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Big Tech CEO Hearing | Key Takeaways From Business School Professors

The CEOs of Apple, Amazon, Facebook, and Google, have just been grilled by Congress. Find out the key takeaways from top business school professors

Fri Jul 31 2020

BusinessBecause

In a historic hearing in Washington DC, Apple CEO Tim Cook, Amazon CEO Jeff Bezos, Facebook CEO Mark Zuckerberg, and Alphabet (Google's parent company) CEO Sundar Pichai, all faced tough questions from the House Judiciary Committee’s antitrust panel.

The culmination of a year-long investigation into the four tech giants, the hearing set out to investigate the precise extent of these companies’ power, and the extent to which they may have been abusing it. 

The main focus was around how all the companies have used their extensive reach to harm their competitors and help themselves. 

With technology now competing with finance and consulting as a top destination for MBA graduates, it's crucial for MBAs to be aware of the monumental shifts in the sector that may result from the work of the antitrust panel.

BusinessBecause spoke to several leading business professors, who weigh in on the implications of the hearing.


What did the hearing reveal? 

In Amazon’s first ever appearance before congress, Jeff Bezos took a beating over counterfeit sellers.

Betsy Sigman, a distinguished professor at Georgetown University's McDonough School of Business, says that finding counterfeits is a herculean task for a company as big as Amazon, but it’s still crucial to work towards better regulation. 

Mark Zuckerberg was grilled over buying out Whatsapp and Instagram, two previous rivals, with the express intent of consolidating Facebook’s dominance.

Tim Cook was interrogated over Apple’s monopoly on the App Store, and resisted giving clear answers over questions on the 30% commission it takes from app developers. 

Professor Nicholas Economides, of NYU Stern, says the Apple CEO's apparent lack of awareness over anti-competitive practices was hard to believe, and likely nothing but a PR stunt. 

Tough questions were levelled at Sundar Pichai for Google’s ad marketplace, where the company essentially acts as operator of the market, as well as the buyer and the seller, which Professor Vasant Dhar, also of NYU Stern, says risks stifling access and innovation in the digital economy. 

Google was also interrogated over its influence on the political sphere, which is particularly important given the upcoming election. 

However, Republicans tended to focus their questioning solely on the issue of anti-conservative bias based on their own anecdotal evidence, which somewhat took away from the integrity of their questioning. 

Democrats were more neutral overall, with most of their questions concerning how a monopoly over any industry squeezed out small businesses. 


What was missing from the hearing?

Amazon has substantial power across a range of sectors beyond retail and delivery. Nicholas was surprised that no one asked questions on Amazon’s Web Services (AWS), which owns 34% of the cloud that allows for our internet connection. 

Betsy talks about the absence of Twitter from the hearing, and believes it's likely they refused to appear due to the upcoming election. “At this point in the election cycle, [Twitter CEO] Jack Dorsey probably felt he had little to gain and a lot to lose from the hearing.”

There was also a notable lack of questioning regarding user’s personal data, with far more focus on national loyalty. Google took a particular hit in the hearing for dropping out of a key defence contract out of moral concern, back in 2018.


What might the long term implications be? 

A final report on the investigation is due in the next few weeks. Depending on its conclusions, this may lead to new laws around user data, legal action, or even forced breakups of the companies by the US government.

Experts are spilt on what the future may hold for big tech.

Professor Lawrence White, of NYU Stern, predicts that the Department of Justice will likely bring a case against Google for unduly favouring its own services in its advertising and search results.

Lawrence also says the Federal Trading Commission may bring a case against Facebook for the misuse of private data. Though the hearing is a big moment for big tech, he believes it's unlikely to stop the continued usage and popularity of the companies’ products and services.

Betsy agrees, highlighting the influence of the pandemic. “Where would we be during the COVID-19 crisis, if these companies were not providing for consumer needs around the world?"

She also predicts that as a result of this hearing, Google, Apple and Amazon may be the subject of new levels of scrutiny that they have escaped so far. Previously they have dodged this because it’s often Facebook getting criticised.

For Vasant, it’s natural that companies build monopolies and use their unique data in ways that are harmful to capitalism and democracy, unless they are properly regulated, as he thinks congress will likely end up doing. “This time, things will change.”

Lawrence is not so sure. “We’ll be back here in two years,” he says. 


BB Insights explores the latest research and trends from the business school classroom, drawing on the expertise of world-leading professors to inspire and inform current and future leaders

Student Reviews

Georgetown: McDonough School of Business

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1/11/2023

Online

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4/04/2023

On Campus

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1/03/2023

On Campus

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1/03/2023

On Campus

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28/02/2023

On Campus

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28/02/2023

On Campus

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28/02/2023

On Campus

Review of Georgetown university

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28/02/2023

On Campus

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Student

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7/02/2024

On Campus

4 Years as an Expat at Georgetown University

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