Big Tech testifies: Bezos promises action if investigation reveals misuse of seller data, Zuckerberg defends Instagram acquisition

Closing out the more than five hour-long hearing, antitrust subcommittee Chairman David Cicilline, D-R.I., said the testimony showed him all four tech firms "have monopoly power."

"This hearing has made one fact clear to me: these companies as exist today have monopoly power," he said. "Some need to be broken up, all need to be properly regulated and held accountable."

The panel will now turn its attention toward releasing a report of its findings from the investigation, which will inform legislative proposals to update the antitrust laws. All four companies are still facing antitrust investigations from a mix of federal, state and international regulators. — Lauren Feiner

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One issue iPhone developers complain about is the possibility or threat that Apple could emulate their software and introduce it as a new feature for iPhones or other Apple products.

Rep. Joe Neguse revealed a slide that juxtaposed Apple's App Store Guidelines — the rulebook which determines what is allowed on the App Store — and Apple's developer agreement.

Neguse pressed on why Apple's developer agreement has legal language that protects it if it ends up making a competing product, yet the App Store guidelines have a rule against "copycat apps," banning them because it "just isn't fair to your fellow developers."

"Congressman, I'm not familiar with that, but I could follow up with your office," Cook said. 

"We would never steal someone's IP," he added. — Kif Leswing

All four tech CEOs committed under oath to improving racial and gender equity at their companies.

Rep. Lucy McBath, D-Ga., asked that the executives make the commitment on the record, "including black leadership and women in your senior ranks." — Lauren Feiner

Jeff Bezos chastised the discourse on social media platforms when he was asked by Rep. Jim Jordan, D-OH, whether he's "concerned with the cancel culture mob" and group think.

"I am concerned in general about that," Bezos told the House Antitrust Subcommittee. "What I find a little discouraging is that it appears to me that social media is a nuance destruction machine and I don't think that is helpful for a democracy."  

The other three CEOs also espoused the importance of free expression on social media. Tim Cook deftly avoided Jordan's framing of Apple's iconic "Think Different" ad, aired in 1984,  as evidence that "mob think, cancel culture, group think is not what this country is about."

"I remember it well," Cook said. "It was Apple vs. IBM at the time." — Annie Palmer

The question of conservative bias has become a common topic throughout the hearing, with multiple Republican lawmakers grilling the CEOs about whether their content moderation policies and other business decisions are influenced by ideological prejudice.

It's a concern that President Donald Trump has also expressed, even announcing an executive order aimed at social media companies after Twitter placed a fact-check label on his tweets about mail-in voting.

Rep. Jamie Raskin, D-Md., criticized his colleagues' questions about bias, listing conservative authors that have proliferated on the tech platforms.

"If Facebook is out there trying to repress conservative speech, they're doing a terrible job, so I don't understand the endless whining," Raskin said.

Facebook's own engagement metrics routinely show conservative news sources as the most-popular pieces of content.

Raskin pointed to Twitter's recent decision to temporarily limit the account of the president's son, Donald Trump Jr., after he posted a viral video about hydroxichloroquine being used to treat Covid-19. Twitter said it took the enforcement actions because the information was misleading and potentially harmful.

"That was an absolute public health measure which I hope all of us would endorse," Raskin said. — Lauren Feiner

When Apple CEO Tim Cook faced a line of questioning from Rep. Jamie Raskin about why Apple charges 30% on digital goods on the App Store, he said that iPhone users who don't like it can switch to other phones, like those running Google's Android operating system. 

"If you're a customer, and you don't like the setup, the curated experience of the App Store, you can buy a Samsung," Cook said, before Raskin cut him off. — Kif Leswing

It took nearly five hours of testimony before it finally happened: One of the tech CEOs forgot to unmute before speaking.

Amazon CEO Jeff Bezos was the one who first slipped up. Earlier, the hearing went on recess to try to fix an issue with Bezos' video feed.

"Mr. Bezos, I believe you're on mute," subcommittee Chairman David Cicilline, D-R.I., told him as he attempted to answer a question. — Lauren Feiner

Antitrust subcommittee Chairman David Cicilline, D-R.I., criticized Facebook for being slow to take down misinformation about the coronavirus, allowing it to spread across its platform before eventually being removed.

Cicilline used the example to suggest that Facebook's size is working against it.

