SMOKING IS ADDICTIVE. Yet when the bosses of America’s largest tobacco companies testified in Congress on April 14th 1994, they all denied what by then was obvious. Their obstinacy provided new momentum to efforts to regulate and sue their industry. In a legal settlement with the states four years later, the companies agreed to pay more than $200bn over 25 years and to limit how tobacco was marketed.
Critics of America’s largest tech firms hope that a congressional hearing on July 29th—postponed by two days because the late Congressman John Lewis was lying in state in the Capitol—will unleash a similar dynamic. For the first time the chief executives of Alphabet (Google’s parent), Amazon, Apple and Facebook will together face the questions of lawmakers in Washington. Yet the chances are that the proceedings will prove far less momentous.
To be sure, they will make headlines, and have already caused a flurry of activity. On July 22nd, for instance, economists at the Analysis Group, a consulting firm, published a report commissioned by Apple, which—predictably, perhaps—showed that the 30% cut it charges firms for sales on its App Store is fair and not unlike fees on other online marketplaces. The same day, piggybacking on the attention, Slack, a corporate-messaging service, filed a competition complaint with the European Union against Microsoft, which 20 years ago had been the favourite target of antitrust action, but has since avoided scrutiny. (Slack alleges that the world’s largest software firm is up to its old tricks by bundling its dominant package of online productivity tools, Office 365, with a service competing with Slack’s.)
Legislators—the members of the antitrust subcommittee of the Judiciary Committee of the House of Representatives, to be precise—will also put pointed questions to the tech bosses. They will ask Apple’s Tim Cook to explain why charging 30% does indeed not amount to abusing the company’s monopoly on distributing apps for the iPhone. They will quiz Alphabet’s Sundar Pichai on whether Google leveraged its dominance in online search and related advertising into other digital markets. They will confront Amazon’s Jeff Bezos with cases in which his firm gleaned data from merchants on its e-commerce platform to develop rival offerings. And Facebook’s Mark Zuckerberg will need to lay out why taking over Instagram and WhatsApp, a social network and an instant-messaging service, respectively, did not amount to neutralising potential rivals. In their defence they will claim that their behaviour mostly benefits the consumer and that any antitrust action will only help Chinese competitors (according to a probably orchestrated leak, Mr Zuckerberg will argue that success is patriotic).
However, the circumstances are not conducive for the tech bosses to say anything that could change the debate about how to regulate their industry. Nor are they likely to supply much fodder for a significant reform of America’s antitrust law, as the subcommittee aims to propose. For one thing, the pandemic complicates matters. Although they will be grilled as a group—rather than individually, as first planned—the four will not sit in one room, but be beamed in via videoconference. That will make for much less bracing and fewer unscripted exchanges. It may even tempt them to cheat in a way: handlers in the background could feed them suggestions on how to answer a tricky question. (Then again, if lawmakers manage to make clever use of screen sharing, they could confront the executives with some enlightening charts, such as how much the market capitalisation of the four companies has grown during the pandemic; they are now worth a total of $4.85trn.)
What is more, in contrast to smoking and despite years of debate, the harms of remedies for the tech giants’ dominance are not obvious. Smoking causes lung cancer, and tobacco companies can be fined and cigarettes regulated, but even critics of big tech still cannot agree on whether breaking up big tech companies, for instance, would be a practical way of constraining them—or whether it is better to regulate their behaviour. The debate is also burdened by other things people do not like about these firms, including their hunger for personal data, the way they moderate content and their supposed anti-conservative bias (which Republican members of the subcommittee will be sure to bring up during the hearing).
Last, and most important, the political environment in Washington does not lend itself to much movement. As in other policy areas, nobody expects much to happen before the presidential election in November. Aides to the subcommittee have said that it will produce a report “later this year”. And even after the election, it is unlikely that antitrust will be a priority. What a re-elected Donald Trump would do is anybody’s guess. As president, Joe Biden, who has not shown a particular interest in tech matters so far, would have his plate full with other projects, such as fixing health care and getting the economy back on track.
If there is big antitrust news in the months before the election it is likely to come in the form of lawsuits. Insiders say that the Department of Justice is intent on filing one by September—perhaps in conjunction with some state attorneys-general—against Google for having extended its monopoly in online-search advertising into other areas of digital marketing. The Federal Trade Commission may follow suit by going after Facebook, but it is unclear what it would focus on, partially because of internal disagreements. Barring any settlements, it would take years in both cases before courts made a final ruling.
That said, the hearing may still bring surprises. Since the committee began its work about a year ago, its staff collected hundreds of hours of interviews, waded through 1.3m documents from the companies and could confront the tech bosses with unpleasant evidence. There is talk that lawmakers have found some smoking guns, for instance that an executive had pushed a “copy-acquire-kill” strategy for fledgling competitors. Conversely, they could undermine their work by asking ignorant questions, which the executives can easily bat away. When Mr Zuckerberg testified at a congressional hearing in April 2018, a senator, Orrin Hatch, asked him how his company could survive when its services are free. Facebook’s founder answered, smiling: “Senator, we run ads.”
By The Economist https://www.economist.com/united-states/2020/07/28/alphabet-amazon-apple-and-facebook-face-an-antitrust-grilling