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Big Tech Antitrust Hearing: Lawmakers Pummel CEOs Over Market Dominance

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By Agence France-Presse | Updated: 30 July 2020

Big Tech executives faced an onslaught of criticism from US lawmakers Wednesday at a high-stakes antitrust hearing which could lay the groundwork for tougher regulation of the major Internet platforms.

CEOs Tim Cook of Apple, Jeff Bezos of Amazon, Mark Zuckerberg of Facebook and Sundar Pichai of Google were grilled for more than five hours in the unprecedented joint appearance — by video — before a House of Representatives panel investigating market dominance.

While the hearing was called to focus on whether the companies abuse their dominant positions in the market, it veered quickly into topics including political bias, privacy, dealings with China, and how platforms deal with misinformation.

“Simply put, they have too much power,” said Representative David Cicilline, a Democrat from Rhode Island who chairs the panel conducting a year-long investigation into the business practices of the four companies.

Cicilline said the hearing made clear that the firms “have monopoly power — some need to be broken up, all need to be properly regulated and held accountable.”

Congress has no formal role in antitrust enforcement, but several lawmakers appeared intent on revising US laws to deal with the extraordinary market power and dominance of large technology firms.

“The anti-trust storm clouds appear to be building in the Beltway against Big Tech,” Wedbush analyst Dan Ives said in a note to investors.

“With today’s hearings setting the stage for a battle royale over the next 6 to 9 months.”

Pandemic strength

Cicilline said the coronavirus outbreak has strengthened the clout of the four, saying: “They are likely to emerge (from the pandemic) stronger and more powerful than ever before.”

Some lawmakers sought to play down the competitive danger of the companies, which have won praise for innovating and introducing new technologies and offering lifelines during virus lockdowns.

“Being big is not inherently bad,” said Jim Sensenbrenner, a Republican from Wisconsin. “Quite the opposite, in America you should be rewarded for success.”

Abusing platforms?

Lawmakers also put spotlights on problems with tech companies operating platforms relied upon by rivals.

Pichai was pressed regarding whether Google’s ad platform tactics hurt other Internet players such as news outlets.

Apple’s Cook faced tough questioning over the market power of the company’s App Store and its treatment of developers.

“We treat all app developers the same,” Cook said. “We do not retaliate or bully people.”

Bezos, in his first appearance before a congressional committee, defended Amazon’s dealings with third-party sellers after a blistering attack from Cicilline.

“We’ve heard from third party sellers again and again during the course of our investigation that Amazon is the only game in town,” the committee chair said to the company founder.

Bezos disputed the characterisation while adding, “There are a lot of options for small firms.. I think we are the best one.”

Playing politics

President Donald Trump, who has accused Facebook and Twitter of censoring his remarks and being biased against conservatives, weighed in with a tweet shortly before the hearing.

“If Congress doesn’t bring fairness to Big Tech, which they should have done years ago, I will do it myself with Executive Orders,” Trump said.

Representative Jim Jordan, a Republican from Ohio, said during the hearing: “I’ll just cut to the chase — Big Tech is out to get conservatives. That’s not a suspicion. That’s not a hunch. That’s a fact.”

Democrat Jamie Raskin of Maryland rejected the argument, saying Facebook and other platforms have failed to contain misinformation from Trump and his supporters, including unverified COVID-19 claims.

“If Facebook is out there trying to repress conservative speech they’re doing a terrible job,” Raskin said. “I don’t understand this endless whining” from Republicans.

Moving forward

Some analysts said the hearing could set the stage for revising US antitrust laws, which at present make it difficult for enforcers to target companies simply for being big.

“There was considerable skepticism toward the tech sector as legislators worry about unfair competition and unfair practices,” said Darrell West, director of the center for technology innovation at the Brookings Institution.

“If Democrats gain control in the (November elections), this hearing will serve as a blueprint for enhanced regulatory oversight,” West said.

Michael Carrier, a Rutgers University professor of antitrust law, said that while “the hearing showed that the representatives did their homework” he didn’t think the hearing would lead to quick action.

Avery Gardiner, a former government antitrust lawyer who follows competition for the Center for Democracy & Technology, said the hearing failed to demonstrate specific anticompetitive actions, leaving the matter now to regulatory agencies.

