WASHINGTON — Today, at a Senate Judiciary Committee hearing with the CEOs of Facebook and Twitter, U.S. Senator Amy Klobuchar (D-MN), Ranking Member on the Subcommittee on Antitrust, Competition Policy and Consumer Rights, raised serious concerns about potential anticompetitive conduct and acquisitions by Facebook and highlighted the urgent need to increase transparency in political advertising.
“What I want to focus on is what I think we're seeing all over this country, not just in tech. We're seeing a startup slump. We're seeing more and more consolidation, and throughout history, we've seen that is not good for small businesses. It's not good for consumers, and it's not good for capitalism in the end,” Klobuchar said.
In a series of exchanges with the CEO of Facebook, Mark Zuckerberg, Klobuchar focused on Facebook’s actions to limit smaller companies that it considered competitors from accessing parts of Facebook’s platform, crippling the growth potential of those rivals.
“So, I want to start with exclusionary conduct, regarding excluding smaller competitors by limiting interoperability with the Facebook platform. The investigation that we saw in the House recently gave us a number of examples of excluded companies including Vine, Stackla, Message Me, and Ark. My view is that this exclusionary conduct not only damaged the ability of these smaller businesses to compete, but it deprived customers of convenient access. You're one of the most successful companies, biggest companies in the world, Mr. Zuckerberg. Facebook. Do you think that this is fair competition or not? With regard to the interoperability and how you've conducted yourself with these other companies?” Klobuchar asked.
She also questioned Zuckerberg on Facebook’s motivations for acquiring emerging rivals Instagram and WhatsApp, which prevented either company from challenging Facebook’s social media dominance.
“And when we look at your emails, it kind of leads us down this road as well with Whatsapp, that part of the purchase of these nascent competitors is to -- I'll use the words of FTC Chairman Joe Simons who just said last week a monopolist can squash a nascent competitor by buying it not just by targeting it with anti-competitive activity. So, I know that this is a subject of investigation. Maybe we'll be hearing something soon. But I think it's something that committee members better be aware of, not just with Facebook, but what's been going on with these deals that have gone through and how it has led to more and more consolidation. And how we as the Senate, and I just talked to Chairman Graham about this last week could actually do something about this, by changing some of the standards in our laws to make it easier to bring these cases and not just involving tech,” Klobuchar said.
Full transcript of remarks and questions further below. Watch video of Klobuchar remarks HERE.
In her role as Ranking Member of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights and a senior Member of the Senate Commerce Committee, Klobuchar has been a leader in the fight to protect consumers’ personal data and promote online competition.
And as the Ranking Member of the Senate Rules Committee, with oversight over federal elections, Klobuchar has fought to improve the transparency of online political advertising, stop foreign interference in elections through online platforms, and combat the spread of online election related disinformation and voter intimidation and suppression.
In October, at a Senate Commerce Committee Hearing with CEOs from Google, Facebook, and Twitter, Klobuchar highlighted the urgent need to combat disinformation and improve transparency in online political advertising. She also raised serious competition concerns with Google’s CEO.
In September, Klobuchar, along with 16 colleagues sent a letter to Facebook, Instagram, Google, Twitter and YouTube, urging executives to take further measures to stop voting related misinformation and disinformation.
In August, at an Antitrust Subcommittee hearing on Google’s dominance in advertising technology markets, Klobuchar emphasized the need to enforce antitrust Laws.
Klobuchar leads the Honest Ads Act, which was reintroduced in 2019 with cosponsors Senator Lindsey Graham (R-SC), and Senator Mark Warner (D-VA) to help prevent foreign interference in future elections and improve the transparency of online political advertisements. The Honest Ads Act would prevent foreign actors from influencing our elections by ensuring that political ads sold online are covered by the same rules as ads sold on TV, radio, and satellite and by improving disclosure requirements.
