July 29, 2020 / 9:36 PM / 16 days ago

Breakingviews - Big Tech bosses face hot air and hard truths

Facebook CEO Mark Zuckerberg testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on "Online Platforms and Market Power" in the Rayburn House office Building on Capitol Hill, in Washington, U.S., July 29, 2020. Mandel Ngan/Pool via REUTERS

SAN FRANCISCO (Reuters Breakingviews) - Politicians love to throw mud at Silicon Valley, and sometimes it sticks. The chiefs of Apple, Amazon.com, Facebook and Google faced an array of silly questions at a Washington, D.C. hearing on Wednesday, but also encountered pointed examples of their firms throwing their weight around and squashing competitors. Tim Cook, Jeff Bezos, Mark Zuckerberg and Sundar Pichai have some self-examination to do.

Forcing tech bosses to answer questions about their market power before the House of Representatives’ antitrust subcommittee, albeit remotely, was bound to be political theater. Republicans spent most of their time accusing Facebook and Alphabet-owned Google of censorship of conservative views. One congressman wanted to know why his campaign emails were ending up in his parents’ Gmail spam filters.

But there were questions that made the tech moguls squirm. House Judiciary Committee Chairman Jerry Nadler cited emails where Zuckerberg describes how buying new competitors, like the purchase of Instagram in 2012, buys Facebook time. In a 2012 note posted by the Verge, the social network’s founder said “Instagram can hurt us.” Instagram executives were worried that if they didn’t sell, Facebook would go into “destroy mode.”

Bezos also faced uncomfortable questions about Amazon’s 2010 acquisition of Quidsi, which ran Diapers.com. A congresswoman referred to documents that showed Amazon was willing to lose $200 million a month before the acquisition by undercutting prices on Diapers.com, which it saw as a threat in that product category. The committee has been investigating Big Tech for a year; it looks like the time hasn’t been wasted.

Regulators gave these acquisitions a free pass at the time, but they might not do so again. Each of the four that appeared in front of Congress is being investigated by the Federal Trade Commission or the Justice Department. Demands could range from behavioral curbs to, at worst, a breakup. There are also several bills in Congress to strengthen antitrust laws, and the subcommittee will eventually produce a report on the evidence it has collected.

At times, the tech chiefs seemed caught by surprise by the questions they faced on Wednesday. Bezos claimed at one point that he couldn’t recall particulars over the Diapers.com saga. That suggests it’s time the foursome took a walk down memory lane before the next phase of the tech backlash begins.

Breakingviews

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