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India’s New E-Commerce Rules Considered ‘Cause for Concern’ by US Lobby Group, Email Shows

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By Reuters | Updated: 24 June 2021

A top lobby group that is part of the US Chamber of Commerce believes India’s proposed new e-commerce rules are a cause for concern and will lead to a stringent operating environment for companies, according to an email reviewed by Reuters.

India this week spooked online retailers like Amazon and Walmart’s Flipkart by outlining plans to limit “flash sales”, reining in a private label push and mandating them to have a system to address grievances.

The Washington-headquartered US-India Business Council (USIBC), of which Amazon and Walmart are members, described the rules as concerning in an internal email, saying some provisions were in line with New Delhi’s stance on other big digital companies.

India’s draft plan “includes several concerning policies, including significant limits on platforms’ ability to organise sales and handle grievances,” USIBC said in an email to its members.

USIBC has in the past urged India not to tighten a separate set of rules governing foreign investment in companies like Amazon and Flipkart, an issue that has often soured trade relations between India and United States.

USIBC did not immediately respond to a request for comment.

The new rules – open for consultation until July 6 – are expected to have an impact across the board in an online retail market forecast to be worth $200 billion (roughly Rs. 14,84,650 crores) by 2026.

They will also apply to Indian firms like Tata’s BigBasket and Reliance Industries’ JioMart, but the proposal comes after Indian retailers for years complained that market leaders Amazon and Flipkart used complex business structures to bypass India’s foreign investment law, hurting small businesses.

The companies deny any wrongdoing.

India’s new proposed rules have raised concerns they will force Amazon and Flipkart to review their business structures, industry sources and lawyers have told Reuters.

The USIBC email noted that India’s proposals “preclude (e-commerce) platforms from owning vendors”.

Amazon specifically holds an indirect stake in two of its top sellers and a Reuters investigation in February cited Amazon documents that showed it gave preferential treatment to a small number of its sellers.

India’s rules also will force e-commerce companies to reveal the country of origin of a product and suggest alternatives to ensure a “fair opportunity for domestic goods”.

Some of the new provisions align with India’s similar federal policies “for social and digital media companies … and will result in a more stringent e-commerce regime,” USIBC said in its email.

© Thomson Reuters 2021

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Hackers Shouldn’t Be Paid Ransoms, FBI Director Christopher Wray Pleads With Public Companies

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By Reuters | Updated: 24 June 2021

FBI Director Christopher Wray on Wednesday pleaded with public companies and other hacking victims to avoid paying ransom, saying he fears it will only embolden cyber criminals to ramp up future attacks.

“In general, we would discourage paying the ransom because it encourages more of these attacks, and frankly, there is no guarantee whatsoever that you are going to get your data back,” Wray testified before a US Senate appropriations panel.

The Justice Department has disclosed it managed to help the Colonial Pipeline recover some $2.3 million (roughly Rs. 17.07 crores) in cryptocurrency ransom it paid to hackers – an attack that led to widespread shortages at gas stations on the East Coast.

The FBI was able to recover those funds because it had a private key that it was able to use to unlock a Bitcoin wallet holding most of the money. It was unclear how the FBI managed to access the key. Bitcoin price in India stood at Rs. 24.3 lakhs IST on June 24.

Bitcoin seizures by the federal government are relatively uncommon, but authorities have been stepping up their expertise in tracking the flow of digital money.

Wray said on Wednesday that the FBI is seeing increasingly sophisticated types of ransomware attacks and that cyber thieves have been demanding larger sums of money.

“We’ve seen the total volume of the money paid I think triple over the last year or so,” Wray said.

He said companies and municipal governments who become victims of ransomware attacks should consider going to the FBI as soon as possible, and not wait.

“When they do, there’s all kinds of things that we can do,” Wray said.

“Sometimes through other work we’ve done, we might have the decryption key and be able to help the company unlock their data without having to pay the ransom,” he added.

© Thomson Reuters 2021

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Elon Musk Says Starlink to Go Public Once Cash Flow Is More Predictable

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By Reuters | Updated: 24 June 2021

Tesla Chief Executive Officer Elon Musk will list SpaceX’s space Internet venture, Starlink, when its cash flow is reasonably predictable, the billionaire entrepreneur said late on Wednesday.

