Tag: Tech antitrust hearing

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Apple’s App Store commission structure called into question in antitrust hearing

Apple CEO Tim Cook defended the company’s App Store commission structure in his sworn testimony before the House Antitrust Subcommittee on Wednesday. He claimed the majority of the apps pay no commission at all, with others paying either 15 or 30 percent, based on the specifics of their particular situation. He said developers were all treated equally and that Apple wouldn’t raise commissions, because it had to compete for developer interest in its platform as well.

But the documents shared by the House subcommittee as part of their investigation indicate that exceptions to Apple’s rules have been made — notably, with Amazon’s Prime Video app. In addition, Apple may have never raised commissions, but discussions weren’t off the table. It had once even considered raising commissions to 40% in particular situations.

The lawmakers had come to the hearing armed with internal Apple emails and interviews from App Store developers who argued that Apple doesn’t uniformly enforce its rules and plays favorites. But their questioning of Cook over App Store fees, combined with a format that limited execs’ ability to respond at length, initially seemed to reveal little in terms of new information about Apple’s practices.

For instance, when asked directly about how the App Store worked, Cook simply restated the store’s published rules — that is, for app developers who have to pay commissions, they pay only 15 or 30 percent. The current guidelines require 30% for apps selling digital goods or services, with a drop to 15% in year two for subscription apps. The rules also document a carve-out for “reader” apps like audiobook apps, streaming services, news publications, and other competitive products which have the option of forgoing in-app purchases.

 

Cook also squeezed in a mention about how the vast majority of App Store apps, 84%, pay nothing to Apple in commissions. It’s the remaining 16% that pay, he noted.

And when asked if Apple was the sole gatekeeper as to what gets published on the App Store, Cook agreed that it was — given that the App Store was a “feature of the iPhone, much like the Camera and the chip is.” He clarified that Apple’s control over apps only extended to native software applications, not web apps, but denied Apple treated developers unfairly.

“We treat every developer the same. We have open and transparent rules,” Cook said, in his testimony. “It’s a rigorous process, because we care so deeply about privacy and security and quality. We do look at every app before it goes on,” he added.

But emails in 2016 between Apple SVP Eddy Cue and Amazon CEO Jeff Bezos, shared here on the House Judiciary Committee’s website, indicate that Apple, in fact, appears to have negotiated a special deal with Amazon over its Amazon Prime Video app for iOS and Apple TV.  In an email dated Nov. 2016 — before the 2017 launch of the Prime Video tvOS app —  Apple agreed to take only a 15% revenue share for customers that signed up in the app using Apple’s payment mechanism. (Typically, subscription apps don’t drop from 30% to 15% until year two.)

Apple this April confirmed  it had a special program for Prime Video and a small handful of other apps, which were subscription video entertainment providers. The program allowed those companies to rent or sell movies and TV shows to customers using the payment methods the companies already had on file, as well as more deeply integrate with Siri. But Apple hadn’t said that this special program would include a reduced commission on subscriptions or any other in-app upsells, as these emails confirm were points of discussion.

This wouldn’t be the first time Apple saw its commission structure as having some room to flex.

When Cook was questioned as to whether there was anything that could stop Apple from raising commissions to, say, 50%, the CEO responded that Apple had never increased commissions since day one. He also argued, when asked if anything could stop it from doing so, that competition for developer interest would stop it from raising its cut.

“There is a competition for developers, just like there’s a competition for customers. And so the competition for developers — they write their apps for Android or Windows or Xbox or Playstation,” said Cook. “We have fierce competition on the developer side and the customer side which is essentially — it’s so competitive, I would describe it as a street fight for market share in the smartphone business,” he added.

But in internal emails from 2011, Apple did discuss raising commissions — all the way to 40% for the first year of recurring subscriptions. “I think we may be leaving money on the table if we just asked for about 30% of the first year of sub,” Cue had written at the time.

Of course, Apple didn’t go so far as to actually make that change in the years that passed. But these emails indicate there’s more to Apple’s thinking — and its discussions around the commission structure — than the even playing field Cook testified to.

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Zuckerberg unconvincingly feigns ignorance of data-sucking VPN scandal

Facebook’s Mark Zuckerberg appeared less than entirely truthful at today’s House Judiciary hearing, regarding last year’s major Onavo controversy, in which his company paid teenagers to use a VPN app that reported detailed data on their internet use. Though he may not have outright lied about it, his answers were evasive and misleading enough to warrant a rushed clarification shortly afterward.

