tv House Judiciary Subcommittee Hearing on Entrepreneurship and Online... CSPAN July 22, 2019 8:00pm-9:52pm EDT
the chairs authorized to come to claire recess without any time we welcome everyone to the second of our series of investigating competition and digital markets, this one on innovation and entrepreneurship. i recognize myself for an opening statement. 30 years ago-- was released into the public domain to create a global communications network within a few years services were built onto the software to give people tools to communicate, share through a decentralized platform designed
to be open and nondiscriminatory. the pioneer testified in 2006 on behalf of google that the overarching principle of the open internet was that no central gatekeeper should exert control over the internet. this open and competitive environment means that entrepreneurs for new ideas need not worry about getting permission for inventions to reach end-users. over following decades the growth of our competitive internet revolutionized our lives, our work, businesses, and entire world. millions of good paying jobs were created and greater access to information promised renewal of our democracy and social projects progress. for companies will testify at today's hearing, google amazon facebook and apple. each have contributed immense breakthroughs and economic value to our country. they started on shoestring budgets, in dorm rooms and garages and a testament to our
core values as a country. in an effort to promote or continue this economy congress and antitrust enforcers allowed them to regulate themselves with little oversight. as a result the internet has become an increasingly concentrated, less open, and hostile to innovation entrepreneurship. as was recently noted, there are only one or two significant layers in important digital spaces including internet search, social media networks, mobile and desktop operating systems and electronic sales. they can include nearly all the search market and 90% of searches are conducted via google platforms. google controls nearly half of online commerce. despite statements that it only captures a small percent of retail, the reality is that half of american families have a prime account from 35% three years ago. amazon's closest competitor, ebay, controls less than 6% for
online commerce. facebook controls 58% of the us social media market and has approximately 2.7 billion monthly active users across platforms. notwithstanding to talk, facebook captures 80% of global social media revenue. as a facebook cofounder has observed, no major company has been founded in the united states since the fall of 2011. finally, apple is under increasing scrutiny for abusing its role as both a player and referee for prices that may be higher than the market would allow an policies that may favor apple owned products and services. as was recent recently noted, apple pockets have 30% commission on every app sale and in addition to developer membership fees and a 30% commission on an app purchases. the former executive who
oversaw approvals for seven years has also described them as having a complete and unprecedented power over customer devices. using this power as a weapon. although there's a series of laudable commitments to protect privacy as the board recently noted, it's the management of a dangerously reminiscent anticompetitive behavior that triggered united states versus microsoft, a landmark antitrust case. several reports by leading economists and experts suggest that the dominance of these firms is unlikely to be challenged by new arrivals. these reports have found the combination of high network effects, high switching costs, and reinforcing advantages of data can result in a winner take all market that shields dominant firms from competitive threats. at the same time, there is
growing concern that it is a kill zone around google amazon facebook and apple that prevents new startups from entering the market with innovative products and services to challenge incumbents. financing has dropped significantly from startup financings in 2015 to just above 6000 in 2018. while the number of capital deals beneath $1 million have also declined significantly. even when escaping the kill zone they remain reliant on platforms and other ways. according to a recent report 17 out of 22 initial public offerings by significant technology companies cited online platforms as competitors or risks to their business. this report noted the tech giants have the power to change their services at any time generating have a downstream.
the connection, there's concerns that the gatekeeper role of online platforms is now imperiling small businesses. stacy mitchell of the institute for local-- will testify and i quote powerful online gatekeepers not only control market access but directly compete with businesses that depend on them undermining entrepreneurship and economic opportunity. this trend is not compatible with open internet or defining features that have allowed entrepreneurship to flourish. as was testified today the united states is at risk of losing our best innovation and being a country of giant lumbering concerns where incremental improvement is the norm and were innovators dream of being bought and not of building something of their own. most importantly for purposes of today's hearing, the trend is not the inevitable consequence of technological
progress. it's the result of policy choices we are making as a country. the largest technology firms have required over 436 companies, many of which were actual or potential competitors. according to the new york time counterpart, the companies that google has required, 171 include potential competitors, and 46 involved actual or potential competitors. not a single one was challenged by antitrust enforcers. only a handful were closely scrutinized. in the two decades since filing landmark monopolization case against microsoft there has not been a single complaint by either agency alleging it's a competitive progress. these decisions have created a defect to immunity for online platforms. i hope today's hearings provide an opportunity for serious and sober discussion about these trends and possible paths
forward. in lest we address these trends , we can expect the next 20 years to be less innovated than the last. it's not just about the companies before us today but ensuring we have conditions for the next google amazon facebook and apple to grow and prosper. i think both panels of expert witnesses for appearing before us and recognize the gentleman from wisconsin for his opening statement. >> innovation and entrepreneurship are hallmarks of the american economy. this has been true in the past and remains true in the digital age. today's hearing will focus on the impacts that they have on innovations and entrepreneurship. this is a critical topic and i want to stress that we must take a fair and balanced approach to it.
some will advocate that the biggest platforms should just be broken up because they supposedly dominate too much of the market. it seems misguided for several reasons. first, just because a business is big doesn't mean that it is bad. focusing on the conduct of companies and whether that conduct is anti-competitive, they do not exist to punish big mrs. deshler businesses because they are big. on the contrary, they exist to foster it. the most innovative successful and competitive companies often become big not through competitive conduct or violations of antitrust laws but simply by providing a better service or product than others in the market place. second, witnessed statements offered can present small
companies in many sections with a better way to reach the most customers. breaking big businesses because they are large and a pretty large businesses. breaking up big platforms will not necessarily solve a problem associated with those platforms. for example, privacy issues are prominent in today's discussions of what is going on online but raking up platforms into smaller ones may compound the problems of protecting privacy. i reasons not to dismiss the ideas of issues in the online ecosystem-- but i want to offer counterpoint to some of the more radical positions being articulated. we should take a serious look at allegations of wrongdoing. perhaps we will hear some today but should not rush to amend
antitrust laws or breakup companies based upon false notions that being big is inherently bad. but everything a big company does should presume to be anti- competitive. i yield back the balance of my time >> i want to acknowledge that the chairman of the committee and ranking member mr. collins are on the floor right now and when they come to the committee they will be recognized if it's okay, for opening statements. at this time i would like to introduce our panel. we have two panels of witnesses and it's my pleasure to introduce the first. our first witnesses adam cohen director of economic policy at juneau google. before that he was an economic correspondent for dow jones and the wall street journal reporting out of london and brussels. he received his a.b. from harvard and ms from london school of economics.
