Commentary Addressing Risks and Opportunities Through the Life Cycle of Data, Technology, Advertising and Innovation

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<img class="alignright wp-image-5468 size-full" src="https://dataprivacymonitor.bakerhostetlerblogs.com/wp-content/uploads/sites/5/2018/10/laptop-smartphone-internet-iStock-621981028-e1539039446439.jpg" alt="" width="375" height="250" />On Wednesday, July 29, 2020, the House Judiciary Committee’s Subcommittee on Antitrust conducted its sixth hearing into online platforms and market power, welcoming as witnesses the chief executive officers of Amazon, Apple, Google, and Facebook. The hearing lasted more than five hours and was styled as “Examining the Dominance of Amazon, Apple, Facebook and Google.” Due to COVID-19, the CEOs testified virtually, adding an ironic digital twist with the tech titans appearing together in video tiles on a screen with no big-tobacco moment standing side-by-side to take their oath.

The Subcommittee’s hearing culminated its year-long investigation into Big Tech, and the questioning was informed by requests for information posed to each tech company last September, which generated millions of pages of documents and hundreds of hours of interviews. Subcommittee Chair Cicilline opened the hearing by describing each of the tech companies as a “bottleneck for a key channel of distribution,” whether that be a channel of retail distribution, distribution of software applications, or distribution of information. Chair Cicilline began and ended the hearing by expressing concerns about the dominance of each firm and abuse of their purported monopoly power.

The hearing covered a wide variety of topics and the questioning was rarely directed to all the CEOs on the same topic. The difficulty in finding cohesive threads to question each of the CEOs about highlights that the testifying CEOs lead America’s largest tech companies, each of which operates in a variety of markets. This key point underscores the complexity of an antitrust analysis in this space. Being big alone does not end the analysis. Existing antitrust laws require establishing not just monopoly power, but the possession of monopoly power in a relevant market and then proving the monopolist engaged in anticompetitive conduct – sometimes described as “exclusionary” conduct. Those are elements that must currently be proved in court to establish violations of Section 2 of the Sherman Act, but the hearing focused on a much broader swath of more general competition and other concerns across platforms, tech and digital markets.

The Congressional questioners raised concerns about several methods by which these big tech companies might have leveraged their positions for anticompetitive purposes. Of chief concern was each company’s capacity to use its data to disadvantage its competitors or potential competitors, which may utilize these platforms as a marketplace, advertising venue or distribution channel while at the same time competing with the companies providing the platforms. Subcommittee members asked several questions about whether having competitor-related data might have informed a tech company’s replication of a competitor’s product, the acquisition of a competitor, or restriction of a competitor’s access to its marketplace. Subcommittee members also probed a tech company’s capacity to leverage its control over its distribution channels to give preference to its own products and its capacity to exploit its market power by engaging in predatory pricing schemes.

The hearing went beyond traditional antitrust issues, discussing data privacy issues and concerns about the harvesting and abuse of personal user data and at times veered into child online privacy protection concerns. We have previously written about the increasingly blurred line between antitrust and privacy<a href="#_edn1" name="_ednref1">[i]</a> and also have a podcast on this topic.<a href="#_edn2" name="_ednref2">[ii]</a>

The hearing frequently strayed far afield of antitrust or privacy inquiries, into subjects such as counterfeiting, forced labor, perceived discriminatory moderation of politically conservative content, the platforms’ impact on past and future presidential elections, attitudes toward foreign governments and non-governmental organizations, First Amendment issues and the proliferation of hate speech, and the so-called “cancel culture.”

The Subcommittee will publish a report on the findings of its investigation and propose solutions to the problems the investigation reveals, which may include recommended amendments of the antitrust laws or perhaps privacy laws. Although the Subcommittee has not tipped its hand as to any particular amendments it may be considering, some key substantive concerns members articulated during the hearing included:
<ul>
 	<li>As owners and operators of essential distribution channels and advertising venues, large technology companies may exploit their market power to harm competitors and deny rivals access to their platforms. They viewed this as particularly threatening to small, nascent competitors, which are often especially reliant on these platforms for distribution.</li>
 	<li>The consolidation of online markets may be the result of “killer acquisitions,” in which larger technology companies purchase their rivals in order to avoid the costs of competition.</li>
 	<li>Large technology companies’ control of popular marketplaces may afford them exclusive access to data about consumers and competitors, which the marketplace owner may use to enhance or algorithmically favor its own competitive products.</li>
</ul>
Recommended legislative solutions may also address committee members’ concerns about issues apart from competition, such as perceived political biases in content moderation.

Apart from legislative recommendations, the report may also call on antitrust and privacy enforcers to more vigorously enforce existing laws. Indeed, the Department of Justice’s Antitrust Division (“DOJ”), the Federal Trade Commission (“FTC”) and state attorneys general are reportedly conducting multiple Big Tech investigations, which are expected to result in enforcement actions or to conclude in the coming months. The FTC has also undertaken an initiative<a href="#_edn3" name="_ednref3">[iii]</a> to “take a closer look” at acquisitions by large technology companies over the past decade, which has included document production orders directed at each of the companies represented at Wednesday’s hearing. The Subcommittee’s report may put pressure on the FTC and the DOJ.

The hearing put concerns often described as “Techlash” in the national news last week. There will be much to watch in this space in the coming months.

<a href="#_ednref1" name="_edn1">[i]</a> Ann M. O’Brien, Jeewon Serrato, and Alyse F. Stach, The Thin Line Between Privacy and Antitrust, International Association of Privacy Professionals: The Privacy Advisor (June 23, 2020), <a href="https://iapp.org/news/a/the-thin-line-between-privacy-and-antitrust/">https://iapp.org/news/a/the-thin-line-between-privacy-and-antitrust/</a>.

<a href="#_ednref2" name="_edn2">[ii]</a> Ann M. O’Brien and Jeewon Serrato, Blurred Lines: Focusing on Antitrust and Privacy, BakerHosts Podcast (August 2, 2020) <a href="https://www.bakerlaw.com/podcasts/blurred-lines-focusing-on-antitrust-and-privacy">https://www.bakerlaw.com/podcasts/blurred-lines-focusing-on-antitrust-and-privacy</a>

<a href="#_ednref3" name="_edn3">[iii]</a> FTC to Examine Past Acquisitions by Large Technology Companies, Federal Trade Commission (February 11, 2020), <a href="https://www.ftc.gov/news-events/press-releases/2020/02/ftc-examine-past-acquisitions-large-technology-companies">https://www.ftc.gov/news-events/press-releases/2020/02/ftc-examine-past-acquisitions-large-technology-companies</a>

Big Day for Big Tech: CEOs Testify in House Antitrust Hearing