"Doesn't that suggest, Mr. Zuckerberg that your platform is so big that even with the right policies in place you can't contain deadly content?" Cicilline asked.

Zuckerberg said he doesn't think that's case and that Facebook's been largely successful in taking down false content on Covid-19. Earlier in the questioning, Zuckerberg said Facebook has been "quite aggressive about taking that down as some of the questioning from the other side of the aisle has shown so far," referencing questions about alleged censorship by Facebook's moderators. — Lauren Feiner

Tim Cook reiterated claims that Apple did not exhibit anti-competitive behaviors when it introduced its Screen Time software, and had only removed competitors from its App Store over safety concerns. 

Apple released software in 2018 called Screen Time that enables users to track which apps they use the most and restrict access to distracting apps, a useful tool for parents looking to control their childrens' technology usage. In the weeks after Screen Time was released, 11 of the 17 most-downloaded screen-time and parental control apps were removed and restricted, according to a 2019 report from the New York Times.

Apple has said the removed apps were abusing a kind of technology intended for company-owned work phones called Mobile Device Management, which can give an app developer access to information including user location, browsing history and what photos and videos have been taken with the camera.

"We were concerned over the privacy and security of kids," Cook told Rep. Lucy McBath, D-GA, rather than it being a matter of competition. "There's vibrant competition for parental controls out there." — Jessica Bursztynsky

Rep. Val Demings, D.-Fla., on Wednesday accused Facebook of weaponizing its policies to stifle competition. 

Demings cited an internal email from 2012 in which Facebook CEO Mark Zuckerberg said to his staff that he assumed the company enforced its policies against competitors "more strongly." 

Specifically, Demings called out emails from 2013 and 2014 in which Facebook staffers discussed preventing Pinterest and MessageMe from accessing Facebook's services. Demings asked Zuckerberg why Facebook would prevent Pinterest from accessing its services. 

"We used to have a policy that restricted competitors from using our platform, and Pinterest is a social competitor with us," Zuckerberg responded. 

"These examples and supporting documents strongly suggest that Facebook does weaponize its platform policies and enforces them selectively to undermine competitors," Demings responded. — Salvador Rodriguez

Amazon CEO Jeff Bezos appears to be making his own playbook in his first congressional testimony. 

Bezos, the only CEO of the four who has never previously testified before Congress, has taken a different approach from that of his peers so far in the hearing, which went into recess beginning around 4:25 p.m. ET.

While the other CEOs tend to deny some issues raised by lawmakers or object to their framing, Bezos instead has responded with surprise and concern to allegations made about Amazon by competitors interviewed by the panel and documents it has obtained.

When Rep. Lucy McBath, D-Ga., presented Bezos with a recording of a former Amazon seller who claimed she was removed from the platform without explanation, Bezos said the anecdote "surprised" him and that he wanted to talk to the former seller who shared her story with the committee. McBath said that was missing the point of a larger problem, though Bezos said he did not believe it was systemic.

Later, Rep. Hank Johnson, D-Ga., brought up the testimony from the CEO of PopSockets at a January hearing. Johnson recounted that the executive alleged Amazon used counterfeit versions of PopSockets on the site as "leverage" and only cracked down on the counterfeits after the company committed to hefty advertising spend.

"That's unacceptable," Bezos responded. "If those are the facts, and if someone somewhere inside Amazon said buy X dollars in ads and then we'll help you with our counterfeit problem, that's unacceptable." — Lauren Feiner

Instagram's founder Kevin Systrom told an investor he feared Facebook CEO Mark Zuckerberg would go into "destroy mode" if he didn't sell him the business, according to Rep. Pramila Jayapal, D-Wash., citing documents uncovered by the House committee's investigation.

Jayapal asked Zuckerberg if he had ever threatened to clone a product of a company he was trying to acquire. Zuckerberg said he did not recall. 

She then asked if Zuckerberg threatened Instagram with its development of a similar product, Facebook Camera, while he attempted to acquire the business. Zuckerberg said he didn't see that as a threat since it was already public the company was working on the product.

Jayapal cited a message she said Zuckerberg sent to Systrom before Facebook had acquired Instagram where Zuckerberg allegedly said Facebook was "developing our own photo strategy so how much we engage now will also determine how much we're partners versus competitors down the line."

