America vs. Apple, Google, Facebook and Amazon

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America vs. Apple, Google, Facebook and Amazon

Everything You Need to Know About The Antitrust Hearings

“

Being big isn't necessarily bad. In America, success is commendable. We are here to better understand the impact your companies have on the digital market, consumers and, finally, society as a whole

James Sensenbrenner , Congressman

On July 29, landmark hearings for the industry were held in the US Congress — the leaders of technology giants Apple, Google, Facebook and Amazon were called to prove that their companies did not monopolize the market and do not impede fair competition.

The charges are very serious: if Congress decides that the companies are monopolists, they could be forcibly split.

Before the hearing, each of the CEOs of the accused companies prepared their own line of defense. You can read their full statements here:

Apple

Google

Amazon

Facebook

"Competitive, honest, useful"

Despite the fact that companies are not very friendly with each other, their defense arguments turned out to be surprisingly similar: each of the CEOs emphasized the severity of competition their company deals with. In particular, Jeff Bezos, who topped the Forbes list of the richest people in the world, the 2020 version, complained that Amazon accounts for less than 4% of the total retail market in the United States and, therefore, it can not be considered a monopoly. Among the main competitors, Bezos named the supermarket chains Walmart and Target.

Tim Cook also talked about the competition from Android manufacturers — Samsung, LG, Huawei and Google.

Pichai and Zuckerberg disowned accusations of monopoly, saying that users have a wide range of choices — they just choose convenient and effective solutions.

The second general line of defense was an appeal to society: they say that the companies' products are useful, and people and other businesses love them and use them with pleasure. Tim Cook cited as proof that 99% of Apple users are happy with their purchases, Bezos talked about how Amazon's marketplace helps small businesses grow, and Pichai reminded that Google users get access to many useful free services: search, calendar, Gmail, Maps. etc., and thanks to Android, users can buy inexpensive, convenient smartphones with a single operating system.

We added all the companies' arguments into these infographics:

Amazon: "We create jobs"

Bezos: Amazon spends over $700 million on training its employees and has indirectly created almost 700,000 jobs in areas such as construction.

Amazon employee minimum wage

$15 per hour

$7.25 per hour

Federal minimum wage

Apple: "App Store gives everyone equal opportunity"

Apple has been criticized for charging a 30% commission on App Store purchases. Tim Cook argues that the commission is lower than many competitors, and the brand gives equal opportunity to all developers.

apps available in the App Store

1,700,000

Only 60

of them are designed by Apple itself

Facebook: "We grow our rivals ourselves"

Among the claims voiced by Facebook were the company's acquisition of its main competitors Instagram and WhatsApp. Zuckerberg, in his defense, argues that these services have achieved their current popularity only due to access to the resources and opportunities that Facebook provides them.

2012 — 30 million users and zero revenue
2020 — 1 billion

$1 billion

$21.8 billion

2014 — 500 million users
Now — 1,500,000,000

Deal value:

Google: "Our investments are saving American technologies"

Google's CEO tried to play on rising tensions with China. He noted that it is the company's investments in new technologies that help the United States maintain leadership in this area and compete with the developments of foreign competitors.

Google's investment in R&D

2009 — $2.8 billion

2019 — $26 billion

During the hearing on July 29, the CEOs of the tech giants voiced their arguments before members of Congress.

But not everything is fluffy in Facebook

Despite the rosy picture that Zuckerberg and company paint, there are actually many scandals around the tech giants — a prime example is the Facebook boycott in July over the company's reluctance to filter hate speech on the platform.

Another example is Amazon, which "helps small businesses grow with their marketplace" while leveraging their sensitive data to gain a competitive advantage.

Claims against companies:

Google downloads content from third-party sites, including reviews for restaurants, businesses, and the like. Instead of transferring users to other sites, Google uses other people's content to promote its products and services.
Google can use its data-gathering power to track down and destroy competitors. Pichai replied that the company collects analytical data, but does not violate the principles of fair competition.
Pichai was pledged to promise that "Google will not adopt anti-law enforcement policies" and to end technical deals with law enforcement after more than 1,650 Google employees signed a letter of warning about police brutality last month. Pichai promised that the company will continue to cooperate with law enforcement agencies within the framework of current legislation.
Questions also arose about the behavior of Google in the field of digital advertising, because the company manages the marketplace and at the same time is a player on the side of both the buyer and the seller. This allows them to set very low prices for advertising slots on sites, reducing the income of publishers, and then sell the same slots to small businesses at an inflated price.

Zuckerberg was asked why the platform temporarily blocked Donald Trump Jr.'s account for posting false claims about masks and hydroxychloroquine, and whether the platform is filtering politically sensitive information. Zuckerberg replied that the story with Don Jrs. account actually happened on Twitter, but the publication of fake information about the coronavirus disease is dangerous, so such posts will be deleted.
Mark Zuckerberg has discussed the Instagram acquisition as a potential threat to Facebook in internal company correspondence. Zuckerberg denied this accusation, noting that it is unknown whether Instagram would have become successful on its own or not.
Also, Facebook was accused of pressuring competitors and making threats to enter the market with a similar product if a competitor refuses to go "under the arm" of the company. Members of Congress cited their Instagram correspondence with Kevin Systrom as an example. Zuckerberg denied any pressure, because "it is clear that Facebook works in the same area" and could create its own application for sharing photos and videos.
Several congressmen immediately referred to the #StopHateForProfit movement, asking Zuckerberg if the company considered itself invincible enough to ignore the boycott by 1,100 major advertisers. Zuckerberg replied that the platform does not ignore advertisers, but it will not adapt to them, since it is already actively fighting hate speech on the platform.

Amazon was asked to respond to criticisms in The Wall Street Journal article about the company's use of third-party data to develop its own competitive products. Bezos said he "can't answer yes or no": the marketplace rules forbid it, but he can't guarantee that they have not been violated.
When asked why Amazon behaves like a poacher, in fact stealing and copying merchants' goods on its platform, Bezos replied that "the final choice is always with the buyer."
The company has been accused of systematically blocking individual businesses from selling products in certain categories — as an example was a bookstore on Amazon, which the platform banned without explanation from selling several categories of books.

Tim Cook was asked about a case where Apple removed third-party parental control software that used mobile device management (MDM) technology. Cook argued that the move was made purely for privacy reasons. "We apply the same rules to all developers," he said. — There are over 30 parental control apps in the App Store today, so there is a lot of competition in this area. And I will note that in this area Apple does not receive any income at all."
Cook was then asked about a different report, which indicated that Airbnb and ClassPass received new commission requirements after the launch of virtual services — meaning Apple is trying to cash in on the pandemic. Cook tried to actively deny this accusation.

To be continued

The hearings lasted five and a half hours. Congressman David Sicilline announced that the committee will soon publish a report that will contain its findings and a roadmap.

"Thanks to these hearings, I realized one thing: these companies in their current state have monopoly power. Some of them need to be split; they all need to be carefully regulated and held accountable for their actions. We need to make sure that the antitrust laws that first appeared centuries ago continue to work effectively in the digital age, "he concluded.

Want to know what the real implications of the Congressional hearing will be — follow us.

By Julia Danylenko