Congressman Cicilline's Opening Statement at Hearing on “Reviving Competition, Part 1: Proposals to Address Gatekeeper Power and Lower Barriers to Entry Online”

Feb 25, 2021

Statement of the Honorable David N. Cicilline, Chairman, Subcommittee on Antitrust, Commercial, and Administrative Law

Hearing on “Reviving Competition, Part 1: Proposals to Address Gatekeeper Power and Lower Barriers to Entry Online”

Thursday, February 25, 2021
Room 2141 of the Rayburn House Office Building

Today’s hearing is the first in a series that the Subcommittee will hold to develop legislation to promote competition online and modernize the antitrust laws.

These hearings follow a 16-month, bipartisan investigation led by the Subcommittee last Congress, which produced significant evidence of the rise and abuse of gatekeeper power online.

In testimony, submissions, and numerous interviews with Subcommittee staff, businesses of all types and sizes described how dominant platforms exploit their gatekeeper power to charge exorbitant fees, advantage their own products and services, impose oppressive contract terms, and extract valuable data from the people and businesses that rely on them. 

Over and over again, words like “fear” and “hardship” permeated the concerns of businesses across the economic spectrum—app developers, innovators, and locally owned companies alike. According to these businesses, their dependence on platform gatekeepers to access users and markets are simply the cost of doing business because they have few, if any, other options.  

In one example, David Heinemeier Hansson, the co-founder of Basecamp, testified last Congress that Apple’s power over app developers was “complete tyranny” and “insufferable,” adding that developers “live in constant fear we may have violated these vague rules, and that the next update to our applications will be blocked by Apple.”

This power is also critical for the platforms to maintain their grip on the market. By having control over the infrastructure of the digital age, these firms can conduct surveillance over other businesses to identify potential rivals, and ultimately buy or bury any competitive threats. 

For example, during the investigation, the Subcommittee uncovered emails from Mark Zuckerberg to Facebook’s chief financial officer describing the purpose of Instagram as neutralizing a competitive threat. 

Before it was acquired, the co-founder of Instagram told an investor that he was worried Mr. Zuckerberg would go into “destroy mode” if he refused to sell the company. Facebook later acquired the surveillance company Onavo to identify other competitive threats, and then neutralize them through acquisition, cloning their features, or blocking them from Facebook’s platform.  

In advance of today’s hearing, we have also received written testimony from Cliff Pemble, the CEO of Garmin, about this topic. He notes that, as gatekeepers of the app ecosystem for virtually all app developers, Apple and Google “have the ability and incentive to harm competition, and that “[t]hese super-dominant companies should not be allowed to use their ability to control key inputs and distribution as a sword to eliminate or impede competition.” 

Due to high barriers to entry in these markets—such as strong network effects and high switching costs—new entrants are unable to enter the market with better products or services to contest the dominance of these firms. In other words, businesses and consumers are stuck with few or no alternatives. 

I want to be very clear about two things.
First, this problem is not just about a market failure. At its core, this issue is fundamentally about whether or not we have an economy where businesses fighting for economic survival can actually succeed. 

It is about whether our economic future is going to be defined by the success of the best businesses with the best ideas, or simply the biggest companies with the biggest lobbying budgets.  

Second, this problem goes far beyond the exchange of dollars and data online. It is also at the heart of our nation’s reckoning with domestic terrorism and hate speech. 

In a letter to Facebook requesting documents and information related to the spread of disinformation on its platform, earlier this week, my colleagues on the Energy and Commerce Committee wrote that “[f]rom conspiracy theorists peddling false information to extremist voices urging and organizing violence, Facebook has become a breeding ground for polarization and discord.”

As Chairman Pallone and Subcommittee Chairs Schakowsky, Doyle, and DeGette explained, phrases like “kill them all” and “lock and load” appeared thousands of times on Facebook pages in the days and months leading up to the violent mob’s attack on the Capitol on January 6th. 

Rather than bring the world closer together, Facebook functioned as an organizing tool for extremists to plot violence against our democracy and plan to kidnap public officials. 

Last year, dozens of civil rights leaders from the Anti-Defamation League, the NAACP, Color of Change, and other groups organized a boycott by more than 500 advertisers following Facebook’s refusal to tackle hate speech on its platform.

In response, Mark Zuckerberg reportedly said that Facebook is “not gonna change our policies or approach on anything because of a threat to a small percent of our revenue, or to any percent of our revenue.”

That is because in the absence of competition or accountability, Facebook and other dominant platforms have no incentive to change. 

This problem is a cancer that is metastasizing across our economy and our country. It is spreading through our body politic and taking over our ability to function as a democracy.

Americans have had enough. 

According to multiple surveys over the past year, Republicans and Democrats agree on an overwhelming basis that these companies have too much power and that Congress must curb this dominance.

Today’s hearing begins the process of doing just that. And mark my words—change is coming. Laws are coming. 

Every day, policymakers around the world are undertaking a similar process.

In Europe, the European Commission has developed the Digital Markets Act, a comprehensive set of rules for platform gatekeepers that will now be considered by the European parliament.

In the United Kingdom, the government has announced that its Competition and Markets Authority will create a digital markets unit to enforce “a competition regime for tech giants to give consumers more choice and control over their data, and ensure businesses are fairly treated.”

In Australia, the Parliament is finalizing a law produced by the Australian Competition and Consumer Commission to give news publishers greater bargaining power with online platforms. 

And several other countries have announced similar proposals.

As Margrethe Vestager, the Executive Vice President of the European Commission, has said, we have a choice—a set of clear, strong requirements or a completely fragmented legal system.

I would also add that virtually every other sector of the economy is subject to rules and safeguards—the digital marketplace should be no different.

In communications markets, there are decades of laws and regulation to complement the breakup of AT&T.

In pharmaceutical markets, Congress enacted the Hatch Waxman Act of 1984 to lower prescription drug costs through the benefits of generic competition, and we have added to this with recent laws like the CREATES Act to foster competition and lower prescription drug costs by billions of dollars.

By comparison, the market capitalization of Amazon alone is larger than that of AT&T, Verizon, Comcast, Pfizer, and Johnson & Johnson combined.

And while we need more competition in every market across the economy, unlike the firms in these other sectors, Amazon and other dominant platforms are virtually unbound by laws or regulation. 

But that time is coming to an end. It must end.

Today’s hearing is the beginning. We will hear from a panel of experts on several of these topics, which will build on the testimony and information we received as part of our investigation last Congress. 

In the coming weeks, we will hold several additional hearings to consider reforms to our antitrust laws and paths forward for ensuring the survival of trustworthy sources of news. We will also hold additional hearings as necessary to develop a comprehensive record in support of legislative reforms. 

And we will work on a serious, bipartisan basis to advance these reforms together. 

In the words of my colleague, Ranking Member Buck, “we have an opportunity to offer bipartisan solutions that will promote competition and build a better technology marketplace for the future.”

I agree. With that, it is my pleasure to recognize the Gentleman from Colorado, Mr. Buck, for purposes of making an opening statement.