A long one, too. The House Judiciary Committee’s investigation into the market power of Amazon, Apple, Facebook and Google ran to nearly six hours, accounting for a handful of delays and intermissions. Alternating Democrats and Republicans asked the CEOs of those companies a combined 217 questions, ranging from pointed questions about how Facebook intimidates smaller competitors (from Rep. Pramila Jayapal) to comically self-interested inquiries into why members’ fundraising emails are going to the spam folder (thank you, Rep. Greg Steube.)
In its lunatic whipsawing between companies, issues, and conspiracy theories, Wednesday’s antitrust hearing resembled nothing so much as an endlessly scrolling social media feed. Every question shouted, every answer interrupted, nothing truly ventured, and very little learned. Polarized and polarizing. You want to look away, you can’t look away. Another day in 2020.
And yet for everything there is to criticize about Wednesday’s hearing, I came away from it mostly heartened. For the first time in half a century, Congress is taking its role as antitrust regulator seriously, and has undertaken a 13-month investigation that has so far produced 1.3 million documents laden with evidence. Members of the subcommittee have largely come to believe, as I do, that tech companies have grown too powerful and are in need of regulation. Wednesday offered them a chance to show us what they have found so far — and to hint at where they might be going next.
Let’s take a look at where Congress pressed each company.
Amazon has a policy barring the practice, but lawmakers like Rep. Pramila Jayapal (D-WA) focused in on the company’s enforcement of that policy.
“Let me ask you, Mr. Bezos, does Amazon ever access and use seller data when making business decisions?” Jayapal asked.
Bezos highlighted the company’s policy banning the practice, but said, “I can’t guarantee you that that policy has never been violated.” He continued, “We continue to look into that very carefully. I’m not yet satisfied that we’ve gotten to the bottom of it, and we’re going to keep looking at it. It’s not as easy to do as you would think because some of the sources in the article are anonymous.”
Bezos was calm and genial in his first time testifying before Congress, but was mostly interrupted before he could get out more than a couple of sentences. Still, there were stumbles: he said he didn’t know if merchants were required to provide a name, address, or phone number before they could sign up to sell products on Amazon. And documents released by the committee outlined how Amazon executives schemed to undermine the parent company of Diapers.com, which once challenged it in the market for products for new parents. Amazon cut prices on diapers and eventually acquired the company for a fraction of its previous value.
Apple arguably got off the lightest of any of the companies in Wednesday’s hearing, if only by volume of questions: Tim Cook got just 35, compared to 59 for Bezos, 62 for Mark Zuckerberg, and 61 for Sundar Pichai. It’s not clear why, though the avenues of inquiry are clear. Apple makes at least 60 apps like Music and Mail that compete with third-party sellers but are not subject to the 30 percent tax that it places on them, reducing competition in the marketplace. Cook argued that there are many phones, and many operating systems, and more consumer choice than you can almost even imagine, and that the fees Apple charges are competitive with Google and other stores.
But documents released Wednesday offered evidence that the playing field is not level for all developers. Bloomberg’s Mark Gurman revealed how Apple was able to get Amazon’s Prime Video app on its App Store in 2017: by taking half as much revenue from the company as it takes from everyone else.
Cook also had to answer for why Apple wiped out a whole category of apps that parents used to monitor their children’s screen time while introducing a screen time measuring feature of its own. (I’m sympathetic to Apple’s position here — these apps used mobile device management features that were not designed for this sort of thing and could easily have been abused — but it does show the company’s tremendous market power.)
One place where Cook was let off the hook almost entirely: there were very few questions about the company’s reliance on China as a supplier or a market for its products.
In late February 2012, Facebook CEO Mark Zuckerberg emailed his chief financial officer, David Ebersman, to float the idea of buying smaller competitors, including Instagram and Path. “These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us,” he wrote. “Given that we think our own valuation is fairly aggressive and that we’re vulnerable in mobile, I’m curious if we should consider going after one or two of them. What do you think?”
Ebersman was skeptical. “All the research I have seen is that most deals fail to create the value expected by the acquirer,” he wrote back. “I would ask you to find a compelling elucidation of what you are trying to accomplish.” Ebersman went on to list four potential reasons to buy companies and his thoughts on each: neutralizing a competitor, acquiring talent, integrating products to improve the Facebook service, and “other.”
It’s a combination of neutralizing a competitor and improving Facebook, Zuckerberg said in a reply. “There are network effect around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”
In the hearing, Zuckerberg copped to buying a competitor, but said he thought it would be complementary to Facebook rather than an app that would one day rival its size:
“I’ve been clear that Instagram was a competitor in the space of mobile photo sharing,” Zuckerberg told Congress on Wednesday. “There were a lot of others at the time. They competed with apps like VSCO Cam and PicPlz and companies like Path. It was a subset of the overall space of connecting that we exist in. And by having them join us, they certainly went from being a competitor in the space of being a mobile camera to an app that we could help grow and to help get more people to be able to use.”
