House Judiciary Setting up Political Theater Disguised as Tech Antitrust Hearing

Congress - Think stock

Sometime next month, the House Judiciary Committee is expected to hold a hearing on competition and antitrust featuring the CEOs of Alphabet (Google), Amazon, Apple, and Facebook. All indications suggest that this hearing will be nothing more than a political stunt. The clues are fairly obvious.

First and foremost is the fact that all of these companies compete with one another in some way, suggesting that competition in the broader tech sector remains robust and lacking a justification for government investigation, let alone intervention. While by no means an exhaustive list, here are some examples.

Most would consider Facebook to be the dominant social media company, especially considering that it owns Instagram. However, Facebook is far from a “monopoly.” YouTube, owned by Alphabet, is at its core a social media site. Users create profiles, upload content, and “like” and comment on each other’s posts. In 2019, more US.. adults reported using YouTube than Facebook.

Of course, neither Facebook nor Alphabet makes money by offering “free” social media services to users. Both companies make their money through advertising where, again, the data show that they are major competitors. Neither company holds anywhere near a monopoly or even a majority of the market.

The data further show that Amazon is rapidly increasing its role in the online advertising marketplace and likely pulling business away from Alphabet.

Amazon’s growing presence in digital advertising shows that these companies are far from monolithic and compete with one another in ways we might not initially consider. Alphabet, Amazon, and Apple compete in the data storage or “cloud” market. From Gmail and G-Chat to iCloud and iMessage to Facebook’s Messenger and its separate application WhatsApp, Alphabet, Apple, and Facebook vigorously compete in the email and instant messaging market.

All four companies compete in the device sector as well. Each offers its own unique smart speaker device: Alphabet’s Google Home, Amazon’s Echo, Apple’s HomePod, and Facebook’s Portal. Alphabet and Apple compete in the smartphone market, where Alphabets Android and Apples iOS are the dominant operating systems.

The list of various markets in which these companies compete with one another goes on and on because each of these companies has grown to offer an exhaustive list of products and services. This raises another question as to the efficacy of next month’s hearing.

It has been reported that the House Judiciary Committee’s antitrust subcommittee Chairman, Rep. David Cicilline (D-RI), has insisted on hearing “directly” from these companies’ CEOs as part of the committee’s investigation. While CEOs certainly bear significant accountability for the actions of their respective companies, they’re unlikely to be the best positioned to answer specific or technical questions, especially about companies as large as the four discussed here. Despite offers from the companies involved to make more relevant members of their leadership teams available, lawmakers have gone so far as threatening to force CEOs to testify.

Perhaps having a CEO testify does make sense at some point. But is that time and place a hearing that also involves CEOs from three other massive companies? It’s hard to imagine how such an event will allow any of the attending members of Congress to drill down on specific questions or concerns.

The insistence on having CEOs testify before the committee makes sense only for political reasons. It provides lawmakers an opportunity to lecture household names like Jeff Bezos and Mark Zuckerberg in front of cameras. Having multiple CEOs present precludes all but high-level  “gotcha” questions and commentary—which make for great soundbites for the news and political advertisements. But antitrust enforcement is not supposed to be a political process.

Last month, 23 prominent antitrust experts, including attorneys and economists, submitted a letter to the House Judiciary Committee on “the State of Antitrust Law and Implications for Protecting Competition in Digital Markets.” The letter emphasizes the importance of what is known as the consumer welfare standard. This standard provides a fairly straightforward framework to determe if antitrust action is warranted by focusing almost exclusively, as its name suggests, on whether or not the average consumer is better off.

The scholars write in their letter, “By grounding antitrust analysis in a disciplined and tractable framework, the consumer welfare standard fosters the rule of law and helps prevent arbitrary or politically motivated enforcement decisions.”

In short, the antitrust enforcement process should be precise and methodical. Dragging four CEOs from companies that all compete with each other before Congress at the same time is neither.