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Tuesday 20th March 2018

Big Tech Faces Questions in US over Competition, Power, Trust

Business

7Dnews London

Wed, 17 Jul 2019 10:04 GMT

Big Tech - companies such as Apple, Google, Facebook and Amazon – faced tough questions on Tuesday July 16th as US lawmakers focused on issues of potentially anticompetitive behaviour by the technology giants and expressed scepticism over Facebook's plan for a new digital currency.

According to an AP report, the US-based titans of the tech world have long enjoyed near unfettered growth and a mythic stature as humble, garage-based startups that grew up to dominate their rivals. 

However, as they have grown more powerful, critics have begun to question whether the companies stifle competition and innovation, and if their influence poses a danger to society.

An afternoon panel of the House Judiciary Committee focused on whether it is time for Congress to rein in these companies, which are among the largest on Earth by several measures. Central to that case is whether their business practices contravene century-old laws originally designed to combat railroad and oil monopolies.

For some on the panel, mostly Democrats, those laws are in need of updates or at least stricter enforcement. Ultimately, such action could lead to the break up of big online platforms, blocking their future acquisitions or imposing other limits on business dealings.

One charge brought by the panel was that the tech giants had enjoyed "de facto immunity" thanks to current antitrust policy in the US, which typically equates anticompetitive behaviour with higher prices for consumers. That allowed them to expand without restraint and to gobble up potential competitors at an early stage. This "startup kill zone" prevents smaller companies from challenging incumbents with innovative services and technology.

A group of four mid-level executives from the tech companies countered that their firms continue to innovate, that they face vigorous competition on all fronts — including from one another — and, perhaps most of all, that they were not monopolists in any way, shape or form.

The company representatives did not help their case by pleading ignorance on multiple occasions. Google's director of economic policy, Adam Cohen, said he was "not familiar" with how much Google pays Apple for the right to supply the default search engine for Safari on iPhones. ($9 billion in 2018 and $12 billion in 2019, according to a Democrat representative.) Cohen also said he was "not familiar" with allegations of widespread fraudulent listings on Google Maps.

Facebook's head of global policy development, Matt Perault, was unable to name the world's largest social network by active users. (It is Facebook.) Perault eventually admitted that four of the six largest social networks — Facebook, Facebook Messenger, Instagram and WhatsApp —are owned by Facebook.

Expert witnesses suggested it might be time to reassess antitrust policy. Timothy Wu, a law professor at Columbia University who has advocated for more expansive antitrust enforcement, noted concerns about a fall in the number of start-ups being formed, and wondered aloud whether the US will remain a place where start-ups thrive and launch new industries.

Fiona Scott Morton, a Yale economics professor, argued that stifled competition has hampered innovation and hurt both smaller businesses and consumers, who have no choice but to surrender their privacy and watch more advertising.

Earlier in the day, a Facebook executive appeared before a Senate panel to defend the company's ambitious plan to create a digital currency and pledged to work with regulators to achieve a system that protects the privacy of users' data. David Marcus, who leads the Libra project, faced sharp criticism from both Democrats and Republicans.

"Facebook is dangerous," asserted Senator Sherrod Brown of Ohio, the committee's senior Democrat. Like a toddler playing with matches, "Facebook has burned down the house over and over," he told Marcus. "Do you really think people should trust you with their bank accounts and their money?"

Republican Senator Martha McSally of Arizona said, "The core issue here is trust." Users will not be able to opt out of providing their personal data when joining the new digital wallet for Libra, McSally said.

US & Canada