Subscribe to Bloomberg Law Podcast Big Tech Firms Under Attack By Lawmakers on Antitrust

reckoning the companies could face in the future. Four of the biggest US tech firms, Amazon, Facebook, Google, and Apple defended themselves before the House Antitrust Subcommittee yesterday. Chairman David Cicilini was obviously prepared for his attack on Amazon, suggesting it uses its control over data to thwart competition on its platform. Do you use consumer data to favor Amazon products?

Because before you answer that, analysts estimate that between eighty and of sales go to the Amazon by box, So you collect all the stata about the most popular products where they're selling, and you're saying you don't use that in any way to change an algorithm to support the sale of Amazon branded products. The answer was no. A little explanation joining me as Bloomberg Intelligence Senior litigation analyst Jennifer Reid. So, Jen, this was the four big tech

companies facing this tough questioning from the panel. Was the bottom line, the concern about sheer size and the dominance of these firms. You know, yes and no. So overall, yes, this is all beginning and all of these investigations are starting because there are general concerns about the dominance, the size of these companies, their power, uh, their ability to

to hinder arrivals and small arrivals and new entrants. But you know, an antitrust is fact specific and its conduct specific, and I think many of the committee members recognize that. So to some extent, some of them started getting into very detailed conduct. For instance, what we just heard with Cicilyne talking about Amazon and what Amazon does. And there were even some questions about Apple and why a prompt for Apple's iCloud for NS comes up when you go

into an Apple device. So so it was both UH and they are going to have to get into the specifics if something is to be done along the lines of antitrust here to curb these companies, because monopolistic conduct has has to do with conduct and it's very fact specific. So which company faced the most criticism and which the least well in the hearing yesterday, I think Amazon really had the most heat, for sure, and I would say

Facebook the least. And while that might sound surprising, that's probably because Yeah, but the thing is, Facebook's problems are really more rooted in privacy concerns and and this was an antitrust hearing, so there was certainly um questioning a Facebook as to who how much competition it has in social media and Facebook really had a little bit of

trouble answering that question. Um, But like I said, the privacy concerns the bigger issue for Facebook, and with Amazon faced a lot of heat, I would say Apple the least so well, and we know Facebook was facing its own problems over its attempt to have cryptocurrency or another committee. So, um, is this criticism by lawmakers likely to go anywhere? I mean past legislation there there there seems to be biportistans support here, That's right, and I think that's the ultimate

goal here. So this hearing was the second hearing and what is meant to be a series of antitrust hearings and an investigation because that could include a subpoena and getting documents from these companies. Uh. And the goal is to understand if there's a problem, how to solve the problem and weather legislation makes sense, and then how to craft that legislation. So it's going to be difficult and it's going to be somewhat of a long process, but

that is the idea here. Some people were saying this hearkens back to Microsoft when when Bill Gates appeared before the Senate in and then Microsoft was the target of a government lawsuit. Uh. Short time later two months later. Is that likely to happen here when there are four

different companies. Well, first of all, we have to remember with the Microsoft situation that Bill Gates appeared in n to testify, but the Department of Justice had been investigating Microsoft since So timing wise, they have been investigating five years, and I think the lawsuit by the Department of Justice would have been brought and was getting set up for that time period, you know, whether Bill Gates had testified

at that time or not. We're at a different place with these big four tech companies because if there are investigations ongoing already by the Federal Trade Commission, and Department of Justice. They are likely at very beginning stages and those investigations take years, not always five years, but definitely years. Um So we have ongoing in parallel tracks, is this house look into the market power and the impact of that power on competition, and possibly FTC in Department of

Justice investigations. So at the end of the day, we don't know where that will lead us to whether the Department of Justice and FTC will find that each of these four companies in the in the areas in which they each have some power, have engaged in conduct that is deemed to be illegal under the anti trust laws, or whether they may find that just one of them has.

But it's going to be the fruits of these investigations, the evidence they pull, documents, data, testimony that will lead them to a place where they either settle, do nothing, or bring a suit. So, and we've discussed before how there was news that the Justice Department in the FTC sort of divvied up the companies in order to to

start investigating them. Now, as you mentioned, and as Republican Jim Senson Brenner said that just because of business is big, that doesn't mean it's bad and anti trust law doesn't exist to punish businesses because they're big. But isn't that what most Americans think of as anti trust that they're going to break up the big companies? Absolutely, and they say, hey, that company has a monopoly, and isn't it isn't it

unlawful to have a monopoly. But Jim Sense and Brenner actually stated the law as it exists currently, and I think that's why they're taking this look because they understand

how the laws developed and what our law says. Our Supreme Court has said it is not illegal to obtain a monopoly, and it's not even illegal to charge high prices monopoly prices that if the market will bear it, and if a company has a lawful monopoly, And I think the question becomes, well, then do we need legislation because the state of the law doesn't necessarily give us

a lot of flexibility in going after these companies. But the biggest issue is that you have these companies providing great benefits for consumers, free products, lower prices, and that's going to be the biggest battle because anti trust law is really meant to protect consumers against higher prices. Now the EU has opened a form they're always ahead of us.

There market the stayers is always ahead of us. As far as anti trust, they opened a formal investigation into Amazon's due role as retailer and online platform, which was sort of what Cicilini was getting into yesterday. Yes, absolutely, The question is if if you're playing on the platform, you're the referee but are also competing, how is that fair and is that a conflict of interest? Now we've done that in the United States. You know, we often

are vertically integrated companies. UM, we we participate in you know, let's say in a market, in a retail store where they're selling a private label product that competes against a branded product in that store, they are the distributor as well as competing. So that occurs, and that is okay,

it's not necessarily conflict of interest. But if Amazon is doing something, um, taking competitively sensitive information let's say of a rival seller, that could be a problem, or demoting that seller's products and using it to advantage itself, that might be a problem. And yet people like those low prices, as you mentioned, so we'll see what happens. That's Bloomberg Intelligence Senior litigation analyst Jennifer read Thanks for listening to

the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple podcast US, SoundCloud, and on bloomberg dot com slash podcast. I'm June Brosso. This is Bloomberg m