Will the Big Tech antitrust hearings have any impact?

On July 29, the CEOs of Amazon, Apple, Facebook and Google sat before the United States House Judiciary Subcommittee on Antitrust, which certainly made for great political theater. It is not often that you get the leaders of such powerful companies together for bipartisan grilling. With four remote witnesses taking questions from numerous representatives over more than five hours, the hearings were chaotic. Often, the representatives left little time for the witness to answer the question before hurrying along to the next prepared statement in the limited time allotted. And many of the questions had little to do with antitrust, as when Google's Sundar Pichai was questioned about his company's alleged bias against political conservatives.

But what did the hearing mean for the antitrust fortunes of the companies? While no smoking guns were uncovered, the hearings certainly furthered the momentum for one or more of the many potential antitrust challengers to act against some or all of the companies.

Of the questions actually about antitrust, several focused on alleged harms to the companies' competitors, despite the fact that the focus of today's antitrust laws is harm to competition and consumers, not competitors. Those questions might hint at potential legislative changes the members of the subcommittee may propose this fall.

Other questions, including two sets of questions asked of Amazon's Jeff Bezos, suggested the subcommittee may consider less radical legislative changes. First, a member asked Bezos was about Amazon's aggressive pricing of diapers in competition with Diapers.com shortly before buying the struggling start-up. Second, in response to another line of questions, Bezos admitted that Amazon's current pricing of Echo and other home assistants sometimes dips below its costs. While both rounds of questions implied something anticompetitive about Amazon's low pricing, neither elicited -- or seemed designed to elicit -- evidence that would meet today's standard for illegal predatory pricing: prices below variable costs and the possibility of later recoupment through higher prices. Might there be a legislative proposal forthcoming to change that standard?

There were some questions, however, that did provide information useful to antitrust challenges consistent with current interpretations of the law that focus on competition and consumer welfare.

Several subcommittee members reported statements from manufacturers or third-party sellers on Amazon's marketplace who felt "stuck" or had "nowhere else to go." Such statements might prove useful to show Amazon's market or monopoly power, which would be necessary for various antitrust claims. Bezos also admitted that sellers on Amazon were more likely to be presented to customers in the highly coveted "Buy Box" if they also participated in Amazon's Prime and Fulfillment by Amazon programs. While Bezos claimed such actions benefitted consumers, they could also be susceptible to claims of illegal tying or monopolization under today's antitrust interpretations.

Bezos and Apple's Tim Cook were asked about copying or cloning products or apps sold by third party sellers on marketplaces or app stores run by the companies. While such claims may be a better fit for intellectual property rules on when and how the information of another company can be used, the questions implied that Amazon and Apple may be abusing their power in the marketplaces. But any antitrust claims would have to explain how Amazon's decision to begin producing, say, an Amazon Basics version of a third-party seller's product was anticompetitive while, say, Kroger's decision to offer private label products in its stores was not. Some commentators have tried to make that distinction and one of the questions raised the issue; unfortunately, Bezos was not given time to respond. Any proposed legislation would need to grapple with that question.

Cook was also asked about an allegation of removing popular parental control apps from Apple's app store when Apple introduced its own version. Cook responded that the apps were removed because Apple was concerned about the privacy and security of children. The questioner then pointed out that after Apple's app was established, the other apps were allowed back in the app store without any changes to their privacy controls. Cook pointed out that app developers can and do develop apps for Android and other systems. If Apple has an antitrust duty to deal with all app developers -- which is not clear under current antitrust interpretations -- these allegations could support an argument that Apple is not meeting that duty.

Similarly, Google's Pichai was asked about allegations that the company cloned content from popular websites and then steered its search engine users to that cloned content. Allegedly, any complaining websites found their content disappeared from Google search results. Pichai did not directly deny the allegations but claimed that the company was always looking for ways to improve its products for users, such as more quickly displaying the information they were seeking.

Many of the questions asked of Facebook's Mark Zuckerberg -- and much of the media reporting immediately following the hearing -- revolved around Facebook documents created during its evaluation of the Instagram acquisition. Some of those documents, including some from Zuckerberg himself, generally describe "neutralizing a potential competitor" as a possible justification for an acquisition. In some of those documents, however, Zuckerberg rejects that justification as a "bad reason" to do any deal. In response to the questions, Zuckerberg pointed out that the transaction was allowed to close under the federal merger review process; however, that process does allow for the agencies to later return for a second look at any transaction, even if that rarely happens. Some questioners encouraged the Federal Trade Commission to do just that, even though such a move would be a huge practical shift in the merger review process.

So all four executives and their companies survived this antitrust battle to fight another day. And they certainly will have to fight: According to various media reports, all four companies face antitrust investigations from at least enforcers in Europe; both U.S. federal enforcement agencies; and many, if not most, state attorneys-general, including California's. The companies will have to face many of the issues raised by the hearings as they prepare to defend themselves in any court of law.

Perhaps more importantly, the hearings might chip away at the advantages the companies have enjoyed in the court of public opinion. Many of the tech companies are among the most popular and admired global companies. Certainly, they rate higher than Congress. Will consumers at least reconsider those opinions as reports of the companies' sharp elbows are repeated in mainstream media? At the very least, all four companies -- just like A&P, General Motors, Microsoft, and other giants that faced Congressional hearings and other seemingly endless antitrust investigations -- will find themselves spending considerable time and attention on antitrust issues while their competitors can focus on competition. 