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Tech CEOs take a beating, but will it lead to change?

The leaders of Amazon, Apple, Facebook and Google faced a barrage of tough questions, and first-person accounts of questionable corporate behavior, but what comes next, if anything, is an open question.

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Amazon CEO Jeff Bezos speaks via video conference during a House Judiciary subcommittee hearing on antitrust on Capitol Hill on Wednesday, July 29, 2020, in Washington.

Graeme Jennings, Pool via AP

SALT LAKE CITY — The chief executives of Amazon, Apple, Facebook and Google were at the business end of a battering by federal lawmakers throughout a historic, five hour-plus hearing Wednesday focused on antitrust issues.

And Utah Attorney General Sean Reyes’ team is keeping an eye on the proceeding as his office continues to participate in a nationwide investigative effort focused on Google and whether the company has unfairly, and illegally, leveraged its power over the digital search and advertising realm to nudge out competition.

But at least one local expert on antitrust matters cast doubt on whether the hearing, and the investigation that preceded it, is poised to foment any meaningful change in the current federal rules governing the anti-competitive conduct of megabusinesses.

The tone of the federal proceeding was set early on by Rep. David Cicilline D-Rhode Island, who characterized all four companies as guilty of “killing the small business, manufacturing and the overall dynamism that are the engines of the American economy.”

“Many of the practices used by these companies have harmful economic effects,” Cicilline said. “They discourage entrepreneurship, hike costs and degrade quality.

“Simply put, they have too much power.”

Lawmakers were armed with a trove of information gathered in an investigation that’s been in progress for over a year and, according to committee chairman Cicilline, included millions of pages of documents, hundreds of hours of interviews and a slew of earlier hearings and roundtable discussions.

Witnesses included Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg and Alphabet/Google CEO Sundar Pichai.

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Top row, Facebook CEO Mark Zuckerberg, right, Amazon CEO Jeff Bezos, second from right, and bottom row Google CEO Sundar Pichai, left, and Apple CEO Tim Cook, second from left are sworn in remotely during a House Judiciary subcommittee on antitrust on Capitol Hill on Wednesday, July 29, 2020, in Washington.

Mandel Ngan, Pool via AP

Cicilline said the importance of the investigation went beyond just establishing whether the companies had been engaging in anti-competitive practices.

“Because concentrated economic power also leads to concentrated political power, this investigation also goes to the heart of whether we as a people govern ourselves or whether we let ourselves be governed by private monopolies,” Cicilline said. “Concentrated markets and concentrated politics are incompatible with Democratic ideals.”

The 15 members of the U.S. House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law were each given five-minute windows in multiple rounds of questioning, mostly focused on competitive practices.

All four executives tried to deliver interstitial messages about the highly competitive realms in which they operate, but the time-limited congressional members mostly stomped on those attempts as they worked to get responses to specific incidents.

Bezos, making his first appearance before federal lawmakers, was pummeled repeatedly for how Amazon uses, and possibly misuses, data on third-party resellers, a segment of the company’s online retail business that accounts for some 60% of sales.

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Amazon CEO Jeff Bezos testifies remotely during a House Judiciary subcommittee on antitrust on Capitol Hill on Wednesday, July 29, 2020, in Washington.

Mandel Ngan, Pool via AP

Rep. Lucy McBath, D-Georgia, countered Bezos’ description of its third-party sellers as “partners and customers,” citing evidence gathered by the committee that told a “completely different story” by resellers who used words like “bullying, fear and panic” to describe their relationships with the company.

And, when the Amazon chief was braced with a question about an April Wall Street Journal report that purported to have uncovered direct evidence that Amazon used data on a particular third-party reseller to develop a competing product — a practice the company has repeatedly denied — Bezos stated that “I can’t guarantee you that this policy has never been violated” and the matter was “under investigation.”

So too, Zuckerberg was called on to defend an oft repeated criticism that Facebook has unfairly wielded its power to simply acquire any emerging social media startups that have an inkling of usurping the market share of the world’s largest social media site.

Rep. Jerry Nadler, D-New York, said documents gathered in the investigation reflected that Facebook saw the upstart photo sharing service Instagram as a powerful threat that could siphon business away, so the company bought it.