our second witness, matt peralta -- perault is planning-- and also overseeing public policy for whatsapp and artifice research. he was chairman of the congressional oversight panel and received his best bachelors degree from brown university, mtp from duke university, and jd from harvard law school. or third witness is nate sutton who receives competition regulation and regulatory matters. he was with the department of justice antitrust division for nine years working on civil antitrust matters and worked at the-- from 2001-2007. he received his bs in nuclear engineering from carolina state university and jd from
university of chicago. the last witness is kyle andeer and prior to joining apple mr. andeer spent four years with the federal trade commission competition managing a staff of 25 attorneys and support staff and served as a principal competition attorney for commissioner j thomas. mr. andeer received his ba from the university of pennsylvania and jd from university of california berkeley school of law. we thank them for participating in today's hearing. if you would please rise i will begin by swearing you win. please where you raise your right hand. do you swear the verb but the testimony you are about to give is true and correct to the best of your knowledge information and police so help you god? >> let the record show the witnesses answered in the affirmative. you may be seated. please note that each of your
written statements will be entered into the record in their entirety. i ask you summarize your testimony in five minutes and to help you stay within that there is a timing light on your table. when it switches from green to yellow you have one in it and when it turns red signals your five minutes have expired. mr. cohen we will begin with you. >> chairman and ranking member indistinguishable of the committee, thank you for the opportunity to appear. and the director for economic policy in google. i lead a public policy work on antitrust issues. google was founded in 1998 google was founded in 19 98 x 2 students who had a big idea. organize the information of the world and make it universally accessible and useful. in the earliest form google search results were simply 10 links on a webpage. 20 years later we provide users with much richer results including direct answers to questions, and points on a map
when they search for an address and links to flights products and a range of other information. as a responsible and-- company, we are proud of our record of continued innovation and face constant pressure to improve products and services, both sure signs of a competitive marketplace. in my testimony i will focus on the value of google and the wider technology sector are creating for the us economy. investments in new technologies and competitive dynamics of the industry. for the us economy google's products and services create significant value generating $335 billion in economic hippity . this has benefited a wide range of consumers and businesses across the country. firms that operated in a local or regional market reach international customers using
our tools. we've also made substantial direct investments in the us economy. last year we hired more than 10,000 people and invested $9 billion in data centers across the country. we announced plans to invest in $13 billion this year with major expansions in 14 states. these investments will give us the capacity to hire tens of thousands of additional employees and create 10,000 new construction jobs. overall the technology sector supports roughly 10 million american jobs, the equivalent of 7.6% of the total us workforce. it is a vital source of new jobs. for consumers technology companies continue to provide innovation and better prices. prices in the tech center fell in 2018 compared to an increase in the rest of the private sector. when it comes to investing in innovation technology companies
are america's largest spenders on research and development as an example last year google spent $21.4 billion on research development and related areas, three times more than in 2013. continuing investments spur innovation that improve products and services and support and accelerate innovation among other firms. we share many of the results of technologies typically through open source software which helps broad communities of developers to use advances in our own applications and services. in terms of competition, the industry is highly dynamic and drives innovation to give better services and prices. when consumers search for information they can choose him as a amazon yelp travelocity and many country companies like these that support strong user growth. if you don't want to use google there are other information
providers available. we always fate also face competition around the world. the success enables us to make research and investment developments necessary to compete in a global environment with other global players. firms are competing as well. we can continue to see record- setting venture activity with companies raising more than $130 billion in financing, the highest amount in over a decade. the technology sector has had one of the highest rates of formation and job creation over the past three decades. in fact, in the first quarter of 2019 147 american companies reached so-called unicorn status with valuations exceeding $1 billion. these companies had a combined value of $582 billion in the first quarter of the year. the highest aggregate value ever recorded, is a rate of new business success unrivaled elsewhere in the economy creating new companies that
compete with established companies across many areas. to conclude, even as innovation expands, regulatory frameworks help ensure that societies and economies continue to benefit. we look forward to continue work with the committee as it examines issues. thank you for your time and i look forward to your questions. >> mr. perault is recognized for five minutes. >> chairman and distinguish members of the committee thank you for the opportunity to appear before you today. my name is matthew perault and i'm a director of public policy at facebook. i've been at the company for eight years and focus on competition and economic policy. it's an honor to be here to discuss important issues. facebook is an american success story. we were founded in a college dorm room 15 years ago and since that time we have helped
transform the way that people around the world communicate connect and share. we believe deeply in the values of competition and innovation, values fundamental to the success of the american economy and it is precisely because of these shared values that facebook has grown from a dorm room idea to a vibrant american company. new applications enabling people to connect discover communicate and share our merging all the time because barriers to entry for digital platforms are low. watching launching mobile applications or a new service often requires minimal staff capital and infrastructure and the rise of cloud computing and stores enable platforms to reach a global audience. consumers move easily between different services. if they do not enjoy a product or experience they will leave it to explore other options.
>> we face intense competition for all products and services that we provide. to name a few, twitter, snapchat, imessage, skype, telegram, google, youtube, and amazon are for photo and video sharing, messaging, advertising, and other services that compete with facebook. in fact more than 92% of advertising happens off of facebook and less than one quarter of online spend goes to facebook. our competition is not just here. we compete with companies around the world. tick-tock, a chinese application launched less than three years ago has been downloaded more than 1 billion times and was the most downloaded application in the world in 2018. it was transformative and groundbreaking when it launched and we worked hard to remain so
today which is why we push ourselves to revolve and experiment to develop the tech elegies that change how people connect and communicate in the future. i would like to touch on the ways that facebook is investing in innovation. first, through developing products and features, when facebook was created the site consisted of text details about each user. now users can message, read news, broadcast live video, connect with businesses, receive payments and raise money for important causes to name a few options. goes beyond software to hardware products like portal and oculus we are proud of how much we've innovated and how much products and services have improved. second, investments in research and development have played an important role fueling innovation. we devoted nearly 20% of revenue last year to investments
in innovation and have made significant advancements in areas like artificial intelligence, virtual-reality and energy-efficient data centers. third, acquisitions have been a powerful force for innovation. companies like instagram and whatsapp have had increased opportunities to innovate . we are better together. fourth, facebook has democratized advertising helping millions of small and medium-size businesses. the advertising platform can accommodate every budget and we help them reach target audience and maximize impact. >> services have enabled small and medium-size businesses to create jobs and more effectively compete with larger companies leading to more choice and better products. we've heard countless examples of small entrepreneurs in rhode island wisconsin and across america who could not afford print or tv ads but have been
able to succeed by using services to reach a local national or even global audience. facebook is constantly looking to find ways to help connect communicate and share and like many successful companies, we've grown from learning from mistakes and constantly striving to improve. we recognize we are a work in progress and are committed to addressing challenges we face as a company. we are incredibly proud of what we've accomplished. i look forward to your questions. i recognized mr. sutton for five minutes. >> thank you. in my brief remarks i will provide background on amazon's approach to business and the industries on which we operate. i will discuss the relationship with third-party third-party sellers and explain the positive effects that we have on competition and the economy. amazon's mission is to be the most customer centric company.