Rep. Hank Johnson (D-GA) was asking Zuckerberg to confirm a series events last year first reported by TechCrunch: A VPN app called Onavo, owned by Facebook, was kicked out of Apple’s App Store for collecting and reporting usage data while purporting to provide a protective service.

Soon afterward, Facebook quietly began paying people — 18 percent of whom were teenagers — to install the “Facebook Research” app, which did much the same thing as Onavo under a different name. TechCrunch reported this and Apple issued a ban before the end of that day; Facebook claimed to have removed it voluntarily, but this was shown not to be true.

Rep. Johnson questioned Zuckerberg along these lines, and the latter repeatedly expressed his unsureness about and lack of familiarity with these issues.

Johnson: When it became public that Facebook was using Onavo to conduct digital surveillance, your company got kicked out of Apple’s App store, isn’t that true?

Zuckerberg: Congressman, I’m not sure I’d characterize it in that way.

Johnson: I mean, Onavo did get kicked out of the app store, isn’t that true?

Zuckerberg: Congressman, we took the app out after Apple changed their policies on VPN apps.

Johnson: And it was because of the use of the surveillance tools.

Zuckerberg: Congressman, I’m not sure the policy was worded that way or that it’s exactly the right characterization of it… [The policies are explained below.]

Johnson: Let me ask you this question, after Onavo was booted out of the app store, you turned to other surveillance tools, such as Facebook Research App, correct?

Zuckerberg: Congressman, in general, yes, we do a broad variety—

Johnson: Isn’t it true, Mr. Zuckerberg, that Facebook paid teenagers to sell their privacy by installing Facebook Research App?

Zuckerberg: Congressman, I’m not familiar with that, but I think it’s a general practice that companies use to, uh, have different surveys and understand data from how people are using different products and what their preferences are.

Johnson: Facebook Research app got thrown out of the App Store too, isn’t that true?

Zuckerberg: Congressman, I’m not familiar with that.

Image Credits: YouTube

Of course, the idea that Zuckerberg was not familiar with events that made headlines, took down Facebook’s internal apps for days, and prompted an angry letter to him from a senator is absurd. (After all, Facebook responded.)

Perhaps intuiting that this particular claim of ignorance was a bridge too far (and perhaps in response to some frantic off-screen action in the CEO’s barnlike virtual testimony HQ), Zuckerberg took the opportunity to backpedal a few minutes later:

In response to Congressman Johnson’s question, before I said that I wasn’t familiar with the Facebook research app when I wasn’t familiar with that name for it. I just want to be clear that I do recall we used an app for research and it’s since been discontinued.

Of course, although Zuckerberg may plausibly have been unsure about the name, it’s not to be believed that he was not familiar with the events of that time, as they were both highly publicized and very costly for Facebook. Naturally he would also have been refreshed on them during preparation for this testimony.

Senator Warner calls on Zuckerberg to support market research consent rules

That Zuckerberg is unfamiliar with the exact wording of Apple’s rules is possible, even probable, but it was no secret that the rules were changed basically in response to reports of Facebook’s Onavo shenanigans. Here is what Apple said at the time:

We work hard to protect user privacy and data security throughout the Apple ecosystem. With the latest update to our guidelines, we made it explicitly clear that apps should not collect information about which other apps are installed on a user’s device for the purposes of analytics or advertising/marketing and must make it clear what user data will be collected and how it will be used.

Later, when TechCrunch showed that Facebook had been using an enterprise deployment tool to essentially sideload spyware onto teenagers’ phones, Apple said this:

We designed our Enterprise Developer Program solely for the internal distribution of apps within an organization. Facebook has been using their membership to distribute a data-collecting app to consumers, which is a clear breach of their agreement with Apple. Any developer using their enterprise certificates to distribute apps to consumers will have their certificates revoked, which is what we did in this case to protect our users and their data.

So Facebook was the reason, implicitly first, then later explicitly, for these App Store lockdowns. Rep. Johnson put the whole thing quite plainly at the end of his questions.

Johnson: You tried one thing and then you got caught, made some apologies, then you did it all over again. [long pause]… Isn’t that true?

