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Wednesdays five-plus-hour congressional probing of the bosses of Americas tech giants did not reveal a singular gotcha moment or smoking gun email. Weve heard many of these examples of Big Tech abuse before.

But the power of this hearing and others like it was the cumulative repetition of tales of abusive behavior, and evidence of the harm this has had on peoples lives.

The spectacle also showed that the impact of congressional investigations is the digging that happens when the C-SPAN cameras are turned off.

Worries about Americas tech stars have swirled for years. Its clear now that this isnt going away. In world capitals, courtrooms and among the public, we are wrestling with what it means for tech giants to have enormous influence on our lives, elections, economy and minds.

And while what happens to the future of Google, Amazon, Apple and Facebook is anyones guess, it was clear from Wednesdays hearing that Congress was pointing the way for other branches of government to pick up the digging from here.

We saw on Wednesday old emails and texts from Mark Zuckerberg, worried about Facebook losing ground to Instagram and suggesting that buying competing apps is an effective way to take out the competition. The big deal here: Trying to reduce competition by purchasing a rival is a violation of antitrust law. (Zuckerberg said that Instagrams success wasnt assured when Facebook bought it.)

Representatives said that their interviews with former Amazon employees backed up news reports that the company used private data from its merchants to make its own version of their products.

The subcommittee discussed their conversations with companies that claimed Google funneled web searches to services it owned rather than to rivals like Yelp. Through company documents and questioning, members of Congress picked apart Apples stance that it treats all app developers the same.

My colleague Kevin Roose wrote that the tech bosses seemed to be taken off guard by the rigor and depth of the questions they faced.

The Department of Justice and the Federal Trade Commission are also investigating whether these companies abuse their power, and I bet they watched closely. The U.S. governments antitrust case against Microsoft more than 20 years ago was built, in part, on the emails of Bill Gates and other Microsoft executives discussing how they planned to kill upstart competitors.

Heres one more sign that the backlash against Big Tech has only just begun: The shouty tech critics in Congress and the tech bosses all seemed to agree that these four companies have a meaningful impact on many peoples lives.

The tech bosses focused on the good that comes from their companies size, reach and influence. A New York bakery finds customers by buying advertisements on Google. Merchants can thrive by selling their products or apps on Amazon or Apple.

The representatives pointed out examples of the dark side of Big Techs size, reach and influence. In the pin drop moment of the hearing, a House member played an audio recording of a book seller saying her family was struggling because of a change Amazon apparently made that dried up her sales there.

The subcommittee chairman said these tech powers can pick the winners and the losers. That might be stretching it. But both sides demonstrated that these four companies have a profound say in who wins or loses.

Lawmakers of all political stripes seemed uncomfortable with the knowledge that four companies have this much influence. Beyond the legal antitrust questions at issue, its this feeling of discomfort that makes it hard to imagine that nothing will change for these tech superpowers.

Wednesdays hearing was really two hearings. The Democrats mostly asked the four tech chief executives about ways their companies wielded their power and influence. Republican members largely asked about persistent concerns that Google and Facebook in particular censor right-leaning viewpoints or treat conservative figures unfairly.

Some Republican politicians complaints about political bias arent backed by credible evidence. Regardless, suspicion of bias is a thorny problem for these companies.

In a 2018 Pew Research survey, Americans who described themselves as Republicans or Republican-leaning overwhelmingly said that they believed that tech companies censor online information for partisan reasons. (A smaller, but still majority, share of Democrats said that they believed this, too.) Since then, polling has shown a growing mistrust of tech companies, particularly among conservatives.

This doesnt seem to have hurt the tech companies businesses. In fact, some Republican members on Wednesday argued that even though people dont trust Big Tech, they have no choice but to continue using these services because these companies have so much influence. It was an effective way to connect bias concerns to investigations into tech company market power. (Yes, I said earlier this week not to pay attention to bias claims. But maybe pay attention a little?)

Even if allegations of bias dont cause the companies to lose customers, the loss of faith among a large share of Americans should worry them.

Its also a problem if the tech companies overcorrect. Facebook employees and critics have said fears of being accused of bias have made the company reluctant to crack down on people, including President Trump, who spread dangerous or inflammatory messages online. Its a fine line to walk.

The really important stuff from the Big Tech hearing: House plants and bookshelves. My colleague Mike Isaac rated the tech bosses choices of backgrounds for their webcast testimony. Mike gave Amazons Jeff Bezos, who sat in front of wooden shelves with a sprinkling of books and tchotchkes, a score of 8 out of 10 for his cool Pacific Northwest dad office vibes.

Example infinity of technology as a flawed virus surveillance: A Wall Street Journal technology columnist reviewed smart watches, internet-connected thermometers and other gizmos that say our heart rate readings or other bodily data can provide early warnings of coronavirus infections. Spoiler alert: Some of this stuff holds promise but needs further research, and we still need more laboratory virus testing.

If you feel like screaming when you watch TV: Rolling Stone has a hilarious and smart rage fest on why the video streaming services can be so infuriating to use.

Best wishes forever to this tiny rabbit peeking out of a canvas bag.

We want to hear from you. Tell us what you think of this newsletter and what else youd like us to explore. You can reach us at ontech@nytimes.com.

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Big Techs Backlash Is Just Starting - The New York Times

Theres a contradiction in the Trump, and by extension Republican, deregulatory agenda that could inadvertently threaten the recovery of an already wavering economy.

That aberration is the continued reflexive embrace of antitrust regulation, an original sin of the administrative state with vast, potentially destructive societal costs.

