At historic Apple, Amazon, Facebook, Google CEOs hearing, congressmen ramble, congresswomen home in on tech market abuse

We watched six hours of congressional hearings so you didn’t have to


Analysis For six hours on Wednesday, the Western world's most powerful tech CEOs – whose businesses have become household names and touch every part of our daily digital lives – were grilled by US lawmakers regarding their market dominance.

The hearing was supposed to be a closing chapter in what has been a long-running probe into Apple, Amazon, Facebook, and Google, and their extraordinary power over everything from online ads and e-commerce to news to smartphones and smart homes, and everything in between.

A report is due sometime this year from Congress and it could form the foundation for new laws that restructure digital markets to ensure future competition; Facebook may be required to break off Instagram and WhatsApp; Apple may be forced to loosen control of its App Store; Amazon may have to stop competing with its own customers; Google may have to stop stealing content and screwing competitors.

If the report is anything like the hearing earlier today, however, it will be a mess. Apple, Amazon, Facebook, and Google's chief execs, Tim Cook, Jeff Bezos, Mark Zuckerberg, and Sundar Pichai, respectively, appeared before the House Judiciary Committee's antitrust subcommittee via video chat, and the experience was frustrating.

Congress CEOs

Only Jeff bothered to find an interesting room for the video-chat hearing ... Clockwise from top left, Apple's Tim Cook, Google's Sundar Pichai, Facebook's Lt Cmdr All Your Data, and Amazon's Jeff Bezos. Source: US House of Reps' Judiciary Committee. Tap to enlarge

Despite significant quantities of first-hand evidence that tech giants have abused their positions as the controllers of online platforms to kill competition and boost profits at others' expense, a significant amount of the hearing was taken up by bloviating congressmen talking about tangential issues that had little to do with antitrust actions and everything to do with their re-election bids.

You can watch nearly the whole thing on YouTube if you have five hours to spare.

Some of it was outdated, such as Representative Jim Sensenbenner's (R-WI) view on antitrust actions no longer applying to the modern digital world; some of it was the worst kind of partisan political nonsense, such as Rep. Matt Gaetz (R-FL) treatises about China and claims that conservative voices were being censored. Some of it seemed off-topic, such as Rep. Ken Buck (R-CO) long rant about Communist China, complete with an aide holding up a picture of Uighurs being forced onto a train behind him.

And some of it was just plain embarrassing, as when Rep. Greg Stuebe (R-FL) repeatedly complained about his personal email to the CEO of Google, citing problems his mom and dad were having.

Saviors

On the plus side, some of the lawmakers came prepared and repeatedly pierced the veil that the lovable tech companies were putting up to reveal what really happened behind it, putting even extremely well prepared CEOs on the back foot.

When we say lawmakers, though, we mean the congresswomen because it was notable, even stark, that the members of the committee that made unfocused, irrelevant or wild statements and allegations – that were often no more than political grandstanding that made the hearing largely pointless – were all men. By contrast, every woman – including Rep. Val Demings (D-FL), who clearly had little understanding of the tech market but had staff who did – provided the kind of questioning that we like to imagine Congress carries out all the time.

Reps. Lucy McBath (D-GA) and Pramila Jayapal (D-WA) stood out for asking precise questions with specific information and, for the most part, allowed the CEOs time to respond. Their exchanges made the monster marathon of a hearing worthwhile and may set the groundwork for serious and significant changes.

So what actually happened of note?

Because of the structure of the hearing where members got five minutes to ask questions and the CEOs were on video in their offices, the most important parts of the hearing came in the same format:

  • A member quoted either a businessperson talking about their experience with Apple/Amazon/Facebook/Google or internal emails that highlighted clear abuse of market power and asked a precise question
  • The CEO responded with a vague non-answer
  • The member interrupted with a follow-up question that built on the first and asked a second precise question
  • The CEO tried to evade giving an answer, claiming not to remember, or said they did not agree with what was said, or promised to get back, or claimed there was a larger context.
  • The member reflected back the lack of answer and highlighted what that lack of answer meant before moving onto the next question.