Zuckerberg: Congressman, I respectfully disagree with that characterization.

You can watch the full hearing here:

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Apple CEO Tim Cook questioned over App Store’s removal of rival screen time apps in antitrust hearing

Last year, Apple href="https://techcrunch.com/2018/12/05/apple-puts-third-party-screen-time-apps-on-notice/"> removed a number of screen time and parental control apps from its App Store, shortly after the company had released its own first-party screen time solution with the launch of iOS 12. At today’s antitrust hearing, Apple CEO Tim Cook was questioned about the move, given the anti-competitive implications.

Shortly after Apple debuted its own Screen Time feature set, several third-party app makers suddenly saw their own screen time solutions come under increased App Store review. Many apps also saw their app updates rejected or their apps removed entirely. The impacted developers had used a range of methods to track screen time, as there was no official means to do so. This had included the use of background location, VPNs, and MDM-based solutions, and sometimes a combination of methods.

Apple defended its decision at the time, saying the removals had put users’ privacy and security at risk, given that they required access to a device’s location, app use, email accounts, camera permissions, and more.

But lawmakers questioned Apple’s decision to suddenly seem to care about the user privacy threats coming from these apps — many of which had been on the market for years.

Rep. Lucy McBath (GA-D) began the line of questioning by reading an email from a mother who wrote to Apple about her disappointment over the apps’ removals, saying that Apple’s move was “reducing consumer access to much-needed services to keep children safe and protect their mental health and well-being.” She then asked why Apple had removed apps from competitors shortly after releasing its own screen time solution.

Cook responded much as Apple did last year, by saying the company was concerned about the “privacy and security of kids,” and that the technology the apps used was problematic.

“The technology that was being used at that time was called MDM, and it had the ability to sort of take over the kid’s screen, and a third party could could see it,” Cook said. “So we were worried about their safety.”

That’s perhaps not the most accurate description of how MDM works, as it describes MDM as some sneaky remote control tool. In reality, MDM technology has legitimate uses in the mobile ecosystem and continues to be used today. However, it was designed for enterprise use — like managing a fleet of employee devices, for example, not consumer phones. MDM tools can access a device’s location, control app use, email, and set various permissions, among other things that a corporate entity may want to do as part of their efforts in securing employee devices.

In a way, that’s why it made sense for parents who wanted to similarly control and lockdown their children’s iPhones. Though not a consumer technology, the app developers had seen a hole in the market and had found a way to fill it using the tools at their disposal. That’s how the market works.

Apple’s argument, isn’t wrong, though. The way the apps used MDM was a privacy risk. But rather than banning the apps outright, it should have offered them an alternative. That is, instead of just booting out its competition, it should have also built a developer API for its iOS Screen Time solution in addition to the consumer-facing product.

Such an API could have allowed developers to build apps that could tap into Apple’s own screen time features and parental controls. Apple could have given the apps a deadline to make the transition instead of ending their businesses. This wouldn’t have harmed the developers or their end users, and would have addressed the privacy concerns associated with the third-party apps.

“The timing of the removals seem very coincidental,” McBath pointed out. “If Apple wasn’t attempting to harm competitors in order to help its own app, why did Phil Schiller, who runs the App Store, promote the Screen Time app to customers who complained about the removal of rival parental control apps?,” she asked.

Cook replied that there are today over 30 screen time apps in the App Store so there is “vibrant competition for parental controls out there.”

But McBath noted that some banned apps were allowed back into the App Store six months later, without any significant privacy changes.

“Six month is truly an eternity for small businesses to be shut down. Even worse, if all the while a larger competitor is actually taking away customers,” she said.

Tim Cook wasn’t given a chance to respond further to this line of questioning as the McBath moved on to question Apple’s refusal to allow Random House a way to sell e-books in its own app outside of Apple’s iBooks.

Cook deflected that question, saying “there are many reasons why the app might not initially go through the App store,” noting it could have been a technical problem.

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Bezos ‘can’t guarantee’ no anti-competitive activity as Congress catches him flat-footed

At today’s House Judiciary Committee hearing, Amazon CEO Jeff Bezos bungled attempts to assuage concerns that the company poaches ideas from its competitors, taking sustained fire from Rep. Pramila Jayapal (D-WA) and others. Faced with testimony from employees that there is “nobody enforcing” policies, resulting in “a candy shop” of seller data, Bezos admitted to what amounts to ignorance or complicity.