With antitrust intervention, politicians and bureaucrats do not merely push companies around; they also directly or indirectly dictate business models and can even inappropriately influence the trajectory of entire economic sectors in non-market directions.

A picture taken on August 28, 2019 shows the US multinational technology and Internet-related ... [+] services company Google logo (top L), US online store application Amazon (top C), US online social media and social networking service, Facebook (top R) and US multinational technology company Apple logo application (down C) displayed on a tablet in Lille. (Photo by DENIS CHARLET / AFP) (Photo credit should read DENIS CHARLET/AFP via Getty Images)

The big tech news this week is a hearing in the House Judiciary Committees Subcommittee on Antitrust, Commercial, and Administrative Law.

Called "Online Platforms and Market Power: Examining the Dominance of Amazon AMZN , Apple AAPL , Facebook, and Google, GOOGL " the hearing will feature the CEOs of each, appearing remotely: Jeff Bezos, Tim Cook, Sundar Pichai, and Mark Zuckerberg, respectively. This hearing is the committees sixth in a series.

Its bad news when both parties favor economic regulatory intervention and thats the state were in now with antitrust. While international regulators and state attorneys general have their sights on these companies, all are targets of federal antitrust investigation by the Justice Department and the Federal Trade Commission in the Trump administration. (Attorney General Bob Barr, separately testifying in Judiciary this week, is taking a lead role.)

In a joint statement, House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) and Antitrust Subcommittee Chairman David Cicilline (D-R.I.) said:

Since last June, the Subcommittee has been investigating the dominance of a small number of digital platforms and the adequacy of existing antitrust laws and enforcement. Given the central role these corporations play in the lives of the American people, it is critical that their CEOs are forthcoming. "

The subcommittee will ultimately issue a report based on more than a year of information gathering, but will likely downplay letters for the record and inconvenient testimony from antitrust skeptics. How do we know that? A headline on Drudge referred to an APPLEFACEBOOKAMAZONGOOGLE Reckoning. Other articles refer to the CEOs facing a "grilling."

The very notion of monopoly power in intangible code, in ones and zeros, seems perverse, though. And here we observe not one monopoly but four companies (other giants could have also been invited to testify) vigorously competing against one another in various ways. That would seem to exemplify competition rather than the stifling of it with which big tech stands accused.

The chief internal contradiction of antitrust is that it decries bigness and excess power but then urges that the biggest and most powerful entity of all the government wielding the life or death power over all the CEOs domains impose a subjective remedy.

And government enjoys that power not just in the present case, but enjoyed it in all those that came before, and will in all those interventions to come after. That is a truly awesome power.

So we go through this theater with the dominant firms of the day every so often (AT&T, IBM IBM , Microsof MSFT t). Google is accused of favoring its own content in search results, Apple of downlisting rival apps, Facebook (and non-invitee Twitter, too) of suppressing conservative speech. Other gripes will be aired.

If the companies are so bad and the claimed consumer harm the only condition that could justify intervention is real, the more honest approach of the grandstanders would simply be to directly forbid consumers from using any of these companies services. Consumers would surely thank Congress for its protection, right?

An antitrust subcommittee doing antitrust stuff is one thing; whats more striking is the degree to which Trump himself has energized and legitimized tech attacks, especially regarding issues like content moderation that will ride along at what is ostensibly an antitrust-centric hearing. (One GOP member wants the aforementioned Barr to investigate Facebooks Zuckerberg for allegedly lying about to Congress about anti-conservative bias in prior hearings.)

On the one hand, and consistent with the Trump administrations well-known and broad deregulatory agenda to energize business, the administration took early steps to cut merger review times overall, and to speed up bank merger approvals via internal streamlining at the Federal Reserve and at the Comptroller of the Currency.

But often, President Trump has threatened antitrust action against tech and telecom firms, a stance conflicting with that deregulatory agenda and an especially dangerous tinkering with the marketplace and peoples portfolios and 401(k)s in todays crisis-rocked world.

We could see it coming, though. As a candidate, Trump proclaimed, AT&T T is buying Time Warner, a deal that we will not approve in my administration because it is too much concentration of power in the hands of too few. We will look at breaking that deal up and other deals like it. The Justice Departments attempt to block the merger ultimately failed.

Similarly, Trump tweeted in 2018 thatComcast CMCSA may be violating antitrust laws. However, after mulling it over (such delays of business transactions themselves impose heavy regulatory costs, something Trump recognized with respect to infrastructure approvals during his July 2020 White House South Lawn deregulation celebration), the Justice Departmentultimately did not investigatethe Comcast-NBCUniversal alliance.

With respect to the big tech players in the hotseat now, the president said in 2018 that Google, Facebook, and Amazon may be in a very antitrust situation, and said he was in charge and looking at it. Even then, politicians and pundits across the political spectrum were calling for thebreakupof these companies. Forcible breakup calls for an even bigger entity to wield the axe, as noted; but one will not likely find that contradiction expressed in grillings.

Some Republicans wanted Twitter at the Judiciary hearing also. Trump fought bitterly earlier this year with that company and has on numerous occasions threatened to regulate social media. In May, he followed though by issuing an executive order targeting their alleged censorship.

The online speech debate and the antitrust debate are highly intertwined, and in addition to cutting big tech down to size, both the right and left want to change underlying rules that protect platforms from liability for user postings. This battle too will doubtlessly emerge at the hearing and continue thereafter.