Full transcript of Klobuchar remarks and questions as delivered at the November 17, 2020 Senate Judiciary Committee hearing below:
KLOBUCHAR: Thank you very much, Mr. Chairman. As you know, I'm the lead Democrat on the Antitrust Subcommittee. I'm going to take a little different approach here than Mr. Hawley when it comes to competition policy because I understand why they might be coordinating when it comes to security. What I want to focus on is what I think we're seeing all over this country, not just in tech. We're seeing a startup slump. We're seeing more and more consolidation, and throughout history, we've seen that that is not good for small businesses. It's not good for consumers, and it's not good for capitalism in the end.
Even successful companies, even popular companies, and even innovative companies are subject to the antitrust laws of this country. When I asked Mr. Pichai about this at the Commerce Committee hearing a few weeks ago, he told me Google was happy to take feedback. And my response was that the Justice Department already provided feedback in the form of a federal antitrust complaint. And I know there is an investigation reportedly going on out of the FTC right now regarding your company, Mr. Zuckerberg.
So, I want to start with exclusionary conduct, regarding excluding smaller competitors by limiting interoperability with the Facebook platform. The investigation that we saw in the House recently gave us a number of examples of excluded companies including Vine, Stackla, Message Me, and Ark. My view is that this exclusionary conduct not only damaged the ability of these smaller businesses to compete, but it deprived customers of convenient access. You're one of the most successful companies, biggest companies in the world, Mr. Zuckerberg. Facebook. Do you think that this is fair competition or not? With regard to the interoperability and how you've conducted yourself with these other companies?
ZUCKERBERG: Senator, I'm generally strongly in favor of interoperability, and building platform and API access for companies to be able to access. That's why we built the Facebook platform in 2007. Some of the policies that you mentioned, I think came about, because what we were seeing was not necessarily startups, but larger competitors like Google and some of our Chinese rivals, from trying to access our systems in order to use their scale to compete with us better and it just felt to us like at the time that that wasn't the intent of what we were trying to enable. I think it’s worth noting--
KLOBUCHAR: We have a non-Chinese example here. I just want to know -- I know that -- maybe we could hear from Mr. Dorsey. And I have concerns about Facebook's treatment of Twitter subsidiary Vine. It's my understanding is that once Facebook recognized Vine as a competitor after Twitter acquired it in 2013, it cut off Vine's ability to interoperate with Facebook so that Vine users couldn't upload their videos to Facebook. And then I think that Twitter shut down Vine in 2016.
Mr. Dorsey, could you tell me about the actual impact of Facebook's actions on Vine's business? On Vine's ability to compete and on your decision to shut down the service? And I know you're not a Chinese company.
DORSEY: Well, I don't know about the intent on the other side, but I know our own experience was we found it extremely challenging to compete with Vine. And ultimately, decided that the ball moved past us, and we shut it down. Again, I don't know the specifics and the tactics and what was done, but we did find it very, very challenging market to enter, even though we existed prior to some of our peers doing the same thing.
KLOBUCHAR: Okay. I'm going to move to something else quickly. Instagram and Whatsapp and we have some released internal Facebook emails in which you, Mr. Zuckerberg, wrote that Instagram was nascent and if they grow to a large scale they could be very disruptive to us. In a later email you confirm that one of the purposes of Facebook acquiring Instagram would be to neutralize a competitor. You wrote those emails that were mentioned in that House report, is that right, Mr. Zuckerberg?
ZUCKERBERG: Senator, I believe so. I've always distinguished between two things, though. One is that we had some competition with Instagram in the growing space of kind of camera apps and photo sharing apps. But at the time I don't think we or anyone else viewed Instagram as a competitor, as a large multipurpose social platform. In fact, people at the time kind of mocked our acquisition, because they thought that we dramatically spent more money than we should have to acquire something that was viewed as a primarily camera and photo-sharing app at the time. I think it’s important to distinguish.
KLOBUCHAR: Here's the view, though, we don't know how it would have done. And when we look at your emails, it kind of leads us down this road as well with Whatsapp, that part of the purchase of these nascent competitors is to -- I'll use the words of FTC Chairman Joe Simons who just said last week a monopolist can squash a nascent competitor by buying it not just by targeting it with anti-competitive activity. So, I know that this is a subject of investigation. Maybe we'll be hearing something soon. But I think it's something that committee members better be aware of, not just with Facebook, but what's been going on with these deals that have gone through and how it has led to more and more consolidation. And how we as the Senate, and I just talked to Chairman Graham about this last week could actually do something about this, by changing some of the standards in our laws to make it easier to bring these cases and not just involving tech.