Jayapal’s interrogation was one of precious few substantive exchanges in a hearing dominated by tiresome grandstanding and uninformed or irrelevant lines of questions.

Amazon has been dogged for years with well-substantiated allegations that it uses its bird’s-eye position in online retail, much of which passes through its platform, to spot new products and categories and enter them using that inside information — often taking huge losses to undercut the existing players in the market.

Jayapal — who represents the district in which the company is headquartered and has gone head to head with the company numerous times — began by asking straight out whether Amazon does this (Wording of questions and answers has only been slightly edited for clarity.):

Jayapal: Does Amazon have access and use third party seller data when making business decisions?

Bezos: I can’t answer that question yes or no. I can tell you we have a policy against using seller-specific data to aid our private label business but I can’t guarantee you that that policy has never been violated.

In response, Jayapal cited a recent WSJ report citing multiple instances where Amazon had done just that:

Jayapal: You’re probably aware that an April 2020 report in the Wall Street Journal revealed that your company does access data on third party sellers both by reviewing data on popular individual products and sellers and making tiny categories that allowed your company to categorically access detailed seller information in a supposedly aggregate category do you deny that report?

Bezos: I’m familiar with the Wall Street Journal article you’re talking about. We continue to look into that very carefully, I’m not yet satisfied we’ve gotten to the bottom of it. It’s not as easy to do it as you think because some of the sources in the article are anonymous.

Jayapal: I’ll take that as a you’re not denying that.

“It’s a candy shop, everyone can have access to anything they want.”
Her next move was a damning quote from a former employee that Bezos seemed at a loss to counter.

Jayapal: A former Amazon employee and third party sales an recruitment told this committee, quote, “there’s a rule but there’s nobody enforcing or spot checking. They just say don’t help yourself to the data. It’s a candy shop, everyone can have access to anything they want.” Do category managers have access to non public data about third party products and businesses?

Bezos: Uh, here’s what I can tell you. We do have certain safeguards in place. we train people on the policy, we expect people to follow that policy the same we would with any others. It’s a voluntary policy [in that having such a policy is voluntary, not that it is voluntary to follow that policy, he clarified]. If we found that someone violated it, we would take action against them.

Jayapal: Well, there’s numerous reports and the committee has conducted interviews with former employees that confirm that there are employees that do have access to that data and are using it. If you thought you were actually enforcing these rules, do you think that that’s working? There’s credible reporting that has documented breaches of these rules you’ve put into place, and this committee has interviewed employees that say that these breaches typically occur.

WASHINGTON, DC - JULY 29: Rep. Pramila Jayapal, D-WA, speaks during the House Judiciary Subcommittee hearing on Antitrust, Commercial and Administrative Law on Online Platforms and Market Power in the Rayburn House office Building, July 29, 2020 on Capitol Hill in Washington, DC.

(Photo by Mandel Ngan-Pool/Getty Images)

After confirming that “aggregate” data could be on as little as a single seller under Amazon’s policy, she then began a lengthy presentation of why this was obviously a serious concern for competition:

Jayapal: Interviews with former employees have made it clear that that aggregate data essentially allows access to highly detailed data in those product categories – there’s the example of Fortem, a small business that had no direct competitors, except for Amazon Warehouse Deals, a resale clearance account that only sold 17 units. An Amazon employee accessed a detailed sales report on Fortem’s product with information on how much the company spent on advertising per unit and the cost to ship each trunk. And then Amazon launched its own competing products in October 2019. That’s a major loophole. And I go back to the general counsel’s statement to this committee very clearly that there was no access to this data, that Amazon does not use that data for its own benefit. And I’m now hearing you say, well you’re not so sure that’s going on.

…You have access to the entirety of sellers pricing and inventory information, past, present and future, and you dictate the participation of third party sellers on your platform. So you can set the rules of the game for your competitors but not actually follow those rules yourself. Do you think that’s fair to the mom and pop third party bus that are trying to sell on your platform?

