Congress Puts Big Tech in Crosshairs

Date : 07/17/2019 @ 12:35AM
Source : Dow Jones News
Stock : Facebook Inc (FB)
Quote : 183.28  -0.91 (-0.49%) @ 12:59AM

Congress Puts Big Tech in Crosshairs

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By Ryan Tracy 

WASHINGTON -- Concerns about the power of Big Tech echoed across the capital on Tuesday, with politicians in both parties demanding more regulatory scrutiny of four giant companies' reach and plans for expansion.

In three hearings, which were focused on Facebook Inc.'s cryptocurrency plans, alleged Google censorship, as well as on an antitrust examination of Facebook, Google, its owner Alphabet Inc., Inc. and Apple Inc., the companies took punches on a range of political and policy issues.

"In an effort to promote and continue this new economy, Congress and antitrust enforcers allowed these firms to regulate themselves with little oversight," House Antitrust Subcommittee Chairman David Cicilline (D., R.I.) said at the outset of a hearing featuring executives from the four U.S. tech giants. "But as a result, the internet has become increasingly concentrated, less open and growingly hostile to innovation and entrepreneurship."

The hearings come as public-opinion polls show that more Americans are concerned about how tech companies protect their personal data and are looking to Washington to step up oversight.

There is also scrutiny over the role of tech companies as gatekeepers. In the past week, President Trump invited critics of Facebook and Google's YouTube to the White House and promised he would explore regulatory solutions to maintain free speech on social media.

Mr. Trump separately said on Tuesday that his administration should look into Google's ties to China, elevating the political risk of the search giant's yearslong effort to build a presence in that huge market. YouTube also faces an investigation by the Federal Trade Commission over allegations that it has improperly gathered data on minors, prompting the online-video giant to weigh changes to how it handles content for children.

In their testimony, the companies said that they still face competition in markets from advertising to apps, and that their online platforms have facilitated the growth of many other smaller companies.

"We have helped reduce prices and expand choice for consumers and merchants in the U.S. and around the world," said Adam Cohen, Google's director of economic policy.

Mr. Cicilline's hearing raises the prospect of Big Tech's worst fear: actions to break them up or fundamentally restrict their business models.

That threat hasn't materialized yet, and may not for years, if ever. The Justice Department and the FTC have privately divvied up jurisdiction for potential antitrust probes of the four companies, with the Justice Department preparing for an investigation of Google, The Wall Street Journal has reported. Those probes could take years to unfold.

Major legislation on privacy, antitrust or other tech-related issues also doesn't appear likely to pass a divided Congress before the 2020 elections.

Opponents of the companies nevertheless hope criticism from Capitol Hill could lend political backing to regulators who may want to rein in Big Tech -- much the way analysts credit congressional oversight for helping to fuel the successful U.S. antitrust case against Microsoft Corp. in the 1990s.

Scrutiny of Silicon Valley is growing beyond antitrust probes to hit the companies' reputation and their plans to extend their reach, particularly for Google and Facebook.

Facebook will face a $5 billion FTC fine for violations of its privacy promises, the Journal reported last week -- an action that is expected to come with ongoing scrutiny of the company's privacy practices.

Also under the microscope: Facebook's plan to launch the payments-enabling cryptocurrency Libra as soon as next year. "I think we're going to take more time than that," Federal Reserve Chairman Jerome Powell said of Facebook's timeline in a July 11 hearing. David Marcus, the Facebook executive in charge of the project, said Tuesday that Libra wouldn't launch until regulators' concerns are addressed.

Some Republicans appeared more resistant to crack down on the companies. In response to attacks on Facebook in the hearing on its cryptocurrency, Sen. Pat Toomey (R., Penn.) warned against "strangl[ing] this baby in the crib."

Rep. James Sensenbrenner (R., Wis.), the House Antitrust Subocmmittee's top Republican, told colleagues: "Just because a business is big doesn't mean it's bad."

Facebook has worked for more than a year with partners to develop Libra. Despite its promises about cooperating with regulators, lawmakers on Tuesday said they have heard such assurances from Facebook before on matters ranging from privacy to the policing of the company's platforms.

At a Senate hearing on alleged censorship, Sen. Ted Cruz (R., Texas) accused Google of "playing Big Brother" by collecting swaths of data on Americans who use its search engines and controlling public discourse through its dominance of internet search.

Mr. Cruz said the tech giant's frequent response -- that its results are produced by algorithms -- is inadequate. Algorithms are "written and maintained by people," he said.

Karan Bhatia, Google's vice president of global government affairs and public policy, told Mr. Cruz the company has built platforms that operate in an apolitical way.

At the antitrust hearing, Facebook and Amazon faced the most questions. Mr. Cicilline and others pressed the e-commerce company on whether it uses data gleaned from other sellers who introduce and favor Amazon's own new products on its platform.

"The best purchase to you is an Amazon product," Mr. Cicilline said.

"No, that's not true," objected Nate Sutton, Amazon's associate general counsel. "Our incentive is to help the seller succeed because we rely on them."

At times, the executives sidestepped questions. Mr. Cohen, the Google economic policy chief, was asked about a recent Journal article about fake listings on Google Maps. He said he wasn't aware of it.

Rep. Joe Neguse (D., Colo.) asked Matt Perault, director of public policy at Facebook, "What is the largest social-media network platform company by active users in the world?"

Mr. Perault said he didn't know, to which Mr. Neguse said: "It's Facebook." Around 2.7 billion people globally use Facebook's services each month.

The hearings were also punctuated at times by lawmakers' personal experience.

Pressed by Rep. Hank Johnson (D., Ga.) about competition, Mr. Perault said the company faces significant competition in advertising and other markets.

"I'd like to get a list" of competitors, Mr. Johnson replied. "So that I can do some shopping around."

"Why do you keep getting that alert for the iCloud?" Rep. Greg Steube (R., Fla.) asked Kyle Andeer, Apple's chief compliance officer, referring to the company's promotion of its cloud-storage product. Mr. Andeer said he wasn't aware of the details.

Katy Stech Ferek in Washington contributed to this article.

Write to Ryan Tracy at


(END) Dow Jones Newswires

July 16, 2019 19:20 ET (23:20 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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