By: Ryan Tracy of the Wall Street Journal
Congress opened a new front in the government’s antitrust probe of giant technology firms, with House lawmakers on Friday demanding emails and other records from some of the industry’s top chief executives as they look for evidence of anticompetitive behavior.
The requests from House Judiciary Committee leaders from both parties to Amazon.com Inc., AMZN 0.65% Facebook Inc., FB 2.74% Apple Inc. AAPL 0.85% and Alphabet Inc., GOOG 0.95% owner of Google, set up potential conflicts between tech leaders protective of their business tactics and lawmakers who want to scour their corporate records.
Among other requests, the committee asked the firms to provide by Oct. 14 reams of documents, including executive communications and financial statements as well as information about competitors, market share, mergers and key business decisions.
The dozens of executives named in the requests include Amazon founder Jeff Bezos, Facebook CEO Mark Zuckerberg, Apple CEO Tim Cook and Google’s early leaders Larry Page, Sergey Brin, and Eric Schmidt.
The companies are likely to resist such carte blanche access, which could set in motion negotiations with the House committee over the scope of materials provided, said William Kovacic, former chair of the Federal Trade Commission.
“If you want everything, everything will take a long time,” said Mr. Kovacic, who is now a George Washington University professor. The next step will be “intense negotiations between the companies and the committee about what will be produced,” he said.
The House committee isn’t subpoenaing the records, though it has the authority to do so—a fact that gives lawmakers a stick they can use in negotiations over access.
Committee Chairman Jerrold Nadler said the requests will aid an investigation, begun on June 3, into “growing evidence that a handful of corporations have come to capture an outsized share of online commerce and communications.”
“This information is key in helping determine whether anticompetitive behavior is occurring,” said Rep. Doug Collins (R., Ga.), the panel’s top Republican. The letters were also signed by Reps. David Cicilline (D., R.I.) and Jim Sensenbrenner (R., Wis.), the two senior members of the panel’s subcommittee on antitrust issues.
The companies didn’t comment Friday. All four firms have previously said they provide significant benefits to consumers and face significant competition. They have expressed willingness to work with authorities.
The congressional probe adds to scrutiny of the tech giants, which already face a broad antitrust review by the Justice Department that could lead to formal investigations. The department has asked Google for information about previous antitrust probes by other agencies.
The Federal Trade Commission, the other top U.S. antitrust enforcer, has opened an investigation of Facebook, with an early focus on its key acquisitions, and is questioning third-party sellers who use Amazon’s marketplace. FTC Chair Joseph Simons declined to comment Friday on the House letters.
State attorneys general from both parties recently launched probes of Google, with an early focus on its advertising business, and Facebook. Authorities in other countries are also investigating. Officials have said they would work together on the overlapping probes, although the extent of that cooperation isn’t known.
U.S. sanctions against the companies, if they come at all, are likely to be years away and imposed by federal or state enforcers rather than Congress. Lawmakers can find facts and change laws, but not bring enforcement actions.
The House probe represents a threat to the firms, even if it doesn’t result in changes to antitrust laws. Documents released to lawmakers could become public and serve as justification to summon top executives to high-profile hearings. That would create risks to the companies’ reputations and could fuel political pressure for a regulatory crackdown.
The House panel’s detailed information requests also provide hints as to how authorities could try to build an antitrust case against the firms:
—The request to Alphabet targets 24 products and services, from advertising technology to YouTube and the Waze navigation app, seeking executives’ communications regarding acquisitions and how other businesses interact with Google’s own services.
—The lawmakers asked Amazon to provide executive communications related to product searches on Amazon.com and the pricing of Amazon Prime as well as fees charged to sellers.
—Apple was asked for executives’ emails about search rankings in its App Store, whether Apple has discussed copying some third-party apps and the company’s policy on requiring that apps use Apple’s payment systems for purchases, an issue raised by Spotify Technology SA in an antitrust complaint in Europe. The Wall Street Journal has reported that Apple routinely lists apps ahead of competitors though the company’s apps skirt its own rules for rankings.
Apple, which takes a 30% cut from most apps it sells, has said the App Store encourages competition and that its cut is justified by the work its staff does reviewing apps to protect consumers from malware or other threats. Its apps account for a small fraction of those available on the store, and it collects money from only 16% of the 2 million apps available.
—Facebook received questions about its executives’ discussions around the acquisitions of WhatsApp, Instagram, and the data-security app Onavo, as well as decisions related to which third-party apps access its social-media platform.
Big tech companies have ramped up spending to influence the new antitrust discourse, as well as other policy debates, none more so than Google. It is a funder of at least 33 nonprofit groups that are active in the antitrust debate across the political spectrum, according to its public policy transparency reports.
Google is also a financial supporter of minority lawmaker groups such as the Congressional Black Caucus Foundation and the Congressional Hispanic Caucus Institute. It has given substantial sums to state attorneys general groups over the last decade or so, including more than $450,000 to the Democratic Attorneys General Association and more than $250,000 to the Republican Attorneys General Association, according to data gathered by the Center for Responsive Politics.
Its Google NetPAC contributed about $1.9 million to federal candidates and committees in the 2017-2018 election cycle, according to federal data, compared with about $1.8 million for Amazon’s PAC and about $721,000 for Facebook’s. Amazon leads the group in spending for the 2020 election to date. Apple doesn’t have a PAC.
Amazon in 2017 gave $12,500 each to the Democratic and Republican attorneys general associations. For 2018 it bumped that up to $50,000 each
Staffers on the Judiciary Committee are simultaneously dealing with other time-consuming issues, most notably potential impeachment proceedings. That said, the bipartisan nature of Friday’s letters reflects broad support for the probe.
“Bipartisan consensus sends a clear statement to regulators that this isn’t just one side’s sour grapes,” said Paul Gallant, an analyst at Cowen Inc.
Mr. Gallant noted that internal emails discussing stifling competition at Microsoft Corp. became an issue during that firm’s time under the antitrust microscope two decades ago.
“This is Congress’ backstage pass. They will be able to see what company management said privately about the way they designed their business and about whether that was actually anti-competitive,” Mr. Gallant said.
Congress has a history of going after emails, although those from top-level executives tend to be less revelatory because cautious higher-ranking people typically send few such online communications, investigators have found. In 2010, Senate investigators released an email from then-Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein in which he appeared to acknowledge that the firm dodged a bullet in the financial crisis by betting on a market decline through taking “short” positions.
But generally, emails from lower-level employees have led to more criticism. A 2010 probe of the BP PLC oil spill made headlines when a lower-level employee said in an email “who cares” about a shortage of parts on a drilling rig before it exploded. In the General Motors Co. ignition-switch crisis, the company pinned the blame largely on a single engineer who received emails warning him of problems.
This isn’t the first time that Congress has probed whether large tech companies are stifling competition. In 2011, the Senate Judiciary Committee hauled Mr. Schmidt, former Google Inc. executive chairman, for questioning related to whether the company was abusing its dominance of online searches by steering users toward its own services at the expense of rivals. But he emerged largely unscathed, and amid a weak recovery from the worst recession since the Great Depression, Congress had little appetite to pursue a probe into a driver of the U.S. economy.