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Big Tech Beatdown
By Patrick Walsh
September 2, 2020

A little over a month ago, the biggest fight since McGregor vs Mayweather occured. CEOs of the Big Four tech companies sat down with the House Judiciary Subcommittee to talk about their alleged anti-trust violations, anti-competitive practices, and monopolization of the tech industry. If you don’t have six hours to spare to watch the live stream (with about two hours of silence to skip), we’ll cover some of the highlights from the hearing and a bit of critique on both sides of the hearing.

Here’s how the teams were comprised: 

Blue Team                                                                                         Red Team

Jeff Bezos – Amazon                                                                        David Cicilline – Rhode Island

Mark Zuckerberg – Facebook                                                         Jim Sensenbrenner – Wisconsin

Sundar Pichai – Google                                                                    Jerrold Nadler – New York

Tim Cook – Apple                                                                              Jim Jordan – Ohio

                                                                                                             Ken Buck – Colorado

                                                                                                             Hank Johnson – Georgia

                                                                                                             Matt Gaetz – Florida

                                                                                                             Jamie Raskin – Maryland

                                                                                                             Kelly Armstrong – North Dakota

                                                                                                             Pramila Jayapal – Washington

                                                                                                             Greg Steube – Florida

                                                                                                             Val Demings – Florida

                                                                                                             Mary Gay Scanlon – Pennsylvania

                                                                                                             Joe Neguse – Colorado

                                                                                                             Lucy Kay McBath – Georgia

 

The rules were simple: the red team would have three rounds of questions, the blue team may or may not have a chance to defend themselves, and you need to keep your mask on unless you were speaking.

Modern Day Kings

David Cicilline gave a great opening speech. Without reasonable alternative services, people can’t escape these tech giants, so they don’t have the choice but to submit their private data to these “emperors of the online economy.”

Jim Sensenbrenner regularly reminded us of his position: these companies are large and successful, but that isn’t the problem. But how they leverage their size to the disservice of the modern consumer is the problem—particularly with First Amendment rights and online censorship. Sensenbrenner likened the current situation to AT&T in 1984, and that one-stop shops are monopolistic.

Jerrold Nadler compared these companies to the railroad and oil industries that abused their “concentrated economic power” to pick winners and losers, to expand their reach into their producers’ markets, and to push consumers into their products and services. Small businesses are reliant on these companies to reach new customers. The Big Four own the platform on which the modern online economy thrives, but they also do business on their own platforms. A prime environment for monopolies to grow.

Censorship and Election Interference

Jim Jordan was keen on discussing “shadow-banning” conservatives, online censorship, and election interference—later described in the meeting by Scanlon as “fringe conspiracy theories.”

Overall, this subcommittee did a wonderful job focusing on the bipartisan effort at hand, but it just wouldn’t be Washington without a few left hooks and quick jabs. Steube also described first-hand accounts of conservative sites like Gateway Pundit not appearing in search results and that campaign emails that once went to friends and family now are going to spam folders. Demings also added that Democrat campaign emails have been going to spam as well—perhaps Google’s spam filtering algorithms are affecting both sides of the aisle. Raskin pointed to fake Facebook accounts as a tool that Russia used as social warfare to interfere in the 2016 election and how prolific hate speech is on the Facebook platform.

App Store Lock-in

Hank Johnson’s questioning the App Store was on point. Some developers are favored over others. Reduced commissions for preferred apps are made seemingly on a whim. The terms of service are so complex, it can take a full-time job to understand the ever-changing regulations on the App Store. Cook’s oblivious point was that developers have “a choice” as they can develop apps for Android, Xbox, and other platforms.

Wrong—in order to reach a broad range of customers, most developers create apps for multiple platforms. Mobile apps are not platform-independent, so most companies need to develop the same app multiple times. Cook fancies their Swift language and APIs as a positive, but these tools are just another scheme by Apple to get developer lock-in and keep people using only their products—an approach they use on their devices as well.

Information Privacy

Demings made a fantastic point on Google’s 2016 decision to merge data across their subdomains using a cross-site cookie—effectively destroying anonymity on the Internet. “While Google had to care about user privacy in 2007, it no longer had to in 2016.” While discussing GDPR, geofence warrants, and location tracking with Pichai, Armstrong reminded us on how delicately we should proceed with regulating these tech giants, stating “usually in our quest to regulate big companies, we end up hurting small companies more.”

Connections to China

Gaetz attacked Google’s involvement in China, very bluntly stating “your company is directly aiding the Chinese military” and even cited a comment by Zuckerberg calling their actions “treasonous.” Google turned down working with the US military on project Maven stating that the project didn’t align with their mission, but they helped to build technology that was adapted into missile guidance systems for the Chinese military—but Google denies any direct association with the Chinese government.

Anti-Competitive Practices

Jayapal dug deep into Amazon using data on third-party sellers to make strategic marketing decisions. What’s very interesting about Amazon’s policy is their definition of aggregate data. If there are two or more sellers in a given category, Amazon employees have access to highly detailed information on sellers, including inventory, sales, and pricing. Therefore, if there are only two sellers in that category (and one of them is Amazon), they can easily isolate a single company’s data. McBath quoted Amazon as being “the only game in town” so sellers have no choice than to submit themselves to Amazon.