“And that’s exactly what antitrust law was made to prevent,” Nadler said.

Zuckerberg also fielded similar questions about another acquisition, instant messaging service WhatsApp, and, in a tale of the one that got away, similar internal communications about Snapchat, which successfully avoided becoming part of Facebook’s portfolio.

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Facebook CEO Mark Zuckerberg testifies remotely during a House Judiciary subcommittee on antitrust on Capitol Hill on Wednesday, July 29, 2020, in Washington.

Mandel Ngan, Pool via AP

The manner in which Google combines its search and online advertising dominance was parsed in a few different lines of questioning, including whether the company skews search query results to favor sites it controls or from which it derives profit. According to eMarketer, Google led all companies in digital advertising revenues in 2019, pulling in over $100 billion, with Facebook a distant second at just over $67 billion.

Pichai said the company’s commercial concerns do not impact the ranking of search results.

The Google executive also countered issues raised about how his company put user data to work, acknowledging the company did leverage users’ browsing information to match and place ads, but said it achieves a balance by providing tools for consumers to control that process.

“We, today, make it very easy for users to be in control of their data,” Pichai said, noting that users can easily “turn ad personalization on or off.”

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Google CEO Sundar Pichai testifies remotely during a House Judiciary subcommittee on antitrust on Capitol Hill on Wednesday, July 29, 2020, in Washington.

Mandel Ngan, Pool via AP

Cook, perhaps, had the easiest response path with lawmakers mostly focused on how Apple curates and controls its App Store, a marketplace that now includes some 1.7 million applications developed for the iPhone. Cook said Apple only makes money on about 16% of the apps and the rest are distributed for free with proceeds going entirely to developers.

Rep. Henry C. Johnson, D-Georgia, noted Apple wields “immense power over small businesses to prosper and grow” and asked Cook about evidence that showed the rules governing acceptance into the App Store were “arbitrarily enforced” and “subject to change whenever Apple sees fit.”

Cook said the managers of the App Store “treat every developer the same” and the process runs by a set of “open and transparent rules.”

“We do look at every app before it goes on,” Cook said. “But, those rules apply evenly to everyone.”

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Apple CEO Tim Cook testifies remotely during a House Judiciary subcommittee on antitrust on Capitol Hill on Wednesday, July 29, 2020, in Washington.

Mandel Ngan, Pool via AP

Rep. Jim Jordan, R-Ohio, and Rep. Matt Gaetz, R-Florida, paired up in focusing many of their questions on perceived biases against conservative voices and commentary on big tech platforms.

Jordan cited a list of instances he said represented the censoring of conservative commentary on social media sites and also squared off with Pichai, claiming Google was complicit in working against the election of President Donald Trump in 2016 and asking if Google was planning on tweaking its platform to help the 2020 presumptive Democratic nominee, former Vice President Joe Biden.

“We engage with campaigns according to the law,” Pichai said. “We won’t do any work to politically tilt things one way or another.”

What potential legislative moves the antitrust subcommittee may be considering remains to be seen, but Cicilline may have offered a clue in his powerful closing statement.

“Today we had the opportunity to hear from the decision-makers of four of the most powerful companies in the world,” Cicilline said. “This hearing has made one fact clear to me — these companies, as they exist today, have monopoly power. Some need to be broken up, all need to be properly regulated and held accountable.

“We need to ensure the antitrust laws first written more than a century ago work in the digital age. When these laws were written the monopolists were men named Rockefeller and Carnegie. Their control of the marketplace allowed them to do whatever it took to crush independent businesses and expand their own power. The names have changed but the story is the same.”

University of Utah S.J. Quinney School of Law professor and antitrust specialist Jorge Contreras said he expects there will be some repercussions for at least some of the big tech companies, noting the numerous ongoing investigations, but voiced skepticism about whether meaningful legislative changes would be forthcoming.

“Some of these investigations will lead to some liabilities against some of these companies,” Contreras said. “And the companies will pay whatever the fines are and probably reform whatever the behavior was that they got slapped on the wrist for.

“But structural changes to statute? These are the last big industries that the U.S. has, the companies that have replaced steel and oil and the railroads. Is Congress going to kill this last, big American industry? I doubt it.”