She added, "Instagram's founder seemed to think that was a threat. He confided in an investor at the time that he feared that you would go into 'destroy mode' if he didn't sell Instagram to you." — Lauren Feiner

Rep. Mary Gay Scanlon, D-Pa., pressed Jeff Bezos on Amazon's strategy to beat back competitors by bringing up the company's old, but important, acquisition of Diapers.com.

Amazon bought Quidsi, parent company of Diapers.com and other sites, for about $500 million in 2010. The company shut down its Quidsi unit in 2017 after it failed to reach profitability. 

Before Amazon acquired Quidsi, it identified Diapers.com as a potential competitor and attempted to enter the online diaper business. Amazon cut prices on its own diaper products in an effort to drive Diapers.com out of business, Scanlon said.

Amazon later raised the prices on its diaper products, "after Amazon eliminated its competition," Scanlon added. 

Scanlon said she has reviewed emails that illustrate Amazon's "aggressive plan to win" against Diapers.com, adding that Amazon's strategy has been described as similar to the "way a cheetah would pursue a sickly gazelle."

The acquisition has been examined closely by critics and antitrust experts who say it represents Amazon's cutthroat treatment of competitors. — Annie Palmer

Snap released its first-ever diversity report in the midst of its rivals' hearing, revealing low diversity among its workforce. 

Black/African American employees made up 4.1% of its entire U.S. workforce in 2019, and Hispanic/Latinx people represented 6.8%, the report said. Native American/Alaskan Native people made up less than 1% of its workforce. 

Overall, women made up 32.9% of Snap's global workforce, the report said. 

The company said its senior leadership team is composed of 3.2% Black/African American employees and 3.2% Hispanic/Latinx people. The company said 74.2% of its senior leadership team is White. 

Snap acknowledged its low representation of minorities and women, and outlined its diversity goals along with the numbers. The company said it wants to double the number of women in tech at Snap by 2023. It also wants to double the number of minorities by 2025. 

"We are determined to do what it takes to improve these numbers, because behind the numbers are real people," the company said in the report. — Jessica Bursztynsky

Amazon CEO Jeff Bezos told Congress that a dramatic complaint from a third-party seller who claimed to be unfairly delisted from the platform is not a systemic issue.

Rep. Lucy McBath, D-Ga., played an audio clip of a woman she said was an Amazon seller whose storefront was removed from the platform without explanation after she claimed to have followed all the rules. Bezos said the anecdote "surprised" him.

"It's not the systematic approach that we take, I can assure you," Bezos said. "I'm not even sure what's going on in that anecdote."

"I think though that you're missing the point," McBath said. "This is not just about one business. I'm concerned that this is a pattern of behavior." — Lauren Feiner

While many people in the technology industry were following along as the chiefs of Alphabet, Amazon, Apple and Facebook were taking questions from the U.S. House Judiciary subcommittee, Amazon pushed out a corporate announcement: Its Amazon Web Services cloud division will hold its annual Reinvent conference online, rather than presenting it in Las Vegas later this year. 

With people continuing to contract the coronavirus, some Amazon observers had been expecting the company to have the event online, as many other technology companies have done. Now Amazon has announced its decision four months before the show.

It will be free to all and longer than usual when it starts on Nov. 30, spanning 2½ weeks instead of five days. Because it will be online for weeks instead of requiring people to travel, it could attract attention from more people, as have some virtual events that technology companies have organized this year in place of real-life events. — Jordan Novet

Rep. Pramila Jayapal, D-Wash., on Wednesday pressed Amazon CEO Jeff Bezos on the company's use of third-party seller data. 

"You can set the rules of the game for your competitors but not actually follow those same rules for yourself," Jayapal said. "Do you think that's fair to the third-party businesses that sell on your platform?"

The issue is at the heart of why Bezos was asked to appear at Wednesday's House Antitrust Subcommittee hearing. Top Democrats on the committee said they suspected Amazon of lying to Congress during a July 2019 hearing over its private-label strategy, after a recent Wall Street Journal report on the company's use of third-party seller data appeared to contradict an Amazon executive's previous testimony on its treatment of sellers. 

Bezos said he was "familiar" with the WSJ report, adding that Amazon is still investigating the report's findings, which found Amazon employees used non-aggregated or easily identifiable data from third-party sellers to figure out which products to make on its own. 