our corporate philosophy is firmly rooted on working backwards from what customers want, and we seek to continually provide customers the best experience. this is essential to understanding amazon as we apply it to all areas of the business. amazon operates a diverse range of businesses from retail and entertainment to consumer electronics and technology services. in each of these we face intense competition from well- established competitors. for example, retail which remains by far our largest business, is as old as human experience. continues to be characterized by intense competition at every level. new technologies such as the internet have only made competitive reducing barriers to entry and expanding out put. studies show that shopping in stores both off-line and online,
and as target and best buy recently announced, one of the best growing consumer practices is a mix of off-line and online whereby customers order products online with a pick up in a physical story. there are dozens of online marketplaces in the us and around the world. the result in retail is an ever broadening ray of competitors including many large and well- known companies like walmart ebay target safeway, kroger, and wayfair not to mention other global retailers. it depends on partnership with third-party sellers that sell products right alongside our own products. we've invested heavily and are going twice as fast and make up 60% of total unit sales in our stores. these businesses are primarily small and medium-sized firms, and last year almost 200,000 of them sold more than $100,000.
was on supports these because we have a strong incentive to do so. the broad selection and price competition sellers bring to our stores are attractive to customers. for example, our partners provide the vast majority of new products in our stores. we know they have other ways to which which customers so we support them and make efforts to improve their experience. we have dedicated teams assigned to supporting sellers, launching tools to increase sales, and spend resources to root out bad actors and prevent fraud and abuse that harms sellers and customers. if we did not make these efforts they would sell fewer products and more to our competitors. other retails have benefited the economy more generally. we've invested tens of billions of dollars in infrastructure
and technical services employing more than 275,000 people in the united states and offering a 15,000-- $15 minimum wage and valuable benefits. we invest in employees in workforce training programs. days ago we announced an initiative to invest $700 million in providing $100,000 of employees to help them move into more advanced jobs or new careers. from our vantage point in a highly competitive field we offered two views. first, the technology used to provide a service is not the primary fact in a competitive analysis. consumers benefit from all retail competition regardless of the business model involved. in today's retail market the notion that two products that are exactly the same do not compete with each other simply because one was ordered online and one was brought in a brick- and-mortar store makes no sense-
- makes little sense. second, to avoid unintentionally tilting the competitive playing field new rules should encompass all retailers regardless of the supply models they use. think you and i look forward to answering questions. the chair recognizes mr. andeer. >> members of the committee, thanks for inviting me to speak with you. i am apple's chief compliance officer and spend time focusing on legal issue issues in business ethics. we are a 40 year history of innovation in a competitive market. our mission is to make the best products and services in the world in each of the markets where we compete. for us, it has never been about making the most. always about making the best. we design technology to be easy to use and safe and secure for all customers. we see our customers privacy is a fundamental human right and
we embed that value and everything we create. we go above and beyond to incorporate accessibility features making sure everyone can get the most from their devices. our products are made with our responsibility to the environment in. we play a role in promoting-- skills all around the world. in discussing online platforms we consider five distinct categories. ios, mac os, watch os and soon to be released ipad ios. they run and compete on these platforms. we are proud of each of these and feel that they are the best at each of the categories. we create great products, not commodity products. as a result we don't have a share. petition is fierce and there is an ever-growing number of choices when it comes to
products and services. we compete against some of the largest companies in the world foreign and domestic. we work hard to retain and grow customer trust and compete for their business. each platform depends on a thriving ecosystem from the app store to peripherals and accessories to partners such as service providers and carmakers. our expertise enables services like moving seamlessly between apple devices, finding the same messages in safari book works no matter which device you use, and taking advantage of features like car plane that integrates your iphone into your daily commute. the benefits of this ecosystem are clear to customers and mean world-class security and unparalleled ease-of-use. we are proud to offer services where millions of services and entrepreneurs can share ideas like apple music hosting more than 50 million songs from articles around the world, podcasts, where hundreds of thousands of topics are shared, and the app store which is
providing new opportunities from the individual opportunities since it was launched in 2008 it has been vibrant competitive and ever- growing and has transformed the experience and reduced the cost of innovation so they can distribute and build worldwide on home. we are proud that 1.5 million us jobs across all 50 states have been generated. we designed this to be a safe and trusted customers to discover and download applications and a great opportunity for developers to start as mrs. every developer abides by the same guidelines from the student in the living room to the largest companies. we want every creator to have an equal opportunity to succeed. we work hard every day to work with developers who want to join our ecosystem.
we are proud that a good number of our applications have developed successful businesses with support from our team and developer tools we offer. it provides enormous opportunity for developers to reach millions of users and a vast majority of applications, 84%, sure none of the revenue that they make from our store to with apple. only a small number are made by apple and in every category where our software competes we face multiple competitors. apple believes users expect their devices should provide a great experience out-of-the-box subproducts include certain functionality like email phone and a music layer as a baseline. users have various needs and are free to discover and use any other alternatives they may prefer. if a customer wants to use icloud, or doesn't, they can use box drop box or any other number of options.
at the end of the day the only objective is to provide customers the best ecosystem in the world. it means the phone that they love, the choice of accessories that enhance the experience, and millions of applications and services. it means a tremendous market opportunity for everyone. entrepreneurs, artists, accessory makers, and developer makers. we are committed to bringing this forward committed to the core that a single idea can unlock opportunities once unimaginable. that's what defines apple. we welcome-- apple welcomes the efforts to promote entrepreneurship and look forward to working with you. >> we will proceed under the five minute rule with questions and begin by recognizing miss scanlon. we are doing it out of order because due to the time change some committee members have other commitments. >> thank you for this and thank you for hosting this event.
we've heard a lot about the various ways in which platforms have developed a whole new set of the economy but we wanted to dig into a little bit of the anticompetitive aspects. i wanted to focus on the issue of digital piracy and what that does to the-- community. 555 organizations ranging from mgm to one of the local philadelphia theater groups, and represents a quarter million people. they have raised concerns about the impact on the competitive process of copyright theft on facebook and google platforms. specifically they noted unfair methods of competition can be facilitated or sometimes pack just on these massive internet platforms resulting in less creative content than otherwise would exist.