While the Judiciary committee was conducting the months of investigations culminating in this weeks Super Bowl hearing, the administration was doing similarly. Back in early 2019, the Federal Trade Commission announced a technology task force to assess tech sector antitrust violations and to go beyond current practice in scrutinizing transactions. In the wake of that, and in contrast to the administrations recognition of agency misuse of regulatory guidance documents elsewhere, the FTC is now in the process of drafting guidance on how the antitrust laws apply to the technology sector and defending its own role in policing it.

In other antitrust developments, this year, the FTC requested data from top tech companies on their business acquisitions over the last 10 years. The commission is also pondering an injunction against Facebooks procedures for interoperability across platforms, and is in the early stages of investigating Amazon, having started interviews in 2019 with businesses that sell on the site.

Still other signals point to a potentially expanding Trump administration antitrust agenda by the Department of Justice and FTC beyond big Internet tech firms. The FTC, for example, has been challenging an aquisition transaction in DNA sequencing.

While the DoJ and FTC did issue a Joint Antitrust Statement with respect to collaborative activities among firms during the pandemic, expedited advisory opinions still constitute playing Mother-May-I.

America may have some real troubles right now, but so-called monopoly power among competing firms in media and online sales and services are not threats to the country calling for coercive intervention from this unfortunate alliance of Democrats and Republicans.

The reality is that the infrastructure needed in tomorrows world of smart cities, autonomous vehicles, robotics and artificial intelligence, and space travel and more will require firms of far larger scale than any that we today call big tech and fret over.

These giants of the future will likewise be competitive non-monopolies, unless government grants them monopoly power or license.

Having just celebrated years of regulatory cuts at the White House, now would be a good time for President Trump back off his counterproductive flirtations with one of the worst forms of economic intervention, antitrust regulation. Congress? Thats not so simple.

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Antitrust Showdown In Congress: Big Tech, Meet Big Government - Forbes

Big tech is back in the spotlight.

The chief executives of Amazon, Apple, Facebook and Google testified before Congress on July 29 to defend their market dominance from accusations theyre stifling rivals. Lawmakers and regulators are increasingly talking about antitrust action and possibly breaking the companies up into smaller pieces.

I study the effects of digital technologies on lives and livelihoods across 90 countries. I believe advocates of breaking up big technology companies, as well as opponents, are both falling prey to some serious myths and misconceptions.

Arguments for and against antitrust action often use earlier cases as reference points.

The massive 19th-century monopoly Standard Oil, for example, has been referred to as the Google of its day. There are also people who are recalling the 1990s antitrust case against Microsoft.

Those cases may seem similar to todays situation, but this era is different in one crucial way: the global technology marketplace.

Currently, there are two big tech clusters. One is in the U.S., dominated by Google, Amazon, Facebook and Apple. The other is in China, dominated by Baidu, Alibaba, Tencent, Huawei and TikTok-maker ByteDance.

This global market is subject to very different political and policy pressures than regulators faced when dealing with Standard Oil and Microsoft. For example, the Chinese government has blocked most of the U.S. companies from entering its market. And the U.S. government has done likewise, blacklisting some Chinese outfits over perceived national security threats while discouraging others.

Since the COVID-19 outbreak, the Chinese government has doubled down on championing its own technology companies.

U.S. companies size and data accumulation capabilities give the country economic and political influence around the globe. If the U.S. technology giants are broken up, the result would be a vastly uneven global playing field, pitting fragmented U.S. companies against consolidated state-protected Chinese firms.

There are two main views of antitrust action among legal experts.

One focuses on consumer welfare, which has been the prevailing approach federal lawyers have taken since the 1960s. The other suggests that regulators should look at the underlying structure of the market and potential for powerful players to exploit their positions.

Those two sides seem to agree that price plays a key role. People who argue against breaking up the tech giants point out that Facebook and Google provide services that are free to the consumer, and that Amazons marketplace power drives its products costs down. On the other side, though, are those who say that having low or no prices is evidence that these companies are artificially lowering consumer costs to draw users into company-controlled systems that are hard to leave.

Both sides are missing the fact that the monetary price is less relevant as a measure of what users pay in the technology industry than it is in other types of business. Users pay for digital products with their data, rather than just money.

Regulators shouldnt focus only on the monetary costs to the users. Rather, they should ask whether users are being asked for more data than is strictly necessary, whether information is being collected in intrusive or abusive ways and whether customers are getting good value in exchange for their data.

There arent just two ways for this debate to end, with either a breakup of one or more technology giants or simply leaving things as they are for the market to develop further.

In my view, the best outcome is right in the middle. The errant company is sued to make necessary changes but isnt broken up. The very fact that the government filed a lawsuit leads to progress with other companies. That is exactly what happened in past cases against the Bell System, IBM and Microsoft.

In the 1956 federal consent decree against the Bell System telephone company, for example, which settled a seven-year legal saga, the company wasnt split up. Instead, Bell was required to license all its patents royalty-free to other businesses. This meant that some of the most profound technological innovations in history including the transistor, the solar cell and the laser became widely available, yielding computers, solar power and other technologies that are crucial to the modern world. When the Bell System was eventually broken up in 1982, it did not do nearly as much to spread innovation and competition as the agreement that kept the Bells together a quarter-century earlier.

The antitrust action against IBM lasted 13 years and didnt break up the company. However, as part of its tactics to avoid appearing to be a monopoly, IBM agreed to separate pricing for its hardware and software products, previously sold as an indivisible bundle. This created an opportunity for entrepreneurs Bill Gates and Paul Allen to create a new software-only company called Microsoft. The surge of software innovations that have followed can clearly trace their origins to the IBM settlement.

