The Antitrust Hearing, the Role of Congress, CEO Questions

https://stratechery.com/2020/the-antitrust-hearing-the-role-of-congress-ceo-questions/

by simonpure • 6 years ago

133 103 6 years ago

stratechery.com

partingshots• 6 years ago

Prepared statements from each of the companies respectively:

Alphabet Inc., Sundar Pichai Statement -http://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-...

Amazon.com Inc., Jeff Bezos Statement - http://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-...

Apple Inc., Tim Cook Statement - http://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-...

Facebook Inc., Mark Zuckerberg Statement - http://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG-...

Interesting to see what they’ve all chosen to say to start off with.

aniketpant• 6 years ago

For example, people have more ways to search for information than ever before — and increasingly this is happening outside the context of only a search engine. Often the answer is just a click or an app away: You can ask Alexa a question from your kitchen; read your news on Twitter; ask friends for information via WhatsApp; and get recommendations on Snapchat or Pinterest. When searching for products online, you may be visiting Amazon, eBay, Walmart, or any one of a number of e-commerce providers, where most online shopping queries happen. Similarly, in areas like travel and real estate, Google faces strong competition for search queries from many businesses that are experts in these areas.

I like how they've mentioned competitors as if they want to take a stand against regulations together while also enacting a feeling that there's enough competition within each of these markets.

sukilot3• 6 years ago

Often the answer is just a click or an app away.

It used to be "a click away". Now that it's "an app away", what does that say about App Store antitrust?

Also, "We face competition from... the other gigacorps in this hearing" is not a great look.

gen220• 6 years ago

I think it was Thiel in Zero to One, who said something like "Companies with monopolies love to talk about their competition", and then he goes on to use Google as a case study, ironically.

Historically, Google made themselves look small by casting themselves as an advertising company, instead of a web-search company. (they own a very small portion of overall advertising, compared to their portion of web search). By making advertisers their competitors, they look like the underdog.

Here, it seems like Google's position has evolved further: "hey, look at all of these other websites with search bars, they are our competition, and they're crushing us". I guess moving the goal-posts is a very effective strategy. :)

santoshalper• 6 years ago

The hearings will definitely not focus on competition because that is not what congress cares about. At most, they will try to portray their actual concerns (perception of censorship or bias) as a byproduct of the lack of competition.

To be clear the people driving this do not care about increasing competition in the digital world, they care almost exclusively about advancing the GOP agenda and forcing these companies to be more compliant and cooperative. This is all chilling effect.

Barrin92• 6 years ago

"This is a remarkable bit of framing for a (checks link) news article. It is taken as a given that the big tech companies are akin to big banks after the financial crisis, the tobacco industry, and airlines — no wonder there are “long-simmering frustrations”! People must hate Apple, Google, Amazon, and Facebook!

Needless to say, this doesn’t match reality; every year The Verge conducts a tech survey and the results speak for themselves:"

Wrong comparison. During its heyday high finance was actually very popular and bankers had a positive reputation as brave risk takers. In the 80s it was still very much seen as the heart of American capitalism. The demise of Wall Street in popular opinion is quite new, and I'm sure if you go back to the days of the Marlboro Cowboy when smoking represented freedom rather than lung cancer you could find similar surveys. (not to mention smoking in popular culture, the risks of smoking were not widely publicised until the 60s).

Whether big tech is comparable to big banks or big tobacco isn't really a question of popular opinion on big tech right now, but rather on the externalities they produce. The population being blind to externalities and negative effects of emerging industries is exceedingly common.

sukilot3• 6 years ago

The S&L crisis was 1986-1995. The demise in popular opinion is not new.

smallnamespace• 6 years ago

Savings and loans were not high finance outfits, they were mostly local, small banks that made bad bets.

techbio2• 6 years ago

Source(s) for popular opinion across that date range?

Ericson2314• 6 years ago

I heard finance was considered a sleepy boring backwater in the mid 20th century. Hardly any "positive reputation as brave risk takers".

shuntress2• 6 years ago

"generally speaking the idea is that more competition should address harms — and that increased regulation, in contrast, reduces competition"

I think this idea that regulation is the opposite of competition is not correct (or is too simplified to be meaningful). It is obviously possible to enact regulation that would make competition less viable. It is also just as obvious that regulation which enables competition is possible.

For example, consider a regulation that standardizes a "social contacts list" and requires that ecosystems in which a use can maintain a list of contacts must be capable of import/export in this standard format.

