July 16, 2019
By: John Eggerton of Multichannel News
WASHINGTON — Sounding a bit like Google execs in front of the Senate Commerce Committee almost a decade ago, a top Facebook official told the House Antitrust Subcommittee that it faces “vigorous” competition for its products and services, including fierce competition for revenue and low barriers of entry for new competitors.
That is according to the prepared testimony of Matt Perault, Facebook’s director of public policy.
He also said the company had been a boon to small businesses, saying it had "democratized advertising, helping millions of small and medium-sized businesses along the way."
Perault suggested Facebook had been successful because it had worked hard and taken risks. "America does not punish success,” he said. “It rewards it."
Google was represented at the same hearing by Adam Cohen, director of economic policy, who was making the same arguments in his testimony about being subject to vigorous competition for search, including from Bing, DuckDuckGo, Yahoo and "many more."
Last year, Cohen pointed out, 54% of product searches originated on Amazon, and specialized search services are growing in the areas of flights, hotels and restaurants.
Amazon associate general counsel for competition Nate Sutton weighed in, too. He spoke in his testimony of how each of the company’s many businesses “faces intense competition from well-established competitors,” including its online retail business. Sutton said Amazon knows its retail customers have many options, including brick-and-mortar stores that operate their own online businesses and the third-party sellers Amazon hosts on its platform — many of which are small businesses it is helping out.
And for Apple, said chief compliance officer Kyle Andeer: “The competition is fierce. Our customers have an ever-growing number of choices when it comes to products and services. We compete against some of the largest companies in the world, both foreign and domestic."
Their statements were at odds with the general tenor of the House’s inquiry into Big Tech, which is based on the companies' massive size, market cap and dominance in various areas. Legislators on both sides of the aisle have talked about the need to rein in or break up giant edge providers, with Republicans pointing to allegations of conservative bias and Democrats speaking of the need to downsize converged corporate giants in general.
Rep. David Cicciline (D-R.I.), chairman of the Antitrust Subcommittee, gave the companies props for dynamism, immense tech breakthroughs and economic contributions. But he said they had been allowed to grow without sufficient antitrust oversight, leading to an increasingly concentrated and less open internet “growingly hostile to innovation and entrepreneurship.”
The companies’ protestations about fierce competition notwithstanding, Cicciline said Google controls nearly all the search in the country (about 90% of all searches), with Amazon controlling almost half of all online commerce, despite the company's statement that it only captures a small percentage or retail. Cicciline said Amazon’s closest competitor, eBay, controls less than 6% of the market.
Facebook controls more than half of the U.S. social media market, Cicciline said, with about 2.7 billion monthly users. Notwithstanding the growth of Chinese social app TikTok — which Perault noted as one of its fierce competitors — Cicciline said Facebook captures over 80% of global social media revenue.
Apple, the chairman pointed out, is under scrutiny for prices in its App Store and policies that may favor its own services and products.
Cicilline said there was a good argument that the market lends itself to shielding dominant firms and producing a "kill zone" for new startups that might want to challenge them. “There is growing concern that anti-competitive practices and the gatekeeper role of online platforms is now imperiling small business in our communities,” he said, echoing the knock on ISPs inside the Beltway of the past decade.
Ranking member Rep. James Sensenbrenner (R-Ill.) raised red flags about coming down too hard on Big Tech. The antitrust laws don't exist to punish size or success, he said, adding that just because a company is big doesn't necessarily mean it is bad.
He echoed the Big Tech comments that they had actually helped small businesses, not hurt them. “Breaking up big businesses because they are large could wind up hurting small businesses throughout the country,” Sensenbrenner said.
He also said breaking up the companies would not solve all the problems, like privacy, he said.
Sensenbrenner did not dismiss the possibility of anti-competitive conduct, but said he was offering a counterpoint to some of the more radical speculation. He said they should look seriously at wrongdoing, but not break up companies by fiat because big was inherently bad.