November 27, 2020

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Amazon, Facebook, Apple CEOs lay out their antitrust defenses in remarks to Congress

Facebook CEO Mark Zuckerberg will appear via video before the House judiciary’s antitrust subcommittee on Wednesday.


James Martin/CNET

The CEOs of Amazon, Facebook and Apple released on Tuesday evening opening remarks that cast their companies as icons of American ingenuity as they gear up for a a highly anticipated antitrust hearing with legislators on Wednesday.

Jeff Bezos, Mark Zuckerberg and Tim Cook, who will be joined by Alphabet CEO Sundar Pichai, will appear before the House of Representatives antitrust subcommittee. All four men will testify remotely by video chat because of the coronavirus pandemic. (CNET has details of how to watch the proceedings here.)

Members of the subcommittee have been looking into whether the four tech giants stifle competition and harm consumers for more than a year. In that time, the subcommittee has gathered more than 1.3 million documents from the companies, competitors and antitrust enforcement agencies. Here’s what the bosses of Amazon, Facebook, Google and Apple have to say. 

Amazon

Amazon’s Bezos started his statement with a personal story about his upbringing by his mom, who was a 17-year-old high school student when she had him, and his adoptive father, a Cuban immigrant. He walked through the very early days of Amazon, when he founded the company in his garage and drove packages himself to the post office. Back then, Amazon was far from a sure thing and his parents were his initial investors. The company struggled through the dot-com bust and wasn’t profitable for years, he wrote.

It’s clear he was framing his company’s origin story as one that epitomizes the American dream. However, while for many people that dream is a house and a stable job, Bezos grew his company into the world’s biggest online retailer. He’s now the world’s richest person, worth about $180 billion.

As Amazon and the other tech giants have done when defending themselves against monopoly concerns, Bezos hits on job creation, its investments in the US and competition.

On job creation, he said Amazon now employs 1 million people. He added that many of those jobs in the US can’t be outsourced since they are needed in local communities to pack and ship products to customers. “The trust customers put in us every day,” he wrote, “has allowed Amazon to create more jobs in the United States over the past decade than any other company—hundreds of thousands of jobs across 42 states.”

On US investments, he said Amazon has invested more than $270 billion in the U.S. over the last decade.

And on competition, he said his company is just a tiny player in global retail, accounting for less than 1% of the global retail industry and less than 4% of the US market. These figures belie the fact that Amazon is the dominant player, by far, in US online sales, accounting for 38% of the market.

While taking pains to identify his competition,  — including Walmart, Target and Alibaba — and cast Amazon as relatively small in the context of the greater retail world, Bezos offered a defense of big companies, saying only large organizations can handle some of the complexities that come with business.”I don’t care how good an entrepreneur you are,” he wrote, “you’re not going to build an all-fiber Boeing 787 in your garage.”

Bezos also went out of his way to highlight how Amazon is a force for good, pushing its Climate Pledge, encouraging other retailers to raise their minimum wage and starting the Amazon Future Engineer youth program.

The letter is sprinkled with many Bezosisms, phrases and concepts he often peppers in his remarks, including Amazon’s obsession with customers, how he lives his life trying to minimize his regrets, and his push for big risks to get big rewards.

He added a Bezosism he often employs when defending his company: “I believe Amazon should be scrutinized. We should scrutinize all large institutions, whether they’re companies, government agencies, or non-profits. Our responsibility is to make sure we pass such scrutiny with flying colors.”

(Read the whole testimony here.)

Facebook

Facebook’s Mark Zuckerberg will tell US lawmakers on Wednesday the social network is a “proudly American company” that has competition, including Chinese tech companies.

Zuckerberg said in his five-page prepared remarks the company faces “intense competition globally.” Some of Facebook’s competitors include TikTok, which is owned by Chinese tech company ByteDance, and US social media apps such as Twitter and Snapchat. Zuckerberg said Facebook competes with Apple, Amazon and Alphabet, which owns Google and YouTube.

“We believe in values — democracy, competition, inclusion and free expression — that the American economy was built on. Many other tech companies share these values, but there’s no guarantee our values will win out,” Zuckerberg said in his prepared remarks. “For example, China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries.”

Zuckerberg said he supports “strong and consistent competition” policy that ensures a level “playing field.” Facebook has also created new products in response to competition, contributes to the open-source community and creates new tools that helps nonprofits, people check if their loved ones are safe during a natural disaster, and addresses user’s needs during the coronavirus pandemic, he says in his prepared remarks.

Calls to break up Facebook began to heat up last year after one of the company’s founders Chris Hughes published a lengthy op-ed in The New York Times about the threat to democracy posed by the social network’s growing power. The company has faced several scandals, including over data privacy and election meddling. Facebook owns popular photo-service Instagram and messaging app WhatsApp. Hughes and other critics want Facebook to spin off Instagram and WhatsApp, allowing the services to compete as separate businesses. 

Facebook is facing several antitrust probes, including from the Federal Trade Commission, the US Department of Justice, the House antitrust committee and a group of state attorneys general. The FTC is reportedly looking into whether Facebook’s acquisitions were part of the social media giant’s strategy to stifle competition, The Wall Street Journal reported. The FTC has declined to comment on their investigation.

Zuckerberg will tell lawmakers that its acquisitions have helped fueled innovation not hinder them. Instagram, WhatsApp and Facebook all work together to combat spam and harmful content that violates the social network’s rules, he said.

“Our acquisitions have helped drive innovation for people who use our own products and services and for the broader startup community. Acquisitions bring together different companies’ complementary strengths,” Zuckerberg said in his prepared remarks.

Instead of breaking up the company, Zuckerberg has been pushing for more regulation around issues such as privacy and data portability.

“I understand that people have concerns about the size and perceived power that tech companies have. Ultimately, I believe companies shouldn’t be making so many judgments about important issues like harmful content, privacy, and election integrity on their own,” Zuckerberg said.

He also thinks that one day Facebook will be replaced by another social network, noting that the company kept the sign of what used to be Sun Microsystems headquarters on its campus to remind them that the tech industry changes rapidly.

“I’ve long believed that the nature of our industry is that someday a product will replace Facebook,” he said. “I want us to be the ones that build it, because if we don’t, someone else will.”

(Read the whole testimony here.)

Apple

Apple CEO Tim Cook will highlight how the company’s iPhone App Store, launched in 2008, created an industry onto itself that helped give rise to global companies. “Fortune 500 companies,” Cook will say, “got their start on the iPhone.”

Cook says the iPhone and competing smartphone Samsung, LG and others altered the tech industry, but argues that Apple doesn’t have a dominant market share in any of the industries in which it competes.

In part, his opening testimony is written to defend Apple against an argument raised by European Commission officials investigating the company. In the EU, Apple has been accused of being a gatekeeper, effectively picking winners and losers, stifling innovation and warping competitive prices in the process.

“After beginning with 500 apps, today the App Store hosts more than 1.7 million — only 60 of which are Apple software,” Cook plans to testify on Wednesday. “Clearly, if Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the store, not keep them off.”

He will also argue the up to 30% commission Apple charges helps to pay for improvements, programming tools and other code that help make apps work. 

“Apple’s commissions are comparable to or lower than commissions charged by the majority of our competitors,” he plans to say. “And they are vastly lower than the 50% to 70% that software developers paid to distribute their work before we launched the App Store.”

While Cook says he invites scrutiny, he will also argue that Apple’s platform creates 1.9 million American Jobs in all 50 states. “This is nothing short of of an economic miracle in a relatively brief span of time,” he’ll add.

 (Read the whole testimony here.)

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