Executives from Facebook, Google, Apple and Amazon defended their dominant positions in the tech ecosystem on Tuesday as Congress dug deeper into their business models looking for unfair business practices.
The executives from the major tech platforms were on Capitol Hill to discuss their market power before a House subcommittee. Congress and regulators have been investigating the companies for a host of issues related to everything from privacy policies and data collection to monopolistic behavior.
“There’s a kill zone around Google, Amazon, Facebook and Apple that prevents new startups from entering the market with innovative products and services to challenge these incumbents,” says Rep. David Cicilline of Rhode Island, chairman of the House Judiciary Committee.
The FTC and Department of Justice have divvied up oversight duties to uncover any areas of concern where the platforms could require new rules of operation, investigating Google’s power over search and advertising and Facebook’s control of social media through its ownership of Instagram, WhatsApp and Messenger. Just last week, Facebook was hit with a $5 billion fine over violations of a 2011 agreement with the Federal Trade Commission, which was meant to provide safeguards for consumer privacy.
“That suggests that this is not going to be all talk,” says Morgan Reed, executive director of The App Association, an industry group that represents app developers. Reed, talking by phone ahead of his appearance at the hearing, said it would be difficult to pass bipartisan legislation, but these discussions could pave the way for more action from the FTC and DOJ.
“This serves as a light-post to the FTC that it’s on safe ground [to act],” Reed says.
Besides the probes into Facebook and Google, Apple is under scrutiny for App Store policies and fees that dictate the fortunes of so many developers, including rivals like Spotify and Netflix. Meanwhile, Amazon faces concerns over its e-commerce and advertising platform that raises questions of conflict when it promotes its own products and services over those of rivals that are beholden to its ecosystem for sales.
Reed’s testimony to Congress mostly defended the tech platforms for helping the growth of thousands of small business and app developers, and he downplayed criticisms that they stymie competition. “The symbiotic relationship between apps and platforms is not perfect, but it has created a powerful ecosystem that continues to benefit consumers,” Reed says.
Facebook’s head of global policy development Matt Perault was forced to defend his company’s purchase of WhatsApp and Instagram, mergers that lawmakers worried gave it undo control over the social media sector. “Our acquisitions have been a powerful force for innovation,” Perault says.
Rep. Joe Neguse asked Perault if he considers Facebook a “monopoly,” and pointed to old company policies that restricted developers from leveraging its services if they built features that competed with its products. “This is no longer a policy maintained by Facebook,” Neguse says. “And I presume that is because this policy can be construed as an anti-competitive one.”
Amazon faced similar questions about how it could use the power of its e-commerce platform to squash competitors. Lawmakers worried that the company gathers data from independent merchants on its platform and uses their sales stats to inform its strategy to create private label brands. “Do you create products that directly compete with [the] most popular brands that are out there,” says Rep. Pramila Jayapal from the state of Washington.
Amazon’s associate general counsel Nate Sutton says the company does not use “individual seller data to directly compete with them.”
Not all lawmakers were critical of the size of the big tech companies. Rep. Jim Sensenbrenner of Wisconsin cautioned against rash actions, wary of calls from some lawmakers to break up companies. “We should not rush to amend the antitrust laws,” Sensenbrenner says, “or breakup companies by congressional fiat based upon false notions that being big is inherently bad or that everything a big company does should be presumed to be anti-competitive.”