“Going public sooner than that would be very painful,” Musk said in a tweet. “Will do my best to give long-term Tesla shareholders preference.”

He was responding to a question on Twitter, where a user asked: “Any thoughts on Starlink IPO we would love to invest in the future. Any thoughts on first dibs for Tesla retail investors?”

Last year, SpaceX President Gwynne Shotwell floated the idea of spinning off Starlink for an initial public offering.

Starlink, a planned network of tens of thousands of satellites in low-earth orbit, aims to offer fast Internet speeds globally.

Musk had said earlier that Starlink, currently based in Redmond, Washington, will be a crucial source of funding for his broader plans like developing the Starship rocket to fly paying customers to the moon and eventually trying to colonise Mars.

© Thomson Reuters 2021

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Amazon Restores Services After Multiple Users Face Outage

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By Reuters | Updated: 24 June 2021

Multiple users experienced a brief outage at Amazon’s platforms including Alexa and Prime Video late Wednesday before services were restored, according to outage monitoring website Downdetector.

More than 6,200 user reports had indicated issues with Amazon’s online store site, as of 1:48am GMT (7:18am IST), while about 1,700 users reported problems with Prime Video and more than 400 with Alexa, according to Downdetector.

Outage reports dropped significantly to double digits on the platforms in a little over an hour, Downdetector showed.

The issue affecting the sites was not immediately clear. Amazon did not immediately respond to a Reuters request for comment.

Downdetector tracks outages by collating status reports from a series of sources, including user-submitted errors on its platform.

On June 23, Amazon and Google were pressed by US Senator Amy Klobuchar about how their smart home devices and virtual assistants will support competition and user privacy.

In a letter, the chair of the Senate Judiciary Committee’s antitrust subcommittee said testimony last week by attorneys from the companies left her with concerns about their dominance of the fast-growing field.

She asked the companies which of their products will support – and which will not – a recently revamped industry alliance known as Matter. The group, which includes Apple, Ikea, and others, aims to allow home-automation gadgets such as Internet-connected lights and speakers from various companies to sync with one another.

“For what period of time do you commit to support the Matter interoperability project, and who at your companies is responsible for determining whether to extend the length of your commitment to Matter?” Klobuchar wrote to Amazon and Google.

She called on the companies by July 2 also to answer questions about data collection by voice assistants and how the information is used.

© Thomson Reuters 2021

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Ant Group Highlights Distinction Between NFTs and Cryptocurrencies

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By Reuters | Updated: 24 June 2021

China’s Ant Group sought to draw a distinction on Wednesday between non-fungible tokens (NFTs) available on its platforms and cryptocurrencies currently subject to a crackdown by Beijing, after users expressed confusion.

Ant, the Jack Ma-controlled fintech group, put on sale two NFT-backed app images via its payment platform Alipay and the items quickly sold out on Wednesday.

Ant’s adoption of non-fungible tokens caused confusion on social media where they were linked to virtual currencies such as Bitcoin, which have the same underlying technology. Bitcoin price in India stood at Rs. 24.2 lakhs as of 11am IST on June 24.

“Alipay selling NFT products. Isn’t that illegal transaction?” one comment posted on Twitter-like Weibo said.

Ant, which is undergoing a government-ordered revamp restructuring after the collapse of its mega-IPO last year, said on Wednesday that non-fungible tokens and cryptocurrencies were two different things.

NFTs have exploded in popularity this year, with NFT artworks selling for millions of dollars.

“NFT is not interchangeable, nor divisible, making it different by nature from cryptocurrencies such as Bitcoin,” said a spokesperson at AntChain, the Ant unit that develops blockchain-based technology solutions.

He said that NFTs can be used to create a unique signature for digital assets.

Winston Ma, NYU Law School adjunct professor, also highlighted the confusion over the nature of NFTs.

“Are NFTs virtual currencies? Or, are NFTs certificates for virtual currencies? And more importantly, are NFTs securities? These are the questions that no major digital economy’s legislature has ever answered,” Ma said.

In addition to app images, NFT digital artworks are also auctioned on Alibaba’s platform that can be accessed by Ant’s Alipay app. AntChain said in product agreements that it provides blockchain technologies to NFT products.