Two decades later, Microsoft was itself the target of an antitrust action. In the resulting settlement, Microsoft agreed to ensure its products were compatible with competitors software. That made room in the emerging internet marketplace for web browsers, the predecessors of Apples Safari, Mozillas Firefox and Google Chrome.

Even Margrethe Vestager, the European Unions top antitrust official and frequent tech-giant nemesis, has said that antitrust prosecutions are part of how technology grows. But that doesnt mean they all have to achieve their most extreme ends and be broken up.

The current pandemic has highlighted the value of the technological innovations of the big tech companies.

Americans are relying more than ever on the internet and online shopping and delivery, while mobility data has been critical in gauging social distancing behaviors and guiding policy. Digital tools for tracking coronavirus cases, deaths and social distancing behaviors in the smallest counties have circulated widely, and social media and smartphone videos were crucial to the recent protests and calls for social justice.

Altogether, this has led to a softening of public opinion toward big tech and calls for an end to talk of breaking them up.

But the pandemic has also revealed numerous digital fault lines: differences in access by country, race and region; the ability of tech companies to exploit labor; and potential for new kinds of misuse of data.

Far from giving the technology industry a free pass, the pandemic is an opportunity to take a more balanced view. Yes, lets celebrate the Silicon Valleys value, but lets not turn a blind eye to the problems they create or worsen.

During the hearings, youll likely hear politicians accentuate the bad stuff, while the tech CEOs will paint an overly rosy image of themselves. Antitrust is complicated enough without misconceptions clouding their judgments as well.

This is an updated and expanded version of an article originally published on July 17, 2019.

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Lawmakers keen to break up 'big tech' like Amazon and Google need to realize the world has changed a lot since Microsoft and Standard Oil - The...

The coronavirus pandemic might have slammed the broader market in the June quarter but tech isnt expected to have seen much effect on earnings.

For the sector, second-quarter earnings are expected to be down 10.9% on 0.3% lower revenues. But thats far better compared to the overall earnings picture. This is because total earnings for S&P 500 companies are projected to decline 42.9% on 9.6% lower revenues (read more: The Technology Sector Shows its Earnings Power Amid Coronavirus).

Thus, investors are now keeping an eye on four big tech companies in terms of market capitalization that are slated to report their June-quarter earnings on Jul 30, after the closing bell. Apple Inc. AAPL, Amazon.com, Inc. AMZN, Alphabet Inc. GOOGL and Facebook, Inc. FB worth nearly $5 trillion are mostly expected to come up with encouraging earnings results.

The big four are expected to have benefitted from the coronavirus-led shutdown measures as some of their businesses gained immensely from consumers, mostly working and learning from home. At the same time, these companies have been gaining immensely from secular trends like cloud computing and robust telecommunications infrastructure demand for which skyrocketed amid the health crisis.

The big four tech stocks along with Microsoft Corporation MSFT have in fact returned 49% over the past year, whereas the rest of the companies in the S&P 500 cohort have barely moved. Jonathan Golub, chief U.S. equity strategist at Credit Suisse, noted that net margins of the big four and Microsoft taken together are 17.3% on average in the trailing 12 months, which is 70% higher than the rest of the S&P 500 companies. And profits of the five stocks were up 3.1% in the same period against a 9.2% decline for the other S&P 500 companies.

But if financial results for the to-be-reported quarter fall short of expectations, it could cause big market gyrations in after-hour trading and again on Jul 31. After all, their sheer size no doubt will have a big impact on the market and could easily decide whether the bourses will continue to hit new highs. Nevertheless, Golub has calmed investors concerns by saying that these companies have strong cash positions and their higher margins should certainly help them post better results in periods of market stress. Let us, thus, take a look at how they will fare this time around

One of the areas of Apples business that investors expect to have shone in the June quarter is the services segment. It has always been Apples most lucrative segment in terms of gross profit, and investors anticipate lockdown measures and social-distancing norms in the quarter to have fuelled rapid growth in the segment that includes the App Store and Apple Pay.

But Apples fortunes are heavily dependent on iPhone sales. And the companys fiscal third-quarter iPhone sales are believed to have remained muted due to sluggish demand in China. Thus, Apples sales are expected at $51.94 billion, indicating a year-over-year decline of 3.5%. Earnings per share are also likely to come in at $2.03, suggesting a 6.9% decline year over year. Traditionally, Apples third-quarter fiscal results are always the weakest. The Zacks Rank #3 (Hold) company currently has an Earnings ESP of +0.72%. Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can see the complete list of todays Zacks #1 Rank stocks here.

With majority of retail stores remaining closed in the June quarter, online sales picked up lockdown and social-distancing measures. Whats more, financial relief packages by the government and an uptick in employment rates increased disposable income in the quarter, something that boosted online sales.

Separately, Amazons focus on cloud computing might have improved the e-commerce giants financial results. This is because as majority of people remotely worked during the quarter ending June 2020, most companies had to move a bulk portion of their workloads to the cloud. The Zacks Rank #3 company currently has an Earnings ESP of +107.82%.

Story continues

The pandemic helped Facebook increase user engagement with its several social media platforms as people had to stay at home amid stringent lockdown measures imposed to curtail the spread of the deadly virus.

Therefore, Facebook is widely expected to have seen a surge in the usage of its services like Messenger, Instagram and WhatsApp in the second quarter.

Thus, the companys expected revenues for the June quarter is $17.29 billion, indicating a year-over-year increase of 2.4%. Similarly, the company expects earnings per share of $1.44, indicating a 58.2% increase from the same period last year. Whats more, the Zacks Rank #3 company has an Earnings ESP of +4.86%.

