30 July, 2020

An Advertiser’s Guide To The Tech Giant Antitrust Probe

By Edward Pollitt

Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg, Apple’s Tim Cook and Google’s Sundar Pichai have all fronted up to US Congress overnight to defend their business practices and explain why their products and services make the world a better place.

Here is everything you need to know about what happened.

What is this all about?

Yesterday’s hearing was part of a long-running antitrust investigation into whether or not these tech giants have violated antitrust laws.

The investigation has been running for well over a year and will see whether or not existing antitrust laws – which are hundreds of years old – need to be modernised.

All four of the companies have been accused of different antitrust violations, meaning each CEO was forced to enduring a grilling with specific questions.

This is what they said.

Google

Google’s Pichai was quizzed about the company’s search business, specifically whether there was a conflict of interest between sending people to their websites and selling ads.

He was also asked whether Google’s digital advertising business is a conflict of interest, given it runs a marketplace on the buy-side and acts on the sell-side simultaneously.

Rep. Pramila Jayapal, who was questioning Pichai, even went as far as to compare it to insider trading and said Google’s advertising business was “depriving [newspapers]of ad revenue”.

In response, Pichai said “we are deeply committed to journalism in this area” and is “focused on providing users with the information they are looking for”.

Pichai also said he didn’t know the exact size of Google’s market share over the digital advertising space.

facebook

While Pichai was forced to defend Google’s advertising practices, Zuckerberg had to answer to accusations of fake news, election interference, and largescale acquisitions.

The company’s acquisition of Instagram was a particular focus, after Congress accused Zuckerberg of making the acquisition to “neutralize a competitive threat”.

Zuckerberg’s defence was that Instagram may not have been the successful business – and potential competitor – it is today if Facebook hadn’t acquired it in 2012.

“Following its acquisition, Instagram was able to get help stabilizing infrastructure and controlling runaway spam. It also benefited from the ability to plug into Facebook’s self-serve ads sys

He also discussed the acquisition of messaging service WhatsApp.

“Before it was acquired, WhatsApp was a paid app with a reputation for secure communications; together we built on that by introducing end-to-end encryption and making it free to use. Since its acquisition, WhatsApp has also been able to develop products such as voice and video calling that were built on Facebook’s technology stack.

“These benefits came about as a result of our acquisition of those companies, and would not have happened had we not made those acquisitions.”

Zuckerberg was also asked about the recent #StopHateForProfit advertising boycott and whether the company is “so big that you don’t care how you’re impacted by a major boycott of 1,100 advertisers?”

In response Zuckerberg said: “No, congresswoman, of course we care. But we’re also not going to set apple

our content policies because of advertisers. I think that would be the wrong thing for us to do. We’ve cared about issues like fighting hate speech for a long time.”

Apple

Cook received the least amount of questions out of the four CEOs, but he was still grilled over how Apple uses its App Store.

The lawmakers raised the fact Apple can take up to a 30 per cent commission on in-app sales and subscriptions.

Cook said the policy is simply a way for Apple to keep the app environment alive.

“After beginning with 500 app, today the App Store hosts more than 1.7 million — only 60 of which are Apple software. Clearly, if Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the Store, not keep them off.”

Amazon

The world’s richest man Jeff Bezos was asked about a recent report which suggested Amazon mined third-party data to develop products.

Bezos did not deny the claims.

“I can’t answer that question yes or no. What I can tell you is we have a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated,” he said.

He was also quizzed over Amazon’s market share in the US, where it accounts for roughly four per cent of overall retail sales (which includes restaurants etc) and 38 per cent of all e-commerce sales.

“I don’t accept that e-commerce is a different market, but it is a different channel,”

Bezos also described Amazon as one of the most popular consumer brands and emphasised how many jobs the company had created.

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