As Matt Yglesias notes, Wednesday’s hearing with Big Tech executives was a bit sprawling, but that isn’t necessarily a bad thing. While Amazon, Apple, Facebook, and Google are all very large companies in technology-related lines of industry, their business models are quite different and they raise varied sets of concerns about anti-competitive behavior. And those concerns vary in their severity and in the strength of the case that the government can or should use some sort of anti-trust authority to change what the companies are doing.
My view after this hearing remains that antitrust concerns are most founded as regards Google, which has a truly dominant position in the online-search and advertising businesses, and least so regarding Amazon, whose retail business only looks dominant when you make the arbitrary choice to compare the company only to online competitors and not to brick-and-mortar retailers that compete with it to sell the same products. Amazon has become big in an unusual way, often entering lines of business where its market position is sure to be far from dominant, such as grocery retail, where the acquisition of Whole Foods has given the company approximately a 2 percent national market share.
One line of questioning in the hearing, from Pennsylvania congresswoman Mary Gay Scanlon, regarded Amazon’s supposed effort to corner the market for diapers — offering sharp discounts to new mothers to compete with Diapers.com, then buying Diapers.com in 2010 and raising prices once the competition was out of the way. Amazon CEO Jeff Bezos responded by pointing out that his company sells diapers in a still highly competitive market, facing brick-and-mortar retailers like Costco. Scanlon replied that she wanted to talk about the online market — but why? Data from the Bureau of Labor Statistics shows that price growth in the consumption category that contains diapers (toddlers’ and infants’ apparel) has significantly lagged inflation since 2010, with prices up 5 percent from 2010 to 2019, a period when the overall price level rose 17 percent. This was part of a broader theme from the hearing, where lawmakers identified ways that competing with these very large companies could be a real headache for other firms but the harm to consumers was often much less clear.
It’s worth remembering that, despite the narrative of a backlash against Big Tech, Google and Amazon at least are very popular with the public. Georgetown University’s 2018 American Institutional Confidence poll found the two companies were the second- and third-most trusted out of 20 major institutions studied, beating the courts, the press, the FBI, organized labor, and “major companies” in general, and lagging only the military. Not all Big Tech companies are beloved — Facebook scored poorly in Georgetown’s survey, and a 2019 NBC News/Wall Street Journal poll found 60 percent of respondents say they don’t trust Facebook with their personal information, while only 28 percent and 37 percent said that of Amazon and Google, respectively. There’s an obvious reason that members of the public draw distinctions among these companies: Amazon and Google provide extremely useful services, while Facebook frankly does not.
And so when trying to address real problems with these companies’ businesses — like the issue of counterfeit products sold through Amazon Marketplace — lawmakers should be careful to avoid unintended consequences that interfere with the services from these companies that consumers find so useful. Counterfeits are a problem for Amazon’s own brand, so members of Congress may be doing something useful by raising the issue in the hearing and pressuring Amazon to find better private solutions even if it would be very challenging to devise a public policy that balances counterfeit prevention with protecting the advantages that third-party sales create: a broader variety of products available to buy, with more price competition. After all, defining problems can be a useful purpose for congressional hearings, even if they do not produce obvious solutions.