fewer new voices and harm to legitimate non-pirated forces of distribution. can you address these concerns of people in the creative rights community particularly in how youtube doesn't really have an economic incentive to combat widespread copyright and may have distorted the market for online streaming of movies and television? >> thank you for the question. youtube has a strong set of tools to prevent copyright infringing materials. we developed a technology called content id that can remove copyrighted material before it's seen by anyone using the platform. we take this seriously and we provide a means for consumers to find and access quality licensed legitimate content. >> is at the process you use when in fact pirated contact
content is loaded? >> we use a combination of automated tools. we can recognize copyrighted materials that creators upload and instantaneously discovered it and keep it from being seen in our platforms. >> an additional concern that has been raised around this issue is if i were to google and original show produced by the youtube premium, maybe something like weird city, if i try to find pirated versions of the youtube shows nothing comes up. but if i search for a pirated version of a game of thrones or russian doll, torrent inversions, a lot of different pirated versions pop up. there is a disc-- discrepancy in how
these are working because the youtube google shows, those pirated versions are taken down but some other companies versions are not. can you discuss how that may be occurring? >> i have not seen any evidence of a discrepancy. we take great steps to protect copyrighted material and to provide customers legitimate means of reaching legitimate licensed content. >> if you come up with any data regarding discrepancies between various platforms can you provide that to the committee please? >> i would be happy to. >> thank you. i will yield back. >> i recognize the ranking member of the subcommittee for five minutes. >> first question, there was a time when facebook was a pledging operation and people thought that others like
myspace for the future of social media. what competitive features of the marketplace made it possible for facebook to overtake and vanquish myspace and others like it? >> thank you very much for the question. we've rolled out many innovations over the course of the history of our product. we had a real name policy at the time we were founded. that was important assuring that there were authentic interactions on the platform and provided users with a better experience. we have since rolled out additional features like the news feed and the like button and continue to innovate today. >> myspace didn't have any of those features, is that why people went to facebook and abandoned myspace? >> i believe they did not have all of those features. we competed aggressively with myspace and we believe that aggressive competition is in
part responsible for our success today. >> i think what you are looking at is anticompetitive action. did myspace complain about what you were doing or they just watched ships slowly sink under the waves? >> i am not aware of anticompetitive complaints from myspace. >> mr. cohen. your witness statement says that google help to reduce prices and expand choice for consumers in the us and around the world that sounds nice but what facts figures and services can you point to us to prove that it's true? >> i saw a recent study from the progressive policy institute that showed that for every three dollars of advertising spent online, a business would
have to spend an equivalent of five dollars off line to get equal prominence. the cost savings makes efficiency goes to reinvestment , lower prices to consumers, and is a tremendous savings for the us economy. >> okay. -- comes out of hard times and there are a lot of reasons for that. google might be one of them but i don't think it's the exclusive reason, falling on hard times. if i buy a copy of the washington post and there's an advertisement there and the washington post only circulates extensively in the metropolitan area, the same company puts an advertisement on google, what do you think the exposure is
between a print ad and an online advertisement in terms of numbers? >> it can vary. there's a lot of control given to the advertiser and how they interact and advertise with online platforms. one of the key things is in newspaper advertising you would spend a certain amount of money . but i was last a journalist it was expensive to place advertisements in print media. you didn't know what your and return was and it was hard to measure. in digital formats it's easy to know when it's clicked on and often you only pay when an advertisement is clicked on. you can then measure the effectiveness of the campaign. you can have them reach as broad of an audience as you'd like or use them narrowly focusing on independent markets if you prefer. >> i looked toward my own--.
i don't think we've ever put advertisements daily or weekly for over 25 years because the surveys that we did showed that the people who read political advertisements in papers were either seeing with their favorite candidate was doing or seeing what the opposition was doing. with an online ad, we've used those for the last couple of cycles. do you think there is at least the purpose of advertising to educate someone toward a vote or buying a product or something like that? are there any marketing surveys to show that's effective? >> i'm not an expert in political advertising. i think you've identified an issue that affects the newspaper industry.
there are different ways of reaching customers in different settings and the business model has come under pressure even before the internet from competing services like cable news and with the advent of the internet, newspapers used to make a lot from classified advertising and a lot of that has shifted to craigslist, auto trader, and there are a range of competitive pressures. >> my time is expired. >> thank you mr. chairman and thank you all for being here. my district has the great honor of long being a place for innovation and where many small companies became large giants including amazon. it is also a place where in the past, innovation has had to be protect did by the federal government specifically i call your attention to in 2001, the department of justice suing microsoft accusing the company
of violating the antitrust act by using a monopoly to adversely affect the web browser market. the case settled after microsoft agreed to make it easier for competitors to integrate their software with the windows operating system. there are many scholars believe this case is what opened up tremendous space for innovation that otherwise would not have existed and allowed a new way of tech companies to spring up. some companies actually flourished after that court ruling. mr. perault let me start with you. does facebook devote any resources to identifying promising tech startups or innovative non-facebook platforms and applications? >> not to my knowledge, no congresswoman. >> not at all? >> we devote resources to
understanding the competitive landscape in which we operate but i believe the answer to your question is no, not to my knowledge. >> you don't acquire promising startups or integrative that forms or applications? >> we certainly look to innovate with products and the focus of our acquisition strategy is focused on acquiring companies that enable us to offer better service to people who use our products. we look to acquire services that will enable us to innovate more effectively. >> they may actually be competing with you and that may be something that you think would integrate well into your existing platform? >> thank you congresswoman. the focus of our acquisition strategy is on companies that will enable us to innovate more effectively and bring value to the people who use our services. for instance, at the time that we acquired oculus a virtual- reality company it did not have a product in the market. as a result of our investment
it has a virtual reality product in the market. >> what about when you acquired positivity focused polling startup tbh and then the company shut down the application after eight months? it also bought the application moves and later shut it down. how do you consider those acquisitions and terminations if you will, of smaller companies? >> it is certainly the case that some acquisitions don't work. when they don't work we may discontinue a product because of a legitimate business judgment. >> i would draw your attention to sort of, i would look at the pharmaceutical industry and according to a 2018 study some seem to engage in what they called killer acquisitions where they would buy smaller firms or shutdown potentially competing projects. researchers found that when that happened it was more likely that the acquired
companies will be discontinued. i'm not saying it's directly paralleled. your associate general counsel at amazon, do they devote any resources to identifying the most popular brands and products sold using the interface? for example, do you track the most popular brands sold in houseware divisions or size 14 pants that are sold most often, or any other product like that? >> amazon is proud to be a company of builders and have built it not through acquisitions. with respect to data such as you've identified, -- seller data to compete with them. last year was our smallest year of acquisition and we've only had one multibillion-dollar acquisition which is whole foods. >> that was slightly different which is when people sell products on your site, do you track which products are most
successful? and do you sometimes create a product to complete with that? essentially you have a massive trove of data, people buying products you create products that directly compete with those most popular brands that are out there. >> the data on popularity of products is actually public data for each of our products. you see how popular it is. we do not use any of the specific data in creating our own private brand products. it is an area where we'd lot behind any of our retail competitors who have 20 percent to 80 percent of their private brands. we do offer private brands on occasion because we think it offers high-value.