When asked whether Amazon employees are given access to third-party seller data, Bezos said the company has a "voluntary policy" that safeguards seller data from employee access. He later appeared to backtrack on his messaging, after Jayapal asserted Amazon doesn't enforce its own policies.

"If we found someone violated it, we would take action," Bezos said. — Annie Palmer

The hearing took a short recess to fix an issue with Amazon CEO Jeff Bezos' video feed, according to a congressional aide. The hearing resumed around 2:50 p.m.

Prior to the recess and nearly two hours into the hearing, Bezos had yet to field any questions from the lawmakers. — Lauren Feiner

Google CEO Sundar Pichai faced questions about the company's work with China in early lines of questioning at Wednesday's hearing.

Rep. Ken Buck, R-Colo., asked Pichai about Google's $10 billion cloud project deal with the Department of Defense's JEDI, or Joint Enterprise Defense Infrastructure, which it dropped out of in 2018. Google's former cloud chief told employees in 2018 that the company would not renew a different U.S. Defense contract after it was set to expire in March 2019.

Buck asked Pichai why the company dropped those and related projects but did work on projects such as Dragonfly, which was a China-specific search engine that it ultimately abandoned in 2018 after employee protest. An aide behind Buck held up a poster of a drone image of footage of China during the questioning.

Buck said he wanted to ask what values Google and communists and China have in common.

"Did Google align with the Chinese policies to suppress information?" Buck asked Pichai in a series of questions. "Do you think Google could get away with China's corporate espionage playbook?"

Pichai answered by describing how it partners with United States agencies and was adamant about not serving customers in China in the present day with the exception of a small number of projects.

"We are proud to support the U.S. government," Pichai said, adding that the company has projects with the Navy and other branches. He added that it doesn't offer any of its services in China.

Pichai said he would address the current partnerships further if Buck wished to follow up. —Jennifer Elias

Rep. Jerrold Nadler, D.-N.Y., on Wednesday grilled Facebook CEO Mark Zuckerberg over the social network's acquisition of Instagram. 

"The documents you provided tell a very disturbing story, and that story is that Facebook saw Instagram as a powerful threat that could siphon business away from Facebook," Nadler said during the House Antitrust Subcommittee hearing. "Rather than compete with it, Facebook bought it. This is exactly the type of anticompetitive acquisition that antitrust laws were designed to prevent."

Facebook acquired Instagram for $1 billion in 2012.

In response to Nadler, Zuckerberg said Facebook always viewed Instagram as both a competitor and a complement to its services.

"At the time, almost no one thought of them as a general social network or competing with us in that space," Zuckerberg said. "The acquisition has been wildly successful."

Nadler referenced a number of emails from the time leading up to the acquisition in which Zuckerberg described Instagram as a threat. The emails were published on Wednesday by The Verge. 

"Did you mean that consumers might switch from Facebook to Instagram?" Nadler asked. "Yes or no?"

"In the space of mobile photos and camera apps, which was growing, they were a competitor," Zuckerberg answered. 

Nadler later told Zuckerberg that "mergers and acquisitions that buy off potential competitive threats violate antitrust laws."

"If this was an illegal merger at the time of the transaction, why shouldn't Instagram now be broken off into a separate company?" Nadler asked.

"With hindsight it probably looks like obvious that Instagram would reach the scale that it has today, but at the time, it was far from obvious," Zuckerberg responded. "It was not a guarantee that Instagram was going to succeed." — Salvador Rodriguez

Rep. Hank Johnson, D-Ga., pressed Cook on whether the App Store treats all app developers equally. When Johnson asked if Apple employs two people to help Chinese search engine Baidu navigate the store, suggesting that Apple gives certain app makers special treatment, Cook said he did not know. 

Johnson also asked about a recent agreement that would allow Apple users to rent movies on Amazon Prime without using Apple's in-app payment mechanism, which takes a 30% cut of sales, and whether other app makers could enter into the same arrangement.

"It's available to developers meeting the conditions, yes," Cook said. — Kif Leswing

Google staff discussed the "proliferating threat" of competing websites such as vertical search engines, subcommittee Chairman David Cicilline, D-R.I., said, based on the panel's investigation. 

