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Open Internet

What to Look For at the Mega Hearing of CEOs Testifying on Antitrust

This post is jointly authored with Grant Versfeld, a CDT summer 2020 intern and student at Tufts University.

UPDATE: The House Judiciary Antitrust Subcommittee hearing is now likely Wednesday, July 29, 2020.

On July 27th, the House Judiciary Antitrust Subcommittee is bringing together the CEOs of Amazon, Facebook, Google, and Apple as part of an investigation into the companies’ dominance online. This event marks the first time the CEOs of these four companies are testifying together, although the COVID-19 restrictions have made this hearing go virtual.

As Chairman David Cicilline said, “…it is critical that their CEOs are forthcoming. As we have said from the start, their testimony is essential for us to complete this investigation.” Given that all four companies have faced increased scrutiny from international regulators and U.S. enforcers alike, this hearing will provide additional insight into potential U.S. antitrust concerns related to them. As we gear up for the event (dubbed “techopalooza”), here’s what we have on our radar screen.

What makes this hearing tricky for the Subcommittee?

Antitrust law is designed to protect consumers by identifying harmful conduct from companies acting against the interests of free and open markets. Importantly, antitrust law does not punish companies for achieving success and gaining scale such that they become industry behemoths. It does, however, bar dominant companies from acting anticompetitively. The key is determining what conduct could be harmful to competition and consumers.

This will be an unprecedented, virtual hearing of multiple CEOs of very different companies. No one has ever seen anything like it. Back in 1994, tobacco company executives testified about their business practices, but they were all in the same line of business. Because each of these four giant tech companies has a very different business model, it is hard to ask common questions that focus on the effects of their conduct. This is especially difficult when the four CEOs know so much more about their companies than the members of Congress possibly can. How do you stop the CEOs from going on and on about the great things their companies do and actually get at the core competitive issues?

Such concerns are exacerbated by the non-competition concerns that modern technology companies introduce. Many of the concerns about these four companies are about data security and privacy, working conditions, and algorithmic accountability. Those are generally addressed by laws other than antitrust. How will the members of Congress adapt to these amorphous harms and their connection to the antitrust issues? What does antitrust law and competition policy have to say about these issues?

What questions would we like answered at the hearing?

Given this unusual hearing, if we were in the seats of the Members of Congress, here is what we would focus on with these CEO witnesses:

  1. Your companies regularly say that competition in the digital arena is robust. What are the key pieces of data or evidence that make you so confident that competition is strong in your markets? Here’s what we’re looking for in an answer: robust competition means that companies large and small are constantly responding to the marketplace and the demands of consumers. The CEOs should provide evidence that consumers are getting the best digital services that the market can provide, and that they respond to competitive pressures on a daily basis. Data on consumers switching from service to service, or about the pace of innovation, or about responses to advertiser demands would all be relevant here.
  1. There has been a lot of concern in the role you play as gatekeepers, such as in app stores or in ranking search results for products or services. Do you think that this gatekeeper control is a concern, and what should antitrust enforcers and policymakers do about it? Here’s what we’re looking for in an answer: lots of companies play gatekeeper roles, from supermarkets to internet service providers. These CEOs could explain what, if anything, they think is different vis-a-vis the digital arena. They should also address how they adjust their algorithms to respond to competitive signals from consumers, and members of Congress should press them to be more transparent about how these algorithms work.
  2. We have heard accusations that your companies discriminate against your rivals and give special preference to your own products, whether in private label products or app stores or search results. How should antitrust law address self-preferencing? Here’s what we’re looking for in an answer: The CEOs should reflect on the wide variety of companies that are vertically integrated and thus compete with their own customers. They should explain how their companies are similar to and different from those firms. They should be pushed on issues of transparency and disclosures, because consumers should know how these decisions are made and what products and services they are buying. Finally, if they take any steps to keep data from one part of their business separate from their other businesses, they should explain how and why they do that, and how they ensure that it works.
  3. Many observers have expressed concerns about Big Tech companies buying up potential competitors before they become a real competitive threat. Have you seen any acquisitions by Big Tech companies (not necessarily yours) that raise that concern for you, and if so, why? Here’s what we’re looking for in an answer: This is an especially tricky one, and if any CEO were to name an acquisition that another Big Tech firm did that raised concerns, that would be an exciting moment in the hearing. The FTC has an ongoing investigation into exactly this question, so we will be listening for any hints about how that proceeding is going.
  4. We have four of the largest tech companies testifying today. As you analyze the tech landscape, which other companies or sectors raise competition concerns that you think this Committee should investigate? Here’s what we’re looking for in an answer: Huge swaths of the American economy are heavily concentrated. In the tech space, people often focus on Google, Apple, Facebook, and Amazon, and that makes sense, given their scale. But there are few chip makers, few broadband providers, few cell phone makers, et cetera. The CEOs could shed light on whether concentration in other parts of the economy affects them in ways that are relevant to bringing consumers the benefits of competition.

Conclusion

This hearing is the culmination of months of work by the Antitrust Subcommittee. It could be a theatrical performance, or it could elucidate key issues that are relevant to competition policy. We’re hoping for the latter, and we’ll definitely be watching. Pandemic must-see TV, for sure.