Shaina Levin, Business Manager
On Wednesday, July 29, 2020, CEOs of Google, Apple, Facebook, and Amazon, the four most powerful technology companies, together known as the “Big Tech,” sat virtually before Congress amid antitrust allegations. After years of speculation and investigation, Representative David Cicilline (D-RI), the chairman of the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee, interrogated each CEO. The focus of their questions was regarding the claim that these highly influential technology companies consume too much market share and have unfair tactics of eliminating competition. With a combined market capitalization of $5.28 trillion, the enormous amount of power and influence held by these four companies complicates fair business negotiations and a fair chance of competition with other companies. They were also interrogated for prioritizing monopoly rent, the ability for a company to charge more when there is less competition in the market — bullying smaller competitors into abiding by these larger companies’ rules. During this hearing, the committee questioned each of the four CEO’s under oath as well as based off of emails and internal documents from these companies to determine the best solution to upkeep antitrust regulations.
While Amazon’s investigation over the past year was not as detailed as that of the other companies, CEO Jeff Bezos was questioned just as much as the other CEOs. These questions primarily centered around Amazon’s treatment of third party sellers and whether Amazon is responsible for dishonest selling practices such as counterfeit. Amazon was also questioned regarding internally-created algorithms which promote Amazon’s products ahead of their competitors. Furthermore, when Representative Pramila Jayapal (D-WA) asked Bezos if Amazon uses data from independent sellers when making business decisions to gain a competitive advantage, he replied, “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.”
Apple’s Tim Cook was faced with fewer questions than the other CEOs which were mostly focused on the app store. The main issue at hand was whether Apple favors their own apps ahead of those of their competitors when considering key factors such as pricing apps or even making them accessible and known to consumers. Cook answered that they have always treated each app equally, carefully reviewing each one for the sake of security. He continued to point out multiple non-Apple apps that continue to increase competition and give benefits for consumers. Cook continued to defend against these accusations throughout the entire hearing.
Next came Facebook’s Mark Zuckerberg, who faced a series of different questions revolving around Facebook’s aggressive acquisition strategy. Zuckerberg defended both himself and Facebook, claiming that his company’s practices were law-abiding and were encouraged by strategic investing tactics. An email that Zuckerberg sent in 2012 was read, and he was asked to explain his comment to a Facebook Senior Engineer that Facebook is “[l]ikely to buy other competitive startups, but it will be a while before we can buy Google.” This was in alignment with the claims of Facebook’s strive for market power; for example, acquiring Instagram as this social media site was viewed as a rival. Zuckerberg responded that he didn’t remember sending this email, but it sounded to him like a comment that was made as a joke.
Lastly, Cicilline started questioning Google’s Sundai Pichai. Google is seen as the company with the highest risk due to their hitech. Pichai was questioned about their control over the advertising market, as well as the alleged abuse of search engines which diverted consumers’ searches away from competing websites. Pichai responded that Google strives to understand the data they see and use it to best serve customers as any company should and does do. Another point of questioning brought up by the committee was by the Republicans who questioned Google’s biases to how the Republican party is viewed and represented on platforms such as YouTube and Google Search. Pichai denied these allegations.
On Thursday, July 30, 2020, the day following the hearing, all four companies showed an increase in their earnings per share in Q2 2020, despite being under scrutiny due to the hearing. Amazon completely conquered this quarter, despite being in the middle of a pandemic with an increase in revenues of $88.9 billion from last quarters $63.4 billion. Their revenue also exceeded their expectations of $81.53 billion projected revenue. Along with this increase, their share price was $3,051.88. Despite spending on safety measures in the workplace which amounted to $4 billion, Amazon projects continuous increase for the remainder of the year and beyond.
Apple’s revenues increased by 11% from prior years to $59.7 billion, exceeding their expectations of only $52.25 billion in revenue this quarter, and their share price amounted to $384.76. In their quarterly report, Apple also announced their 4-1 stock split in order to make their stocks more available to a wider range of investors. Similarly, Facebook’s revenue also went up 11% to $18.7 billion (which is more than their projected revenue of $17.4 billion) with a share price of $234.50. Finally, Google’s parent company, Alphabet, reported an increased revenue of $38.3 billion (more than the projected $37.36 billion) and a share price of $1,538.37.
These high tech companies have become a vital part of society, especially due to the coronavirus pandemic and the necessity for more online interactions. Despite the hearing putting these four companies under scrutiny, the rise in these companies’ revenues and earnings proves the high success and vitality of these companies. Just as James Sensenbrenner (R-WI) explained at the beginning of Wednesday’s hearing, “[b]eing big is not inherently bad, quite the opposite. In America you should be rewarded for success. We’re here to better understand the role your companies have in the digital marketplace and importantly the effect they have on consumers and the public at large.” The next step in the investigation will consist of Congress reviewing their findings from both the companies’ emails and internal documents which will lead to an updated report.
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Sources:
https://www.npr.org/2020/07/29/896840093/congress-holds-big-tech-antitrust-hearing
https://www.wsj.com/amp/articles/amazon-amzn-2q-earnings-report-2020-11596137257
https://finance.yahoo.com/news/amazon-reports-profit-topping-estimates-202811821.html