Do you think this would help or hurt competition among social networks? Would this be an overreach? Is this an example of regulation performing "product design"?

sukilot3• 6 years ago

It's a legal defense argument. Of course it's not correct or intellectually honest.

JackFr• 6 years ago

For example, consider a regulation that standardizes a "social contacts list" and requires that ecosystems in which a use can maintain a list of contacts must be capable of import/export in this standard format.

Such an innocuous regulation may seem pro consumer and pro competition, but in practice is probably not great. To start, Congress is probably not qualified to come up with such a standard, leaving you with two possibilities, and new government bureaucracy to manage the standard -- who simply become targets of industry lobbying, or an industry consortium, which is not subject to lobbying because it is already controlled by industry incumbents. This bureaucracy now exists to protect incumbents through 'certification' hurdles and other gatekeeping and reduces innovation since by simply preventing changes.

shuntress2• 6 years ago

This seems like you are saying "The system is broken and cannot work" but that this assertion hinges mainly on the assumption that "new government bureaucracy to manage the standard" is automatically a bad thing.

In reality, there should be both a government bureaucracy and industry consortium for the exact reasons you have laid out.

The industry consortium brings deep technical knowledge and pulls in private companies best interest.

The government bureaucracy brings broad technical knowledge and pulls in the general public's best interest.

Obviously there are significant complexities regarding the effectiveness and social consciousness of either group that are interdependent and potentially dead-locked by external factors (Such as the effectiveness/regulation of lobbying in general). But I don't think that justifies your apparent "Can't win don't try" attitude.

tacocataco• 6 years ago

Imagine your cell phone only being able to reach other Sprint customers.

guerrilla2• 6 years ago

I think this is right, especially when it comes to capturing externalities. In that case, you're just changing the environment in which they compete.

jjk1666• 6 years ago

For example, consider a regulation that standardizes a "social contacts list" and requires that ecosystems in which a use can maintain a list of contacts must be capable of import/export in this standard format.

So now every social network must be similar enough to facebook that facebook can import its social contacts lists (and thus must beat facebook at its own game) or so different that it doesn't even have social contacts lists (and thus isn't competing with facebook at all).

This sort of regulation may hadicap a dominant player in the field, but it also handicaps everyone else, and the dominant player is best positioned to play with a handicap. Things only get more problematic if lobbyists from the dominant player get the regulations made in such a way that the handicap for everyone else is worse. You can only regulate what already exists, so regulations by their nature will always enshrine the status quo.

Breaking up monopolies and preventing mergers which significantly reduce competition is much more reasonable than prescriptive regulation in cases where innovations in technologies and business practices can reasonably be expected.

enumjorge3• 6 years ago

The specific example the parent comment used may be flawed, but the main point still stands. Regulation can promote competition (just as it can prevent it).

supercanuck• 6 years ago

I find Ben to be out of his depth when he discusses the role of a democratically elected body should be doing to represent its constituents.

He still thinks the United States is a competitive market and that congress simply needs to open up competition.

What a wonderful, fantastic world that must be to live in.

Tech’s products are a series of unregulated skinner boxes vacuuming up data in order to segment each customer into Infinitely smaller market segments to charge them maximum prices they can afford while completely ignoring externalities. The average American is exhausted from playing this “free market virtual “game” in an ever increasing sociopathic world. The average consumer is simply ill-equipped to keep up and they aren’t earning enough to vote with their dollars.

Tech and America business needs to shape up or welcome a bunch of bullshit laws because Americans are tired of this and will welcome “big government”. maybe ben living in Hong Kong can’t see what is happening “on the ground” so to speak.

Read the room, Ben.

JumpCrisscross• 6 years ago

The average American is exhausted from playing this “free market virtual “game”

There is limited evidence for this. Polling certainly doesn’t show it.

What the data do show is these companies’ app downloads are at record highs. To the degree polling shows broad concern, it’s around monopoly power, workers’ rights and speech suppression.

ben living in Hong Kong

Believe he is in Taiwan.

skummetmaelk• 6 years ago

Whenever I want to show someone the valley mindset I will pull up this comment. The app download numbers are at an all time high! That must be good, right guys? Right? ... Guys?...