customers demand that. we want to provide the opportunity for customers. >> i just wanted to quickly say that my office recently met with a small business in my district. in the storefront, they did have concerns. on the law offices reached out directly. we are right in the same place. we are looking forward to that conversation with you to see how they are helping some small businesses. >> i now recognize the gentleman from north dakota.>> i am glad that policy has come up already. piracy has come up. we talked about newspaper advertising. i think that is where we get into this. everybody sitting at the table has a role in some of those issues. will have different interest in that. i know everybody at this table are antitrust experts. one of the problems, we have to
recognize this. is very company specific. we may want to talk to one of them about piracy, we may want to talk to another one of you about privacy. one thing that is consistent, everybody sitting in the companies you work for are capable of dealing with regulations. we have witnessed this before as we continue to move forward. whether or not it is healthcare legislation or regulation. what ever we work as a body to attempt to capture big bad actors. often times what we do, we make it more difficult for startups. whether or not that was our intent. >> with the german poet and microphone closer please.>> it is just a caution. we should not have this conversation because i'm glad we have. i just want to say that at the beginning.
whatever concerns anybody may have the particular company are not necessarily the same for the other one. as the prophet companies with the judiciary duty to shareholders, i understand it is particularly in this field to stay on the cutting edge of innovation. 20 years ago, ge was the most valuable company in the world. apple was almost bankrupt. you made it through there. even now, a handful of unicorn companies so that we miss valuable innovations in the technological field. >> this simply demonstrates how hard it is to predict what consumers will want in the future. i guess we will just go down. i do not think this applies to apple so much. what extent do companies use capital funding to invest in startups. >> thank you.
amazon is a company of bonus. we primarily build from within. i am not sure the exact details. i will be happy to follow up with more detail. >> thank you very much congressman. we do not engage in that practice. will be happy to follow up with specifics.>> we do have venture capital on. i am not familiar with the scope of their investments. what i can tell you, we apply some small businesses to accelerate innovation. we actually are grades incubator for technology talents as well.'s sub i mentioned the number of acquisitions google has made. they have started companies like twitter and pinterest. >> i just go back for second.
the written testimony highlights the new product is because it does. how many of those have developed as opposed to buying? >> that is a really broad question. >> we have developed many in house. we developed newsfeed which is now used broadly in many of our competitors. we developed photo tagging and the like button. we have also invested in companies we have acquired like instagram and oculus. >> what features in the current social media market : a possible for him to competitor it on facebook?>> i think there are many different interest to that question. to talk is focused on a public servant. that may be one feature that companies like ours be
interested in. my last question is more of a personal question. can you explain to me why a 9- year-old would rather watch somebody play format. i do not understand. >> i am completely mystified. >> with that i yelled back. are focused on how competition online is affecting real people. i think we see a tremendous that is fundamentally shaping markets. resulting in less choice for working people. we want to make sure that our competition is working the entire week. more than half of online commerce, they are relying on amazon as a commerce buffer. as we know, amazon also offered
its own private profit. does it create a conflict of interest? >> take you for your question. we disagree. we partner very close with our third-party sellers. we rely on them to provide a broad selection of process to our customers. we have been very proud of our investments to grow. >> that is a different question. >> you are selling your own products on a platform that you control. they are competing with products in the marketplace from other sellers. >> thank you for the question. that has been common for many decades. most retailers offer the products in their story.>> amazon is $1 trillion company that runs an online platform with real-time data. millions of purchases and
billions in commerce.'s that is not the same as the local retail. that is quite different. he said we do not use data to compete with other sellers online. you do click enormous data about what is selling. you do not use that in any way to promote amazon public. you are under oath. >> thank you for your question. we use data to serve our customers. we do not use individual seller dated to compete with them. >> to use consumer data to favor amazon products. analyst estimate between 80 percent and 90 percent of sales go to the amazon by butts.
collect all of this better. the most popular products and you're saying you do not use that in any way to change in algorithm to support the cell of amazon branded products? >> our algorithm is and to predict that what customers want to purchase. we apply the same criteria. we want customers to make the right purchase regardless if it is sl or amazon. >> that is not true. >> you are telling us that amazon does not use any of that data collected with respect to what is signed and what product to inform the decision to make or to change algorithms to direct people to amazon products and prioritize amazon and the prioritize competitors. >> the algorithms are optimized to predict what customers want to purchase regardless of the seller. we provide the secretary. with respect to popularity, we provide the ranking of each
product. >> i just want to give you an example. they create a better set of headphones. it is great for amazon. more people become amazon prime customers. instead of seeing the fruits of their success, this hard-working man discovered the road on a regular gopher product. because amazon controlled the platform, because of self- taught billing and demotes the entrepreneur to pay results which most people never see. how would anyone in light of the sequence of events, how would any entrepreneur invest in this type of environment where that can happen.>> our incentive is to help the sellers exceed. we know they would go elsewhere. they have many options. we apply the same criteria to both. we do not use their individual data. >> i am now turning to the google search for a moment.
everyday people think they're getting the best most accurate results. for the products and services they are looking for. people are seeing results for google's own services. in 2004, they said the purpose of google is for people to come here and to quickly find what you want. would you agree that google still claims that is your principal or guiding principle. >> our goal is to provide users efficiently as possible. >> i want to direct your attention to 2 studies. a leading expert on search engine optimization. primarily review desktops and found the majority of traffic no longer is it a broad array but instead stays on google products. the second is the research. it also finds that google is increasing the campbell within google's ecosystem.
we agreed that google is no longer selling people the best products are best results. is giving the results to keep them on google product.>> thank you for the person. i am not familiar with any of the studies. we send a lot of traffic to competitors. we have aimed to connect merchants and airlines. a range of other services directly with consumers. making the experience better for consumers and advertising. >> i regret my time is expired. i would just ask you to review the studies. they do not have traffic to their websites because they google search is in favor of google's own services but keeping them inside, google's word guarded and the internet as we know it ceases to be an engine of economic opportunity. i would welcome your comments after you have an opportunity to study those. >> i have a very important
question for apple. oblivious on the minds of all americans. why do you keep getting that alert for the i club. for the nine lessons on the i club. all the time it constantly to pay the nine lessons for icloud. you're not using it. >> i'm afraid i'm not aware of the details around what you are talking about. i would be happy to get back with you with any information on that. i am honestly not familiar with the. >> i have seen it and allowed people investment about a the fact that the conflict in getting the sellers to use i call. the alerts will not go away until you actually pay the nine lessons to use i club. if you have some information on that, i would love to get it.