Bezos

In this way, Amazon's claim to be a benevolent dictator was repeatedly exposed. Most notable was when Jeff Bezos accepted that while he called third parties on his platform "partners and customers" in public, in private and inside Amazon they are known as "internal competitors."

The most effective line of questioning came with precise examples: a business that sold diapers that was targeted and ruined by Amazon; another that sold textbooks that was booted out of the Amazon online market and never given a reason why.

Bezos' most shaky moment came when he was forced to admit that Amazon's staff get access to all the internet souk's data behind the scenes and can use that to decide which new products to sell: something that competitors have long claimed is a clear abuse of Amazon's position as owner of the platform.

The Zuck

Facebook CEO Mark Zuckerberg also had a tough time on occasion. Faced repeatedly with internal Facebook emails that showed how the social network had consistently used its position to screw competitors, he kept shifting position, before being caught again.

Zuckerberg's worst moment, however, came by his own hand. During an exchange over the purchase of Instagram, which Representative Jerry Nadler (D-NY) argued was done to eat up its competition, crush rivals, and control the photo-sharing market, Zuckerberg gave a list of other companies that were in the market at the time. None of them exist any more, and what's more, even this tech journalist could only remember two.

"Mr Zuckerberg, you're making your point," Nadler responded. The fact that there was a thriving market and now there isn't is exactly the problem: that Facebook uses its power and money to steamroll competitors, and control and destroy markets, was the implication.

Pichai

Google's Sundar Pichai came out of the hearing a little better off, despite occasional traces of racism in those questioning him.

Again, however, the platitudes of how incredibly beneficial the tech giants have been to the economy were pulled apart a little when Representatives used examples, pointing out how companies like Google played both sides of the game because of the extraordinary access and control they have over the market itself. They both play in the market and set its rules. And, on occasion, decide that those rules shouldn't apply to them.

Pichai also frequently used the "I don't recall" excuse as a way to explain away clear examples of Google's theft of others' content, including Yelp's listings and Genius's lyrics. Genius even famously set a trap for Google scrapers, embedding the word "REDHANDED" in Morse code into their lyrics by alternating apostrophes in the text. The same text appeared on Google's pages.

Cook

As for Tim Cook, the big target of Apple's anti-competitive behavior is its App Store, where Apple decides what appears and what doesn't and imposes a cut on everyone's revenues.

Cook seemed the most confident in his answers and was caught out least. His explanation for why Apple removed parental controls apps from the App Store when it launched its own ScreenTime app – because they were a security and privacy risk – came across as extremely confident, even beneficial.

Until the follow-up revealed that those apps were allowed back on the App Store six months later with minimal change, but by which time ScreenTime had effectively taken over the market.

Whenever pressed on Apple's clear market control and profiteering from apps, Cook repeatedly reverted back to the same two answers and one exposition: we haven't raised our (30 per cent!) cut on apps since day one; there are other smartphones on the market; and look what a wonderful thing apps have been.

Time flies

All CEOs also kept using variations of the same excuse for why they couldn't respond to questions, of why they weren't relevant: it all happened so long ago – by which they typically meant more than four years.

Except, of course, by doing that the CEOs highlighted the exact problem: their behavior in the past allowed them to squash the competition with the result that there is no one left to challenge their market dominance and so expose the same tendencies.

This hearing was a mix of the best and worst of Congress but it was also a decade too late. ®


Other stories you might like

  • Lonestar plans to put datacenters in the Moon's lava tubes
    How? Founder tells The Register 'Robots… lots of robots'

    Imagine a future where racks of computer servers hum quietly in darkness below the surface of the Moon.

    Here is where some of the most important data is stored, to be left untouched for as long as can be. The idea sounds like something from science-fiction, but one startup that recently emerged from stealth is trying to turn it into a reality. Lonestar Data Holdings has a unique mission unlike any other cloud provider: to build datacenters on the Moon backing up the world's data.

    "It's inconceivable to me that we are keeping our most precious assets, our knowledge and our data, on Earth, where we're setting off bombs and burning things," Christopher Stott, founder and CEO of Lonestar, told The Register. "We need to put our assets in place off our planet, where we can keep it safe."