SpicyLemonZest2• 6 years ago

It seems like he is reading the room, and the room says Americans are not in fact tired of this. It's hard to reconcile your claim that "Americans are tired of this and will welcome big government" with polls showing 90% of Americans view Amazon and Google favorably.

kulahan• 6 years ago

I think this is a tough pill for some to swallow. With as much press as we've seen about Amazon abusing their workers, or Google infringing on privacy, or social media degrading our happiness levels, people keep going back. Most people just don't seem to care much (or at least, not enough to make any serious changes to their lives).

smt882• 6 years ago

People can view those brands positively and still want to break them up, regulate them, or change their leadership.

In fact, polls seem to suggest that's exactly the (seemingly contradictory) viewpoint of many Americans[1].

I suspect the thinking is along the lines of, "Amazon makes my life better, but I worry about their ability to abuse their power in the future."

1. https://www.vox.com/policy-and-politics/2019/9/18/20870938/b...

rayiner2• 6 years ago

He’s reading the room correctly. At no point in the last 20 years have even 30% of people polled said that we need more regulation of business and industry: https://news.gallup.com/poll/243662/americans-worry-less-gov.... Since 2006, a plurality, often an outright majority, have said we need less. And at every point since 2006, a majority of people have said the federal government is “too powerful.”

free_rms• 6 years ago

I hate to defend someone who unironically wrote "read the room", but breaking up the big tech firms is also hugely popular: https://www.vox.com/policy-and-politics/2019/9/18/20870938/b...

Everybody hates congress and loves their congressman, everybody hates 'regulation' but strongly supports some forms of it.

smt882• 6 years ago

I suspect that poll is skewed because of wording. If you ask people if they want more or less of something vague (govt, regulation, etc.) you're baking their preconceptions into the poll.

Some people see "more regulation" as restrictions to abortion, while others see it as less.

A better poll for this context would ask directly about breaking up or regulating Big Tech, which is very popular[1].

1. https://thehill.com/policy/technology/456221-majority-suppor...

AM8iwYFJASLUdW9• 6 years ago

vacuuming up data in order to segment each customer into Infinitely smaller market segments to charge them maximum prices they can afford

Can you explain this mechanic? I see how segmentation can be related to filter bubbles, which cause externalities (political polarization, etc.). I also see how the Internet exposes "the long tail" that previously couldn't be marketed to. But I don't see how this inflates prices exactly.

The classic example of market segmentation, AFAIK, is tomato sauce: They used to think people wanted one kind of tomato sauce; then they discovered they could sell (e.g.) "chunky", "spicy", and "classic", and that people would pay a little more for these.

I guess, to use an analogy, you're saying that there used to be something like "American tomato sauce", which was mass-produced and sold for $5, whereas now there's "Blue state tomato sauce" and "Red state tomato sauce" (and more than these, but let's keep things simple), each selling for $7. And maybe even the old "American tomato sauce" is still on the market, but people are nevertheless willing to spend the extra $2 to get the "Red" and "Blue" varieties for some kind of emotional and/or signaling reasons ("I don't want communist tomato sauce in my pantry"). And that these companies are creating the red/blue fracture in order to capture the extra $2 on each jar.

But, in this analogy, what exactly is the tomato sauce?

I could see the answer being "news" in the feed. I could see the "dollars" being paid by consumers actually being "attention". So then the story becomes that FAAMG are selling eyeballs, which I think is uncontroversial. But to complete the story, you also need to include all the brands that they're selling the eyeballs to. So who are they? Starbucks vs. Chik-Fil-A?

To connect to your earlier lines about "competitive markets" and the "free market virtual game", are you saying that new entrants are shut out by this advertising arms race? Is that how you complete the story?

Your post is vague but gestures at important things. From it, I'm trying to draw the diagram of the complete "triangle trade" (and maybe it's more than three vertices) happening here. What are the pieces?

- Social media (content discovery, filtering, curation). - Content (e.g. news) - Brands (ad buyers) - Consumers (eyeballs)

Something like that?

Can you spell out how this works with specific examples?

oxymoran• 6 years ago

Using a poll from the Verge to validate your opinion that people like tech companies...sorry, that’s a no from me.

You discount that the vast majority of people are completely ignorant of how computers and the internet actually function. They have no idea or, because of their ignorance, do not care that companies such as Google are hovering up all their data and doing who know what with it. Or that large monopolies are wielding more power than any entity has ever possessed. Or that social media is being weaponized by domestic and foreign parties. Or that they are acting as arbiters as to what is and what is not science. I love tech but Facebook, Google, and Twitter are tearing society apart. Twitter and Facebook aren’t even special as far as code goes. Let’s just create open source social media to remove the advertising aspect and kill Facebook and Twitter completely. These sort of companies should NEVER be publicly traded FFS.

hrhrhrd• 6 years ago

Mastodon already exists; it's just unpopular outside of small circles. People have already spoken with their time that they prefer hosted, "easy" solutions regardless of the evil they perpetuate (even if this preference is coming from a place of ignorance). The biggest question now is how to popularise it.

single_source• 6 years ago

I just tried Mastodon yesterday. I was highly unimpressed with the on-boarding funnel and confusing UX.