i would like to go to amazon for a couple of seconds. just to take you back on the chairs question. what is the current market share of amazon in u.s. domestic retail sales.>> amazon is one percent of the global retail market. four percent of the global market. >> only one percent of the domestic retail sales. who is above amazon. >> in the u.s., walmart is two or three times larger than we are. i do not know everyone who was potentially larger. the thousands of competitors across the retail landscape.>> who was the current market share of amazon online retail sales. >> online is not a separate market. evidence shows prices have conversed. amazon is one of the leading retailers with respect to online. there are many other retailers including every other major retail has an online program
such as ebay. >> you're like one percent. >> one percent of the global retail market. four percent of the u.s. >> what is the largest market share of any reseller in the u.s. market. >> amazon focuses on our customers. i am not sure the exact marketshare. that is not what we focus on as a company. i do know that walmart is many times our size. >> amazon sells online u.s. retail she is growing at a fast rate of all companies on the same level. walmart has put a lot of investment in their online platform. heidi compared to walmart or other retail stores. >> thank you for your question. the report walmart growing at a faster rate than we are aligned. >> you suggest amazon competes directly with other sellers.
several other seller simply is an online marketplace to which they can reach their customers. explained to me how that does or does not translate into whether or not amazon is leveraging dominant market power into anticompetitive behavior crystals other sellers. the clearest answer to that question, showing how much we have invested. there now the majority of our cells. would think that is great for the small and medium-size businesses. >> are you aware of any figures special consumer choices among outlets is declining? or the competition is feeling to keep prices down?>> we're going to get back to i club. what has amazon shared storage market.
>> we offer aws for enterprises which is different than a personal online storage. >> any other comments on that? >> the vast majority of the space is still operating on premise service. is a new and developing space. the competition exists with long-standing i.t. competitors. >> what did amazon get into the cloud services market.>> i did not member the exact year.>> how fast this is going on the club. >> amazon innovated in creating club options for storage and compute enterprises. is one of the early innovators we have a lead but major competitors have entered and are closing that gap such as
microsoft and many others. cloud is still in its very early days. >> for holding this committee hearing. i want to thank them for their appearance today. >> thank you congressman. it is right. >> when was the last time that facebook changed its terms and conditions. >> thank you congressman. we evaluate our terms and conditions on a regular basis.
we are costly changing our terms and conditions to assure people have the best experience.>> how many times over the last year have you change the terms and conditions. >> i do not have the specific date on that. i do not have the data. i do know that we face significant concerns about various aspects of our product. that is one of the reasons we have actually called for regulation in that area.>> i just wanted to know approximately how many times have changed. a recent report from the center observed one way in which digital platforms exploit their market share and market power is by requiring consumers to agree to terms and conditions that are unclear or difficult to understand and constantly changing.
do you agree with that assessment? >> we take privacy very seriously. >> the point i'm trying to make. they do not really have much by in to the situation. they have to check the box. agreed to the terms and conditions. having not read it in order to get the service. or they just go without the service. a user may sign up with one set of terms and conditions. building a social network on facebook. then a month later be faced with a different set of terms and conditions. because there is no real alternative to facebook, the user has no choice but to accept those changes.
>> that is not correct. there is competition. >> many of our competitors are sitting at this table with me. >> i think you're in a unique position. is one of the occupying unique and dominant position. facebook stands alone in terms of social media. any other social media platform that can compete with facebook? >> we certainly hope in many ways that we are unique. there may not be an identical competitor to facebook.
there is significant competition in advertising.>> i would like to get a list from you so that we can do some shopping around. that is not to disparage facebook offering. i would just like to know your competition is. it is not readily apparent. facebook terms of service maintain that users on their data. that facebook has prevented users from transferring their data to certain rival platforms including twitter. how do you reconcile facebook stata policy that users on their data with facebook's repeated refusal to allow users to transfer their data to rival platforms. >> we do offer our data
portability product. we have offer that for a long period of time. it is called download your information. we have improved that product. we are actually a member. >> energy transfer the facebook data to another platform?>> you are able to take your data out of facebook to another platform. we are also members of the data transfer project. along with several other companies to try to look for ways to facilitate better data portability. our ceo has actually called for regulation in this area. because of many of the difficult privacy issues as take. it is one we are hoping to work with congress on to improve the offerings for our users. >> i now recognize the young lady from florida for five minutes. >> thank you for all the
witnesses being with us. mr. sutton, bear with us. in recent years, amazon has started selling digital advertisement placement. digital ads brought in about 11 billion in business last year. as a reporter, amazon's advertising is better understood as an additional tax the company imposes on the millions of businesses that sell. that is one more toll extracted from sellers. given how dependent businesses are, for all and cells, what if anything presents amazon's from using ads is another way to
charge a toll. >> thank you for the questions. we do offer advertising as a service to our sellers. that they can use to help get the products discovered. the large majority sold are not so through advertisements. again, there are many ways in which sellers have many options. >> i respectfully disagree. it is like many services we offer that is optional. there are many other ways the sellers can advertise. they can advertise to general-
purpose search. it is one of the reasons we are one of the largest customers.>> you brought in about 11 billion in advertisements last year? is that about right? >> i do not know that exact figure. >> who do you view as amazons competitors with regards to third-party sellers. i do apologize. who do you view as it pertains to third-party sellers.>> third- party sellers have a wide variety of cell. they can sell directly through brick and mortar retail stores. there is dozens of online marketplaces for them as well from walmart. >> if i third-party seller. what other platforms, list my product on that would allow them to be seen by a competing
number of buyers. >> again, make a list on walmart or ebay. target now has lost a marketplace. there other marketplaces including the one from chinese companies. there are so many marketplaces that there is a billion-dollar industry that has grown up to provide services to sellers to list across all marketplaces at the same time. >> you to those of the platforms are competitive and allow for competitive services. >> absolutely. >> i go back. >> i now recognize the gentleman from colorado for five minutes. >> thank you message or and to the witnesses for appearing today. i agree with my distinguished colleague. the antitrust analysis is very
fact specific. i want to talk a little bit today about facebook. following up on the question from the gentleman from georgia. is facebook in your view of monopoly. >> though it is not.>> the reason is because in your view they have a number of competitors and number products the company offers. >> yes that is correct. what is the largest platform company by active users in the world. >> i do know we have 2.7 million users. >> the third largest company. who owns that?