The numbers werent encouraging for Alphabet in the first quarter. But three months later, Alphabets shares went up nearly 21%. So, what happened? This is because the stay-at-home economy in the second quarter buoyed Alphabets YouTube and Cloud services that provided home-based access to the outside world.

However, Alphabet had to bear significant costs in providing cloud services. Needless to say, rising litigations across the world due to its dominant position in search also remained a headwind in the June quarter. As a result, the Zacks Rank #3 company currently has an Earnings ESP of -1.12%.

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Click to get this free report Microsoft Corporation (MSFT) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report Facebook, Inc. (FB) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research

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All Eyes on Big Tech Earnings: Here's What to Expect - Yahoo Finance

FCC Commissioner Brendan Carr argues there is a growing and bipartisan consensus to reform Section 230 of the Communications Decency Act, which is in the spotlight after Google allegedly targeted conservative websites ZeroHedge and the Federalist.

Sen. Josh Hawley, R-Mo., on Tuesday introduced a bill that would remove Section 230 protections for Big Tech companies that "display manipulative, behavioral ads or provide data to be used for them."

Section 230 of the 1996 Communications Decency Act ensures internet platforms and social media websites are not held liable for content published by third-party users, which includeadvertisers.

"Big Techs manipulative advertising regime comes with a massive hidden price tag for consumers while providing almost no return to anyone but themselves," Hawley said in a Tuesday statement. "From privacy violations to harming children to suppression of speech, the ramifications are very real."

He added that the manipulative ads seen on social media and other platforms "are not what Congress had in mind when passing Section 230, and now is the time to put a stop to this abuse."

SHOULD SECTION 230 BE REVISED?

One example when a website used Section 230 to defend its role in publishing problematic ads to its platform is a 2015 lawsuit brought against Backpage owner Village Voice Media Holdings.The suit titled J.S. v. Village Voice alleges that Backpage.com posted advertisements that resulted in the sexual abuse of three underaged girls.

"J.S. allegedly was raped multiple times by adult customers who responded to the advertisements. J.S. filed a complaint alleging state law claims for damages against Backpage ... asserting claims for negligence, outrage, sexual exploitation of children, ratification/vicarious liability, unjust enrichment" and more, the case opinion from a Washington state courtreads.

WHAT IF SECTION 230 IS REVOKED?

Backpage tried to dismiss claims in thetrial court on the grounds of Section 230 immunity,but the court denied the move, giving the plaintiffs an opportunity to prove that Backpage helped develop the ads and was therefore subject to liability. The plaintiffs reached a settlement with Backpage.com in October 2017.

A person working on a laptop in North Andover, Mass. (AP Photo/Elise Amendola, File)

Hawley, a staunch critic of Big Tech and social media companies, also accused tech giants,in a press release announcing the proposed legislation,like Facebook and Google of tracking users without their consent for the purpose of profiting off ads

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Section 230 has sparked debate recently along party lines; some Democrats believe the law offers unjust protections to platforms that allow third-party users, including President Trump, to post problematic or harmful content, while some Republicans argue that the law protects social media companies that they allege actively seek to suppress certain political viewpoints or users.

Hawley, for example, introduced another Section 230-related bill in June that would require internet platforms to "submit to an external audit that proves by clear and convincing evidence that their algorithms and content-removal practices are politically neutral," according to a release.

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Sen. Hawley introduces bill to remove Big Tech's Section 230 ad immunity - Fox Business

As the CEOs of Amazon, Apple, Facebook, and Google prepare forhistorictestimony today in front of the House antitrust committee and withlegal chargesexpected soon I have a request: Before we dismiss the possibility of breaking them up, can we please stop comparing the worlds most powerful companies to eggs?

The current Chair of the U.S. Federal Trade Commission stated that after Facebook and Instagram have integrated their systems following their merger, splitting up the two social networks becomes more difficult because the eggs are scrambled. The U.S. Department of Justice antitrust chief under President Obama made a similar observation that it can be very difficult, or impossible, to unscramble the eggs. Over decades, references to this breakfast plate have repeatedly appeared in official speeches, scholarly articles, and judicial rulings.

The metaphor is misguided. Businesses routinely break themselves up. More than3,000 voluntary divestitures occur each year, amounting to abouta third of all mergers and acquisitions. Many are enormous. Not that long ago, Hewlett-Packard split itselfdown the middle to createtwo independent Fortune 100 companies. Last year Fox sold its movie business to Disney for$71 billion.

In other words, while most in the government and academia see breakups as radical and extreme, leading business executives see them as astandard part of corporate governance. I know because I have advised executives at several of the nations largest companies on massive reorganizations. If we must analogize monopolies to eggs, at the very least we should recognize that while nobody unscrambles eggs, we regularly carve up omelets after theyre prepared.

This seemingly harmless metaphor expresses a potentially devastating worldview that helps explain why the government has not broken up any of the largest U.S. companies since 1984. Thats when the Department of Justicesplit the AT&T monopoly into seven pieces, a move widely celebrated especially byconsumers who were paying over eight dollars for a five-minute call from Washington, D.C. to New York.

Today, however, even many leadingleft-leaning intellectualscalling for more aggressive antitrust enforcement opposesplitting up Big Tech due to breakups perceived messiness. They prefer other remedies, like mandating access. Access mandates leave the monopoly in place but require it to help competitors. For instance, rather than forcing Facebook to divest its previous acquisition, Instagram, the social network could be required to allow users to transfer their accounts or post simultaneously to other social networks.