    Continue reading
  • Conti: Russian-backed rulers of Costa Rican hacktocracy?
    Also, Chinese IT admin jailed for deleting database, and the NSA promises no more backdoors

    In brief The notorious Russian-aligned Conti ransomware gang has upped the ante in its attack against Costa Rica, threatening to overthrow the government if it doesn't pay a $20 million ransom. 

    Costa Rican president Rodrigo Chaves said that the country is effectively at war with the gang, who in April infiltrated the government's computer systems, gaining a foothold in 27 agencies at various government levels. The US State Department has offered a $15 million reward leading to the capture of Conti's leaders, who it said have made more than $150 million from 1,000+ victims.

    Conti claimed this week that it has insiders in the Costa Rican government, the AP reported, warning that "We are determined to overthrow the government by means of a cyber attack, we have already shown you all the strength and power, you have introduced an emergency." 

    Continue reading
  • China-linked Twisted Panda caught spying on Russian defense R&D
    Because Beijing isn't above covert ops to accomplish its five-year goals

    Chinese cyberspies targeted two Russian defense institutes and possibly another research facility in Belarus, according to Check Point Research.

    The new campaign, dubbed Twisted Panda, is part of a larger, state-sponsored espionage operation that has been ongoing for several months, if not nearly a year, according to the security shop.

    In a technical analysis, the researchers detail the various malicious stages and payloads of the campaign that used sanctions-related phishing emails to attack Russian entities, which are part of the state-owned defense conglomerate Rostec Corporation.

    Continue reading
  • FTC signals crackdown on ed-tech harvesting kid's data
    Trade watchdog, and President, reminds that COPPA can ban ya

    The US Federal Trade Commission on Thursday said it intends to take action against educational technology companies that unlawfully collect data from children using online educational services.

    In a policy statement, the agency said, "Children should not have to needlessly hand over their data and forfeit their privacy in order to do their schoolwork or participate in remote learning, especially given the wide and increasing adoption of ed tech tools."

    The agency says it will scrutinize educational service providers to ensure that they are meeting their legal obligations under COPPA, the Children's Online Privacy Protection Act.

    Continue reading
  • Mysterious firm seeks to buy majority stake in Arm China
    Chinese joint venture's ousted CEO tries to hang on - who will get control?

    The saga surrounding Arm's joint venture in China just took another intriguing turn: a mysterious firm named Lotcap Group claims it has signed a letter of intent to buy a 51 percent stake in Arm China from existing investors in the country.

    In a Chinese-language press release posted Wednesday, Lotcap said it has formed a subsidiary, Lotcap Fund, to buy a majority stake in the joint venture. However, reporting by one newspaper suggested that the investment firm still needs the approval of one significant investor to gain 51 percent control of Arm China.

    The development comes a couple of weeks after Arm China said that its former CEO, Allen Wu, was refusing once again to step down from his position, despite the company's board voting in late April to replace Wu with two co-chief executives. SoftBank Group, which owns 49 percent of the Chinese venture, has been trying to unentangle Arm China from Wu as the Japanese tech investment giant plans for an initial public offering of the British parent company.

    Continue reading
  • SmartNICs power the cloud, are enterprise datacenters next?
    High pricing, lack of software make smartNICs a tough sell, despite offload potential

    SmartNICs have the potential to accelerate enterprise workloads, but don't expect to see them bring hyperscale-class efficiency to most datacenters anytime soon, ZK Research's Zeus Kerravala told The Register.

    SmartNICs are widely deployed in cloud and hyperscale datacenters as a means to offload input/output (I/O) intensive network, security, and storage operations from the CPU, freeing it up to run revenue generating tenant workloads. Some more advanced chips even offload the hypervisor to further separate the infrastructure management layer from the rest of the server.

    Despite relative success in the cloud and a flurry of innovation from the still-limited vendor SmartNIC ecosystem, including Mellanox (Nvidia), Intel, Marvell, and Xilinx (AMD), Kerravala argues that the use cases for enterprise datacenters are unlikely to resemble those of the major hyperscalers, at least in the near term.

    Continue reading

Biting the hand that feeds IT © 1998–2022