>> we. facebook. the fourth largest social media networking platform in the world by active users is facebook messenger. is it suffice to say that company is also about facebook? the sixth-largest. what company owns instagram. >> facebook does. in the industry, and is monopoly power. with my respect, he is right.
under the antitrust act, a measure of whether or not the company is engaged in monopolistic activities is whether or not there is anti- competitive combat. i suspect we may have some disagreements on that front. just to give you a sense in which away a number of us are evaluating the fax. if you consent to exhibit 1.5. they could just put that up on the screen. this is a document. there were published about eight months ago as a result of the inquiry. with respect to facebook and various activities. this is a platform policy. platform policy number 4. you will see another highlighted subparagraph number 1. do not replicate core functionality the facebook already provides.
this was a policy maintained by facebook. is that correct? >> that is correct but first i'm having trouble seeing the exhibit. we will be sure to provide you a copy. this is no longer a policy maintained by facebook. >> that is correct. i presume that is because this policy would be construed as an anti-competitive one. correct? >> the platform was designed to enable third parties to engage in innovation. when we lost the platform, we did have the roles of the world. the balance a variety of a consideration.
we evaluated those policies over time. we have jason to fit the evolving nature. >> i understand the industries change and evolve. i would say, from our vantage point, facebook did have a policy. exhibit number 1 in which the company developers with competing applications. they might compete with facebook built applications. that was a policy that was then repealed. the prior document that i just show. this notion that facebook has been open to competition as you would describe. the documentary
evidence we have seen. that is why we're having this important hearing today.>> i now recognize the young lady from georgia.>> thank you mr. chairman. thank you for your testimony today. i am truly concerned about the success of a business in my district. small locally owned businesses are the economic lifeblood of our community. i should have access to markets and consumers without facing anti-competitive constraints. i also believe the congress and agencies have a serious responsibility to make sure there is real competition in the market so that startups and small businesses are able to compete and give people the best options they can find. this morning, they have had a positive experience growing the business.
some sellers have had a completely different type of experience. some sellers report that amazon used a variety of tactics to funnel margins into the fulfillment by amazon. international antitrust authorities on investigating whether or not amazon privileges the third-party vendors that you fulfillment. to their privilege vendors use the fulfillment services over those who choose not to? >> thank you for the question. amazon is very proud of all we have done. one of those ways, we built a very successful operation and delivery system. we made that available for sellers to use. it is an optional service that sellers can use if they wanted. we continue to invest and provide tools for them to ship directly. we do not favor products that use them over others. obviously it is one way to
provide quick delivery amongst many. we know our customers do appreciate quick delivery. that is why we get that is an option to our sellers to use.>> on the second panel we have today. ms. mitchell highlights how amazon abruptly and arbitrarily suspense margins accounts. freezing the funds and shutting down the amazon pages. amazon. we mix these about explanation. living merchants to navigate a black box why their livelihoods are hanging in there balance. according to another report, sellers are more worried about a case being open on amazon than actual poor. how many employees does amazon have that are dedicated to addressing these types of concerns.>> amazon partners.
they will be growing twice as fast as amazon. we reluctantly take action. >> how many do you have? >> we have thousands of employees dedicated to address concerns third-party sellers. we do not take arbitrary actions. we do have to take action on occasion when necessary. we do had to take swift and immediate action for the customers. we try to do that through a transparent process. will provide an opportunity for sellers to appeal provide additional information. they do not take advantage of those opportunities.>> how do you respond to the concern for merchants have been suspended by amazon. they said they have no way of ever reaching the amazon employee to make their case. what recourse did actually have.>> we provide a variety of ways for them to reach out.
i know we have a dedicated customer team. we provided dashboard tall. we have a dedicated team that will follow up in the more serious cases. we may communicate via email. there is a variety of ways in which we try to always communicate and receive communication from our sellers. >> it is also important to me that we keep those jobs. too often we hear that retailers and suppliers have an uphill battle due to anticompetitive pricing online. again, numerous reports have identified instances when online platforms price and if would be low-cost threatening mainstream and other retailers cannot compete on those times.
the retail industry notes that although competition, the hallmark of the industry and the absence of competition elsewhere ecosystem stifles the benefit that have historically resulted from the intense competition. once again, how do you respond to concerns that amazon has the ability to absorb losses in any market that it chooses.>> amazon faces fierce rita competition across many. there amongst our biggest competitors. amazon has a profitable retail business for many years. is very thin margins. they have been profitable. >> given externa challenge. >> thank you. the chair recognizes the gentleman from maryland.
>> thank you very much. i have a question for mr. colin. according to data produced, controls over 90 percent of the search engine market. this seems to fit the definition of monopoly. it is nothing to worry about because competition is just a click away. i just want to make sure their position is right. is that the argument. >> for the question. i was say the definition is quite narrow. consumers are searching for information online. for example, when people are searching for products, this the product searches on amazon.
searching for places to travel. this.with dedicated specialist competitors. i think it is much broader than the.>> let me follow up then. i understand that google paid apple $9 billion in 2018. 12 billion in 2010. is that correct? >> i'm enough money with those numbers.>> it is big numbers. what google paid the psalms that there was really an effective competitive market in place? >> i am enough money with those numbers. we do reach agreements. >> are you familiar with the deal? >> i am not close to the time of the deal. if anything the process probably reflect the control of the decisions made.
somebody seeking to syndicate the services.>> my sense that these numbers are correct, the default search engine suggests that google recognizes. i appreciate your thoughts on that. let me come to mr. and dear. the apple ceo. he has argued that unlike your peers, apple is a company that fundamentally is privacy oriented. do you believe apple is a privacy based business.>> we believe privacy is our fundamental human rights.
>> why has apple allowed google to be the default search engine.>> apple has with all of its product focused on what is the best consumer experience. what do we think would be the best for our consumers. consumers have always gone to google. we also make a number of options available to them. is very easy to change the default. other search engines that perhaps have more privacy. >> the church developers and 30 percent tax. then 15 percent every year thereafter. spot of argues their charging attacks on inept purposes. the fourth providers to make an impossible choice.
in the past the cost on to consumers or face a litany of technical hurdles imposed by apple. these complaints have been echoed by other developers. how did apple arrive at the 30 percent fee and could apple charging 30 or 40 percent fee for in app purchases. >> thank you for the question. 84 percent of the applications nothing to apple. is only a very small percentage that pay a commission. saponify is one of our most successful developers. they pay a commission on less than one percent apple. have been able to build a very successful business. we continue to invest in tools. other resources to make it very easy for developers to create great applications. u.s. about how we came to the 30 percent. it is easy to forget.
most distributed to physical distribution. typically they wish are up to 60 percent of the retail price with the distribution channel. we sent a very aggressive price of 30 percent. only applying to additional content in an effort to compete for those developers. it has been very successful. >> offer one more question?>> a quick question. they announced they will be integrating messenger. it calzada with growing calls and different places to break up facebook. specifically but undoing the body of instagram. facebook says it protects users by providing into and encryption. is facebook's integration an attempt to start or preempt
these efforts to break up facebook? >> thank you congressman. know it is not. we face fierce competition for the products and services we offer. it is our understanding that they offer more and more privacy protective services. our pivot towards privacy with respect to our services was because of the competition we faced. >> your back. i appreciate that. >> i just want to turn to you. you have repeatedly emphasized that amazon is a great partner. amazon has been steadily increasing the fees.