One clear problem with this and other alternative remedies is that theyare unlikely to deter anticompetitive behavior. At trial,companies almost always fight for something other than breakups. Weaker remedies give CEOs incentives to build monopolies. Equally problematic is that these other remedies are extremely difficult and expensive. For example, requiring Amazon to share its platform fairly with competitors would require ongoing monitoring by the government over decades to ensure compliance.

In contrast, breakups are cleaner and cheaper because they provide a one-off event after which the government can move on. By instead pushing antitrust toward government-heavy remedies, the resistance to breakups leaves antitrust with only unattractive options. Unattractive remedies mean enforcers are less likely to take any action.

In other words, the animosity toward breakups has enfeebled the very institution of antitrust in America.

Of course, while breakups of Facebook and Instagram or Google and Waze may make sense, there are limits to how much some of these tech companies can be carved up without harming consumers. And antitrust breakups involve considerable costs in executing the reorganization. As a result, some caution is appropriate in choosing them as the remedy, and access mandates have a place in the antitrust arsenal. It would be a mistake to launch into an indiscriminate breakup rampage of all concentrated industries.

In weighing those costs, however, authorities should recognize that even private divestitures require tremendous organizational expenses. The key in both public and private breakups is not to let the inevitable reorganization costs prevent economic progress. In 1911, John D. Rockefellers lawyers argued that breaking up his oil monopoly would not only be dangerous to the industry, but calamitous to shareholders. Similar arguments were made before theAT&T breakup.

ButRockefellers wealth skyrocketed after the Standard Oil breakup, and AT&T shareholders who held onto their stock earnedhigh returns. Thats because buyers of broken up monopolies pay for the carved-up pieces. And smaller,nimbler companies can better adapt to changing markets. More importantly, nobody can deny thatthose U.S. industries subsequently flourished and led the world.

A better antitrust analogy would be to firefighting.The Forest Serviceregularly manages controlled burns, which prevent catastrophic wildfires and enable ecosystems to thrive. Occasional breakups that have costs in the short-term can help make markets healthier in the long run. The harms to our economy from large monopolies are far more certain than the speculative fears of messy breakups.

Rory Van Loo is a professor at Boston University and the author, most recently, ofIn Defense of Breakups: Administering a Radical Remedy. He previously advised multinational corporate executives on mergers and acquisitions. Follow him on Twitter @RoryVanLoo

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Stop with the egg metaphor in discussing Big Tech break-ups | TheHill - The Hill

This hearing is timely and important, said Maurice Stucke, a former prosecutor in the Justice Departments antitrust division who now teaches law at the University of Tennessee in Knoxville. Its taking place not in isolation, but amid increased scrutiny of the dominant technology platforms from around the world.

Stucke believes the hearing is happening at a critical juncture, when authorities are beginning to grapple with the sweeping market power amassed by a handful of digital platforms, only to realize that current antitrust laws are inadequate and in need of change.

All four companies appearing at Wednesdays hearing are the targets of ongoing antitrust investigations by the Justice Department, Federal Trade Commission or bipartisan coalitions of state attorneys general.

The emerging consensus is that first, antitrust scrutiny is a necessary but not sufficient component to address the multiple risks that these powerful platforms pose; second, the antitrust laws need to be updated; and third, we need to go beyond antitrust to a regulatory framework that addresses the risks posed to consumer protection and privacy, Stucke said.

But there are others who see the antitrust scrutiny of major technology companies as misplaced. Geoffrey Manne, president of the International Center for Law and Economics, which advocates limited antitrust regulation of digital platforms, is skeptical of using antitrust enforcement to rein in or break up the companies, as some have suggested doing.

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Big Tech antitrust hearing could be colossal or mere theater - Roll Call

Rep. David CicillineDavid Nicola CicillineHillicon Valley: House panel grills tech CEOs during much anticipated antitrust hearing | TikTok to make code public as it pushes back against 'misinformation' | House Intel panel expands access to foreign disinformation evidence Five takeaways as panel grills tech CEOs Cicilline grills Zuckerberg on coronavirus misinformation: This is 'about Facebook's business model' MORE (D-R.I.), the chairman of a panel hearing testimony Wednesday from CEOs of four of the nation's largest tech companies, compared Americas biggest tech companies to historic monopolies such as AT&T and Microsoft during his opening statement.

"When the American people confronted monopolists in the past be it the railroads and oil tycoons or AT&T and Microsoft we took action to ensure no private corporation controls our economy or our democracy, he said.

Cicilline, who has led the House Judiciary subcommittee on antitrust's yearlong investigation into tech companies, also described the biggest platforms asemperors of the online economy.

He argued that the power of Amazon, Apple, Facebook and Google haslimited consumer choice and stunted innovation.

And while these dominant firms may still produce some new innovative products, their dominance is killing the small businesses, manufacturing and overall dynamism that are the engines of the American economy, he said, pre-empting a likely defense from the executives.

Cicilline also noted that the coronavirus pandemic has intensified reliance on tech companies, which have seen their market values swell while the rest of the economy has suffered.

He also outlined some of the competition issues that link the companies, which some experts say should have testified separately because of the unique antitrust cases against them.

First, each platform is a bottleneck for a key channel of distribution, he said. "Second, each platform uses its control over digital infrastructure to surveil other companies their growth, business activity and whether they might pose a competitive threat.

Third, he continued, these platforms abuse their control over current technologies to extend their power. Whether its through self-preferencing, predatory pricing, or requiring users to buy additional products, the dominant platforms have wielded their power in destructive, harmful ways in order to expand.

