Cicilline, Sensenbrenner Clash Over Dynamics of Tech Competition

Ranking member Jim Sensenbrenner, R-Wis., questioned Democratic calls to break up big tech companies, proposals he said likely won’t solve privacy concerns and other issues. Antitrust laws don’t exist to punish companies because they’re big, he said. The most successful companies often become very big, not because of anticompetitive conduct, but because they offer the best services, he said.

Representatives for each of the four companies argued tech sector competition is thriving. They listed a multitude of companies and industries that threaten their platforms’ market shares.

“The notion that they all see themselves in fierce competition strains credulity,” Cicilline told reporters. He cited remarks from Rep. Jamie Raskin, D-Md. “This investigation has to look beyond the words of these companies and their own characterization of their behavior or their market dominance,” Cicilline added. Fortunately it’s not up to the companies to characterize themselves, Cicilline continued, saying the final result will be a "fact-based determination." Industry obviously can’t regulate itself, and the solution will require action from policymakers, either through regulation, new statutory enactments, new resources for antitrust enforcers or most likely a combination of the three, he said.

Cicilline claimed Amazon is responsible for more than half of e-commerce, Facebook accounts for about 60 percent of the social media market, and Apple has “complete and unprecedented power” over people’s devices. There’s not been a single antitrust enforcement challenge to some 400 acquisitions by Google and Facebook, he said. Lawmakers need to ensure antitrust policies are in place to allow the next Amazon, Apple, Facebook or Google to grow, he said.

In addition to emerging firms, Google competes with companies across various developing fields, Economic Policy Director Adam Cohen testified. He listed operating systems, mobile devices and apps, voice assistants, artificial intelligence, virtual reality, cloud computing, digital advertising and video sharing.

There’s “vigorous” competition in a “rapidly evolving and dynamic” online environment, testified Facebook Global Policy Development Head Matt Perault. Facebook’s competitors for photo and video sharing, messaging and advertising include: Twitter, Snapchat, Apple, iMessage, Pinterest, Skype, Telegram, Viber, Google, YouTube and Amazon, he said.

Amazon Associate General Counsel-Litigation and Regulatory Legal Nate Sutton cited “intense competition from well-established competitors” like Walmart, Target, Macy’s, Safeway and Kroger. He said that's in addition to thousands of retailers across the world.

Of the some 2 million apps in Apple’s App Store, only a small number are made by Apple, testified Vice President-Corporate Law and Chief Compliance Officer Kyle Andeer. The store allows “enormous opportunity for developers to reach millions of users overnight, and the vast majority of apps, over 84 percent … share none of the revenue they make from our store with Apple,” he said.

Facebook engages in anticompetitive behavior through buying up competitors, said Rep. Pramila Jayapal, D-Wash. Perault denied the suggestion, saying acquisitions are meant to bring value to Facebook products and noting that not all purchases end up benefiting the company. Jayapal also accused Amazon of stealing ideas from independent sellers and offering copy-cat products via Amazon. The platform offers the occasional private brand, Sutton said.

Antitrust law is dictated by the hard-fought consensus that it should focus on consumer welfare, testified ex-Commissioner Maureen Ohlhausen, now at Baker Botts. Antitrust enforcement has also evolved with emerging technologies, she said. If policymakers seek to adjust antitrust law, they should understand the underlying court interpretations, “application of that law to particular types of anticompetitive behavior in defined markets” and “the boundaries between antitrust law and regulation,” she said.

The U.S. might be entering a startup “winter,” testified Columbia Law School professor Tim Wu, citing statistics of a decline in American startups from the Brookings Institution and Labor Department. Instead of dreaming of creating innovative services, entrepreneurs are trending in the direction of dreaming up ways of getting bought by large corporations, he said: “We are becoming a country of giant concerns, admirable in their way, but where incremental improvement is the norm, where bureaucracy rules, and stagnation may be inevitable.” Yale economics professor Fiona Scott Morton rejected the argument that the incentive to be bought up is fueling innovation. The reality is that such incentives inspire entrepreneurs to create services that model the incumbents, offering nothing new for consumers, she said.