Last week, the House Antitrust Subcommittee held a unique hearing where executives from Sonos, Tile, Basecamp, and PopSockets laid out the challenges of working and competing with big tech companies like Apple, Google, and Amazon. It felt like a turning point in the conversation about big tech platforms and the power they have over competition, something PopSockets CEO David Barnett called “bullying with a smile.”
“Help us Congress, you’re our only hope,” said Basecamp’s David Heinemeier-Hansson. It was like that.
But the hearing was just one part of a lengthy Antitrust Subcommittee investigation into the competitiveness of digital markets led by Chairman David Cicilline (D-RI) that’s been going on for some time — a bipartisan investigation that’s about to conclude with a report and recommendations for new laws and regulations that govern how big tech platforms work. Cicilline joined Verge senior reporter Adi Robertson and editor-in-chief Nilay Patel for a special interview episode of The Vergecast this week where he talked about what he’s learned and how he plans to tackle the big platform monopolies.
The following excerpt has been lightly edited for clarity and length.
So we’re talking while opening arguments of impeachment are going on in the Senate. It seems like there’s just a lot of polarization in the world. But I was watching the [antitrust] hearing, and I was struck that there seems to be at least a bipartisan consensus on the problem, if not the substance.
You know, when we launched the investigation, that was done in a bipartisan way with the full support of the ranking member, the Republican leader on the Judiciary Committee as well as the ranking member of the subcommittee, [Rep. Jim] Sensenbrenner.
So the investigation has been thoroughly bipartisan and in a very real way. Our staffs are working closely together. And I think you’re right. I don’t know that we’ll have agreement on every single proposal or a recommendation that the final report makes, but I think there’s broad recognition from Republicans and Democrats that this market is not functioning properly, that there is a significant absence of competition and strong evidence of anti-competitive behavior by the dominant platforms. And I think there is a real understanding and expectation that we’re going to do something about this as a Congress. The American people are expecting us to. So it’s been very bipartisan. I hope it will stay that way.
One of the striking things from the hearing last week was how different the accusations against each of these companies was. How much do you think the same remedy is going to work for Google and Apple and Facebook and Amazon?
That’s a great question. We’ve been very careful in this investigation to solicit information from the platforms, both in testimony and in documents relevant to the way those platforms are operating, because I think they’re not all the same, and their behavior has been different in many respects.
So I think we’re going to look at solutions that provide a response broadly to the marketplace. There are some issues where I think there have been very serious concerns by a particular company in this area or this particular company in that area. But I think this is very much about the marketplace generally, and you will not see recommendations that are specific to a company, just like the investigation is not about a company, it’s really about the marketplace broadly. And so I hope the suggestions we develop, both in terms of legislation and in terms of proposed regulations, will address the marketplace broadly, but obviously respond to a number of different activities that we’ve seen throughout the investigation.
Do you think that you can craft a single framework that’s going to address the whole spread of problems from that hearing?
Yes, I do. The goal is to create competition, to protect competition in that digital marketplace so that when Amazon says “give us back money for selling your product at a lower cost,” people have an opportunity to think about another platform because that other platform will have had an opportunity to grow and be successful and enter the marketplace. So competition in each of these examples is the solution, and making sure that we’re promoting competition and protecting folks from a whole range of discriminatory behavior or bullying. I think you can imagine a number of ideas. I would just say you can’t engage in behavior that does X, Y or Z that would apply broadly to all of the large digital platforms.
That’s a pretty classic conception of a behavioral remedy. “You can’t do this.” We’re going to say you can’t do it. You’re forbidden from doing it. But there was a lot of talk about, especially with Amazon, the platforms self-dealing, cutting themselves better deals, selling their own products.
I spoke to Sen. Elizabeth Warren (D-MA) last year, and she said you can’t just do basic behavioral solutions. You’ve got to do a structural solution. And that’s why she was proposing breakups. Do you agree with her on that?
First of all, I think it’s hard. Congress has certain powers, and breaking up companies is actually not one of them.
So while we may have made a mistake by allowing some of these companies to get as large as they have — in fact, we have made a mistake. I think we should have had much more rigorous antitrust enforcement that would have prevented a number of these companies from getting as big as they are. That’s a problem.
