The "Hipster" Antitrust Hearing
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Privacy, Technology and Perspective
The “Hipster” Antitrust Hearing. This week, the CEOs of Amazon, Google, Facebook, and Apple — whose companies are worth more than $5 trillion combined — appeared in a historic hearing before the House Judiciary’s antitrust subcommittee. While we have previously written about “Hipster Antitrust Movement,” now, it has hit D.C. What happens next is anyone’s guess. But right now, Big Tech is facing the first major antitrust investigation in over 50 years.
For some background, you can read our previous post, “Privacy Meets Antitrust” by clicking on the following link:
https://www.hoschmorris.com/privacy-plus-news/privacy-plus-may-11-2019
Wednesday’s hearing opened with Chairman David Cicilline signaling an impending reckoning for Big Tech, stating:
“Our founders would not bow before a king; we should not bow before the emperors of the online economy.”
Mark Zuckerberg of Facebook, Sundar Pachai of Google, Tim Cook of Apple, and Jeff Bezos of Amazon, then faced almost six hours of questions about how their businesses operate. The following opinion piece by Robin Givhan in The Washington Post provides a great summary of the hearing. You can read it by clicking on the following link:
Zuckerberg (Facebook) Admits to Cloning and Acquiring Competitors
Rep. Pramila Jayapal came prepared, and her hard-hitting questions stood out. Confronting Mr. Zuckerberg, Rep. Jayapal quoted emails and statements from multiple Facebook executives, including Mr. Zuckerberg himself, which said that Facebook should block competitors, like Instagram, and copy their products. Rep. Jayapal asked Mr. Zuckerberg, “Has Facebook ever taken steps to prevent competitors from getting footholds by copying competitors?” When Mr. Zuckerberg had a hard time answering, she rephrased: “Since March of 2012, after that email conversation, how many competitors did Facebook end up copying?” Mr. Zuckerberg’s response: “Congresswoman, I—I can’t give you a number of companies.”
You can watch this video of Rep. Jayapal as she questioned Mr. Zuckerberg by clicking on the link that follows:
https://www.msn.com/en-us/news/technology/tech-antitrust-hearing-rep-jayapals-questions/vi-BB17lfOb
Listen particularly to the end of her questioning, where Rep. Jayapal concludes:
“Facebook is a case study, in my opinion, in monopoly power because your company harvests and monetizes our data, and then your company uses that data to spy on competitors and to copy, acquire and kill rivals. You’ve used Facebook’s power to threaten small competitors and to ensure that you always get your way. These tactics reinforce Facebook’s dominance, which you then use in increasingly destructive ways. So Facebook’s very model makes it impossible for new companies to flourish separately. And that harms our democracy, it harms mom-and-pop businesses, and it harms consumers.”
Pachai (Google) Faces Questions About Privacy and its Ad Share
Rep. Val Demings pressed Google’s CEO, Mr. Pachai, about user privacy and in particular, Google’s acquisition of DoubleClick, its merger of DoubleClick’s data with its own, and its practice of tracking users across the Internet. Her questions were not delicate. You can watch this video of Rep. Demings as she questioned Mr. Pachai by clicking on the link that follows:
https://www.youtube.com/watch?time_continue=1&v=4A52Mu_Z-WQ&feature=emb_logo
Rep. Jayapal also asked Mr. Pachai about Google’s ad share: “What is Google’s share of the ad exchange market?” Mr. Pachai’s response that “Google is a popular choice” did not satisfy her. Rep. Jayapal answered her own question, stating that Google “is running the marketplace, is acting on the buy-side and it’s acting on the sell-side which is a major conflict of interest.” You can watch this video of Rep. Jayapal as she questioned Mr. Pachai by clicking on the link that follows:
https://www.youtube.com/watch?v=kl4wMWzg76E&feature=youtu.be
Cook (Apple) Defends App Store Commissions
Apple CEO, Mr. Cook, defended the company’s App Store commission structure, explaining that the majority of the apps pay no commission at all. He said that App developers are all treated equally and that Apple wouldn’t raise commissions. But from documents the Committee posted on its website, Apple appears to have negotiated a special deal with Amazon for its Amazon Prime Video app. You can read more about this development in the following article:
Bezos (Amazon) Won’t Deny Data Misuse
Mr. Bezos (Amazon) managed to escape scrutiny for the first two hours of the hearing, but Rep. Jayapal’s turn rolled around again. She focused on the Amazon consumer platform’s alleged misuse of third-party seller data to advantage Amazon’s private-brand products. Mr. Bezos explained that such misuse would violate the company’s policy, but he conceded: “I can’t guarantee you that policy has never been violated.” You can watch that exchange with Mr. Bezos by clicking on the link that follows:
https://www.youtube.com/watch?time_continue=14&v=C28u2_DDWUA&feature=emb_title
Listen again, in particular, to the end of Rep. Jayapal’s questioning, where she states:
“The whole goal of this committee’s work is to make sure that there are more Amazons, that there more Apples, and that there are more companies that get to innovate, and more small businesses get to thrive.”
What was missing? Our opinion:
What all of these Big Tech companies have in common is data. Big data processing unlocks artificial intelligence (AI) and analytics. Yet, we noted that cloud computing, which has resulted in an explosion of data, was scarcely mentioned during the hearing. As time goes on, we believe AI will drive innovation, and because Big Tech companies have the largest data sets to train AI, ultimately, they will corner the markets.
Rep. Joe Neguse did raise questions regarding Amazon’s cloud computing subsidiary, AWS, but they focused on Amazon’s alleged use confidential information, and not the raw power that Amazon has because of all of the data hosted on its various platforms. For more on Rep. Neguse’s questions, you can click the following link:
We’re hopeful that the Committee is considering the antitrust issues associated with so-called “data-opolies” or monopolies on data. There is an argument to be made that “data-opolies” themselves harm businesses, consumers, and our democracy.
In connection with this issue, we can’t help but remember the remarkable interviews by Kara Swisher of both Mark Zuckerberg and Tim Cook in which each admitted numerous times that their respective companies – Facebook and Apple – have “responsibilities” and “duties” to our society and people, and not just to their shareholders. You can (and should) listen to Ms. Swisher’s interviews on the Recode-Decode podcast, available at the following link:
https://www.stitcher.com/podcast/vox/recode-decode
Incidentally, Ms. Swisher has previously written a powerful opinion piece entitled, Be Paranoid about Privacy, which also contains a video that is worth watching, available here:
https://www.nytimes.com/2019/12/24/opinion/location-privacy.html
We suggest that it is past time to be paranoid about “data-opolies” and privacy. Data -- personal information especially -- confers unimaginable power. The “insights” that Big Tech is able to have into our daily lives and their competitors are eye-popping. Moreover, FISA has complicated the protections of the Fourth Amendment in a way that potentially allows our government to gain access to these “insights” without our knowledge.
As a society bound by law and governed according to those laws, we need to hold companies, and especially Big Tech companies, to certain limits consistent with our societal values, ethics, and morals. Without boundaries or prohibitions on monopolies of data, without an express right to privacy, and with the Patriot Act, we worry that we may already be starting to bow before the “emperors of the online economy.”
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Hosch & Morris, PLLC is a Dallas-based boutique law firm dedicated to data protection, privacy, the Internet and technology. Open the Future℠.