Tech on Trial: House Panel Begins Review of Market Power - NBC Southern California
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Tech on Trial: House Panel Begins Review of Market Power

The head of an association that represents technology and telecom companies said the government scrutiny of successful companies is appropriate

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    Tech on Trial: House Panel Begins Review of Market Power
    Robert Alexander/Getty Images, File
    The United States Capitol is pictured April 20, 2018, in Washington.

    Members of both parties on Tuesday suggested legislation may be necessary for the financially-struggling U.S. news industry as lawmakers began a bipartisan investigation into the market dominance of Silicon Valley companies.

    At a hearing of the House Judiciary Committee's antitrust panel, news media associations accused the tech companies of jeopardizing the industry's economic survival by putting news content on their platforms without fairly compensating them.

    "This is the first significant antitrust investigation undertaken by Congress in decades," Rep. David Cicilline, D-R.I., the subcommittee's chairman, said at the start of the hearing. The investigation is long overdue, he said, and Congress must determine whether the antitrust laws "are equipped for the competition problems of our modern economy."

    Cicilline noted the steep layoffs in the news industry in recent years, saying the dominant position of the online platforms in the advertising market has created "an economic catastrophe for news publishers, forcing them to cut back on their investments in quality journalism." At the same time, he said, tech platforms that are gateways to news online "have operated with virtual immunity from the antitrust laws."

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    As a partial solution, Cicilline proposed legislation to establish an antitrust exemption that would allow news companies to band together to negotiate revenue rates with big tech platforms. He called it "a life support measure, not the remedy for long-term health" of the news business.

    The senior Republican on the full committee, Rep. Doug Collins of Georgia, said he backs Cicilline's proposal. Addressing the broader question of antitrust, however, he said, "Big is not necessarily bad," adding that lawmakers need to proceed cautiously.

    The head of an association that represents technology and telecom companies said the government scrutiny of successful companies is appropriate. However, an antitrust exemption for the news industry wouldn't solve the problem, said Matt Schruer, vice president of the Computer and Communications Industry Association.

    Before the internet, "news publishers received an exemption to deal with previous competitors like radio and TV news (and they) have not worked," Schruer said. "The results were fewer choices for readers and less competition among news outlets."

    But David Chavern, president of the News Media Alliance representing some 2,000 news organizations of all sizes and types, called an antitrust exemption "the lightest-touch option on the table."

    "There's a real urgency in the industry. We're at crisis point now," Chavern said.

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    Stepping ahead of the criticism, Google's vice president of news Richard Gringas said the company has "worked for many years to be a collaborative and supportive technology and advertising partner to the news industry."

    "Every month, Google News and Google Search drive over 10 billion clicks to publishers' websites, which drive subscriptions and significant ad revenue," he said in a statement Tuesday.

    In a Capitol steeped in partisanship, inflamed by special counsel Robert Mueller's report and Democrats' intensifying probes of President Donald Trump, Congress' new investigation of tech market power stands out. Not only is it bipartisan, but it's also the first such review by Congress of a sector that for more than a decade has enjoyed haloed status and a light touch from federal regulators.

    With regulators at the Justice Department and Federal Trade Commission apparently pursuing antitrust investigations of Facebook, Google, Apple and Amazon, and several state attorneys general exploring bipartisan action of their own, the tech industry finds itself in a precarious moment — with the dreaded M-word increasingly used to describe their way of doing business. Cicilline has flatly called them monopolies.

    The Justice Department's antitrust chief suggested in a speech Tuesday that he may take a broad view of harm to competition, and take into account quality factors such as the threat to privacy, not only whether a company's dominant market position results in higher prices.

    "Price effects alone do not provide a complete picture of market dynamics, especially in digital markets in which the profit-maximizing price is zero," Assistant Attorney General Makan Delrahim said, according to a transcript of his speech in Tel Aviv, Israel, provided by the department.

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    Politicians on the left and right have differing gripes about the tech giants. Some complain of aggressive conduct that squashes competition. Others perceive a political bias or tolerance of extremist content. Still others are upset by the industry's harvesting of personal data.

    Several Democratic presidential candidates think they have the solution: breaking up the companies on antitrust grounds. Cicilline has called that "a last resort," but the idea has currency with both major political parties, including at the White House.

    Trump noted the huge fines imposed by European regulators on the biggest tech companies.

    "We are going to be looking at them differently," he said in an interview Monday on CNBC.

    "We should be doing what (the Europeans) are doing," Trump said. "Obviously, there is something going on in terms of monopoly."

    The tech giants have mostly declined to comment on the antitrust investigations.

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    Google has said that scrutiny from lawmakers and regulators "often improves our products and the policies that govern them," and that in some areas, such as data protection, laws need to be updated.

    Facebook executives have been calling broadly for regulation while explicitly rejecting the idea of breaking up "a successful American company." CEO Mark Zuckerberg has called for new rules in four areas: harmful content, election integrity, privacy and data portability.

    When Democratic presidential contender Sen. Elizabeth Warren tweeted in April that tech giants like Amazon should be broken up, Amazon tweeted back, "Walmart is much larger."

    And Apple has countered a legal challenge to its management of the App Store by saying it "will prevail when the facts are presented and the App Store is not a monopoly by any metric."