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The Tech Giants Antitrust Hearing – What Next?

Anuja Chaudhary

[The said contribution is part of the series on “US Congressional Antitrust Hearing” run by the Centre for Competition Law and Economics]

The House Judiciary Antitrust Subcommittee’s hearing on 30th July 2020 featured Alphabet (Google) CEO Sundar Pichai, Amazon CEO Jeff Bezos, Apple CEO Tim Cook and Facebook CEO Mark Zuckerberg where they faced various questions regarding their ‘questionable’ business practices. Various antitrust practitioners were finally relieved for the government’s initiative to address the control these tech companies had in various markets, and the various practices they kept getting away from. Despite having one of the oldest antitrust laws in the world, the USA has been notorious for underplaying the implementation of these laws to actually monitor and foster competition. Various dominant entities in the past have escaped the scrutiny of these laws, where their operations run smooth and heavy. In contrast, newer jurisdictions like European Commission and the Member States were being constantly applauded and appreciated for their nuanced understanding of the digital markets, and their quick action, both in terms of enforcement and merger regulation in the context of tech giants.

The only experience, with some success, the US Department of Justice (DOJ) had while dealing with tech companies was in the ruling against Microsoft back in 1999. Unfortunately, the decision was overturned by the D.C. Circuit Court of Appeals, ultimately leading the DOJ to settle an agreement with Microsoft to share its application programming interface with third-party companies in 2002. This decision was hugely criticized it set a dangerous precedent of government intrusion and their role in regulating the upcoming technological companies.

During the course of hearing, Amazon was questioned on its relationship with third-party sellers and usage of the platform to promote its own products. Facebook was reprimanded for its constant acquisition of start-ups by relying on various internal emails by its CEO and others. Google was interrogated on its online ad space dominance, usage of user data and in worse case, stealing it from competing companies. Apple was chided for its preferential treatment to certain app developers by charging lesser commission from them. Each company gave a myriad of defenses, elucidating that the said allegations were false.

In contrast to their earlier embarrassing attempts of understanding the world of data driven tech giants, antitrust practitioners rejoiced at the Sub-Committee’s preparation and interrogation of the executives. The subcommittee was successful in summoning and studying thousands of internal documents to come up with the hardest hitting questions. Chairman Rep. David Cicilline concluded post hearing that it could not be denied that these companies have monopoly power, hinting towards breaking them up and steps to be taken for proper regulation of the same. He also emphasized the need to relook at the century old antitrust laws and whether they could cope with the current digital age.

Even though the Hearing was able to unearth a lot of data and evidence in terms of holding the CEOs directly responsible for the wrongs committed by respective companies, one must not forget that these Congressional hearings are not a part of the ongoing investigations by the Department of Justice (DOJ), or Federal Trade Communication (FTC). The Sub-Committee will publish a report on its findings in August/September along with suggestions that will pave way for actual deliberations to come up with a legitimate legal recourse to regulate these tech giants in the future. For the longest time, these tech giants had scurried away from antitrust laws because of the ultimate test of establishing ‘harm to consumers’, rather than ‘harm to competition’ to the authorities. It was often argued that if the consumers are presented with the lowest prices available even at the cost of incurring losses, then how can such a practice be considered anti-competitive? However, the advent of digital economy has required a revision of these traditional norms of how market price and supply works.

The talks of breaking up these tech giants is slowly gaining momentum, especially after this hearing. It would have provided some wings to the Democrats to embolden the strict regulation of the tech industry power as part of their legislative mission while they prepare for 2020 general elections. Rep. David Cicilline is already working with Senator Elizabeth Warren on redrafting the traditional antitrust laws, which might become a reality if the Democrats win the election in the coming term. The proposed legislation will broaden its scope from merely regulating mergers and acquisitions and ending big mergers. It proposes to define market power standards for monopoly for companies holding 70% market share, and companies with more than $40 billion in sales. It has also highlighted a new focus on formulating stricter ‘data protection laws’, which have garnered new interest according to the FTC Commissioner Rebecca Slaughter.

While this hearing has a chance to create a butterfly effect in the US antitrust regime, the ripple effect might have followed by the younger jurisdictions like India, to be warned about how we consider data and tech industry power. Even though the Competition Commission of India has become famous for delving enthusiastically into the digital economy (the E-Commerce Market Study Report released in January 2020), some of its decisions have been criticized for being hasty without a proper understanding of the sector, Surely, CCI has come a long way since its odd decision of holding online and offline markets as mere channels of the same market in the 2014 Snapdeal decision, it still needs to have a hard look into the anti-competitive practices in the e-commerce industry to achieve its goal of fostering healthy competition in the market. This hearing, by its contemporary jurisdiction, may only provide the motivation to launch a similar investigative study in India. Possibility of collaboration with international bodies should also be not ruled out in order to gain more perspective in terms of addressing new challenges thrown by digital data market.