Four tech titans go before Congress

By Brian Fung, Rishi Iyengar and Kaya Yurieff

Updated 7:00 p.m. ET, July 29, 2020
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1:28 p.m. ET, July 29, 2020

'Being big is not inherently bad,' congressman reminds committee

From CNN Business' Brian Fung

The top Republican on the House antitrust subcommitee, Jim Sensenbrenner, reminded his colleagues that “being big is not inherently bad.

”Quite the opposite,” he argued. “In America you should be rewarded for success.” He said he is interested in “how your individual companies use your size, success and power and what it means to the American consumer.”

1:19 p.m. ET, July 29, 2020

House antitrust panel chairman calls tech companies 'emperors of the online economy'

From CNN Business' Brian Fung

The pandemic could further entrench the dominance of large tech platforms such as Amazon and Google, Rep. David Cicilline, the chair of the House Judiciary Committee’s antitrust panel, argued at the start of the hearing. 

Cicilline’s opening remarks involved the CEOs of Amazon, Apple, Facebook and Google and took the tech industry to task, calling the tech companies “emperors of the online economy.”

“Each platform is a bottleneck for a key channel of distribution,” Cicilline said. “These platforms have the incentive and ability to exploit this power. They can charge exorbitant fees, impose oppressive contracts, and extract valuable data from the people and businesses that rely on them.”

Cicilline also said that Americans “are stuck with bad options” and that the country “has always been at war against monopoly power.”

The companies “discourage entrepreneurship, destroy jobs, hike costs and degrade quality.”

1:10 p.m. ET, July 29, 2020

Why this hearing won't lead to the tech companies being broken up

From CNN Business' Brian Fung

When people think “antitrust,” the idea of breaking up a company may be the first thing that comes to mind. But a breakup isn't the only or the most likely outcome. It's far more common for regulators to turn to settlements and consent decrees.

For Congress, in particular, breaking up companies isn't even an option. All Congress can do is issue a report, make legislation and pressure the relevant regulatory agencies.

12:21 p.m. ET, July 29, 2020

Tech antitrust hearing delayed by an hour

From CNN Business' Brian Fung

Wednesday’s high-profile antitrust hearing with the CEOs of Amazon, Apple, Facebook and Google has been delayed by an hour to 1 p.m. ET, according to a spokesperson for the House Judiciary Committee.

10:54 a.m. ET, July 29, 2020

Antitrust law: a (brief) explainer

From CNN Business' Brian Fung

The companies testifying before Congress are widely accused of violating antitrust law. But what is antitrust, exactly, and what makes for a violation?

Put simply, antitrust law is about ensuring a level playing field for competition. Think of it as a type of guardrail designed to keep markets fair. When it works correctly, antitrust law is supposed to prevent companies from abusing their dominance in the marketplace in order to gain an unfair competitive advantage.

This doesn’t mean that monopolies are inherently illegal, at least under US law. And a company doesn’t violate antitrust law simply for being big. But it can violate the law if it does things that harm competition. To determine if that’s happened, regulators like the Justice Department and the Federal Trade Commission gather economic evidence. Normally, that evidence comes in the form of data showing that prices have risen, or that rival businesses have been hurt, or that innovation has been stifled. Those investigations can lead to lawsuits, fines and, in the most extreme cases, corporate breakups.

But there are limits to antitrust law. It isn’t designed to address how platforms handle political speech or misinformation, for instance, or election security issues. While those topics may come up today, be careful not to conflate the two.

10:54 a.m. ET, July 29, 2020

How the Congressional hearing will work

From CNN Business' Brian Fung

Once the event kicks off at noon, it is expected to follow the usual pattern for congressional hearings: Opening statements by members of Congress, followed by opening statements from witnesses and then rounds of questioning by the lawmakers.

Since it’s a subcommittee hearing and not a hearing of the full Judiciary Committee, expect about a dozen or so lawmakers to be involved in the questioning. It's unclear how long it could go, but given the breadth and depth of the issues at stake, don’t be surprised if this hearing lasts all afternoon.

10:54 a.m. ET, July 29, 2020

This is how big the four Big Tech companies really are

From CNN Business' Seth Fiegerman

While Amazon, Facebook, Google and Apple will almost certainly push back against assertions that they are too big and hurt competition, it's hard to argue with the fact that these businesses are staggeringly large and successful.

  • Amazon, Apple and Google's parent company, Alphabet, each have market caps of $1 trillion or more. Apple, in particular, is already well on its way to being worth $2 trillion.
  • The combined market cap of the four tech companies now accounts for about 16% of the S&P 500. With Microsoft added in, the companies account for 22%.
  • Facebook had 2.6 billion monthly users as of the end of March. To put that in context: Twitter was hovering a bit above 300 million monthly users when it stopped disclosing that figure last year.
  • In fact, Facebook and Google each have multiple products with more than one billion monthly users. For Facebook, that lists includes Instagram, WhatsApp, Facebook Messenger and, of course, Facebook's main service. For Google, that includes products like YouTube and Gmail.
  • Amazon posted $280 billion in sales last year -- with a B. And the pandemic has only made Amazon more dominant as people shop and work more from home.
  • That staggering success has led to staggering wealth: Amazon CEO Jeff Bezos, the world's richest man, is now estimated to be worth $178 billion, according to the Bloomberg Billionaires Index. And Facebook CEO Mark Zuckerberg is worth more than $87 billion, making him the world's third richest man.

10:53 a.m. ET, July 29, 2020

TikTok CEO blasts Facebook ahead of antitrust hearing

From CNN Business' Donie O'Sullivan

TikTok’s new American CEO addressed concerns about the app’s Chinese ownership and blasted Facebook in a blog post published on Wednesday, just hours ahead of the antitrust hearing.

“The entire industry has received scrutiny, and rightly so. Yet, we have received even more scrutiny due to the company's Chinese origins,” wrote Kevin Mayer, TikTok's CEO. Mayer, a former Disney executive, joined TikTok in May. 

Mayer went on to note Facebook's attempts to copy TikTok with a rival product from Instagram called Reels:

“At TikTok we welcome competition. We think fair competition makes all of us better. To those who wish to launch competitive products, we say bring it on. Facebook is even launching another copycat product, Reels (tied to Instagram), after their other copycat Lasso failed quickly. But let's focus our energies on fair and open competition in service of our consumers, rather than maligning attacks by our competitor – namely Facebook – disguised as patriotism and designed to put an end to our very presence in the US."

 

11:29 a.m. ET, July 29, 2020

Mark Zuckerberg plans to tell Congress that Facebook competes 'the American way'

From CNN Business' Brian Fung

Facebook CEO Mark Zuckerberg is expected to defend his company from allegations of market dominance and antitrust violations on Wednesday by arguing that his company has helped “millions of businesses" and consumers, particularly during the pandemic, according to a copy of his prepared testimony obtained by CNN Business.

Zuckerberg will seek to dispel claims that the company has harmed competition by arguing that Facebook must constantly compete or face extinction, according to the prepared remarks. He will also point to the rising competitive threat posed by China, which he will claim is “building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries.” 

Facebook’s acquisition of WhatsApp and Instagram did not choke off potential rivals, Zuckerberg will argue, but instead led to new features that those apps would not have introduced independently. Facebook’s merger strategy has been closely scrutinized amid claims that the company has pursued a strategy of acquiring potential threats to its dominance. 

“Facebook is a successful company now,” Zuckerberg’s testimony reads, "but we got there the American way: we started with nothing and provided better products that people find valuable.”