And so I think what we have to figure out now is: are there ways to require a retrospective review of some transactions? There’s no way to ensure that if the transaction is approved based on a set of expectations, that you then have an option to go and see if those expectations were bad or something different happened and learn from that. But I think it’s harder for Congress to think about enacting a statute that breaks up companies.
But I do think that the other suggestion that Sen. Warren has made is a really interesting one and something I think about a lot: the notion of “You can be either a platform or you can be a manufacturer or a producer of services, but you can’t do both.” Sort of the Glass-Steagall of the internet. It’s kind of an interesting idea because people go to a platform thinking, somehow, when they do a search, there’s some neutral way that evidence is reviewed, and you’re provided with a result from that search.
Well, we know that that is not the case, the way items get into the Amazon buy box. And Amazon used its own private label to promote it or promotes its own goods. It creates sort of an inherent conflict. You know, you’re both a platform and a manufacturer of goods. And so it’s kind of an interesting idea to think: should you at least separate out those functions and say you can be one or the other, but you can’t be both?
I think these companies are too big, and we’ve allowed them to exercise monopoly power. We have to figure out how to correct that. I’m looking at kind of what are the current antitrust tools that are available to antitrust enforcers, and how we might use those to promote competition. But there is not a mechanism that I can think of that would allow us, as Congress, to go and break up a particular company. I think we can do a lot of things to correct the absence of competition in that space. Everything is on the table, in my view. But I have to think long and hard about how we could, in a congressional enactment, actually break up a company.
I’ve had a bunch of Microsoft executives from the ‘90s tweeting me all day about how Microsoft’s antitrust suit didn’t actually accomplish anything. And really, the question that they keep asking is: what shouldn’t you be able to integrate?
So Tile was at the hearing. They built tracking products. We don’t know yet, but Apple is rumored to be building a tracking product. Apple’s products will obviously have greater access to the operating system of the iPhone than Tile’s product. Should that kind of conduct be prohibited? Should Apple have to have open APIs, which was part of the Microsoft consent decree?
I would have to think about the example you gave. But certainly if, in that example, Apple makes it much more difficult for people to access the Tile product using their software and ... they constantly get reminders [asking], “Do you want to continue this service?” or constantly prodding them to have to answer a prompt. And that creates the kind of friction that ensures that their competitor doesn’t really have access to the marketplace. Or if they do, it’s short-lived.
I think what we have to look at is if the behavior of the company can fairly be described as anti-competitive. Are they using their market dominance to make it impossible for a competitor to enter the marketplace and survive, and as a result, leading to a reduction of innovation, a reduction of choices for consumers, maybe ultimately increasing costs? They’re only able to do that because they have so much market dominance.
How do we deal with the reality that these four large technology platforms are so big and control so much of the market? That they can, with a change of an algorithm, make it more difficult to access their software, make it almost impossible for a competitor to survive? That’s not good for the economy. It’s not good for consumer choices. It’s not good for innovation, and it’s not good for competition.
I’m curious about your view of the Microsoft / Netscape enforcement action, which seems to be the shadow over all of this. Did it work? Did it not work? Did just knocking Microsoft back a little bit create the environment for Google to emerge? There are multiple interpretations of what happened.
I don’t think there’s any question it worked. I don’t think there’s any question that made space for an enormous amount of additional innovation and competition, just pursuing the enforcement action itself, not the consent decree.
Are you hoping for a similar result here? Are you hoping to take it one step further?
This is not an investigation that results in an enforcement action investigation.
Congress is the only place that has the ability to actually change the statutes and update the laws and put proposed regulations in place that actually fix this marketplace. So unlike an enforcement action that focuses on the behavior — a single company gets directed to do a single thing — our work is much broader. And it is actually more significant because if we do it right, we can get this digital marketplace working properly. And that will benefit consumers. It will benefit the next great company that’s going to come down the pike because competition was possible.
But if you write a bunch of new laws and regulations, and then you staff an agency with creative, enthusiastic people who want to do it, you’re going to result in a bunch more enforcement actions, presumably.
Correct. Or much better behavior by digital platforms.