The House's top antitrust subcommittee recently grilled big-tech CEOs Mark Zuckerberg, Sundar Pichai, Tim Cook and Jeff Bezos, who appeared via videoconferencing software. Some people called it tech's "Big Tobacco moment" while others compared it with past antitrust investigations of Microsoft and AT&T. To me, the hearing — and the ongoing investigations — conjured another set of hearings from 70 years ago: the probe into mob activity led by Sen. Estes Kefauver (D-Tenn.).
Those hearings led to a wave of enforcement, new laws and eventually, in 1970, the Racketeer Influenced and Corrupt Organizations Act. What we learned at the hearing suggests the behavior of Facebook, Microsoft, Apple and Amazon calls for a comparably comprehensive and forceful response. (Bezos, the chief executive of Amazon, owns The Washington Post.)
There are more than a few similarities between the organized crime and these four companies. Like the Mafia, the threats that Apple, Amazon, Facebook and Google pose to American democracy flow from the power they have over key services (from email to social media to music and film), the way they use dominance in one area to achieve dominance in others and their ability to use fear to stop challenges to their control.
Like the Mafia, they are a resilient, surveillance-based shadow government. So citizens are dual subjects — of the country, and of the flawed online markets created by these companies. Like the mob, big tech has friends in very high places. Likewise, big tech is an oligarchy with several bosses, who compete in some territories but generally divide power among themselves, without consulting elected officials.
Obviously, I am not saying Facebook and Google murder and kneecap their opponents, or burn down businesses that refuse to play by their rules; I am not equating tech companies with the mob. While just about every Mafia enterprise was illegal, big tech operates in a legal gray area; these companies argue that they have broken no laws. They evade taxes using legal loopholes, not as the mob does by simply refusing to report income. Still, the analogy is useful, because it helps us think about a certain kind of oligarchic governing power that exists alongside — is interwoven with — responsive democratic systems. It helps us to think through what an effective governmental response to systemic interference with, dominance of, and bullying of businesses with less power might look like.
The hearing, compressed into one afternoon with all the CEOs present at one time, was not ideal, but arguably the best Congress could get without getting dragged into an extended legal fight over subpoenas. In one of the funnier moments, Bezos said, "I don't want to be sitting here," and then trailed off, revealing a basic truth.
It went far worse for the titans than you might have expected, given that oversight hearings often feature a series of sleepy (or pointlessly grandstanding) speeches and that big tech has at its disposal potent lobbyists and consultants from every recent presidential administration.
Rep. David Cicilline (D-R.I.), who heads the subcommittee, kicked off the hearing with an explosive opening statement, arguing that the heads of the tech companies are acting like emperors, and they use three basic strategies — copy, kill and acquire — to make it impossible for upstarts to get a foothold. Rep. Joe Neguse (D-Colo.) described the result as an "innovation kill zone," because nobody is going to want to create a new product or service if they know their ideas will either be stolen, suppressed or bought at discount, under threat. A lot of the questions were about territory and fear - how the big four built their territories, how they protect it and how they intimidate small business owners and app developers.
Cicilline's subcommittee used the time constraints well, pinning down the CEOs by using easy-to-understand examples of abusive strategies and explaining how they undermine freedom, equality and fairness.
In Amazon's case, the hearing showed how the company directly competes against independent sellers in its online marketplace. Rep. Pramila Jayapal (D-Wash.) forced Bezos to admit that while his company has a policy against using the data it collects on sellers and their products to create competing goods, he cannot promise the policy has not been violated. Bezos also admitted that a seller may get preferential treatment in a search result if they use affiliated Amazon services such as "fulfillment by Amazon," Amazon's storage, packing and shipping service. The result? Amazon made $60 billion from seller fees last year, and the average fees Amazon charges sellers has jumped from 19% of an average sale to 30% in five years.
While Amazon demands tribute, Google focuses on steering those of us who depend on its search engine to its own products. On average, 40% of the space on the first page of Google search results direct people to Google products, according to an analysis by the Markup, an investigative nonprofit group focused on tech. Rivals charge that the company scrapes content from other sites and uses it for its own purposes — content such as pictures from Yelp restaurant reviews. Cicilline said the committee had evidence that when Yelp complained about this behavior to Google, Google threatened that Yelp would not show up in search results.
Cook, of Apple, was sharply questioned about the 30% cut Apple takes when consumers pay for an app by an independent company, and why rival screen time apps disappeared from the store at the very moment Apple was promoting a similar product. Cook's repeated response that protecting the "privacy and security" of consumers was the reason for expelling such apps — not protecting Apple's financial interests — reminded me of the catchall "national security" defense that government officials often give when asked about questionable activities.
The committee presented documents it had uncovered showing that two months before buying Instagram, Zuckerberg wrote that the "nascent" business "could be very disruptive to us." On the day Facebook bought Instagram, he told an engineer he was correct that "Instagram was our threat," adding: "one thing about start-ups though is you can often acquire them."
These are not small revelations. It is a violation of the Sherman Act to protect a monopoly by buying out or shutting out a direct competitor. It is telling that a congressional committee, not an antitrust enforcement agency like the Federal Trade Commission, revealed these exchanges. The federal enforcers seem not to have been looking — although state antitrust enforcers, who are already in the middle of their own big tech probes, will likely use the new evidence in those investigations.
But the subcommittee's goal involved more than merely revealing specific instances in which laws might have been broken. This is where the echo of the Mafia hearings is strongest: Like Kefauver, Cicilline wants to reveal and then root out a creeping form of oligarchic power.
The Kefauver hearings educated the country about the potency and reach of organized crime and led to short- and long-term legal change. That committee's final report recommended a "racket squad" within the Justice Department, a federal crime commission, bans on some forms of betting and the creation of what became known as the Racketeer Influenced and Corrupt Organizations Act (when it was finally passed in 1970). RICO created major new penalties and civil cause of action for crimes that occurred as part of an ongoing criminal enterprise.
What the country understood after the Kefauver hearings was that when a large, networked institution engages in systemic bullying it is far more dangerous than occasional or individual wrongs; shadow governments cannot be squashed with piecemeal whack-a-mole enforcement.
If the analogy to Kefauver's mob hearings holds, Wednesday's hearings could spell the beginning of the end of abusive big tech power. Congress will rouse itself to use its subpoena power to unearth even more damning documents, and the public will realize that four self-important men should not govern us.
The equivalent of a RICO Act for big tech would be robust new antitrust laws and regulations, such as the structural breakups proposed by Sen. Elizabeth Warren (D-Mass.). All of these companies simultaneously own marketplaces and compete in those marketplaces, and they use their clout to maintain their clout. An effective solution would aim directly at their power, not just their practices — just as Kefauver did with the Mafia.
Zephyr Teachout is an associate professor of law at Fordham University. She wrote this piece for The Washington Post.