The CEOs of Amazon (AMZN  ), Apple (AAPL  ), Facebook (FB  ), and Google (GOOG  ) testified before the House Judiciary Committee as part of an antitrust investigation. The CEOs appeared before Congress via video. In total, these companies are worth $4.8 trillion in value which represents 21% of the total S&P 500 (SPY  ). The hearing was focused on competitive tactics that these large companies are using to attain dominance of their markets.

Unfortunately, a lot of the meeting was unproductive, and many of the politicians failed to elicit anything meaningful but instead demonstrated their ignorance about technology. For example, Representative Sensenbrenner from Wisconsin asked Mark Zuckerberg about prominent conservatives being banned on Twitter (TWTR  ). Congressman Steube asked Google CEO Sundar Pichi why his campaign's emails were ending up in people's spam.

Highlights

There were some more important takeaways like Amazon's Jeff Bezos acknowledging that the company had used third-party seller data when making decisions on what products to sell. This has been a common complaint from merchants who sell on Amazon's platform. Some company develops a successful product and then, in a few months, it's cloned by Amazon who sells it for cheaper and gives their product better placement in search results. This shows there's a conflict between Amazon managing a marketplace and also selling on it.

There was also scrutiny about Facebook including its Instagram acquisition and copying of features from competitors. Zuckerberg responded that these practices were normal as it was part of the company's duty to monitor other products and improve their own. Additionally, he said that other companies were copying Facebook's products as well. In terms of Instagram, Zuckerberg simply said that the deal had been approved by the FTC at the time.

The tech companies also emphasized that they were American companies who were employing American workers. Zuckerberg pointed out that over the last decade, the new, top technology companies in the world were Chinese. The implicit message is that America needs its tech heavyweights to provide a counterbalance to compete with Chinese companies like Alibaba (BABA  ), Tencent (TCEHY  ), and Baidu (BIDU  ).

Implications

It's certainly interesting that the last tech bubble featured Congressional scrutiny of Microsoft (MSFT  ) and its practices in winning market share from Netscape. This time, there's been increasing scrutiny of the market dominance of these companies. It's also become a rare area partisan agreement. Republicans are wary of the power these companies hold to censor content given that the workers and management typically lean left. Democrats are naturally opposed to concentrations of power, and the way that they can lead to abuses.

The companies argue that they have achieved market dominance because they have a superior product. Additionally, they say that the nature of tech is that any product can scale and quickly win market share which is true as well. Google beat several wealthier companies in search as did Facebook in social.

Due to network effects, it doesn't seem like market forces can disrupt their dominance. For example, someone starting a social network is unlikely to beat Facebook. A social network is valuable because of the number of people on it. Similarly, Google search can offer a superior product, because everyone uses it which gives it insights to keep improving. And the better its results, the more people use it.

So, the biggest threat to these companies may be the politicians who might insist on breaking up parts of the company. It's an area that could offer bipartisanship. Additionally, there could be more progress on the issue with a new administration that has control over both branches of Congress. Reports indicate that former Vice President Joe Biden has developed a close relationship with Senator Elizabeth Warren, using her as a sounding board for policy ideas, and Warren has long been an advocate of breaking up tech companies or increasing regulation.