Bloomberg Businessweek - USA (2020-07-27)

64

OnJuly 27 it’sBigTech’sturntoface

a grillingfromCongress.Forthefirst

time, the chief executive officers

of Apple, Google parentAlphabet,

Amazon.com,andFacebookwillall

testifybeforetheHouseJudiciaryanti-

trustsubcommitteeaspartofitsinves-

tigationintodigitalcompetition,albeit

byvideoconference.

Lawmakerswillbesorelytemptedto

askabouttopicssuchashatespeechand

misinformationwhich,whileimportant,

areeasilybattedawaybytheWestCoast

giants.Butit’sessentialthattheyfocusoncompetitionand

gettotheheartoftheproblem—businessmodels.

Here’sonekeyquestiontheyshouldaskeachexecand

whytheyshouldaskit:

AlphabetCEOSundarPichai: “IfI weretoplacethe

winningbidfora paintingatSotheby’s,I wouldknowthe

sizeofthenexthighestoffer.Sowhenbrandswanttoserve

meanadononeofGoogle’splatforms,whydon’tthey

knowthevalueofcompetingbids?”

Whenbrandssayhowmuchthey’rewillingtopayto

haveGoogleusersseetheirads,theyhavenobargaining

power. That’s partly because they have no idea what kind

of prices they’re bidding against, and partly because Google

controls so much of the online advertising ecosystem. And

higher ad costs get passed on to consumers.

Facebook CEO Mark Zuckerberg: “If I sign up for

Facebook or a Facebook platform like Instagram, why

must I give permission to let you track my other internet

browsingactivity?”

This gets at the argument that

Facebookisabletoimposeonerous

termsthataren’tintheinterestsofits

usersbecauseofitsmarketdominance.

Andwhileyoucanoptoutofadtarget-

ing,youcan’trefusetoallowFacebook

togatherthedata.

AppleCEOTim Cook: “Because

Applechargesa 30%commissionwhen

peoplesignupfora servicethroughthe

iPhone,thelikesofNetflixandSpotify

insteadredirectnewcustomerstotheir

websites.WhatcostsdoesAppleincurtojustifysucha roy-

altycharge?”

Theworkaroundtoavoidtheso-called“AppleTax”

meansit’seasierforiPhoneuserstosignupforApple’s

competingstreamingvideoandmusicservices.Thatmay

meanthatSpotifyandNetflixloseprospectivecustomers.

AmazonCEO JeffBezos: “Ifa companysuchas

Duracellalreadysellsbatteriesusingyourplatform,why

doesAmazonneedtoofferitsowncompetingproduct?”

AmazonMarketplace,whichsellsthird-partygoods,

givesthecompanydeepdataonpricingandcustomer

demand. Critics say it uses that to introduce competing,

cheaper products, which it then features more promi-

nently in search results. While lower costs might ostensi-

bly be good for customers, reduced competition ultimately

leads to less consumer choice and higher prices. <BW>

�Webb is the European tech columnist for Bloomberg

ILLUSTRATION BY GEORGE WYLESOL Opinion.

By Alex Webb

Four Key Questions for

The Top Men in Tech

◼ LAST THING

With Bloomberg Opinion

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