Cicilline said a staff memo showed that about a decade ago, Google believed some websites were getting "too much traffic." He described a "multipronged attack" on such websites, including Yelp, which he said the investigation found Google threatened to delist if it was not allowed to keep taking its reviews.

Cicilline asked Google CEO Sundar Pichai if that activity is anticompetitive.

"When I run the company, I'm really focused on giving users what they want," he said without affirming Cicilline's claims.

Cicilline also asked if Google uses surveillance of other websites to inform its own strategy.

"Just like other businesses, we try to understand trends from data which we can see and we use it to improve our product for our users," Pichai said. — Lauren Feiner

Facebook CEO Mark Zuckerberg on Wednesday said the social network competes fairly and lags behind its competitors in many areas.

"The most popular messaging service in the U.S. is iMessage. The fastest growing app is TikTok. The most popular app for video is YouTube. The fastest growing ads platform is Amazon. The largest ads platform is Google," Zuckerberg said during his testimony before the House Antitrust Subcommittee.

Zuckerberg also argued that Facebook's $19 billion acquisition of WhatsApp in 2014 allowed the company to compete against telecommunications companies. 

"When Facebook bought WhatsApp, we could compete against telecos who used to charge 10 cents a text message but not anymore," he said. 

Zuckerberg also argued that Facebook competes against companies globally, especially the rising number of tech companies coming out of China. 

"We compete hard. We compete fairly. We try to be the best," he said. "That's what I was taught matters in this country." — Salvador Rodriguez

Google CEO Sundar Pichai, in his opening statement, said the company has offered a competitive platform that has lowered prices for advertisers, giving consumers more choice. 

"We are committed to doing this responsibly," he added. 

After paying tribute to the recently deceased Rep. John Lewis, he went on to tout the company's growth in the United States. Pichai said the company employs more than 75,000 people in the U.S. across 26 states. He said at the end of 2019, the company's R&D spend had increased tenfold over 10 years from $2.8 billion to $26 billion. — Jennifer Elias

Apple CEO Tim Cook told the House Antitrust Subcommittee on Wednesday that Apple doesn't have a dominant share of the smartphone market and that it is in fierce competition with rivals including Samsung, Google and Huawei.

"Apple does not have a dominant market share in any market where we do business," Cook said.

Cook also defended Apple's 30% fee on digital transactions on the App Store, comparing it favorably to fees charged by brick-and-mortar retailers. Apple's App Store policies are expected to be one of the focuses of questioning during the hearing. "Apple's commissions are comparable or lower than commissions charged by the majority of our competitors," Cook said. — Kif Leswing

Amazon CEO Jeff Bezos emphasized the "strikingly large and extraordinarily competitive" retail market in his opening remarks to the House Antitrust Subcommittee on Wednesday. 

Bezos began his opening remarks by harking back to Amazon's humble beginnings as an online bookseller but acknowledged that Amazon has grown to become "a large company" that warrants scrutiny. 

"Let me close by saying that I believe Amazon should be scrutinized," Bezos said. "We should scrutinize all large institutions, whether they're companies, government agencies or nonprofits. Our responsibility is to make sure we pass such scrutiny with flying colors." — Annie Palmer

The top Republican on the Judiciary Committee, Jim Jordan of Ohio, did not mince words in his opening statement.

"I'll just cut to the chase: Big Tech is out to get conservatives," Jordan said before listing several examples he believed to be instances where the platforms displayed bias against conservatives.

Jordan railed against Twitter as well, which was not represented at the hearing. Jordan had asked to invite CEO Jack Dorsey to attend but claimed the Democrats declined.

Jordan said his concerns were in part about protecting the upcoming election.

As subcommittee Chairman David Cicilline, D-R.I., began introducing the witnesses, Jordan was asked to put on a mask, and Cicilline reiterated committee rules to wear a mask when not speaking. — Lauren Feiner

Judiciary Committee Chairman Jerrold Nadler, D-N.Y., compared the tech companies testifying Wednesday to the railroad monopolies of the past.

"By virtue of controlling essential infrastructure, these companies have the ability to control access to markets," Nadler said in his opening statements, according to his written remarks. "In some basic ways, the problem is not unlike what we faced 130 years ago, when railroads transformed American life — both enabling farmers and producers to access new markets, but also creating a key chokehold that the railroad monopolies could exploit."