Bezos: I appreciate that question and I like it a lot, because I really wanted a chance to address that. I’m very proud of what we’ve done for third party sellers on this platform…

Sensing Bezos was bloviating and/or playing for time, Jayapal cut him off to make her final point:

Jayapal: So you might allow third party sellers onto your platform, but if you’re continuously monitoring the data to make sure that they’re never gonna get big enough that they can compete with you, that is actually the concern that the committee has. The whole goal of this committee’s work is to make sure there are more Amazons, more Apples, more companies that get to innovate and small businesses that get to thrive. That is why we need to regulate these marketplaces, so that no company has a platform so dominant that it is essentially a monopoly.

“Mr. Bezos, did you personally sign off on the plan to raise prices after Amazon eliminated its competition?” “I don’t remember that at all.”
Rep. Jayapal’s questions seemed to open the season on Bezos. Representative Mary Scanlon (D-PA) soon highlighted Amazon’s willingness to lose hundreds of millions of dollars to kneecap the competing Diapers.com:

Scanlon: The price war against Diapers.com worked, and within a few months it was struggling, and so Amazon bought it. After buying your leading competitor here, Amazon cut promotions like Amazon.mom and the steep discounts it used to lure customers away from Diapers.com, and then increase the prices of diapers for new moms and dads. Mr. Bezos, did you personally sign off on the plan to raise prices after Amazon eliminated its competition?

Bezos: I don’t remember that at all.  What I remember is that we matched competitors’ prices and I believe we followed diapers.com. This was 11 years ago so you’re asking a lot of my memory.

Then the Chairman, Rep. David Ciccilline (D-RI), took the opportunity to get some more direct answers on Rep. Jayapal’s line of questions.

House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law Chair David Cicilline, D-RI, speaks during a hearing on "Online Platforms and Market Power" in the Rayburn House office Building on Capitol Hill in Washington, DC on July 29, 2020. (Photo by MANDEL NGAN/POOL/AFP via Getty Images)

Cicilline: Isn’t it an inherent conflict of interest for Amazon to produce and sell products on its platform that compete directly with third party sellers, particularly when you, Amazon, set the rules of the game?

Bezos: Thank you… no, I don’t believe it is. We have… the consumer is ultimately the one making the decisions about what to buy, what price to buy it at, who to buy it from.

Cicilline: That’s not the question, Mr. Bezos. The question is is there an inherent conflict of interest. …You said you can’t guarantee that the policy of not sharing third party sellers data with Amazon’s own line hasn’t been violated, you can’t be certain. Can you please explain that to me? Can you list examples of when that policy has been violated? Shouldn’t third parties know for sure that data isn’t being shared with your own line of competitors?

Bezos: What think is important to understand is we have a policy against using the individual seller data to compete with our private label products.

Cicilline: You couldn’t assure Ms. Jayapal that that policy isn’t violated routinely!

Bezos: Well, I mean, we are investigating that. I do not want to go beyond what I know right now, but we are as a result of that Wall Street Journal article, we are looking at that very carefully.

The Committee’s questioning of Google’s Sundar Pichai, Facebook’s Mark Zuckerberg, and Apple’s Tim Cook was nowhere near this level, but the Amazon portions were effective — if only to see one of the world’s richest and most powerful people stumbling over his words, unable or unwilling to answer basic questions. Bezos has little experience with these hearings and it showed — no doubt this has been as informative for him as it has been for Congress.

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Before buying Instagram, Zuckerberg warned employees of ‘battle’ to ‘dislodge’ competitor

In one of the first substantive moments at Wednesday’s major tech hearing, Facebook’s 2012 acquisition of Instagram came under fire, unearthing a few new revelations about the company’s internal thinking at the time.

Alluding to new documents provided to the committee as part of its ongoing year-long antitrust investigation, House Judiciary Committee Chairman Jerry Nadler said emails between Mark Zuckerberg and other Facebook executives at the time tell “a very disturbing story.”

Nadler went on to declare that Facebook’s acquisition of Instagram violated antitrust laws. “If this was an illegal merger at the time of the transaction, why shouldn’t Instagram now be broken off into a separate company?” Nadler asked.

In a video question and answer session on April 6, 2012 — three days before announcing the Instagram acquisition — Zuckerberg describes the threat posed by the social photo sharing app, mentioning Facebook’s own “not awesome” mobile app that users only “tolerate.”

“They’re growing well. We need to dig ourselves out of a hole. The good news is, we’ve been doing that. The bad news is that they are growing really quickly, they have a lot of momentum and it’s kind of going to be tough to dislodge them. We have a hard battle ahead of ourselves there.”

