When the CEOs of Apple, Amazon, Facebook and Google take questions Wednesday from the U.S. House Judiciary Antitrust Subcommittee, they likely will face intense scrutiny of their companies’ business practices. But just how tough will the questioning get?
Scott Galloway, a NYU Stern School of Business marketing professor who wrote the best-selling book The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google, thinks he knows what Congress will ask the executives. In a new article, Galloway laid out the questions Apple CEO Tim Cook and the others should expect.
Antitrust questions Galloway has for Apple
Q: Mr. Cook, monopoly rent is when a monopoly producer lacks competition and thus can sell its goods and services at a price far above what the otherwise competitive market price would be, at the expense of consumers. Our information age is often called “the app economy,” denoting how important apps have become to commerce and consumption. Your firm and Google dominate the app ecosystem, with 62% and 38% shares, respectively. This chart shows the rents you are able to extract from every streaming video app. Every media company that wants to reach a consumer online must pay you a toll or rent. Do you think any of these firms believe that paying you this rent is a choice?
Q: Apple TV+ is offering consumers $1 billion in original content for every .80c a month the consumer spends on your Apple TV+ streaming video service. Isn’t it your opportunity to differentiate your $1,300 phones and fund Apple TV+ from the revenues of an unrelated product that allows you to offer a media product at well below cost? In sum, isn’t Apple guilty of “dumping,” that is, buying market share with unfeasibly low prices?
Q: Spotify is consistently rated as a superior music service to your Apple Music, yet Apple Music is growing faster than Spotify in the US. Isn’t this a function of you owning the rails, and being able to levy a 30% tax on a competitor while illegally reducing their discoverability in the App Store?
General questions for tech giant CEOs
Galloway makes clear that he thinks the testimony likely won’t prove super-effective at reigning in the powerful companies. “Big tech has won before the hearing starts,” he writes. He also thinks the execs will face very different lines of questioning. Facebook’s Mark Zuckerberg and Amazon’s Jeff Bezos likely will be the main focus.
“When the show starts, Zuck will be the target of the most ire, as he’s an oligarch minus the charm,” Galloway writes. “Bezos, on the other hand, will receive the least ire, as his command of soft power is second only to China…. Cook and Pichai will likely just try to stay out of the line of fire and fawning for Zuck and Bezos, respectively.”
To that end, Galloway also includes some generalized antitrust questions for all the CEOs. These focus on the extremely large size of the companies in question and their apparent “too big to fail” status. For instance, he asks why another company should dare risk moving into areas like streaming music at a time when these tech giants are ascendant.
He also wants to know if the company CEOs think they contribute to inequality. And whether, if they were public servants, they would be concerned about the focus of power on a few very large companies.
Predicting the outcome of the antitrust hearing
Galloway is always an interesting writer on technology. His book The Four is full of fascinating insights about Apple, Amazon, Facebook and Google.
The kinds of questions Galloway suggests should be asked of Apple (and other tech giants) make a lot of sense. The harder job is predicting what will happen following the antitrust testimony. This is just the first step of what’s guaranteed to be a long road.
Nor is this antitrust hearing the only one that Apple faces around the world. Apple is also currently being scrutinized regarding the App Store, Apple Pay, e-books and possible price-fixing due to an alleged agreement with Amazon. Apple has disputed all of these complaints.
Source: No Mercy/No Malice (Galloway’s blog)