He described railroads as abusing their "gatekeeper power" and said, "While the underlying technology is dramatically different, new digital intermediaries have the ability to control access to critical markets."

Nadler said that at the time of the railroad monopolies, "Congress recognized that these powerful new technologies had reshaped the balance of power in our economy — and that it was the role of Congress to ensure the new monopolists could not abuse their power." — Lauren Feiner

The top Republican of the antitrust subcommittee, Rep. Jim Sensenbrenner of Wisconsin, began his opening remarks by emphasizing that "being big is not inherently bad."

"In America, you should be rewarded for success," he said.

While he said current antitrust laws have served the country well, he expressed concerns about aspects of the tech companies' power — most notably their ability to moderate speech on the internet.

Sensenbrenner said he believes "market dominance in the digital space is ripe for abuse, particularly when it comes to free speech."

The statement telegraphs the types of questions that could be to come in the hearing from conservative lawmakers.

"Conservatives are consumers too, and they need the protection of the antitrust laws," Sensenbrenner said. — Lauren Feiner

Antitrust subcommittee Chairman David Cicilline, D-R.I., emphasized the bipartisan nature of the 13-month probe into the four tech giants and highlighted the ways the committee has found that they hinder competition in his opening remarks for the hearing.

"Prior to the COVID-19 pandemic, these corporations already stood out as titans in our economy," his prepared remarks state. "In the wake of COVID-19, however, they are likely to emerge stronger and more powerful than ever before."

Cicilline's remarks laid out three patterns the committee has found are common among the companies and pose issues to competition:

1. Each platform allegedly serves as "a bottleneck for a key channel of distribution."
2. The platforms allegedly use their "control over digital infrastructure to surveil other companies — their growth, business activity, and whether they might pose a competitive threat" and use that information to maintain their own power.
3. The platforms allegedly "abuse their control over current technologies to extend their power" through tactics such as self-preferencing, or giving their own products a leg up over those of competitors who also use their platforms.  

Cicilline argued those practices "discourage entrepreneurship, destroy jobs, hike costs, and degrade quality."

"Simply put, they have too much power," Cicilline said. — Lauren Feiner

President Donald Trump tweeted ahead of the hearing, "If Congress doesn't bring fairness to Big Tech, which they should have done years ago, I will do it myself with Executive Orders."

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Trump introduced an executive order in May that targeted social media companies after Twitter placed a fact-check label on his tweets for the first time. The order directed federal agencies to review rules around Section 230 of the Communications Decency Act, which has served as a liability shield for online platforms by preventing them from being held responsible for their users' posts or moderation practices conducted in good faith.

Still, Trump's powers in changing a current law are limited without congressional action. Several proposals have been made targeting reforms to Section 230, but so far, Republicans and Democrats have remained divided on how it should be altered, if at all. — Lauren Feiner

The testimony by CEOs of Amazon, Apple, Facebook and Google's parent company Alphabet may not contain any bombshells the House Judiciary subcommittee on antitrust has yet to learn from the 1.3 million documents it has obtained from their firms. But it will provide a glimpse into the arguments the companies are using behind closed doors with regulators that could break them up.

Congress does not have the authority to impose structural remedies or other enforcement actions on the four tech giants that have been the subject of the House panel's antitrust probe since June 2019. The investigation is expected to culminate in a report outlining the panel's findings and proposing reforms to the antitrust laws to modernize the tools at regulators' disposal in light of the new digital marketplace.

While legislation, once enacted, can have far-reaching effects, it doesn't pose as immediate a concern for these four giants as the enforcement investigations underway. All four are being investigated by a mix of federal, state and international regulators. In the U.S., federal and state law enforcement agencies can bring suits under federal antitrust law and advocate for companies to change their practices or even be broken up. The Justice Department is reportedly inching closer toward a lawsuit against Google, according to The Wall Street Journal.

The antitrust concerns about each company vary but include questions of whether a company should be able to compete on a marketplace it runs, whether a firm should be allowed to acquire a start-up that could grow into a formidable competitor and whether businesses can amass power to the point of dominance through data collection.

While Wednesday's hearing may not uncover new information, it could yield new commitments from the tech executives and reveal their arguments to regulators and lawmakers' appetite to reform the antitrust laws. — Lauren Feiner