In emails obtained by the committee, Nadler quotes Zuckerberg saying “one thing about startups is you can often acquire them” — and beginning with Instagram, Facebook has certainly done that.

Facebook Buys Instagram For $1 Billion, Turns Budding Rival Into Its Standalone Photo App

“I’ve always been clear that we viewed instagram as both a competitor and as a complement to our services,” Zuckerberg said Wednesday, defending the company and downplaying Nadler’s critiques.

“At the time, almost no one thought of them as a general social network,” Zuckerberg claimed.

The reality is that Instagram was already wildly popular, with more than 100,000 daily downloads in Apple’s App Store. “At 27 million registered users on iOS alone, Instagram was increasingly positioning itself as a social network in its own right — not just a photo-sharing app,” TechCrunch’s Sarah Perez wrote at the time.

Given the climate of the deal, the House Judiciary chairman threatened that unwinding the merger would be appropriate, even eight years later.

“… Facebook saw Instagram as a powerful threat that could siphon business away from Facebook so rather than compete with it, Facebook bought it,” Nadler said.

“This is exactly the same kind of anticompetitive action that the antitrust laws were designed to prevent.”

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Lawmakers argue that big tech will grow even bigger as the pandemic drives people online

In his opening statements, the chairman of Wednesday’s historic tech hearing argued that regulating tech’s most dominant players is vital in the midst of the ongoing pandemic that has driven even more of American life online.

“Prior to the COVID-19 pandemic, these corporations already stood out as titans in our economy,” House Judiciary Antitrust Subcommittee Chair David Cicilline said. “In the wake of COVID-19, however, they are likely to emerge stronger and more powerful than ever before.”

The argument that tech stands to benefit from the COVID-19 crisis is a smart one — and a timely attack that’s difficult to dispute. While many major companies in other industries are struggling, grappling with layoffs or filing for bankruptcy, many of tech’s largest tech companies stand to emerge from the economic storm largely unscathed if not better off.

In his own opening remarks, ranking member Jim Sensenbrenner also argued that because Americans are relying more on online companies than ever before, tech’s power must be examined in light of the pandemic.

“That responsibility comes with increased scrutiny of your dominance in the market,” Sensenbrenner said.

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How to watch big tech’s CEOs tangle with Congress on antitrust issues and more

Jeff Bezos, Tim Cook, Sundar Pichai and Mark Zuckerberg will defend their companies before the House Antitrust Subcommittee Wednesday in a hearing that will make tech industry history, no matter what happens.

Given that the tech giants are accustomed to answering to no one in particular, collecting four of them on a substantive topic is notable in its own right. Remarkably, Wednesday will mark the first time Amazon’s CEO has faced lawmakers in a public hearing — and they’re bound to have plenty of questions for the take-no-prisoners online retail behemoth.

For Apple and Cook, who prefer to stay above the public-facing political fray, it’s the first time before Congress in years. Facebook and Google have both been called to Congress more recently, but lawmakers have still barely scratched the surface of two companies that have completely reshaped modern life.

If you’re just catching up, read our explainer about why this whole thing is happening at all and what to expect. You can also read the opening statements from Apple, Amazon, Facebook and Google and skip them tomorrow so you can spend more time with your Nespresso or whatever it is we’re all doing to get by these days. The statements provide a good idea of how the companies will play defense against regulators keen to install some safety features before we barrel into a fresh decade of unchecked growth.

There are a lot of unknowns heading into the hearing. Will lawmakers extract any useful revelations or will it be five hours of “let us get back to you on that?” Could tech executives manage to be even more evasive now that they’re appearing remotely via video chat? Will some subcommittee members lead the hearing so far into off-topic territory that we learn nothing about the business practices that scaled an industry of market-owning giants? And most importantly: On a scale of one to supervillain, what kind of vibes will Bezos give off?

We hope to know the answers to all of these questions and more — possibly even a question from a lawmaker or two — as we cover Wednesday’s events closely. If you’re interested in watching it go down yourself, you can tune into the livestream right here (well, up there) on Wednesday July 29 at 12PM ET.

