A Quick Rundown of Big Tech’s Showdown with Congress
On 29 July 2020, CEOs Jeff Bezos (Amazon), Tim Cook (Apple), Sundar Pichai (Alphabet/Google), and Mark Zuckerberg (Facebook) were (virtually) brought before the House Judiciary Committee for a hearing ostensibly about antitrust concerns regarding big tech. However, the over five-hour-long spectacle almost immediately turned into a Festivus airing of grievances, with Congressional representatives hurling accusations at the Big Tech CEOs that ranged from stealing the content of smaller websites and blocking smaller competitors from the market to censoring conservative viewpoints and even outright treason. As The Washington Post’s Heather Kelly succinctly put it: “They came for blood.”
If you have most of a day to kill, you can watch the entire hearing on YouTube. I can’t recommend that, because, after an entire afternoon of intense, high-speed questions and accusations, I felt like I’d been repeatedly hit in the head with a hammer. But unlike most government hearings, I can’t say that it was boring.
Tech Regulation Seems Inevitable
After a couple of hours, I concluded that this hearing wasn’t meant for actual evidence gathering, but to be a sort of struggle session. That seemed to have been confirmed by Chairman David Cicilline’s pre-written (he literally read it from a piece of paper) closing statement:
This hearing has made one fact clear to me: these companies, as they exist today, have monopoly power. Some need to be broken up. All need to be properly regulated and held accountable.
His conclusion had been reached long before the hearing, and it was clear nothing said there was going to alter that.
Democrats and Republicans in Washington don’t agree on much, but one point of commonality is that Big Tech is a problem. The stumbling block that prevents any real legislation is that each party thinks tech is a problem for opposing reasons.
For example, Republican Jim Sensenbrenner asked Zuckerberg why Donald Trump Jr. was suspended for sharing a video promoting hydroxychloroquine as a COVID-19 cure (which took Zuckerberg by surprise, since Trump was temporarily banned from Twitter, not Facebook), only for the Democratic congressman Cicilline to ask later why Facebook wasn’t doing more to prevent the spread of COVID-19 misinformation. The Wall Street Journal explored this disparity.
If a single party were to gain control of the House, Senate, and White House in November, it seems likely that tech regulation would be near the top of the priority list, but I wouldn’t expect it until one party is solidly in control.
What Happened at the Hearing
To start, each of the four CEOs gave lengthy opening statements, all of which were published before the hearing in PDF. Politico has done the yeoman’s work of transcribing those PDFs into a Web page. Daring Fireball’s John Gruber posted a breakdown and analysis of Cook’s opening statement. Rob Pegoraro also wrote up his analysis of the four statements in Forbes, zeroing in on Cook’s statement, saying that it “comes closest to offering outright alternative facts.” (Alternative facts, of course, being the present-day euphemism for lies.)
Cook got off relatively easy, with only a handful of questions—the New York Times confirmed that he received the fewest questions by far. However, Apple still took some licks, such as in relation to a subpoenaed email in which Eddy Cue said flat-out that the rejection of an app from publisher Random House led to the publisher finally joining the (then) iBookstore. We’ll have more to say about the accusations against Apple, and Apple’s responses, in a future article.
Adi Robertson of The Verge wrote a good overall summary of the hearing, which summarizes the key exchanges in neat little blocks.
If you want something even more concise, the BBC breaks the five-hour ordeal into five key points:
- Zuckerberg emails discussing the threat of Instagram
- Apple shown cutting special deals with Amazon despite claiming to treat all developers the same
- Republican accusations of bias
- Amazon refusing to give a straight answer about using third-party seller data
- Google being accused of working for China
The New York Times’s take focused on each of the four executives and how they did, with high marks to Bezo’s office setup and discussion of the charge that Apple is profiteering from the COVID-19 pandemic.
The Good Times Still Roll, for Now
Despite a day that could only be described as “rough” for the four tech giants, it was immediately followed by a day of strong earnings for all four companies. Apple pulled off a record Q3 2030, despite a drop in iPhone sales, supply chain woes, and being forced to close stores (see “Apple Q3 2020 Breaks Records While the World Burns, Next iPhone to Be Fashionably Late,” 30 July 2020).
Facebook reported an 11% increase in revenue despite economic calamity and a mass boycott by major advertisers. Google took a bit of a hit but still beat analyst estimates and reported a quarterly profit of $7 billion. Perhaps most stunning of all was Amazon’s 40% year-over-year revenue jump that enabled it to beat its expected earnings per share by a jaw-dropping $8.80. (To give you a sense of the magnitude here, it’s usually a big deal when a company beats EPS estimates by a few nickels.)
Despite the worst economic meltdown since at least 2008, all four of these companies are still rolling in dough, and Congressional gridlock practically guarantees that they will slide past US regulators for now. It’s a different story in Europe, and as we noted, that could change in the US after the November elections as well.
Thanks for this coverage! Very much looking forward to your forthcoming analysis of Apple.
I have mixed feelings about Apple. They do so much awesome. And they do appear to champion our privacy. But they also have a track record of anti competitive behavior. Sometimes you can justify it by their ecosystem and creating a high quality experience within the walled garden. But other times they create restrictions that have no justification other than profit motive.
Looking forward to following this!
Same mixed feelings here. The good they do is great. But they can also be ***holes. And when they are, their holier than though act is just obnoxious.
Anyone thought it was weird that Microsoft was absent? Not that long ago, they were the epitome of evil giant tech company. Now, they are completely forgotten – a has been evil empire.
Maybe that’s why they want to buy TikTok.
They learned to keep their mouths shut after the devastating US vs. Microsoft antitrust suit they lost:
Except for gaming, Microsoft isn’t exactly a top tier player in consumer services for kids and young adults. In fact, they haven’t been very good at non gaming entertainment across the board. This market is an extremely valuable one in the US economy, and Facebook, Apple, Google and so many other companies are raking in big bucks from this niche, especially among teens. But oh how they have tried…Zune, Nokia, MS Stores, etc. They have been salivating over the kids, young adult and entertainment markets for decades, and they’ve done extremely well with their business focused social media LinkedIn acquisition. And MS has always lusted at being a major player in the ad sales business, even though Bing never set the world on fire.
If they don’t blow it, TikTok could be a great acquisition for their portfolio. But Facebook and other major players reputedly have competing services in late stage development, so there is a chance that TikTok could end up like MySpace.
Facebook just announced its TikTok competitor:
And TikTok is understandably not happy about it. Microsoft can probably negotiate a better deal.
I also agree with Lisa Li that rumors flying around about Apple being interested in TikTok are not likely:
(Disclaimer: I am not a Fox News fan, but Fox Business is pretty reliable.)
Apple was quick to deny any interest in TikTok.
As for why Microsoft wants TikTok, the simple answer is that Nadella wants to bring the next generation into the Microsoft fold. It’s the same reason Microsoft paid over $1 billion for Minecraft.
It looks like there’s a rival suitor for TikTok:
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