[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]




 
                ONLINE PLATFORMS AND MARKET POWER, PART 4:
                  PERSPECTIVES OF THE ANTITRUST AGENCIES

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON ANTITRUST,
                   COMMERCIAL AND ADMINISTRATIVE LAW

                                 of the

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 13, 2019

                               __________

                           Serial No. 116-63

                               __________

         Printed for the use of the Committee on the Judiciary



         [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
         


        Available http://judiciary.house.gov or www.govinfo.gov


                               __________


                  U.S. GOVERNMENT PUBLISHING OFFICE

40-787                  WASHINGTON : 2020







                       COMMITTEE ON THE JUDICIARY

                   JERROLD NADLER, New York, Chairman

ZOE LOFGREN, California              DOUG COLLINS, Georgia,
SHEILA JACKSON LEE, Texas              Ranking Member
STEVE COHEN, Tennessee               F. JAMES SENSENBRENNER, Jr., 
HENRY C. ``HANK'' JOHNSON, Jr.,          Wisconsin
    Georgia                          STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida          LOUIE GOHMERT, Texas
KAREN BASS, California               JIM JORDAN, Ohio
CEDRIC L. RICHMOND, Louisiana        KEN BUCK, Colorado
HAKEEM S. JEFFRIES, New York         JOHN RATCLIFFE, Texas
DAVID N. CICILLINE, Rhode Island     MARTHA ROBY, Alabama
ERIC SWALWELL, California            MATT GAETZ, Florida
TED LIEU, California                 MIKE JOHNSON, Louisiana
JAMIE RASKIN, Maryland               ANDY BIGGS, Arizona
PRAMILA JAYAPAL, Washington          TOM McCLINTOCK, California
VAL BUTLER DEMINGS, Florida          DEBBIE LESKO, Arizona
J. LUIS CORREA, California           GUY RESCHENTHALER, Pennsylvania
MARY GAY SCANLON, Pennsylvania,      BEN CLINE, Virginia
  Vice-Chair                         KELLY ARMSTRONG, North Dakota
SYLVIA R. GARCIA, Texas              W. GREGORY STEUBE, Florida
JOE NEGUSE, Colorado
LUCY McBATH, Georgia
GREG STANTON, Arizona
MADELEINE DEAN, Pennsylvania
DEBBIE MUCARSEL-POWELL, Florida
VERONICA ESCOBAR, Texas

        Perry Apelbaum, Majority Staff Director & Chief Counsel
                Brendan Belair, Minority Staff Director

                                 ------                                

               SUBCOMMITTEE ON ANTITRUST, COMMERCIAL AND 
                           ADMINISTRATIVE LAW

                DAVID N. CICILLINE, Rhode Island, Chair
                    JOE NEGUSE, Colorado, Vice-Chair

HENRY C. ``HANK'' JOHNSON, Jr.,      F. JAMES SENSENBRENNER, Jr., 
    Georgia                              Wisconsin, Ranking Member
JAMIE RASKIN, Maryland               KEN BUCK, Colorado
PRAMILA JAYAPAL, Washington          MATT GAETZ, Florida
VAL BUTLER DEMINGS, Florida          KELLY ARMSTRONG, North Dakota
MARY GAY SCANLON, Pennsylvania       W. GREGORY STEUBE, Florida
LUCY McBATH, Georgia
                       Slade Bond, Chief Counsel
                    Daniel Flores, Minority Counsel








                            C O N T E N T S

                              ----------                              

                           NOVEMBER 13, 2019

                           OPENING STATEMENTS

                                                                   Page
The Honorable David Cicilline, Chairman, Subcommittee on 
  Antitrust, Commercial and Administrative Law...................     1
The Honorable James Sensenbrenner, Ranking Member, Subcommittee 
  on Antitrust, Commercial and Administrative Law................     2
The Honorable Jerrold Nadler, Chairman, Committee on the 
  Judiciary......................................................     3
The Honorable Doug Collins, Ranking Member, Committee on the 
  Judiciary......................................................    47

                               WITNESSES

The Honorable Joseph Simons, Chairman, Federal Trade Commission
    Oral Testimony...............................................     6
    Prepared Testimony...........................................     8
The Honorable Makan Delrahim, Assistant Attorney General, 
  Antitrust Division, Department of Justice
    Oral Testimony...............................................    27
    Prepared Testimony...........................................    29

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

A statement for the record by the Electronic Privacy Information 
  Center from the Honorable David N. Cicilline, Chairman, 
  Subcommittee on Antitrust, Commercial and Administrative Law...    68