What to expect from tech’s historic antitrust showdown with Congress

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Read how Apple, Amazon, Facebook and Google plan to defend themselves to Congress

With their big day before lawmakers just around the corner, previews of Google (well, Alphabet), Facebook, Amazon and Apple’s opening statements are now available on the House Judiciary Committee’s site. On Wednesday, the CEOs of each company will appear in an unusually executive-packed Congressional hearing focused on antitrust concerns over the business practices.

While the opening statements are just a glimpse of the hearing’s potential topics, they do provide a useful outline for the strategy each company will use to fend off accusations that their businesses have grown on such an enormous scale due to anticompetitive behavior. In recent hearings, tech executives have mostly managed to stick to safe, well-rehearsed lines, so if any moments deviate from these scripts those will likely be the most interesting or useful bits of testimony.

In their opening statements, the chief executives of each company make some similar arguments–for example, all four claim that their companies still face intense competition, especially in global markets. Amazon and Apple also say that their ecosystems have created millions of job for third-party businesses that use their platforms.

But the CEOs also take slightly different approaches to how they present their opening statements. For example, Jeff Bezos, Amazon’s chief executive officer, and Sundar Pichai, the CEO of Alphabet and Google, go into their personal backgrounds in detail. Meanwhile, Apple CEO Tim Cook and Facebook CEO Mark Zuckerberg focus on the fact that their companies are based in the United States: Cook calls Apple an “uniquely American company,” and Zuckerberg says that Facebook is a “proudly American company.”

Though Amazon is the largest online retailer in America, Bezos will argue in his opening statement that it is a small player in the global retail market, with Amazon accounting for “less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S.” Among domestic competitors, Bezos focuses on Walmart, stating that it is “a company more than twice Amazon’s size,” and also names newer competitors like Shopify and Instacart.

Bezos’ opening statement also dwells on the small- and medium-sized retailers that sell products on Amazon’s platform, estimating that third-party businesses on Amazon have created over 2.2 million new jobs around the world.

Cook says that the “smartphone market is fiercely competitive,” with rivals like Samsung, LG, Huawei and Google, and that all of Apple’s product categories, including the iPhone, do not have a dominant market share in any of the markets where it does business.

Like Bezos, Cook’s statement also argues that Apple’s ecosystem has helped create jobs. He says that the App Store now hosting more than 1.7 million apps, only 60 of which were developed by Apple, and “more than 1.9 million American jobs in all 50 states are attributable to Apple.”

Even though Google Search is the dominant search engine in the U.S., Pichai will claim that is facing down a large roster of rivals, including services that aren’t specifically search engines. For example, he cites Amazon’s Alexa, Twitter, WhatsApp, SnapChat, and Pinterest as alternative sources of information and says most people turn to e-commerce sites like Amazon, eBay and Walmart for information about products.

Google’s ad business is also expected to be in the spotlight during the hearings. Pichai’s opening statement argues that advertisers have “an enormous amount of choice” for platforms, including Twitter, Instagram, Pinterest, Comcast and others, that means advertising costs have lowered by 40% over the last decade.

Zuckerberg also argues that Facebook still faces intense competition, especially in other countries. Though Zuckerberg doesn’t reference any specific company or app, he highlights competition from the Chinese tech industry, telling lawmakers that “China is building its own version of the internet focused on on very different ideas, and they are exporiting their vision to other countries.”

While Facebook has been criticized for acquiring companies like Instagram and WhatsApp, Zuckerberg argues that those services improved under his company’s ownership.

The big tech hearing with the House Judiciary’s Antitrust Subcommittee will begin Wednesday at 12PM ET and we’ll be following along over the course of the day so check back for coverage of the most noteworthy moments. For reference, the full opening statements can be found below.

– Apple
– Amazon
– Google
– Facebook

What to expect from tech’s historic antitrust showdown with Congress

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What to expect from tech’s historic antitrust showdown with Congress

Chief executives from four of the world’s most powerful companies will defend the vast empires they’ve built in testimony before Congress on Wednesday.

In a hearing held by the House’s Antitrust Subcommittee, Jeff Bezos, Tim Cook, Sundar Pichai and Mark Zuckerberg will all face questions about how their business practices propelled them into the market-dominant giants they are today. Amazon, Apple, Google and Facebook make up four of top six most valuable public companies in existence and are widely regarded as reshaping the consumer world, both within the tech industry and beyond.

