a request shot down by Democrats.

Jordan also made a last-minute request to rope into the hearing another Republican member, who’s not on the subcommittee, to dig into the alleged constitutional questions raised by the companies testifying. Subcommittee Chairman David Cicilline (D-R.I.) wasn’t having it — a signal that he intends to keep the hearing on topic.
— Nancy Scola

1:20 P.M.

Sensenbrenner: ‘Conservatives are consumers too’

The Republican leader of the House Judiciary antitrust panel became the first to raise concerns about “conservative bias” by the biggest U.S. tech companies.

In his opening statement, Rep. Jim Sensenbrenner (R-Wis.) emphasized that a firm’s large size doesn’t mean they are in violation of U.S. antitrust laws. Rather, how the problem is how they use that power.

“Companies like Facebook, Google’s YouTube and Twitter have become the public square of today where political debates play out in real time,” Sensenbrenner said in his opening statement. “Conservatives are consumers too and they need the protection of the antitrust laws. The power to influence debate carries with it remarkable responsibilities.”

But like his counterpart, panel chair David Cicilline (D-R.I.), Sensenbrenner said he hopes to examine the size and power of the U.S. four biggest tech companies.

“Your companies are large. That’s not a problem. Your companies are successful. That’s not a problem either,” he said. “I want to leave here today with a more complete picture of how your individual companies use your size, success and power and what it means to the American consumer.”
— Leah Nylen

1:04 P.M.

Interest groups clamor to raise other tech complaints

Tech companies have become such a political flashpoint — and exert such influence on our economy and society — that dozens of interest groups are angling to get their issues into the record today, during a hearing whose stated topic is antitrust.

Data privacy and misinformation are two themes that many groups want to see raised.

The NAACP is one group with a particularly compelling — though off-topic — message. NAACP tweeted that it hopes the hearing “addresses [the] devastating conclusion of civil rights audit of @Facebook — that company allows hate speech & disinformation to thrive.” Facebook denies those allegations.
— Ryan Heath

1 P.M.

Cicilline vows to check ‘emperors of the online economy’

The top Democrat leading the House Judiciary antitrust panel’s investigation into competition in digital markets said the nation’s largest tech companies have “too much power.”

“As gatekeepers to the digital economy, these platforms enjoy the power to pick winners and losers, shake down small businesses, and enrich themselves while choking off competitors,” Rep. David Cicilline (D-R.I.) said in his opening statement. “Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.”

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The antitrust subcommittee’s investigation, opened last summer and focused on conduct by Amazon, Apple, Facebook and Google, has so far compiled millions of documents and hundreds of hours of interviews from more than 100 companies, Cicilline said. While he acknowledged that the four companies operate in different markets, Cicilline said the quartet act in similar ways. They are “critical arteries of commerce and communications” who use their control over access or marketplaces to surveil rivals and wield their power in order to expand into other markets.

“Simply put: They have too much power,” Cicilline said. “This power staves off new forms of competition, creativity, and innovation. And while these dominant firms may still produce some new innovative products, their dominance is killing the small businesses, manufacturing, and overall dynamism that are the engines of the American economy.”

Read the rest of his opening remarks here.
— Leah Nylen

12:30 P.M.

Trump’s hearing counterprogramming includes threat of more executive orders

President Donald Trump, who earlier in the day told reporters he’ll be watching Wednesday’s hearing, is now saying he’s ready to take executive action to rein in the tech giants.

Trump in May already issued a hotly contested executive order aimed at what he called social media censorship, which he signed in the middle of sparring with Twitter over its attempts to fact-check his tweeting.

Under directives from that order, the Commerce Department petitioned the Federal Communications Commission this week asking the independent agency to narrow the liability protections shielding internet companies from lawsuits over the content their users post. The administration petition also asks the FCC, which doesn’t regulate social media, to mandate that internet companies offer more transparent disclosure about their moderation policies.
— John Hendel

12:12 p.m.

The world is watching today’s hearings

Heading into Wednesday’s hearings, America’s big tech firms had similar messages emphasizing that “we’re good for America.” While that may or may not be true, what is certain is that this hearing has a global audience.

As CEOs of global companies, today’s witnesses run the risk of inflaming regulators and antitrust enforcers in other countries by playing the American patriotism card. Apple and Google have major open cases in Brussels, for example, and when Mark Zuckerberg appeared before Congress in April 2018, it immediately sparked demands from the European Parliament and elsewhere that he appear. British lawmakers are still peeved that he’s avoided appearances in London.

We’ve seen before — in European antitrust cases — companies like Google and Microsoft shift discussions about technical antitrust matters into broader discussions: essentially saying that because consumers like their products, competition problems and hidden costs either don’t exist or do not need to be addressed by regulators and courts.

Those arguments were effective in initial stages of public debate in Europe, but fell flat over time. Based on their opening statements, the CEOs run the risk of making a similar miscalculation today.
— Ryan Heath

12:04 P.M.

Hearing delayed 1 hour

The House Judiciary antitrust subcommittee hearing with tech company CEOs will start later than planned to allow time to clean the hearing room, a spokesperson for the panel said.

An earlier 9:30 a.m. hearing before the Judiciary Committee’s immigration panel finished up later than expected. Richard Lucette, a spokesperson for antitrust subcommittee chair David Cicilline (D-R.I.), said standard committee procedure requires cleaning of the room between meetings.

The hearing with the top executives of Amazon, Apple, Facebook and Google will now begin at 1 p.m., Judiciary Committee spokesperson Shadawn Reddick-Smith said in an e-mail.
— Leah Nylen

11:44 A.M.

Trump: ‘What the big tech companies are doing is very bad’

President Donald Trump plans to watch Wednesday’s hearing, he told reporters outside the White House earlier in the day.

“We’re going to be watching the hearing today very closely,” the president said. “Because there’s no question that what the big tech companies are doing is very bad.”

Trump has long criticized the U.S. tech giants over how they moderate content, including accusing them of making it hard for his supporters to find his posts. They have denied doing any such thing, although some companies — especially Twitter — have started placing warning or fact-checking notices on some of his statements.
— John Hendel

10:13 A.M.

TikTok CEO slams Zuckerberg’s China comments just before hearing

TikTok CEO Kevin Mayer slammed Mark Zuckerberg on Wednesday ahead of Wednesday’s high-stakes congressional hearing, where the tech mogul is expected to picture Chinese tech corporations as a threat.

“Let’s focus our energies on fair and open competition in service of our consumers, rather than maligning attacks by our competitor — namely Facebook — disguised as patriotism and designed to put an end to our very presence in the U.S.,” Mayer said in a statement.

Zuckerberg depicted Facebook in his prepared statement for the hearing as a “proudly American company.”

U.S. officials have recently floated a ban on TikTok, owned by Chinese company ByteDance. If the company were to leave the U.S. market, American advertisers would be left with less choice, Mayer argued.

The newly appointed CEO, who comes from Disney, also said tech companies should disclose their algorithms, moderation policies and data flows to regulators. “We will not wait for regulation to come, but instead TikTok has taken the first step by launching a Transparency and Accountability Center for moderation and data practices,” he explained.

“TikTok has become the latest target, but we are not the enemy,” Mayer said.
— Laura Kayali





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