                                APPENDIX

Responses to Questions for the Record from the Honorable Joseph 
  Simons, submitted by the Honorable David N. Cicilline, 
  Chairman, Subcommittee on Antitrust, Commercial and 
  Administrative Law.............................................    76
Responses to Questions for the Record from the Honorable Joseph 
  Simons, submitted by the Honorable Henry C. ``Hank'' Johnson, 
  Member, Subcommittee on Antitrust, Commercial and 
  Administrative Law.............................................   112
Responses to Questions for the Record from the Honorable Joseph 
  Simons, submitted by the Honorable Pramila Jayapal, Member, 
  Subcommittee on Antitrust, Commercial and Administrative Law...   113
Responses to Questions for the Record from the Honorable Joseph 
  Simons, submitted by the Honorable Ken Buck, Member, 
  Subcommittee on Antitrust, Commercial and Administrative Law...   117
Responses to Questions for the Record from the Honorable Makan 
  Delrahim.......................................................   118
A letter regarding the proposed merger of Fitbit and Google from 
  a group of antitrust and technology experts....................   146


              ONLINE PLATFORMS AND MARKET POWER, PART 4:
                PERSPECTIVES OF THE ANTITRUST AGENCIES

                              ----------                              


                      WEDNESDAY, NOVEMBER 13, 2019

                        House of Representatives

                 Subcommittee on Antitrust, Commercial 
                         and Administrative Law

                       Committee on the Judiciary

                            Washington, DC.