The event will begin at 12 PM ET and may run all day, given the breadth of relevant topics and the four very different, deeply influential tech companies that we’ll be hearing from. Here’s what to expect from the big day.

Tech’s top CEOs will face Congress in antitrust hearing now set for Wednesday

What’s the big deal?

There have been quite a few Congressional hearings examining tech companies in recent years, but usually those companies send their lead counsel — not their CEOs.

When a tech CEO appears before Congress it’s a sign that whatever they’re testifying about poses a real enough threat to their business that it’s better to place nice with lawmakers rather than blowing them off.

While Tim Cook, Sundar Pichai and Mark Zuckerberg have all testified before Congress before — Pichai in 2018, Zuckerberg in 2018 and 2019 and Tim Cook way back in 2013 — this will be the first time Jeff Bezos has agreed to come before Congress. Given the amount of concerns lawmakers have expressed over Amazon in recent years, that’s a big deal.

Who’s running the show?

The hearing is being coordinated by the House Judiciary’s Antitrust Subcommittee, a subsection of the broader House committee that focuses on antitrust issues, among other topics. Because it’s in the House, the subcommittee is controlled by Democrats and is helmed by David Cicilline, a prominent and serious critic of big tech companies. It’s worth noting that Val Demings, who is currently being considered as Joe Biden’s running mate, is among the Democratic members.

On the Republican side, Jim Sensenbrenner is the ranking member. The outspoken Trump supporter Matt Gaetz also serves on the subcommittee and we can expect to hear a lot from him for reasons we’ll get into it a little bit.

What is this all about?

The title of the hearing is “Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google .” Five previous hearings were also part of the subcommittee’s year-long antitrust investigation into digital markets, touching on issues like data privacy, innovation, the free press and competition. Expect all of those angles to come up at Wednesday’s hearing.

What the hearing is about and what will end up being the focus could be two different things, depending on how well Cicilline is able to rein things in as the subcommittee’s chair. As we mentioned previously, Florida Republican Matt Gaetz has signaled his interest in steering the four tech CEOs to the less substantive but more politically expedient topic of anti-conservative bias in tech.

Earlier this week, Gaetz made a criminal referral to the Justice Department that accused Mark Zuckerberg of lying in his 2018 testimony to Congress when he said Facebook does not have a bias against conservatives. The issue of anti-conservative bias is a favorite among Trump-friendly Republicans, and Gaetz is likely to veer away from very real concerns over anti-competitive behavior among tech companies toward unproven bias claims.

Will they really say anything useful?

House Judiciary Committee Chairman Jerry Nadler and Antitrust Subcommittee Chairman David Cicilline stressed the importance that the tech CEOs are “forthcoming” on Wednesday, emphasizing the “central role these corporations play in the lives of the American people.” While it would serve these companies to appear transparent and not evasive, the testimony is likely to be a careful combination of the two.

In past appearances, tech CEOs have been criticized for being tight-lipped, offering only robotic answers and promising to “get back” to members of Congress every other question. We can expect more of this Wednesday, though the tone and efficacy of the hearing will really depending on who’s asking the questions and how well lawmakers coordinate their lines of inquiry.

Where is Twitter? Microsoft?

Last week, House Republicans led by Jim Jordan called on Twitter to appear at tech’s big antitrust hearing, claiming that the day would be “incomplete” without an appearance from Jack Dorsey. Dorsey has made appearances before Congress before, but the new request was rightfully ignored.

While often elevated to the status of peer companies like Facebook and YouTube, Twitter is a relatively small company with an outsized impact on society — and one not suspected of market-shaping practices that could box competitors out. To put it in perspective: Twitter’s market capitalization is $29 billion; Facebook’s is $667 billion.

Compared to Twitter, Microsoft is massive and a more natural fit for the hearing but the company has a much more storied history of government scrutiny. Cicilline himself said that regulatory enforcement against Microsoft two decades ago “made space for an enormous amount of additional innovation and competition.”

Depending on who you ask, U.S. regulatory efforts against Microsoft either presaged an era of regulatory overreach or failed to be little more than a slap on the wrist. Sound familiar?

How do I watch it?

We’ll be watching the hearing and reporting on it, so check back for our coverage and analysis throughout the day. If you’re keen to sit through it yourself, we’ve embedded a YouTube link below that should work when the livestream begins on Wednesday, July 29 at 12 PM ET.