--:-- [Theme music fades out]
--:-- Sean Rameswaram: Welcome to Today, Explained. I'm your host, Sean Rameswaram.
--:-- [Sound effects: A brief pause]
--:-- Sean Rameswaram: Today, we're talking about the tech giants and their recent testimony before Congress. Joining me is Casey Newton, a reporter at The Verge. Casey, thanks for being on the show.
--:-- Casey Newton: Thanks for having me, Sean.
--:-- Sean Rameswaram: So, what was the big deal about this hearing? Casey Newton: Nothing quite like this had ever happened before, at the very least, yeah? With the exception of the Microsoft antitrust case in the late 90s, we really haven't seen meaningful antitrust regulation in this country for 50 years.
--:-- Sean Rameswaram: That's right. The House Judiciary Committee and its antitrust subcommittee have been investigating the market power of Apple, Amazon, Facebook, and Google for 13 months now. And in the months since, they've held five preliminary hearings. They've produced 1.3 million documents. And Wednesday, we had the culmination of that, this hearing where you had the CEOs of the big tech companies facing real questions about how their companies have dominated the markets they're in.
--:-- Casey Newton: For people who couldn't watch, what did the main event look like? Because none of these dudes actually showed up, huh? Well, as you know, Sean, we have a global pandemic that's happening right now. Sure. And so rather than risk it all to appear before the antitrust subcommittee, the CEOs dialed in on Cisco WebEx and appeared before an in-person hearing of many members of the antitrust subcommittee.
--:-- Sean Rameswaram: That's right. It was kind of a hybrid. Some of the members of Congress were at their homes or offices, and some were actually there in D.C. in the committee room. And then everyone appeared on a giant grid in the manner of so many of our conversations these days.
--:-- Casey Newton: And of course, Jeff Bezos appeared to have the nicest room because he has the most money by far. And that is how that works. You make the most money, you have the nicest room. And that's just basic science.
--:-- Sean Rameswaram: [laughs] So, I didn't get to watch all of it, but I did get to watch some of it, including the opening statements in which each one of the tech lords laid out their inspiring American billionaire business stories with these gentle sort of preemptive suggestions that nothing about Apple, Facebook, Google, or Amazon was anti-competitive. It felt like foreshadowing.
--:-- Casey Newton: Yeah. I mean, nobody loves America like a billionaire, right? Things are going very well for them. And they believe very firmly that they have acted within all of the relevant rules and laws and that nothing ought to change.
--:-- Sean Rameswaram: [laughs] And they also said that customers have a lot of choices and that their products face fierce competition. Many of their competitors have hundreds of millions or billions of users. Some are upstarts, but others are gatekeepers with the power to decide if they can even release their apps and their app stores to compete with them.
--:-- Casey Newton: Research found that free services like search, Gmail, maps, and photos provide thousands of dollars a year in value to the average American. Many are small businesses using their digital tools to grow. Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of U.S. retail.
--:-- Sean Rameswaram: So, let's talk about each of the companies. Starting with Apple. Casey Newton: The thing that is happening with Apple is that it runs one of the two dominant mobile phone operating systems. And it also operates an app store that is necessary to use any apps on that phone. And for many of the apps that run on that phone, Apple charges a 30% cut of revenue and that is true even in cases where it makes a competing app that does not have to pay that cut.
--:-- Sean Rameswaram: So, for example, Apple makes a music product that charges 10 bucks a month and Spotify makes a music product that costs 10 bucks a month. Spotify has to pay three of those dollars to Apple.
--:-- Casey Newton: And so many companies have come forward to say that this is hurting competition because they are unable to invest the same amount that Apple is and that they're not able to compete.
--:-- Sean Rameswaram: Tim Cook responded to that allegation by saying that 84% of the apps are charged nothing. The remaining 16% either pay 15 or 30, depending upon the specifics. And he says, hey, if you don't like it, go find another operating system on another phone.