    The subcommittee met, pursuant to call, at 2:07 p.m., in 
Room 2141, Rayburn House Office Building, Hon. David Cicilline 
[chairman of the subcommittee] presiding.
    Present: Representatives Cicilline, Nadler, Neguse, 
Johnson, Jayapal, Scanlon, McBath, Sensenbrenner, Collins, 
Armstrong, and Steube.
    Also Present: Representative Cline.
    Staff Present: David Greengrass, Senior Counsel; John Doty, 
Senior Advisor; Madeline Strasser, Chief Clerk; Moh Sharma, 
Member Services and Outreach Advisor; Amanda Lewis, Counsel, 
Antitrust, Commercial and Administrative Law; Joseph Van Wye, 
Professional Staff Member, Antitrust, Commercial and 
Administrative Law; Lina Khan, Counsel, Antitrust, Commercial 
and Administrative Law; Slade Bond, Chief Counsel, Antitrust, 
Commercial and Administrative Law; Daniel Flores, Minority 
Chief Counsel; and Andrea Woodard, Minority Professional Staff.
    Mr. Cicilline. The subcommittee will come to order. Without 
objection, the chair is authorized to declare recesses at any 
time.
    We welcome everyone to the fourth in a series of hearings 
investigating competition in digital markets, this one focusing 
on the perspectives of the antitrust agencies. I now recognize 
myself for an opening statement.
    We are living through a moment of extreme concentration 
across our economy. In industry after industry, just a few 
companies dominate critical markets that affect the day-to-day 
lives of hardworking Americans. Unchecked by competition, 
dominant corporations can abuse their market power to raise 
prices for consumers, lower wages, and stifle entrepreneurship 
and small businesses, enriching their executives and 
shareholders at the expense of everyone else.
    One area where this extreme concentration is most troubling 
is in the digital economy, where a small number of dominant 
platforms have become critical intermediaries for the flow of 
commerce and information. While these platforms have delivered 
American consumers some benefits, there's growing evidence that 
these platforms are now using their power to set the terms of 
the market in ways that enrich them but make it impossible to 
compete on an even playing field.
    Each day, the news is full of reports documenting how 
decisions by this handful of corporations increasingly 
determine whether a merchant, app developer, or news publisher 
sinks or swims.
    Because several of these digital monopolies operate 
business models premised on the surveillance of Americans, the 
power they wield over us is by many measures unprecedented. Six 
months ago, this committee initiated a bipartisan investigation 
into competition issues in digital markets. This investigation 
follows a long tradition of congressional investigations into 
monopoly power, including industry-wide assessments of whether 
dominant corporations are abusing their market power, whether 
our laws are working, and how to reverse the rising tide of 
economic concentration.
    This investigation is pursuing a similar path, and a key 
task for the subcommittee is understanding the enforcement 
record of the antitrust agencies. Over the past decade, the 
largest technology firms have acquired over 436 companies, many 
of which were actual or potential competitors, according to a 
New York Times report by Tim Wu and Stuart Thompson, but not a 
single one of these acquisitions was challenged by antitrust 
enforcers. In fact, only a handful of these were closely 
scrutinized. The last major monopolization case brought by 
Federal enforcers was Microsoft 20 years ago.
    While these problems have plagued enforcement across 
markets and not just in the digital economy, the enforcement 
gap in these markets has created a de facto antitrust exemption 
for online platforms. Have the agencies failed to bring cases 
because of unfavorable case law, requiring congressional action 
to amend the law? Is this inaction due to a lack of agency 
resources, or is it due to a lack of will at the agencies to 
enforce the laws on the books?
    These are the questions that the subcommittee is looking to 
answer through its investigation in areas that I hope will be 
fully addressed during today's hearing.
    In closing, I want to thank Chairman Simons and Assistant 
Attorney General Delrahim for their appearance today and look 
forward to hearing their testimony.
    And I now recognize the very distinguished gentleman from 
Wisconsin, Ranking Member Sensenbrenner, for his opening 
statement.
    Mr. Sensenbrenner. Well, thank you very much, Mr. Chairman.
    I want to welcome Mr. Delrahim and Mr. Simons to our 
hearing today.
    In the ordinary course of oversight of the antitrust 
enforcement agencies we conduct annual or biannual oversight 
hearings to examine the waterfront of issues before these 
important agencies. But today Assistant Attorney General 
Delrahim and Chairman Simons have graciously appeared to 
discuss only one set of issues before us, antitrust issues 
concerning the tech sector.
    Like members of this subcommittee, these key government 
officials recognize the importance of making sure that we get 
right the applicability of this Nation's antitrust laws for 
this critical sector of our modern economy. And like us, each 
of them is in the midst of a searching inquiry into whether our 
century-old antitrust laws and our government's enforcement of 
those laws is adequate for the challenges presented by our new 
digital economy.
    In our inquiry in the subcommittee, we have thus far looked 
at whether entities in the tech sector, particularly the 
largest online platforms, have or have not been accumulating 
and leveraging market power over competitors and other market 
participants. Affected entities include fellow tech innovators, 
news publishers, and app developers who depend upon large 
online platforms to reach consumers and many others.
    We have also examined aspects of online data privacy and 
the role that online data plays in competition, particularly 
with very large accumulations of consumers' online data.
    Today we gather to hear the perspectives of the two 
antitrust enforcement agencies on these and other tech issues. 
This will help us not only to engage in oversight of these 
agencies' activities in the tech sector but also to reap the 
benefit of those agencies' expertise and wisdom as we assess 
whether or not our antitrust laws and agencies are up to the 
task or instead need amendment or added resources.
    While this hearing is narrowly focused, it should be noted 
that there are a number of issues before the Department of 
Justice that Members of Congress are monitoring closely. This 
includes the review of consent decrees, and it is my intention 
to submit questions for the record on this topic.
    I encourage our witnesses and all of us to recognize that 
Congress and the antitrust enforcement agencies need to be 
careful not to overreach to extend or apply the antitrust laws 
in ways that end up punishing success, suppressing innovation, 
and ultimately limiting consumer welfare.
    I thank the witnesses for coming and yield back.
    Mr. Cicilline. I thank the gentleman, the ranking member, 
for yielding back.
    I now recognize the chairman of the full committee, the 
gentleman from New York, Mr. Nadler, for his opening statement.
    Chairman Nadler. Thank you, Mr. Chairman, for convening 
today's oversight hearing of the antitrust agencies and our 
competition system.