Scanlon noted Amazon’s anti-competitive attack on Diapers.com. Amazon bled over $200 million in a single month to undercut them and force them into acquisition. After purchasing the company, Amazon swiftly increased the prices to a healthy margin. Neguse aptly described the situation we face today, stating “the industry consolidates as it matures.” And that consolidation has reached the point of monopolization in many cases. Neguse pointed at the favorite strategy in Facebook’s playbook: purchase competitors or replicate their products to drive them out—a so-called “land grab” by Facebook to dominate its way to now owning 95% of all social media.

Critiquing the Big Tech Defense

Amazon: Bezos gave a rags-to-riches story in his opening remarks that described his financially poor upbringing and how hard work made him who he is today. “80% of Americans have a favorable impression of Amazon overall” and only doctors and military are trusted more than Amazon. The subcommittee describes Amazon’s market share as 70% of all online sales, while Bezos’ position is that Amazon is a retail organization so they only share 4% of the market share—seemingly disregarding the fact that brick-and-mortar companies do not have a foothold in the online economy.

Google: Pichai continued to point to all the good that Google has done for the United States. Google provides free access to email, G-suite, and Google Search. They invest in the US economy to maintain technological leadership in the world—including AI, self-driving cars, and quantum computing. Pichai posited that Google could be here today and gone tomorrow. Like any other company, they have new competitors emerging every day and that “users have more access to information than ever before.” With the sheer size and breadth of Google’s presence, it’s difficult to think of a single company that could compete with their overall position, albeit that is not indicative in some individual markets.

Apple: Tim Cook “Products like iPhone just work,” and they have a 99% consumer satisfaction rating. There are other competing phone providers, and Apple doesn’t have a dominant market share in any of the products and services they provide. Apple wants to “be the best—not the most.” After pitching their products like the App Store, the iPhone, and the iPod and wrapping up his opening remarks with the line “tomorrow will be even better than today,” Cook’s opening remarks seemed more suitable for a sales pitch. In my observation, the subcommittee seemed to go a little easier on Cook, but that doesn’t mean Apple will come out unscathed.

Facebook: Zuckerberg also reminded us that they have stiff competition in the market as well, citing apps like iMessage, TikTok, and YouTube as dominant players in their market. “New companies are created all the time all over the world” and if they don’t continue to innovate, they risk being a forgotten tech company in the next decade. “We compete hard; we compete fairly.”

Throughout the hearing, Zuckerberg consistently defended his position with a common tactic: repeat feel-good words like “communicate” and “connect” to persuade his listeners to side with his views. Zuckerberg continued to justify his acquisition of competitors by either stating they weren’t actually a competitor or that it served his goal of building better products. When asked by Jayapal about copying competitors’ products, Zuckerberg preferred the term “adapting features.” Throughout the hearing, Zuckerberg kept a list of no-name competitors in his back pocket to remind us that Facebook isn’t the only social media platform around. How long before those companies are bought?

All of the CEOs tried their best to use their cunning dialogue skills to talk circles around the subcommittee to the extent that Chairman Cicilline reminded them they didn’t have to thank the subcommittee for their questions and that we can all assume that every question is a good question. Savage!

Wrapping Up

After a year of intense research into millions of documents, the subcommittee seems to have expanded their own technical knowledge and asked very thoughtful and relevant technical questions. If you have a chance to watch the whole hearing, I would highly recommend it! However, the hearing was ended on a rather awkward note with Zuckerberg and McBath debating what a cookie is. McBath demanded a yes or no answer to the question, “do you use cookies?” Not an easy question to answer with a straight face.

Recap of some of the allegations

Google

  • Turned down working with the US military on project Maven stating that the project didn’t align with their mission but helped to build technology that was adapted into missile guidance systems for the Chinese military.
  • Stole lyrics from Genius for their own platform. When Genius found out, they added a watermark to their lyrics, which Google continued to steal—including the watermark.
  • Manual review of blacklisted content that could allow biased censorship
  • Selectively display search results to keep users on websites that they own to drive up revenue
  • Stealing content from other websites
  • Enabled cross-domain cookies to allow Google to combine sensitive personal data, location tracking data, and all data across all Google apps and relate that information to an identifiable individual

Amazon

  • Unregulated access to in-depth “aggregated” data about third-party sellers on their platform with which they use to undercut their prices on private-label products well below cost so that no one can compete, force competitors out of existence, and then hike up their prices to a profitable margin
  • Stealing engineering specifications to create Alexa
  • Working with companies and suppliers that use forced labor
  • Counterfeit and stolen products sold on Amazon
  • Competing in the same space in which they own the gateway (Amazon Marketplace)
  • Stealing applications and products that are hosted on Amazon Web Services (AWS)

Apple

  • Leveraging in-depth information on rival companies’ intellectual property to replicate apps
  • Inconsistent commission rates for apps on the AppStore
  • Ever-changing rules that seem to favor Apple’s apps
  • Competing in the same space in which they own the gateway (AppStore)
  • Removing competitive apps from the AppStore

Facebook

  • Copy, acquire, and kill rival companies with competing products
  • Inflated usage metrics that jeopardize journalists and investors
  • Questionable moderator selection that may silence undesirable viewpoints
  • Handling of potentially harmful information spread rapidly on the platform

 

 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of SkillStorm. Any content provided by our bloggers is their opinion and is not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything. All of the allegations against Google, Facebook, Apple, and Amazon are just that — allegations. This article is in no way implying the guilt of any party. 

 

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