The artworks are copied in storage space designated by AntChain, and are marked with distinct, blockchain-based certificates that define ownership of the digital assets.

China has over the past month intensified a campaign against cryptocurrency trading and mining, part of efforts to fend off financial risks.

© Thomson Reuters 2021

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Big Tech Regulation: US Lawmakers in Marathon Debate Over Bills, Reform of Antitrust Laws

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By Agence France-Presse | Updated: 24 June 2021

US lawmakers debated into the night Wednesday over details of legislation aimed at curbing the power of Big Tech firms with a sweeping reform of antitrust laws.

House Judiciary Committee clashed over a series of bills with potentially massive implications for large online platforms and consumers who use them.

The legislation could force an overhaul of the business practices of Google, Apple, Amazon, and Facebook, or potentially lead to a breakup of the dominant tech giants. But critics argue the measures could have unintended consequences that would hurt consumers and some of the most popular online services.

Representative David Cicilline, who headed a 16-month investigation that led to the legislation, said the bills are aimed at restoring competition in markets stymied by monopolies.

“The digital marketplace suffers from a lack of competition. Many digital markets are defined by monopolies or duopoly control,” Cicilline said as the hearing opened.

“Amazon, Apple, Facebook, and Google are gatekeepers to the online economy. They bury or by rivals and abuse their monopoly power conduct that is harmful to consumers, competition, innovation and our democracy.”

The bills would restrict how online platforms operate, notably whether tech giants operating them could favor their own products or services.

The measures would also limit mergers or acquisitions by Big Tech firms aimed at limiting competition, and make it easier for users to try new services by requiring data “portability” and “interoperability.”

The fate of the bills remained unclear, with some Republicans and moderate Democrats expressing concerns despite bipartisan support.

Clash points included whether it is right to target laws at four big tech companies and whether government agencies will hobble them instead of letting them adapt to competition.

“The interoperability measure is a huge step backwards,” said Oregon Republican Cliff Bentz.

“Big Tech is certainly not perfect. This bill is not the way to fix the problem.”

Rep Zoe Lofgren said she hoped the bill would include more measures for data privacy and security but endorses the concept.

“The big platforms have all your information. And if you can’t move it, then you’re really a prisoner of that platform,” she said. “Who wants to leave a platform if they’ve got all your baby pictures and all of your videos of your grandchildren, locked up?”

As the session stretched into the night, some members of the body lobbied to adjourn and resume the work another day.

Republican Representative Ken Buck, a supporter of the overhaul, said the legislation “represents a scalpel, not a chainsaw, to deal with the most important aspects of antitrust reform,” in dealing with “these monopolists (who) routinely use their gatekeeper power to crush competitors, harm innovation and destroy the free market.”

But Republican Jim Jordan criticized the effort, renewing his argument that Big Tech firms suppress conservative voices.

“These bills don’t fix that problem – they make it worse,” Jordan said. “They don’t break up Big Tech. They don’t stop censorship.”

Steve Chabot, another Republican, called the initiative “an effort for big government to take over Big Tech.”

The panel approved on a 29-12 vote a bill that was the least controversial, increasing merger filing fees to give more funding for antitrust enforcement.

Pushback from industry
Tech firms and others warned of negative consequences for popular services people rely on, potentially forcing Apple to remove its messaging apps from the iPhone or Google to stop displaying results from YouTube or Maps.

Apple released a report arguing that one likely impact – opening up the iPhone to apps from outside platforms – could create security and privacy risks for users.

Forcing Apple to allow “sideloading” of apps would mean “malicious actors would take advantage of the opportunity by devoting more resources to develop sophisticated attacks targeting iOS users,” the report said.

Amazon vice president Brian Huseman warned of “significant negative effects” both for sellers and consumers using the e-commerce platform, and reduced price competition.

“It will be much harder for these third-party sellers to create awareness for their business,” Huseman said.

“Removing the selection of these sellers from Amazon’s store would also create less price competition for products, and likely end up increasing prices for consumers. The committee is moving unnecessarily fast in pushing these bills forward.”

The measures may also impact other firms including Microsoft, which has not been the focus of the House antitrust investigation but which links services such as Teams messaging and Bing search to its Windows platform, and possibly other firms.

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