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Top antitrust Democrat opens hearing by comparing big tech firms to past monopolies | TheHill - The Hill

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With four of the five largest companies on the market set to report earnings on Thursday, and technology stocks lagging behind the market on several days over the past two weeks, you have likely read plenty about how Big Tech stocks are driving the market in 2020.

You may have heard comparisons made to the 2000 technology bubble, and dire predictions about how the current run-up in tech stocks will end just as badly for investors.

The combined market capitalization of Alphabet (ticker: GOOGL), Amazon.com (AMZN), Apple (AAPL), Facebook (FB), and Microsoft (MSFT) is 22% of the S&P 500. Thats a lot. In fact, it is more than the 18% share that the five most-valuable companies commanded at the tech bubble peak in March 2000. Back then, Microsoft, Cisco (CSCO), General Electric (GE), Intel (INTC), and Exxon Mobil (XOM) were the top dogs by market cap.

And just like in 2000, the five Big Tech stocks have trounced the market over the past year. They are up 49% on average, while the rest of the S&P 500 is about flat. Thats a big gap.

So it must be a bubble right? No so fast. Credit Suisse chief U.S. equity strategist Jonathan Golub said in a report on Monday that the comparisons to the tech bubbleand predictions of a coming crasharent justified by a comparison of the companies fundamentals. The top five stocks today make up a larger share of S&P 500 earningswith faster relative projected growththan they did in March 2000. And they trade for a cheaper valuation multiple than the top five did back then, too.

While a nearly 50% performance advantage over 12 months is obviously significant, about three-quarters of that outperformance can be explained by superior earnings. Earnings drive stock prices in the long run, after all.

The comparison to the tech bubble peak falls apart more on the fundamentals as well, according to Golub. In March 2000, the top five stocks in the S&P 500 posted earnings and sales growth of 18.0% and 16.8%, respectively, over the preceding 12 months. That compared with 15.4% and 12.1%, respectively, for the other 495 S&P 500 companies. The big five of 2000 were ahead for sure, but not by leaps and bounds.

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Every weekday evening we highlight the consequential market news of the day and explain what's likely to matter tomorrow.

Today, Alphabet, Amazon.com, Apple, Facebook, and Microsoft are sitting on 3.1% earnings growth over the past four reported quarters, while the remainder of the S&P 500 have seen earnings contract by 9.2%. The revenue gap is also wide: 11.2% growth for Big Tech and just 0.8% for the rest.

Andsignificant in times of market stress and volatility like the current environmentthe biggest five companies today have net cash positions on their balance sheets and much wider profit margins than the rest of the S&P 500 and the big five of 2000. That means they can withstand shocks much better, and justifies premium valuations and performance in a down market.

For Golub, that means the big can continue getting bigger.

The conclusion seems quite clear, todays larger names are superior on almost every financial metric including revenue and profit growth, margin structure, volatility, and corporate leverage, Golub wrote on Monday. As such, we wouldnt be surprised to see the performance gap widen even further.

Write to Nicholas Jasinski at nicholas.jasinski@barrons.com

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Big 5 Tech Stocks Have Trounced the Market. So Have Their Fundamentals. - Barron's

Marta L. Tellado, Opinion contributor Published 3:15 a.m. ET July 29, 2020

We would never tolerate age, sex or race discrimination at a grocery store or car lot, but we have allowed it to run rampant in the digital world.

The leaders of Amazon, Apple, Facebook, and Google have some serious explaining to do about bias and discrimination when they appear Wednesday at an antitrust hearingbefore the House Judiciary Committee.

The abuse of trust by the platform-based companies we rely on most has largely flown under the radar as a global pandemic heightens and highlights fissures in our society.But our data and our choices continue to be manipulated in problematic ways often by algorithms that subtly introduce bias into the prices we pay and the information and options made available to us. It is essential that we hold our digital gatekeepers accountable.

The algorithms at issue have a veritable fire hose of our data at their disposal,and they arent the neutral equations we might assume them to be. They are the product of humans, and because of that they have a tendency to perpetuate human biases.

To cite just three examples:

In 2017, Consumer Reports and ProPublica discovered that drivers living in predominantly minority urban neighborhoods were charged higher auto insurance premiums on average than drivers with similar safety records in nonminority neighborhoods with comparable levels of risk.

In 2018, software created by Amazon to help companies identify the most promising job candidates was discovered to be biased against women, according to Reuters. The algorithm had learned to spot "good" rsums on a diet of examples heavily skewed toward males.

Apples new credit card came under investigation in November, after a customer complained that its lending algorithm offered him a line of credit 20 times higher than it offered his wife even though hercredit score was better than his.

We would never tolerate that sort of blatant discrimination if it happened at a neighborhood grocery store or a car lot, but we have quietly allowed it run rampant in the digital marketplace without oversight or accountability.

A smartphone screen with GAFA (Google, Apple, Facebook and Amazon) apps on September 28, 2017, in Hd-Bazouges, France.(Photo: Damien Meyer/AFP via Getty Images)

A follow-up joint investigation recently conducted by Consumer Reports and The Markup revealed how better data can alter the power relationship between company and consumer. The latest example of how algorithms, however unintentionally, negatively affect our lives and our pocketbooks: Allstate, the fourth largest auto insurer in the country, proposed big premium hikes exclusively for customers whoits formulas concluded were less likely than others to shop around.

In targeting what the investigation concluded was a suckers list of drivers deemed by an algorithm to be less likely to switch providers, Allstate used factors that have nothing to do with consumers driving records and their risk for filing a claim.In this case, it was middle-ageconsumers who ended up being discriminated against for no reason other than their shopping tendencies. The result was they wereovercharged quite a bit more for the same coverage.