--:-- Casey Newton: People have like a 50-50 option there. It's Apple or Google. Did Tim Cook sort of like get off easy in the whole thing? I think Tim Cook got off easy. He got the fewest questions of anyone up there, something like 35 questions compared to something like 60 for Zuckerberg.
--:-- Sean Rameswaram: So, let's talk about Facebook. Casey Newton: With Facebook, the question was, Mr. Zuckerberg, you have written that Facebook can likely always just buy any competitive startups. In fact, on the day Facebook bought Instagram, which you described as a threat, you wrote, quote, one thing about startups is you can often acquire them, close quote.
--:-- Sean Rameswaram: And so they presented a bunch of new documents, which we reported on at The Verge, that showed conversations in which Zuckerberg says that it is a competitor and he would like to neutralize that threat.
--:-- Casey Newton: Zuckerberg told Congress, look. I've been clear that Instagram was a competitor in the space of mobile photo sharing. But we never could have imagined it was going to grow as big as it eventually did. And in fact, as Facebook says, By having them join us, they certainly went from being a competitor in the space of being a mobile camera to an app that we could help grow and help get more people to be able to use.
--:-- Sean Rameswaram: [laughs] Yeah, I saw that moment and I kind of scratched my head because I felt like Instagram was pretty huge before Facebook acquired it. It was certainly growing by the time that the ink dried on the contracts.
--:-- Casey Newton: And now today it has over a billion users. So, you know, certainly Facebook had the data that showed that it was growing incredibly quickly. And that growth has done nothing but continue ever since.
--:-- Sean Rameswaram: Google had a much tougher go, it seemed. There were a lot of representatives taking a lot of Google's decisions recently apart.
--:-- Casey Newton: Yeah, Google faces the most imminent risk of real antitrust action. There has been some reporting that an antitrust case may be brought against them by the federal government this summer.
--:-- Sean Rameswaram: And a lot of it has to do with search results. When you Google something, in many cases, you will not see what you used to see on Google, which was links to websites. Instead, Google will try to answer your question for you. And often it will answer with another Google product, right?
--:-- Casey Newton: Like if you search for a location on Earth, Google will show you Google travel products. And that has made it harder to compete for other travel-based businesses, right? Or if you think about local reviews, Yelp built a whole business on reviewing local businesses. And it used to rank really highly in Google search. And then Google started to build in reviews of local businesses. And now Yelp reviews can be harder to find.
--:-- Sean Rameswaram: So, did Sundar Pichai do a good job of convincing the antitrust committee that Google is doing its best to foster competition? Or, you know, is the federal government sure to take action this summer?
--:-- Casey Newton: I don't think he did a good job convincing because I actually don't think that this hearing was about convincing anyone. It was much more of a forum for members of Congress to present what they had learned and to show the homework that they had done.
--:-- Sean Rameswaram: [laughs] And it seemed like Democrats and Republicans were like united in purpose, if not motivation. Yeah, I think it's fair to say that both the Republicans and the Democrats are frustrated with these tech companies with almost an equal level of intensity.
--:-- Casey Newton: But I would also say that while that's true, some of those complaints are rooted in reality, like Republicans really only have one message, which is they believe that there is a conspiracy among tech companies to systematically disadvantage conservatives from using their platforms.
--:-- Sean Rameswaram: [laughs] Mike Wacker came out and was a whistleblower indicating that the manual blacklist targets that Google specifically goes after are those who support President Trump, who hold a conservative viewpoint.
--:-- Casey Newton: And he left your company in 2019 because he was speaking out against these outraged mobs. And that is despite the fact that a preponderance of evidence shows that conservative elected officials outperform Democratic elected officials when it comes to the sheer reach and engagement that the things that they post on those networks receive.
--:-- Sean Rameswaram: [laughs] I think that, yes, something will happen. I think that we will see antitrust legislation against Google this summer. I think we'll probably see an antitrust case against Facebook, although probably not before the election.
