When Facebook founder Mark Zuckerberg went before U.S. Congress for the first time two years ago, his response to an octogenarian senator confused about how Facebook made money given that its platform was free – “Senator, we run ads” – became a viral meme in Silicon Valley.
Tech leaders breathed a sigh of relief at the time. Their industry was unlikely to face much serious political scrutiny in the United States if lawmakers struggled to understand what an algorithm was, or why they were offering free services in exchange for reams of personal data on consumers.
But Silicon Valley faced a rude awakening on Wednesday during a landmark Congressional antitrust hearing in which lawmakers grilled chief executive officers from four of the world’s biggest tech companies – Amazon’s Jeff Bezos, Apple’s Tim Cook, Alphabet’s Sundar Pichai and Facebook’s Mr. Zuckerberg.
The marathon five hours of testimony, conducted virtually over Cisco WebEx, is likely to be a watershed moment for the tech industry – highlighting a growing political consensus that Silicon Valley’s size and influence has given it too much power over the daily lives of Americans.
Armed with a cache of more than a million internal e-mails and other documents amassed over the course of a year-long investigation, members of Congress asked pointed questions about the tech giants’ business practices, extracting significant concessions from executives. They often used the executives’ own words against them to make the case that their companies were a threat to competition.
While none went so far as to agree that their companies had become monopolies, tech leaders were sometimes forced to acknowledge issues that form the core of the multiple tech antitrust investigations now under way in the U.S.
Lawmakers pressed the tech behemoths on whether they use their market dominance to restrict rivals’ access to online consumers, if they copy features and steal content from smaller competitors, and whether they have used acquisitions as a way to squash competition.
Mr. Bezos, testifying in front of Congress for the first time, admitted that his employees might be violating the e-commerce giants' own policies against using data on third-party sellers to develop competing Amazon-branded products.
Lawmakers read from internal documents showing that Amazon was willing to take deep losses on sales of diapers to pressure a competitor to sell its company, and quoted from 2013 correspondence in which Mr. Bezos urged Amazon executives to go after smaller competitors “like a cheetah would pursue a sickly gazelle.”
Mr. Zuckerberg likewise acknowledged that Facebook has sometimes developed features similar to those created by upstart rivals and that it viewed companies such as Instagram – which Facebook acquired in 2012 – as both exciting tech innovations and a competitive threat.
Yet even more important than extracting concessions from tech leaders, the hearing showcased that both Democrats and Republicans now seem to agree that Silicon Valley has become too powerful.
Traditionally, U.S. antitrust law has focused on how a company’s conduct harms consumers – since reduced competition often translates into higher prices. It was a difficult criticism to lob at companies such as Facebook and Google, whose services are largely free, or Amazon, which has driven down prices and shipping costs on many consumer goods.
But increasingly, U.S. lawmakers have started to adopt arguments by legal scholar Lina Khan, who wrote in an influential 2017 paper that Amazon’s tendency to pursue growth over profits had allowed it to crush competitors and become so central to online commerce that rivals had no choice but to use its platform. (Ms. Khan now serves as legal counsel to the Congressional committee that conducted Wednesday’s hearing.)
Democrats have largely jumped on that interpretation – using the hearing to compare tech giants to the 19th century robber barons whose control over railways and oil pipe lines led to U.S antitrust regulation that is still in force.
But the hearing showed that some Republican lawmakers also seem to agree. They are fearful that their own reliance on social-media platforms to reach voters has given left-leaning Silicon Valley too much sway over the outcome of elections.
A day earlier, the Republican-controlled Senate held a hearing to discuss a bill to roll back long-standing legal protections that prevent technology companies from being held liable for content published on their platforms. The law is considered so important to Silicon Valley that the industry successfully lobbied to have similar language included in the United States-Mexico-Canada Agreement.
Whether any of this heightened scrutiny will translate into sweeping new antitrust regulations isn’t yet clear.
David Cicilline, the Democratic chair of the subcommittee that conducted the hearing, said Wednesday that tech companies needed to be broken up and that new regulation was imminent.
Jim Sensenbrenner, the committee’s top Republican, argued that existing antitrust laws already offer enough powers for federal agencies to go after Big Tech. Notably, no politician argued in favour of a hands-off approach to Silicon Valley – signalling that the freewheeling days of an unregulated internet are coming to an end.
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