Tech fail:He was arrested because of a computer error. Now he wants to fix the system.

Facial recognition algorithms used in police departments have been found to misidentify African American and Asian faces up to 100 times as often as Caucasian faces, leading to false arrests and baseless confrontations.

Boston is among the municipalities that have recently taken steps to prevent facial recognition technology from being used by city agencies, including the police. Amazon has imposed a one-year suspension on the sale of its Rekognition software to law enforcement.

Progress has been made on this front in part because of efforts byJoy Buolamwini, a computer scientist and founder of the Algorithmic Justice League, and others to call attention to the very real potential harms of this technology.

In the years ahead, algorithms are poised to influence an ever larger share of what we pay, receive, see, learn and decide between from the cost of goods and services to the headlines and search results that do and do not make it into our personal feeds.As their influence rises, the question becomes more critical: How can we guard against algorithmic biases and hold our tech giants accountable for maintaining fairness in the digital marketplace?

So far, we havent pursued policies to ensure that fairness,or even transparency for that matter. We havent created avenues of recourse for consumers who get the short end of the stick. Wealso know that industry thus far cant be counted on to self-regulate in many cases, they arent even aware that potential discrimination is going on until after journalists or customers happen to unravel it.Too often, the watchdogs arent watching closely enough.

Failure to enforce: Despite COVID-19 pandemic, tech giants still profit from anti-vaccination movement

The good news is that consumers hold tremendous power to set us on a better path. By wielding our collective influence, we can press for policymakers to enact new laws and standards to bring fairness and transparency to the hidden world of algorithms. Companies should not be permitted to use "proxy" data, like users' ZIPcodes or credit scores, in algorithms where it isn't relevant these are data points that frequently lead to discriminatory outputs. And we need vigorous oversight and enforcement of laws that prohibit bias.

As the CEOs of the most powerful tech companies take questions, we must get answers on platform accountability and plans to limit discrimination. Many biases may still be hardwired in our society, but that doesnt mean we have to sit idly by as they replicate themselves in the digital economy. It is within our power and, indeed, it is our responsibility to ensure that the digital world evolves in the direction of greater fairness and greater trust.

Marta L. Tellado is the president and chief executive officer of Consumer Reports. Follow her on Twitter: @MLTellado

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Biased Big Tech algorithms limit our lives and choices. Stop the online discrimination. - USA TODAY

This week on The Vergecast, The Verges Nilay Patel, Dieter Bohn, Makena Kelly, and Casey Newton join a Zoom call to discuss the upcoming big congressional antitrust Zoom call featuring CEOs from Apple, Amazon, Facebook, and Google.

Though the hearing is likely to be postponed (that news came after this episode was recorded), the discussion is still relevant. Signaling a big move to regulate Silicon Valley, the House Judiciary Antitrust Subcommittee will talk to Jeff Bezos, Tim Cook, Mark Zuckerberg, and Sundar Pichai about their potential monopoly powers in the digital marketplace and social media. The Vergecast crew discusses what to expect at the event, the likelihood of legislation as a result of the hearing, and how various investigations factor into the future of Big Tech regulation.

Also, in the middle of the show, games editor Andrew Webster and reporter Megan Farokhmanesh stop by to give us a brief breakdown of what was announced at the Xbox Games Showcase from the new Halo game to the growing significance of Microsofts Xbox Game Pass subscription model.

Theres a whole lot more in between all of that like some of the weeks latest gadget rumors so listen through here or in your preferred podcast player to hear it all.

Stories from this week:

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Vergecast: Big Tech antitrust hearing preview and the Xbox Games Showcase breakdown - The Verge

WASHINGTON (Reuters) - A much-anticipated deep dive into antitrust allegations against four of Americas largest tech companies and recommendations on how to tame their market power could be released by late summer or early fall from the House of Representatives Judiciary Committees antitrust panel, senior committee aides said.

FILE PHOTO: The logos of Amazon, Apple, Facebook and Google are seen in a combination photo from Reuters files. REUTERS

The committee has received 1.3 million documents from the companies so far, they said in a call with reporters on Thursday.

The panel will question the CEOs of Facebook Inc, Amazon.com Inc, Google parent Alphabet Inc and Apple Inc as part of its investigation into whether the companies business practices hurt smaller rivals. The hearing was supposed to be held on July 27 but has been delayed.

On Thursday, Reuters reported that the chief executives will defend themselves by saying their companies face intense competition and by pushing back against claims they are dominant.

All four companies will testify voluntarily and no subpoenas have been issued, the committee aides said.

In May, Representative David Cicilline, chair of the Judiciary Committees antitrust panel, had demanded Jeff Bezos testify and threatened Amazon with a subpoena, after reports surfaced Amazon employees tapped data from small sellers in the companys marketplace to make decisions about the online retailer launching its own competing products, despite telling lawmakers it did not engage in such practices.

Addressing questions about the format of the high-profile hearing, the aides said, there will be a single panel with all four CEOs attending virtually. Members of the subcommittee led by Cicilline, however, will attend either in person or online.

The number of rounds of questioning is up to the discretion of the chair, said one committee aide.

Asked if the hearing would uncover new information, a senior aide said that despite the risk of companies not always answering questions fully it was important to hear from decision makers.

This is not like a normal oversight hearing, where we hear from the CEOs and move on.

Reporting by Nandita Bose in Washington, Editing by Chris Sanders and David Gregorio

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Big tech antitrust probe report from Congress likely by early fall - Reuters