Facebook accused of ‘copy, acquire and kill’ tactics in US antitrust hearing 

Facebook CEO Mark Zuckerberg testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on 'Online Platforms and Market Power' in the Rayburn House office Building on Capitol Hill in Washington, DC, USA, on 29 July 2020. [EPA-EFE/MANDEL NGAN]

Social media giant Facebook has come in for heavy criticism as part of a US congressional hearing into the dominance of online tech platforms, being accused of ‘copy, acquire and kill’ tactics as part of its history in acquiring smaller businesses.

Internal Facebook emails disclosed during the hearing on Wednesday (29 July), demonstrate how the company believed the photo-sharing platform Instagram to previously be a ‘threat’ before Facebook’s 2012 $1billion buyout.

Facebook chief Mark Zuckerberg also admits in one email exchange with chief financial officer, David Ebersman how his approach towards mergers and acquisitions was to ‘neutralise a competitor’ and ‘integrate their products with ours.’

Moreover, Facebook faced allegations of threatening Instagram founder Kevin Systrom by going into ‘destroy mode’ should the company have decided to block’s Facebook’s acquisition of it, by competing more aggressively with the Facebook Camera product.

“Facebook cloned a popular product approached the company you identified as a competitive threat and told them that if they didn’t let you buy them up there would be consequences,” Representative Pramila Jayapal said.

“Your company uses data to spy on competitors and to copy, acquire and kill rivals,” Jayapal added. “You’ve used Facebook’s power to threaten smaller competitors and to ensure that you always get your way.”

For his part, Zuckerberg also conceded that at the time of the 2014 acquisition of WhatsApp for 22bn, the company was regarded as ‘both a competitor and complementary,’ further provoking concerns that the company pursues a culture of aggressive acquisitions over smaller rivals.

In Brussels, there have been previous concerns as to Facebook’s planned ‘platform merger’ which would attempt to amalgamate data between Facebook, Instagram and WhatsApp. Germany’s competition regulator had prohibited the move in 2019.

Facebook is attempting to block the disclosure of more internal documents which could shed light on further anti-competitive practices. The firm has announced that it is suing EU regulators after a spat between the two parties erupted over access to company documents as part of an ongoing antitrust probe.

EU competition enforcers have been investigating Facebook for practices related to the use of data in apps since last year, as well as reviewing how the company operates its online marketplace.

As part of the EU’s ongoing investigations it has transpired that Facebook is appealing the Commission’s right to access thousands of “irrelevant” documents that contain “highly personal information”, the company has confirmed.

More broadly on Wednesday, members of the US congress called into question the profit-making motives of other tech giants including Google, Apple and Amazon, as CEOs of the ‘Big Four’ firms fielded a swathe of questions on anti-competitive practices, content moderation, and the mass-harvesting of user data.

Leading the inquiry, Antitrust Subcommittee Chairman David Cicilline framed the hearing across three fields of anticompetitive practice, including the gatekeeper role Big Tech giants play in the digital economy, their ability to harvest and acquire user data en masse, and self-preferencing behaviour.

US lawmakers have been conducting a year-long investigation into the dominance of the above firms and Cicilline noted how the unprecedented scales of dominance harboured by the tech giants is destabilising for the economy.

“Many of the practices used by these companies have harmful economic effects. They discourage entrepreneurship, destroy jobs, hike costs and degrade quality. Simply put, they have too much power,” Cicilline said.

“Throughout our history, we recognise that concentrated markets and concentrated political control are incompatible with democratic ideals,” he added.

Google’s ‘walled garden’

For its part, Google, in particular, was criticised for the very nature of their business model, with Cicilline claiming that the company now represents a ‘walled garden’ on the web which increasingly keeps users within its sites.

“Emails show that over a decade ago, Google started to fear competition from certain websites, webpages that could divert search traffic and revenue from Google. These documents show that Google staff discussed the proliferating threat…that these web pages pose to Google.”

One specific example of threatening behaviour in the marketplace conducted by Google raised by Cicilline included an alleged theft of restaurant reviews from the reviewing platform Yelp in 2010. Reportedly, when Yelp raised the issue with Google, the latter threatened to deindex Yelp from Google search.

On the subject of data, Congressman Kelly Armstrong pressed Google CEO Sundar Pichai on how the company was exploiting compliance with the EU’s general data protection regulation (GDPR) in order to “restrict the ability to combine this user data with other platforms in order to conduct cross-platform analysis.”

“We are balancing between users, advertisers, and publishers, we deeply care about the privacy and security of our users,” Pichai responded. “We have to comply with important laws and regulations in every country. ”

Amazon’s counterfeit goods

Meanwhile, Amazon’s Jeff Bezos was exposed for his lack of knowledge on how sellers are vetted on the eCommerce platform, being presented with a series of questions on whether Amazon verifies the identity of its sellers, or even if it registers the name and address of vendors on its platform. Bezos was unable to respond to these questions.

This is an area that Brussels would like to make gains in, after the EU’s Digital chief Margrethe Vestager said recently that a crackdown on the sale of counterfeit and illegal goods across online platforms is likely to feature in the European Commission’s upcoming Digital Services Act plans.

Apple app developers

Apple, meanwhile, was probed on allegations of self-preferencing on its app store, with Congressman Hank Johnson probing Apple Chief Tim Cook on the terms and conditions for developers to have their app included on the platform.

Cook conceded that Apple requires all app developers to use Apple’s payment processing system, but ‘disagreed strongly’ with Johnson’s claim that there would be nothing to stop the tech titan charging a 50% commission for developers looking to get their app into the app store.

“We have fierce competition at the developer side and the customer side, which is so competitive I would describe it as a street fight for market share in the smartphone business,” Cook said.

[Edited by Zoran Radosavljevic]

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