CEO and founder Crisis Team
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Antitrust action brought against tech giants

Following the big tech antitrust session where Google, Apple, Facebook and Amazon were grilled in Congress over whether the companies have too much power, Bill Mew asks why a reform? Why now, and for who?

5th Aug 2020
CEO and founder Crisis Team
Columnist
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Subcommittee on Antitrust, Commercial, and Administrative Law | Online Platforms and Market
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On 29 July, the CEO’s of Google, Apple, Facebook and Amazon appeared before the congressional antitrust committee. For six hours the four powerful technology company chief executives were interrogated by US lawmakers on whether they had grown too monopolistic and too powerful, and whether they needed to be broken up.

Many watching the recent committee hearing will have been left disappointed with the performances of the executives: Google’s Sundar Pichai, Apple’s Tim Cook, Amazon’s Jeff Bezos and Facebook’s Mark Zuckerberg – supposedly some of the sharpest minds in the world.

You’d expect Google’s Pichai to be well prepared to face obvious questions about online advertising and data-harvesting giant DoubleClick. However, he could not answer why Google merged the vast databases of personal information gathered by both Google and DoubleClick in 2016, despite a commitment to the European Parliament in 2008 that it would not. Pichai was forced to admit he himself must have approved the decision. So why was he unprepared for this obvious question?

Likewise, Zuckerberg was evasive when asked if Facebook’s acquisition of Instagram was an attempt to neutralise a major competitor – a typically monopolistic action. But, inexplicably, Zuckerberg was not ready for this line of questioning.

Similarly, Bezos must have expected questions about how Amazon is frequently accused of crushing competitors, including small family retailers, on its market platform. And Cook must have expected scrutiny about Apple’s App Store policies and the extent to which it had constrained or removed competing apps. Again, they floundered.

Their salvation, however, was the failure of their inquisitors to really press home any line of questioning, or as with many of the lawmakers to even understand the key issues at hand.

This begs a few questions: do shareholders need their executives to perform better? Do voters need their lawmakers to do better? What is the antitrust argument? And who would benefit most from any change?

The answers depend on your perspective and are very different for each group of stakeholders:

Democrats: Breaking the power of the tech giants

The supposed purpose of the hearing was to consider the monopolistic power of these tech giants and whether they needed to be broken up. 

As Democratic congressman David Cicilline explained in his closing comments, “These companies as they exist today have monopoly power. Some need to be broken up. All need to be properly regulated and held accountable.”

Republicans: Perceived political bias

President Donald Trump and other politicians and pundits on the right love to complain about “biased” social media companies that “censor conservatives.” However, there is no evidence that this is true. The very fact that conservative news thrives on Facebook and that despite making thousands of blatant lies on Twitter, the platform has lightly fact-checked Trump just three times, undermines this argument.

As one lawmaker commented, if they’re seeking to censor conservatives, they’re doing a really bad job of it.

Customers: Free services - at what cost?

The way that antitrust laws in the US are framed is in terms of competitive value from the customer perspective. However, while Apple charges top dollar for its devices and apps, services like Google search, Gmail, Facebook, Twitter and WhatsApp are all free. This means that there is no customer value complaint and that they cannot be subject to antitrust action.

This would change if antitrust regulations were changed to take account of the real value exchange in terms of data collection. The centuries old adage that ‘information is power’ is more true now than it has ever been and maybe antitrust laws need to be reframed to take this into account.

Shareholders: Total shareholder value

As we saw with eBay and Paypal each of which has thrived independently after their breakup, value is almost always derived from separating such operations and allowing them the freedom to chart their own path. AWS and Amazon would be more valuable apart than they are together, as would Google and YouTube. 

The economy: Maximising innovation and competition

Few would argue that allowing Facebook to acquire Instagram and WhatsApp in order to neutralise competitive threats was good either for market competition or innovation. In this respect, better regulation is indeed required to protect the next generation of unicorns from being crushed or acquired in infancy.

The rest of the world: Countering American domination and exceptionalism

The rest of the world was not represented in the congressional hearings and is at the sharp end of American domination and exceptionalism. American legislation and regulation rarely takes global perspectives into account or provides adequate protection or equality to those outside the US. We have seen this with the extraterritorial legislative overreach (and snooping) that led to the recent ruling in the EU high court that overturned Privacy Shield and greatly restricted the use of Standard Contractual Clauses (SCCs) when sharing data across the Atlantic.

Given the poor performance by both executives and lawmakers, I’m hardly brimming with confidence that there will be any consensus for constructive reform any time soon, that the reform will satisfy all the stakeholders or that it will be effective. 

As much as I’d like to be able to say “this is the reform you can expect, this is when you can expect it and this is how we’ll all benefit”, it’s impossible to do.

I mean, you were hardly expecting anything other than disappointment, were you?

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By Slides
07th Aug 2020 15:04

"despite Trump making thousands of blatant lies". A thousand is a large number - to suggest that anyone has told thousands of lies is ridiculous. To suggest they are all blatant is even more so. Are you showing your own bias here?

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