    As part 4 of our series of hearings on online platforms and 
market power, today's discussion is essential to advancing the 
committee's bipartisan investigation into competition in 
digital markets.
    This hearing occurs at a critical moment. There is growing 
evidence that a handful of dominant platforms now control key 
arteries of online commerce, content, and communications. A 
number of important digital markets are now dominated by just 
one or two firms.
    For example, Google controls over 90 percent of the global 
search market, and Facebook captures over 80 percent of all 
global social media revenues. By some estimates, Amazon 
controls about half of all online commerce in the United 
States.
    While the open internet has delivered enormous benefits to 
Americans, waves of anticompetitive consolidation in digital 
markets have had devastating effects on key elements of our 
democracy and economy, such as a free and diverse press. It 
also threatens the survival of a key element of our economy, 
the American startup. Empirical evidence suggests that the 
trends of increasing consolidation of market power in digital 
markets pose a threat to technology startups and to innovation 
in the U.S. economy.
    For example, it has been reported that seed funding for 
technology startups, the initial round of investment in a 
startup, has declined significantly just from 2015 to 2018.
    I am deeply concerned about the antitrust agencies' lax 
merger enforcement, which has permitted these harmful levels of 
concentration and the rise of market power in the digital 
economy.
    In addition to rising consolidation, there have also been 
allegations of anticompetitive conduct in digital markets. For 
instance, as more small and medium-sized businesses become 
reliant on the dominant platforms to reach consumers, they have 
increasing concerns that discriminatory or exclusionary conduct 
by the platforms could destroy their business over the course 
of just a few days or months.
    Despite mounting evidence of illegal monopolization 
activities by some of the dominant platforms and numerous cases 
brought by international enforcers, U.S. enforcers appear to be 
paralyzed. It has been decades, decades, since the Department 
of Justice or the Federal Trade Commission has brought a 
significant monopolization case in the tech sector. This is not 
just a criticism of the current administration. It has been 
decades since a significant monopolization case has been 
brought in the tech sector.
    Tim Wu, a professor at Columbia University, testified 
before the Judiciary Committee in July that the Department of 
Justice court challenges against AT&T, IBM, and Microsoft, 
quote, ``were foundational in terms of shaking up industry and 
creating room for new firms to grow,'' unquote.
    I am encouraged by reports of the agencies' current 
investigations into the dominant tech platforms, but the 
decline in enforcement over the past several decades is 
extremely troubling--a decline, I should add, that has occurred 
across all industries, not just in the technology sector. I 
find it hard to believe that companies in all sectors have 
simply ceased engaging in illegal monopolization rather than 
the more likely explanation, which is that the agencies have 
been and are underenforcing the antitrust laws.
    There may be a number of reasons for underenforcement by 
the agencies with respect to both anticompetitive conduct and 
to merger review, including unfavorable case law, insufficient 
enforcement will, and inadequate agency resources, all of which 
I look forward to having examined at today's hearing.
    One problem Congress can most directly address is ensuring 
that the agencies charged with antitrust enforcement have 
sufficient funding. Unfortunately, appropriations of these 
agencies have declined over the last decade in spite of the 
increase in merger activity and an increase in the complexity 
of investigations. In real terms, agency funding in 2019, this 
year, was nearly 20 percent lower than in 2010.
    It is vital that the antitrust agencies have the resources 
they need to do their jobs. I doubt that the gentlemen in front 
of me will disagree with that statement, at least.
    While ultimately it is the responsibility of the antitrust 
enforcement agencies to enforce the law, Congress has an 
obligation to assess whether existing antitrust laws and 
competition policies and the will to enforce those laws and 
policies are adequate to address the competition issues facing 
our country and to take action if they are found to be lacking.
    Over the past 6 months, the committee's bipartisan 
investigation into competition in the online marketplace has 
explored these questions in the context of digital markets. It 
is essential that we continue this important work through 
today's hearing and throughout this Congress as we seek to 
address competition problems in digital markets for the benefit 
of American consumers, small businesses, and workers.
    With that, I look forward to hearing from our witnesses 
today, and I thank them for their participation.
    I yield back.
    Mr. Cicilline. I thank the gentleman for yielding back.
    It's now my pleasure to introduce today's witnesses.
    Our first witness, Joseph Simons, was sworn in as Chairman 
of the Federal Trade Commission in 2018. Prior to joining the 
Commission, Chairman Simons was a partner at Paul, Weiss, 
Rifkind, Wharton & Garrison and co-chair of their Antitrust 
Group. He's held multiple positions at the FTC throughout his 
career, including assistant director for evaluation, associate 
director for mergers, and director of the Bureau of 
Competition.
    Chairman Simons received his A.B. from Cornell University 
and his J.D. from Georgetown University Law Center, a fine, 
fine institution.
    Our second witness is Makan Delrahim, assistant attorney 
general for the Antitrust Division of the United States 
Department of Justice. Prior to his confirmation in 2017, Mr. 
Delrahim assisted President Trump's transition team and was 
briefly deputy White House counsel. He previously served in the 
DOJ's Antitrust Division in 2003 as deputy assistant attorney 
general under President George W. Bush. Before his time in the 
executive branch, Mr. Delrahim was chief of staff and chief 
counsel to the Senate Judiciary Committee under Chairman Orrin 
Hatch.
    Mr. Delrahim received his B.S. from the University of 
California, Los Angeles and his J.D. from the George Washington 
University School of Law.
    We welcome our distinguished witnesses and thank them for 
participating in today's hearing.
    And now, if you would please rise, I will begin by swearing 
you in.
    Please raise your right hands. Do you swear or affirm under 
penalty of perjury that the testimony you're about to give is 
true and correct, to the best of your knowledge, information, 
and belief, so help you God?
    You may be seated.
    Let the record show the witnesses answered in the 
affirmative.
    Please note that each of your written statements will be 
entered into the record in its entirety. Accordingly, I ask 
that you summarize your testimony in 5 minutes. To help you 
stay within that time, there's a timing light on your table. 
When the light switches from green to yellow, you have 1 minute 
to conclude your testimony. When the light turns red, it 
signals that your 5 minutes have expired.
    Chairman Simons, you may begin.