today, they have raised fees. up to 27 percent of the sellers calls. they have also increased storage fees for over 40 percent. their stimulative for amazon. over $42 billion in 2018. according to the same article. given how dependent marches are on the platform, assisted if he has for amazon and exercise of its outside firepower. >> it is because sellers have had so many options. those are not accurate. there necessary to be paid to sell items and have been steady for a number of years and slightly declining. their optional fees such as fulfillment which are
competitively priced. sending items and store them of that nature. those are effective and competitive with other options. they offer similar services.>> the data that disputes the memphis. you said because the seller has so many options. that is the exclamation for the increased cost of amazon. >> they have other options and will not cause amazon to charge more money. >> let me clarify. because there are so many options we partner with and we charge their fees, is reason that have been stated. the fees for our store have stayed steady or slightly decline. some of these optional fees are based on market cost. there competitive with other options in that state.>> over
the years, they have documented the business tactics. in 2013, the reporter that amazon and named one of his business campaigns because our project. they would approach small publishers. the way a cheater would. is the gazelle project still in place?>> i am not familiar with that project.>> i would like to know if amazon received similar campaigns in other parts of your business. you give interest to both those questions and i would appreciate it.>> this investigation is extremely important. which of them will pledge on the companies they represent to cooperate to the fullest extent possible and to act in good faith to respond in a timely and complete manner.
i will ask you if you can answer that question.>> yes we will. >> you mr. sutton? >> yes. thank you chairman, yes we will. >> gladly. >> gladly, there has been some reporting of very disturbing efforts by a particular company to aggressively impede congressional oversight to go so far as to hire opposition research funds. i would clearly asked you in the spirit of cooperation. you commit to not engaging in those tactics in response to this investigation?>> yes, we would never engage in that sort of public.>> yes. >> yes. with that i recognize the gentleman. mr. r. >> the market has been the same
since the company started. >> that is correct. we actually reduce that down to 15 percent. that only applies to less than 60 percent on the app store. >> he said they do not pay anything. >> that is correct. >> what percentage of the global revenue come from the remaining 16 percent the share revenue. >> i do not know the answer to that question. i did another developers monetize in a number of ways. we have developers on the app store that monetize the advertising. through selling of physical goods. how does it fit into your company's offerings.>> they provide some contents.
with out there with access to the web browser. we have done a lot to encourage. we really look at it as another way to continue selling the device it. >> apple music as part of the strategy. we also make it very easy for competitors. saponify and google play music. dozens of others make apps. >> is more of a hardware business?
we are selling the experience to consumers. >> we compete with all of the companies on this panel. in addition to dozens of others. this is going to go back to what my friend was talking about. >> i believe that you can.>> they are 2 separate and distinct. i do not have that data.>> we talk about competition versus complementing, i just ask you
all of those things. i will not know where to get anything other than the app store. i am sure other things exist. i do not know about them. i think there was a lot of us in that situation. with that, as we closing this out, i hope as we move forward, this errors become more focused and single topic. i would just encourage everybody to be forthright with answers. i can tell you about half the questions that is going to be asked today. assuming you want to do it. it makes it a lot easier as we go forward and focused on specific topics and things that would be easier for everybody. more forthright and honest and transparent with our answers. >> on already message on man from georgia.
>> thank you mr. chairman. >> the resident reported that google maps is overrun with many of false business addresses and fake names. as many as 11 million. the ad business actually profits from the scams on consumers and little local businesses suffer. >> given the power they enjoy, over the small and local businesses, what measures is google taken to identify and remove fraudulent listing. is a lack of competition in an online search that allows google to be so complacent about addressing this problem head-on. >> thank you for your question. i am not familiar. we took a number of measures.
precisely because we operate in a competitive marketplace. >> the process to use. i would be glad to follow up want to discuss with the experts in our company. >> we recognize the gentleman from maryland. because your platforms are so dominant in whether it is accidental or malignant. can be fatal for a business. in order to reach your customers. do you agree that in theory
each of your businesses can pick winners and losers in the marketplace. do you agree? >> i do not. i look at the effect of the marketplace. whether it is music or books. or video. there companies that are far more successful than we are. >> what is your response? >> i respectfully disagree. amazon offers one 's thousands of retail options. customers pick the winners and losers. >> i disagree as well. we face fierce competition. >> online people can traffic anywhere they like.
we often see their searching online. >> you have processes in place for businesses to seek redress if they believe they have been discriminated against by your platform. >> yes we do. you describe briefly what that is?>> there is a process for firms to appeal the way there right. i'm not me with how it works in depth. >> we do have processes as well. we have an appeal process. we're looking to expand and improve the process.>> how does that work. >> pages that are disabled that are able to appeal. with then review them.
with them make a determination on the appeal. >> most of our laws competitors operate their own stores. with respect to the small and medium-size sellers. we have many processes in place. the provider all tools and services for them. lots of opportunity to communicate. >> first and foremost it is the consumers who make it very clear that they're happy with the experience on our products. not to offer our own services. i would also say that we also hundreds of apple employees focused on reviewing gaps and in constant communication with developers. there is an escalation to make sure any concerns or issues are quickly escalated. >> thank you very much.
nonetheless to live in fear of retaliation. this fear is kept. some of them from speaking out publicly about the anticompetitive practices they experienced. the committee has received a lot of communication from people. unfortunately we are not able to be more public at this time out of concern for retribution. given how powerful google is. we are quite frankly word about retaliation. my question to you, would you commit that on behalf of your company that you will not retaliate in any way against any of the businesses that cooperate with this committee or share requested information with us as part of the investigation. we agreed to a non-retaliation policy towards businesses that participate?
>> yes. i will take such an allegation extremely seriously. >> we would also not retaliate against anyone yes, we would a retaliate against anyone who cooperates with the committee. >> mr. cohen? >> yes. >> for me too. >> you guys have done a good job representing your businesses. if you asked them if they were a monopoly, they would they're not a monopoly. so obviously we have to do work that goes beyond just asking you for your opinion. we've got to talk to other people. for that to be meaningful, they can't be living in fear of retaliation of you. thank you very much, mr. chairman. i yield back. thank you, mr. raskin. the ranking member of the judiciary committee has been called for roll call vote. so we'll take a quick ten-minute
recess so we can all vote and then resume with the second panel. i thank the first panel. you are excused. you're welcome back of course to stay for the second panel. we very much appreciate you being here today and sharing your perspective on competition in the digital marketplace. we're in recess until the call of the chair. the subcommittee will come to order. i again want to apologize to our witnesses. this is historic action on the house floor that has taken a number of committee members away from the committee. but i would like to get started. our second panel of witnesses, the first witness on our second panel is timothy wu, the julius silver professor of law