I think one point people miss is, the social media market is highly competitive. All it takes is for Twitter's UX and on-boarding funnel to be 1% better than Mastodon's for Twitter to win.

Someone needs to provide decentralized social media platform without leaking the decentralization into the UX and on-boarding funnel and I've yet to see anyone do that to date.*

*I'm still looking so if anyone has anything for me to check out I'd be thrilled!

CincinnatiMan• 6 years ago

I looked into Mastodon a bit but didn't quite understand it and saw clusters/servers for fringe groups that I didn't really want to be associated with.

suizi• 6 years ago

Mastodon leads to centralisation.

If a Mastodon server shuts down one day and everyone on it loses their accounts, they're likely to gather around one centralised set of servers.

There is a circle of trust too. For instance, the servers a server can trust not to propagate spam or content they dislike. This raises the barrier to entry and makes existing servers suspicious of any new servers which pop up.

The centralised option can also afford lawyers to deal with issues which inevitably crop up especially in the post-230 world we're headed towards.

twblalock2• 6 years ago

These sort of companies should NEVER be publicly traded FFS.

At least public companies are accountable to shareholders. Private companies are not accountable to anyone.

Twitter and Facebook aren’t even special as far as code goes.

You underestimate how hard it is to operate at their scale.

bconnorwhite2• 6 years ago

The best thing about "tech monopolies" is that there are so many of them

vageli• 6 years ago

The problem is with word choice. "Tech" has little to do with the business domain.

bconnorwhite2• 6 years ago

True, but even after narrowing this, you usually end up with 3/4 of these companies in competition.

Messaging? FB vs Apple vs Google

Ads? FB vs Google vs Amazon

Video? FB vs Google (YouTube) vs Amazon (Twitch)

Especially re: Google linking to its own sites, are we now arguing Google has a monopoly over google.com? It gets a bit weird

tomp• 6 years ago

Indeed, we should be talking about a cartel instead. Coordinated action, e.g. banning the same people / videos / keywords on the same day.

LatteLazy• 6 years ago

Ultimately we need a viable alternative to the current system before we trash it. And no one has that.

aripickar2• 6 years ago

People have a very optimistic view of what this hearing is going to reveal, and think that it is going to accomplish anything. But it’s largely gonna be republicans performance vomiting rhetoric about tech companies censoring conservative voices with no evidence, and democrats wanting to discuss everything but what the hearing is actually about, anti-trust. I expect a few democrats to make some interesting queries, and the tech news media to report minor stories that are unknown as breaking news.

Full disclosure: I work at a subsidiary of Amazon

therealdrag0• 6 years ago

anti-trust Questions about Google holding Yelp hostage and Facebook acquiring IG to squash competition seemed on point.

aripickar2• 6 years ago

True, I was pleasantly surprised at those questions.

sschueller• 6 years ago

Live now: https://youtu.be/1s1uWo1_bzg

Nelkins• 6 years ago

I wonder if any of these companies are mining their vast troves of data to research the members of Congress who are asking questions.

Abishek_Muthian• 6 years ago

Judging from the types of questions asked during last congressional hearing to these CEOs regarding privacy(They didn't even understand that Android & iOS were from different manufacturers), I would be really surprised if they really understood the difference between having single Appstore with 30% fee vs allowing 3rd party Appstores, not allowing native browser engines and forcing them to use your own browser with different skin etc.

in3d2• 6 years ago

I wonder what the fact-checkers would say about Pichai’s claims that the ad prices fell by 40% because of more competition...

Cook says that the developers have so many other choices like Android, PlayStation, or Windows. This is about the U.S. mobile market where the iOS has a monopoly-like market share in terms of app revenue. Similar to Bezos trying to make an argument that it’s not about online marketshare but all of retail. Zuckerberg should take notes - social media apparently also includes phone and in-person meetings.

Cook claims that Apple’s 30% cut is half of what the distributors were charging software publishers or developers before Apple came along to save them. Apparently having your software for sale on the web with just the payment processor’s cut was not a thing.

discordance2• 6 years ago

Apple have 17% of the smartphone market share [0] and 32% of smartphone related revenue [1] worldwide.