The question is whether members will find that satisfying, or whether the documents will be used to fuel a new effort to break up Facebook, requiring it to spin off Instagram and possibly WhatsApp. But no member of Congress openly advocated that during the hearing, at least that I heard.
Outside questions about Instagram, the subcommittee asked Zuckerberg lots of questions about content moderation. (How can a piece of harmful content get 20 million views in five hours? Are you biased against conservatives?) We’ve heard those questions and his answers before. But mostly Congress just interrupted before he could answer.
Finally, Google took questions about the way its search engine often privileges results from Google-owned properties at the expense of small businesses. Rich Nieva captured the threat in CNET:
Of the four companies, Google is in the most imminent danger of antitrust action. The US Department of Justice is investigating Google’s massive digital advertising business, and is expected to file a lawsuit against the search giant this summer. The company is also ensnared in another probe by a coalition of state attorneys general, led by Texas AG Ken Paxton.
Lawmakers are mainly focused Google’s on dominance in web search, digital advertising and smartphone software. The company processes around 90% of all online searches in the US. That stranglehold on the market is the foundation of Google’s massive advertising business, which generates almost all of the company’s $160 billion in annual sales. Critics accuse Google of anticompetitive behavior with its ad business because the company owns all sides of the auction system, which could give Google an unfair edge.
The calm and soft-spoken Pichai responded to questions by arguing that advertisers have many choices, and that Google is only trying to give consumers what they want. When the Republicans began grilling him on why some conservatives have been banned from YouTube, Pichai said there are more conservative voices on YouTube today than there ever have been before.
The downside of Wednesday’s format is that Congress struggled to make airtight antitrust cases while prosecuting four of them simultaneously. (The constant attempts by Republicans to derail the hearing with phony “bias” complaints were unfortunately successful.)
But the upside is that Congress actually mentioned, often by name, the many businesses that have been squashed as a result of anticompetitive behavior by the giants. Amazon was asked why, during the pandemic, its own Ring doorbells were deemed an “essential good” so as not to interrupt their distribution, where competitors Arlo and Eufy were not. Tim Cook was made to answer for why Basecamp had such a hell of a time getting an email app approved without giving Apple 30 percent of its revenue. Sundar Pichai had to take questions about the many ways in which the company has made life worse for Yelp.
In an age where these tech CEOs can feel all but untouchable, Wednesday showed us the beginnings of accountability. The giants were called on the carpet and interrogated. It was overdue, it was messy, and it was unsatisfying. In other words, it was democracy, and I for one was glad to see it.
And the tech CEOs were likely glad it all happened on Wednesday, rather than any later date. On Thursday the companies report earnings, and if you see a huge spike in sales at Apple or Amazon, you might understand why the companies were eager to reschedule their inquisition as soon as possible after it was delayed. With everything else they stand accused of, pandemic profiteering is something I don’t imagine they want to take questions about.
In the end I’m left with the words of Rep. David Cicilline (D-RI) as he ended the hearing. “The companies as they exist today have monopoly power,” he said. “Some need to be broken up. All need to be properly regulated.”
It was not nearly enough. But it was true, and it was a beginning.
The Ratio
Today in news that could affect public perception of the big tech platforms.
The new law, which is expected to go into effect Oct. 1, also requires the social media companies to store user data inside Turkey, raising privacy concerns.
President Recep Tayyip Erdogan and his governing A.K.P. party, having already taken control over most of the nation’s traditional media outlets, were behind the legislation, arguing that it was needed to protect citizens from cybercrime and slander. Critics, however, say it is part of a broader effort to control the flow of information in the country and stifle dissent.
It is unclear whether ByteDance’s founder and CEO, Yiming Zhang, will be satisfied with the offer. ByteDance executives recently discussed valuation projections for TikTok that exceed $50 billion, one of the sources said.
TikTok is growing rapidly as it rakes in more cash from advertising, and its management team expects to achieve $6 billion in revenue in 2021, one of the sources said. ByteDance, which owns other apps including TikTok’s Chinese counterpart, Douyin, has set itself a revenue target for 2020 of about 200 billion yuan ($28 billion), Reuters has previously reported.
TikTok will launch a Transparency and Accountability Center in Los Angeles for moderation and data practices that will house all of its data flows and code moving forward. The center will host online tours of its data during the pandemic. […]
TikTok’s transparency ideals sound virtuous, but Google and most other platforms have long argued that publicizing their algorithms’ workings would make it easier for bad actors to game their services.
Evaluate the tech CEO’s hearing fashions. “Beamed in from their offices on the West Coast because of concerns about the coronavirus, facing down the mask-clad members of Congress who were socially distanced from one another on the wood-paneled stage of the hearing room in the Rayburn House Office Building, the four men looked more like four guys dressed up in their first graduation suits — serious, sincere, a little uncomfortable — than the four horsemen of the digital apocalypse whose planetary power was a threat to one and all.” (Vanessa Friedman / New York Times)
Those good tweets
When you define the market correctly—as in, all the air that everyone inhales—then oxygen doesn’t seem so important after all. Nitrogen actually has 78% market share. https://t.co/4i3qcJzGxE
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