So, I want to go to something here at the end, the political ad discussion we had in front of the Commerce Committee, Mr. Zuckerberg, I know you said that Facebook had made over $2 billion on political ads over the last few years. You said this was your quote, “Relatively small part of your revenue,” I know that. But it's kind of a big part of the lives of politics when that much money is being spent on ads. This is a bill I actually have with Senator Graham. Yet, we have seen these political ads that keep creeping through despite your efforts to police them on your own. This is why I would so badly like to pass the Honest Ads Act. One ad that went through, it says, in three battleground states ballots marked for Donald Trump had been discarded. Poll: will voter fraud only increase closer to November? So it stated in three battleground states, paid ad, ballots marked for Donald Trump have been discarded. This played between September 29th and October 7th, 2020, had up to 200,000 impressions. Does this ad violate Facebook's policy?
ZUCKERBERG: Sorry, can you repeat what the ad was?
KLOBUCHAR: The ad was an American Action news ad. They've advertised a lot of them on your platform. And it said in three battleground states, ballots marked for Donald Trump had been discarded. This was preelection.
ZUCKERBERG: Senator, I don't know off the top of my head if that specific ad violates our policies. I'd be happy to follow up afterwards on that.
KLOBUCHAR: Would you commit to a policy where actual people's eyes, people could review these ads, instead of just being hit with algorithm review?
ZUCKERBERG: Senator, we do have review and verification of political advertisers before they can advertise.
KLOBUCHAR: Okay. So does every ad go through a human being?
ZUCKERBERG: Senator, I don't know if every --
ZUCKERBERG: I think every -- our policy is that we want to verify the authenticity of anyone who's doing political or social issue advertising. And I think it's worth noting that our people reviewers are not in all cases always more accurate than the technical systems.
KLOBUCHAR: So are you saying a human being reviews every ad? It’s just really yes or no, or I don't know.
ZUCKERBERG: Senator, I don't know. I don’t think so.
KLOBUCHAR: Well we’ll follow up in the written. You brought this cease and desist order against NYU for publishing a report that noting over the last two years Facebook has not properly labeled approximately 37 million in political ads. Why would you not support this project? Why would you bring a cease and desist against them?
ZUCKERBERG: Senator, is that the project that was scraping the data in a way that might have been -- with the FTC consent decree that we have?
KLOBUCHAR: It's your definition. The reason it's happening is we haven't passed the Honest Ads Act. They're trying, they're not violating privacy. They're trying to get the ads so people can see the ads, other campaigns, journalists, everyone.
ZUCKERBERG: Senator, you know that I support the Honest Ads Act and agree that we should have that passed. And even before that, that we've implemented it across our systems. But I think in the case that you're referring to, that project was scraping data in a way that we agreed in our FTC consent decree around privacy that we would not allow. So, we have to follow up on that. And make sure that we take steps to stop that violation.
KLOBUCHAR: Okay. Last, Mr. Dorsey, do you think there should be more transparency with algorithms? As part of this is not just -- I'm off of the ads now, I'm on just generically, part of this is that people don't know how this data is going across the systems and across the platforms. And people basically are buying access, has been my impression, so that even if you say, what's the news in the last 24 hours, old stuff comes up, something's gone awry from the beginnings of this. Would it be helpful, do you think, if there was more transparency with algorithms?
DORSEY: I do think it would be helpful, but it's technically very, very challenging to enforce that. I think a better option is providing more choice, to be able to turn off the algorithms or choose a different algorithm, so that people can see how it affects one's experience.
KLOBUCHAR: Okay, thank you. I ask that both of you look at the bill that Senator Kennedy and I have, the Journalism, Competition, and Preservation Act to help the content providers negotiate with digital platforms. Thank you.