I understand the constraints on developers/consumers on iOS in regards to the walled garden, but are those numbers considered monopolistic?

0: https://appleinsider.com/articles/20/03/03/apple-iphone-mark...

1: https://www.forbes.com/sites/johnkoetsier/2019/12/22/global-...

in3d2• 6 years ago

I think you missed some words in my post: “in the U.S.,” “revenue,” “apps.”

mrep• 6 years ago

IOS has a 58% market share in the US [0] which single handedly is well above the threshold of market power using the Herfindahl–Hirschman Index [1] which the antitrust department uses for mergers and acquisitions concerns (they don't care about international users).

"The Supreme Court has defined market power as the ability to raise prices above those that would be charged in a competitive market, and monopoly power as the power to control prices or exclude competition" [2].

For people wanting to sell software to mobile users for which web does not suffice, there is no substitute and apple actively excludes you from 58% of the US market if you need mobile software unless you accept Apples 30% cut. With Android at least, they don't exclude you as you can side load like fortnite [3] but Apple is 100% abusing their market power by excluding developers from avoiding their 30% fee.

[0] https://gs.statcounter.com/os-market-share/mobile/united-sta...

[1] https://en.wikipedia.org/wiki/Herfindahl%E2%80%93Hirschman_I...

[2] https://www.justice.gov/atr/competition-and-monopoly-single-...

[3] https://www.theverge.com/2018/8/3/17645982/epic-games-fortni...

ampgt• 6 years ago

Am I the only one who finds some of these representatives impressively... unimpressive?

And don’t even get me started on the format. How are we supposed to set an example for the world when our representatives won’t even let the CEOs of some of our most successful companies finish answering a question? What a waste of time.

game_the0ry• 6 years ago

That hearing was a joke, to be frank.

Anyone notice how much time the congressmen spoke versus the CEOs? Or how often they were interrupted mid-sentence?

They weren't interested in answers, congress wanted to put on a show. Except it was a poor attempt at...whatever they were trying to accomplish - should have been expected given that it was congress.

And of course nothing will come of this hearing - those companies are not technical monopolies. That's why they are being grilled in congress, rather than being taken to court, because they would win in court.

sharatvir• 6 years ago

That’s a product of this limited time format. Without interruptions, nothing prevents the executives from wasting even more time and avoiding answering the question.

supernova87a• 6 years ago

Comparing these companies to tobacco, big banks, airlines? Are you kidding? I'll tell you a simple reason why this won't fly like the other "big company scandals" in the past that the author is alluding to.

The success of every one of these FAANG companies is because each one of us uses, buys, and likes using their products on average. Complain once in a while as we might that XYZ is hurting some group on some specialized issue, we still continue to visit their websites, buy their hardware, use their search engines, and yes -- enjoy doing it.

Why would these companies be worth billions of $ otherwise? Sorry, I mean Trillions of $.

It's not like they're forcing something down our throats and pillaging the earth as their primary reason for existence, or fraudulently filing loan applications in our name or selling shady mortgages. We created them, each one of us in our hour-by-hour behavior, every day. We don't hold our noses and patronize them reluctantly once per year. We do it every minute. Voluntarily.

So, no, I don't think the average person cares as much about the specialized negatives of these businesses as you think he/she does.

And btw, conduct a self-diagnostic once in a while: reading here on HN, you get an inflated sense of how Apple's 30% cut of developer app store fees is the worst thing in the world that everyone should take to the streets about, or how Google's map API key pricing has become an outrage.

For what they get in return, it's not that bad to the average person. Or even average senator or representative.

nojvek• 6 years ago

I don’t know if the hearing is going to go anywhere. All the CEOs are basically saying “hey we did everything legally in an open market, the power of tech has brought more choice and wealth to everyone, we aren’t monopolies, anyone had a fair shot at bearing us if they have better tech”

I’m interested in hearing the other side. Big tech is so big they can afford to take big losses and capture huge markets like maps, android, chrome etc fueled by profits from one part of the business and undercutting the small players until they’re dead.

The other bit that surprised me is why Microsoft isn’t part of this. Have they made themselves so diverse that they’re not in the radar anymore? Isn’t what Microsoft doing with bundling a bazillion things in Office 365 fair competition? E.g Teams vs Slack.

The Antitrust Hearing, the Role of Congress, CEO Questions

Related Stories