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July 16, 2019, 4:51 p.m. EDT

House Judiciary Committee presses Big Tech on anti-competitive behavior

Alphabet, Amazon, Facebook, Apple grilled on business practices

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By Jon Swartz


Bloomberg News/Landov
Rep. David Cicilline, D-R.I., chairman of the House Judiciary Subcommittee, has been an ardent critic of Big Tech.

Tech’s grilling on Capitol Hill intensified Tuesday afternoon when the House Judiciary Committee took aim at four of its biggest players, whom chairman Rep. David Cicilline, D-R.I., called “powerful online gate-keepers.”

In the second of three high-profile Congressional hearings, the Mount Rushmore of the tech industry — Alphabet Inc. /zigman2/quotes/202490156/composite GOOGL +0.23% , /zigman2/quotes/205453964/composite GOOG +0.27%  , Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -0.28% , Apple Inc. /zigman2/quotes/202934861/composite AAPL +0.94% and Facebook Inc. /zigman2/quotes/205064656/composite FB +0.03%  — were pressed on anti-competitive behavior, and the acquisition of smaller companies in emerging markets.

While reps from Big Tech repeatedly credited innovation for their success and market power, several committee members, including Rep. Henry Johnson, D-Ga., countered they were leveraging and building off of their massive user bases and dominant positions.

Cicilline, a fierce critic of Big Tech, asked Nate Sutton, Amazon.com’s associate general counsel for competition, if the company’s practice of selling competing products side by side with other merchants on its digital platform amounted to an unfair advantage, since Amazon controls the platform as well as a treasure trove of consumer data. Sutton said the same algorithm applied to sales of all products.

“Killer acquisitions are one of the concerns I have,” Rep. Pramila Jayapal, D-Wash., said. She noted that the Justice Department’s antitrust investigation of Microsoft Corp. /zigman2/quotes/207732364/composite MSFT +0.82%  in the 1990s and 2000s paved the path for the creation of Google and Facebook.

Rep. Joe Neguse, D-Colo., pointed out that Facebook owns four of the largest six social-networking entities. “Is Facebook a monopoly?” he asked.

Not coincidentally, all four companies are the subjects of pending investigations from the Justice Department and Federal Trade Commission on the enormous economic clout they wield (they own a collective market value of more than $3 trillion), and mountains of data they control on billions of people worldwide.

Though it lacked the high drama of Facebook Chief Executive Mark Zuckerberg’s face-off with Congress last year in the weeks following the Cambridge Analytica data scandal, the proceeding was symbolic on a day that had the look of a national referendum on the tech industry. Earlier in the day, the Senate Banking Committee pushed Facebook executive Dave Marcus for details on its maligned Libra cryptocurrency project; a third hearing on Google searches and political censorship took place in the afternoon.

Read: Facebook’s Libra cryptocurrency project gets blistering reception from Senate

The tone of Tuesday’s antitrust hearing, in particular, could offer a strong hint of where the federal government goes with its various probes of Big Tech, Herbert Hovenkamp, a professor at the University of Pennsylvania who teaches at both its law and business schools, told MarketWatch in a phone interview. All four companies sent legal experts rather than executives to Tuesday’s hearing, suggesting a more substantive discussion than the typical exchange of political platitudes and corporate-speak between the two sides, he said.

Previously: Big Tech can expect another grilling on Capitol Hill

The sharp line of questioning displayed a deeper understanding of tech and its various pressure points around competition. In previous hearings, members of Congress deferred to company executives with broad, and often supercilious, remarks. This time, they pressed on the mechanics behind technology such as Libra and the logic behind a wave of acquisitions of smaller companies in emerging technology fields.

Avery Gardiner, a senior fellow at the Center for Democracy & Technology, lauded Jayapal’s line of questioning on how vertically integrated businesses could impact smaller competitors.

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Jon Swartz is a senior reporter for MarketWatch in San Francisco, covering many of the biggest players in tech, including Netflix, Facebook and Google. Jon has covered technology for more than 20 years, and previously worked for Barron's and USA Today. Follow him on Twitter @jswartz.

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