July 31, 2020
Tepper Insight: Professor Tim Derdenger on Big Tech Anti-Trust Testimony
Chief executives from four of the biggest U.S. technology companies testified before Congress to address bipartisan concerns that they use their dominance to crush rivals at the expense of consumers.
The U.S. House of Representatives antitrust subcommittee heard live-streamed testimony from Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg, Google’s Sundar Pichai, and Apple’s Tim Cook, as part of its yearlong inquiry into technology industry competition.
The following is a response by Tepper School faculty member Tim Derdenger to their Congressional testimonies.
What was your reaction/thoughts on the congressional antitrust hearing yesterday?
The biggest moments were from Reps. Demings and Gaetz questioning of Google’s CEO Sundar Pichai. Each representative highlighted explicit examples of Google’s use of excessive market power and dubious behavior. Most damaging was Deming's questioning around privacy and the merging of data between Double Click and Google after Google’s acquisition.
This merger raised several privacy flags at the time as it would allow Google to connect personal identities to browser activities. Deming's ability to have Mr. Pichai acknowledge that he signed off on the decision to combine this data and thus eliminate anonymity on the internet in 2016 was a very powerful revelation. The fact that such a decision was counter to what was stated during the merger review and fell completely opposite to the beliefs of Google’s founders Larry Page and Sergey Brin did not help Mr. Pichai.
The impact of such a decision was monumental for the advertising industry. The merging of data most likely led to higher ad prices due to the removal of anonymity. The question that must be asked is whether companies and ad agencies were harmed by such a decision — did the increase in ad prices offset the more efficient reach.
Gaetz's questioning around Google’s suppression of information in search and highlighting that manual intervention occurs within Google search was quite alarming. While Gaetz framed his questioning in a political view around conservative websites, the fact that Google has the capability to manually alter search results (and has shown to do so) must frighten all companies who rely on search to drive business.
If Google has such power, what stops Google from manually altering results from a company that it is in competition with (e.g. Hulu Live TV, Philo, Sling) or conversely receives sizeable ad revenue from? Unfortunately, nothing, as the Nov. 2019 Wall Street Journal article illustrated.
In your opinion, in what direction do you believe the congressional/federal/state-level probes will head? Are changes to antitrust law warranted? Is a breakup of big tech warranted?
This was not a good day for tech and these four companies specifically. The hearing painted these firms in a very negative light, and it highlighted the bipartisan recognition that these four firms wield excessive market power.
If I had to predict based upon this hearing, these firms will be regulated and, for Google, maybe even forced to divest/spinout its large entities such as Double Click and YouTube in order to mitigate the market power that Google has with search.
I certainly would not want to be Bezos, Cook, Pichai, or Zuckerberg when there is bipartisan congressional support against you — especially in today’s political environment.