The market rallied today after the Federal Reserve said it would keep interest rates at historic lows in an effort to stimulate economic activity during the COVID-19 pandemic. The Nasdaq Composite (NASDAQINDEX:^COMP) climbed 141 points, or 1.4%.
The headline news today is that Apple (NASDAQ:AAPL) CEO Tim Cook, Amazon.com (NASDAQ:AMZN) CEO Jeff Bezos, Facebook (NASDAQ:FB) CEO Mark Zuckerberg, and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) CEO Sundar Pichai testified in front of the House Judiciary antitrust committee in a highly anticipated hearing that was delayed from Monday.
The chief executives all attended the hearing virtually due to COVID-19. Pichai serves as CEO of both Google and parent company Alphabet, but the discussion focused primarily on Google's business. This is the first time that Bezos has ever testified in front of Congress.
The testimony was the sixth hearing related to an antitrust investigation that lawmakers launched in June 2019 and comes amid a backdrop of intensifying scrutiny around major tech giants and whether their respective business practices undermine competition. The subcommittee released each CEO's opening statements (see Apple's, Amazon's, Facebook's, and Alphabet's).
Here are some brief highlights as they relate to each company. None of the stocks moved meaningfully in response to the hearing.
Apple: Up 1.9%
The primary concern regarding Apple is the App Store and the 15% to 30% cut that the Mac maker takes of sales related to digital goods and subscription services. Critics argue that the commission rate is too high and hurts competition, particularly as Apple itself competes with third-party developers in many prominent app categories. Some iOS developers have complained to lawmakers that App Store rules are inconsistent and arbitrarily enforced, and that Apple itself is often exempt from its own policies.
When asked about competition, Cook argued that developers can code for a variety of platforms including Android, likening the rivalry to a "street fight for market share in the smartphone business." The iOS App Store and Google Play both charge the same commission rates.
Amazon: Up 1.1%
Amazon is the largest e-commerce platform in the world, but Bezos tried to reframe the company's market power by focusing on the $25 trillion global retail market, which includes brick-and-mortar stores, as opposed to just e-commerce. Within that context, Amazon has less than 1% market share globally and less than 4% in the U.S., according to Bezos.
Amazon is also accused of improperly leveraging seller data to guide its own product development decisions, a long-standing fear among third-party merchants. The e-commerce juggernaut previously denied in a prior hearing that it uses such a strategy. Bezos said that Amazon has policies against this use of seller data but acknowledged that it's possible some policy violations have occurred and that an internal investigation is ongoing.
Facebook: Up 1.4%
Facebook has a long history of either buying or copying upstart competitors, a massively successful strategy that has cemented Facebook as the largest social media company in the world. While the price tags were worlds apart, Instagram and WhatsApp are the company's most prominent acquisitions and are now included in its core family of platforms.
An acquisition that is explicitly for the purpose of reducing competition violates antitrust law, and lawmakers pointed to old emails from Zuckerberg suggesting that eliminating competition was one goal of the Instagram deal. Zuckerberg defended the deal by noting how small Instagram was at the time and that its subsequent growth to over 1 billion users was far from certain back in 2012.
Alphabet: Up 1.5%
Controlling much of the world's access to information, Google wields incredible power over what people see with its search algorithms. Many small companies live and die by changes in those algorithms. There have also been allegations that Google steals content from third-party sites while leveraging its control over internet traffic in business negotiations.
Lawmakers also pointed to a recent report from The Markup that Google is increasingly directing users to its own offerings.