--:-- Casey Newton: And of course, the results of the election could change that outcome. People don't realize that there are now antitrust investigations being led separately by the federal trade commission, the department of justice, and multiple groupings of state attorneys general into Facebook, Amazon, Google, and Apple.
--:-- Sean Rameswaram: And so while I don't expect that the result is that going to be every tech company, you know, broken up into smithereens, I do think we are going to see something meaningful come out of all of that.
--:-- Casey Newton: It just seems unimaginable that all of those investigations would turn out to be for naught.
--:-- Sean Rameswaram: Casey Newton's got a very good newsletter called The Interface. You can sign up for it at theverge.com slash interface.
--:-- [Sound effects: A brief pause]
--:-- Sean Rameswaram: And after the break, I'm going to talk to Kara Swisher about the staggering amount of power these four dudes have.
--:-- [Theme music starts playing]
--:-- Sean Rameswaram: Welcome back to Today, Explained. I'm your host, Sean Rameswaram.
--:-- Kara Swisher: Thanks for having me, Sean.
--:-- Sean Rameswaram: So, Kara, I want to talk to you about the recent hearing with the tech CEOs. You wrote about it in The New York Times. What was your take on it?
--:-- Kara Swisher: Well, I think it's worth noting that the hearing was not just about the tech CEOs, but also about the power that they have accumulated over the years.
--:-- Sean Rameswaram: And how does that power manifest itself?
--:-- Kara Swisher: Well, it's not just about the money that they make, but also about the influence that they have over our society. They're not just companies, they're also editorial entities that shape our culture and our politics.
--:-- Sean Rameswaram: And how should we be thinking about this power? Should we be happy that these American tech companies are profiting hugely off of this pandemic?
--:-- Kara Swisher: Well, it's a complex issue. On the one hand, it's great that they're creating jobs and generating revenue. But on the other hand, it's also worth considering the impact that their power has on our society.
--:-- Sean Rameswaram: And what do you think is the most pressing issue when it comes to regulating these tech companies?
--:-- Kara Swisher: I think it's about finding the right balance between innovation and regulation. We need to make sure that we're not stifling innovation, but also that we're not allowing these companies to accumulate too much power.
--:-- Sean Rameswaram: And how do you think we can achieve that balance?
--:-- Kara Swisher: Well, I think it's about having a more nuanced understanding of the issues and being willing to have a more open and honest conversation about the trade-offs.
--:-- Sean Rameswaram: And what do you think is the biggest misconception about the tech industry?
--:-- Kara Swisher: I think one of the biggest misconceptions is that these companies are just benevolent actors that are doing good for society. But in reality, they're also complex entities that have their own interests and motivations.
--:-- Sean Rameswaram: And how should we be thinking about the role of government in regulating these tech companies?
--:-- Kara Swisher: I think the government has a critical role to play in ensuring that these companies are held accountable for their actions and that they're not accumulating too much power.
--:-- Sean Rameswaram: And what do you think is the most important thing that we can do to address the issues surrounding the tech industry?
--:-- Kara Swisher: I think it's about being more informed and engaged citizens. We need to be willing to have a more open and honest conversation about the issues and to demand more from our leaders.
--:-- Sean Rameswaram: And finally, what do you think is the most pressing issue facing the tech industry today?
--:-- Kara Swisher: I think it's about the issue of accountability. We need to make sure that these companies are held accountable for their actions and that they're not accumulating too much power.
--:-- Sean Rameswaram: Kara Swisher, thanks for joining me on the show.
--:-- Kara Swisher: Thanks for having me, Sean.
--:-- [Theme music starts playing]
--:-- Sean Rameswaram: And that's it for today's show. Thanks for listening to Today, Explained. If you want to learn more about the issues we discussed today, check out our show notes at vox.com/todayexplained.
--:-- [Theme music continues to play until the end of the episode]
