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Lawmaker: We have to 'force' Facebook to change its conduct

Apple, Amazon, Facebook and Google are set to testify before the House Judiciary antitrust subcommittee on Tuesday afternoon.

While the committee’s antitrust investigation doesn’t focus on one individual company, Rep. David Cicilline (D-RI), chairman of the antitrust panel, noted to Yahoo Finance that Facebook (FB) has a lot of explaining to do.

“I think for sure Facebook is a company that has engaged [in a] series of actions that have drawn a lot of attention, have violating consent decrees, violated the trust of their users. You know, they've been fined, so I think they stand out among many of the companies in having a lot of explaining to do,” said Cicilline.

Cicilline (D-RI) slammed the FTC for its reported $5 billion settlement with Facebook, saying it wasn’t harsh enough.

“I would have liked to see the FTC take the misconduct that was at issue here more seriously. I mean this involved the breach of data from 87 million Americans without their knowledge. This was a significant breach. It’s significant misconduct by the company — a violation of consent decree. And when you have a company that has $55 billion in revenue in a year... you have to force them to change their conduct. One way you do that is a hefty fine,” Cicilline told Yahoo Finance.

The congressman is leading the antitrust investigation into big tech companies, which he calls the first major antitrust investigation Congress has undertaken in decades.

Impact on innovation

This is the probe’s second hearing and the first hearing where the tech companies will have to answer questions directly from lawmakers.

“We really want to understand what the implications are of this market concentration in a few very large firms, on the ability of new businesses to start — the next Facebook to be born, the next Amazon to come about. So what's the impact on job creation, on innovation? And are they engaged in practices which are discriminatory, which favor the wrong products in services or excludes rivals?” he said.

The investigation has bipartisan support, though Republican lawmakers are urging their colleagues to approach the investigation with an open mind.

UNITED STATES - MAY 15: Rep. David Cicilline, D-R.I., leaves a meeting of the House Democratic Caucus in the Capitol Visitor Center on Wednesday, May 15, 2019. (Photo By Tom Williams/CQ Roll Call)

“Our subcommittee has a responsibility to scrutinize the business practices of this industry, but must do so with a fair and balanced approach,” said Rep. Jim Sensenbrenner (R-WI), the ranking Republican on the committee.

While some like Sen. Elizabeth Warren (D-MA) have called for breaking up the big tech companies, Cicilline has not advocated for any breakups at this point. He said at the end of the investigation, the panel will likely present a set of recommendations for legislative action.

“Some [recommendations] may involve regulatory action and some may propose funding, to be sure —you know, we want to modernize our antitrust statutes, make sure they’re working right. We want to make sure that there are regulations in place that make sense, that promote competition. Then we want to make sure the agencies that are responsible for the antitrust enforcement are properly resourced. So they have the resources they need to do the work,” said Cicilline.

When asked if he would call the tech CEOs to testify, Cicilliine said it would be “hard to imagine” not hearing from the leaders.

Facebook has more than 2.3 billion users globally, more than any other social network, according to data from Statista; WhatsApp and Instagram, both owned by Facebook, also rank in the top 10 based on number of active users.

Libra in the spotlight

Facebook is also facing scrutiny in the Senate, as the Senate Banking Committee grills a company executive, David Marcus, about its cryptocurrency plans.

Sen. Josh Hawley (R-MO) — who serves on the Senate Judiciary Committee — has told Yahoo Finance that Facebook appears to be “expanding their monopoly” with Libra.

Cicilline said he doesn’t necessarily think Libra is an antirust issue, but Facebook should “get their own house in order” before branching out into new areas.

“Promoting competition, honoring full competition policies, honoring privacy of their consumers, respecting the right of consumers to control their own data,” said Cicilline. “I have a lot of concerns that the same kind of arrogance that I think describes their conduct in these other settings may exist as well in this currency setting.”

Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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