  TESTIMONY OF THE HONORABLE JOSEPH SIMONS, CHAIRMAN, FEDERAL 
 TRADE COMMISSION; AND THE HONORABLE MAKAN DELRAHIM, ASSISTANT 
  ATTORNEY GENERAL, DEPARTMENT OF JUSTICE, ANTITRUST DIVISION

                   TESTIMONY OF JOSEPH SIMONS

    Mr. Simons. Chairman Cicilline, Ranking Member 
Sensenbrenner, and members of the subcommittee, thank you for 
the opportunity to appear before you today. I am pleased to 
talk about the Commission's current competition enforcement 
activities and policy priorities, particularly with regard to 
digital platforms. I'm also very happy to appear alongside my 
esteemed colleague, Assistant Attorney General Makan Delrahim.
    Please know that the written statement that I submitted is 
on behalf of the Commission. My oral statement and responses to 
your questions today are my own and do not necessarily 
represent the views of the Commission or any individual 
commissioner, other than me.
    First, I want to thank the committee for its work in areas 
that are core to our mission, such as pay for delay settlements 
and drug companies' abuse of the regulatory processes to thwart 
competition. I also very much appreciate your support in 
addressing recent court challenges to our 13(b) authority, 
which is critical.
    Today, I want to briefly highlight the recent FTC 
competition enforcement matters and developments at the agency. 
In particular, the agency has taken notable actions to prevent 
anticompetitive mergers and conduct, including in digital 
markets, that are of interest to this committee and others.
    Over the past 2 years, the Commission has had 43 merger 
enforcement actions, including seven in litigation for which we 
are undefeated. These cases have implications across the U.S. 
economy in markets for specialized software, medical devices, 
industrial chemicals, and familiar consumer staples.
    With respect to conduct, the FTC recently voted unanimously 
to bring a monopolization case involving vertical restraints on 
a digital platform. The FTC's complaint against Surescripts 
alleges that Surescripts is a monopolist in two multisided 
platforms, one connecting doctors to pharmacies and one 
connecting doctors to PBMs. The complaint alleges that 
Surescripts used exclusive contracts and similar arrangements 
to protect its dominant positions in both markets.
    In another matter, last year the Commission ruled that 1-
800 Contacts had unlawfully entered into agreements with rivals 
to restrict the scope of truthful, nondeceptive online 
advertising. As the Commission learned through its earlier 
research program on advertising restrictions, agreements among 
competitors to restrict otherwise lawful advertising often 
reduces competition. The FTC continues to monitor closely the 
behavior of participants in similar markets.
    In an effort to deepen our focus on technology markets and 
make it a real emphasis, our Bureau of Competition shifted 
internal resources earlier this year to establish a Technology 
Enforcement Division. This dedicated group is investigating 
competition in U.S. technology markets and will recommend 
enforcement action where warranted.
    For example, as Facebook recently publicized, our 
Technology Enforcement Division has commenced an antitrust 
investigation into some of Facebook's business practices.
    Finally, we continue our robust policy work, including 
hearings on Competition and Consumer Protection in the 21st 
Century. We held quite a number of hearings focused on various 
parts of the technology sector, such as multisided platforms, 
algorithms, artificial intelligence, and data security. We 
expect to begin releasing output soon, including technology 
platform guidance.
    We are committed to using our resources efficiently to 
protect consumers and to promote competition, to anticipate and 
respond to changes in the marketplace, and to meet current and 
future challenges.
    Thank you for your time, and I look forward to your 
questions.
    [The statement of Mr. Simons follows:]

    [GRAPHIC] [TIFF OMITTED]
    
    Mr. Cicilline. Thank you, Chairman.
    I now recognize Mr. Delrahim for 5 minutes.

                  TESTIMONY OF MAKAN DELRAHIM

    Mr. Delrahim. Thank you, Chairman Cicilline, Ranking Member 
Sensenbrenner, Chairman Nadler, and distinguished members of 
this subcommittee. Thanks for inviting me to be before you 
today at this oversight hearing.
    We begin by thanking the subcommittee for continuing the 
bipartisan support of the Antitrust Division's work to protect 
competition on behalf of American consumers, workers, and 
entrepreneurs. I also want to thank you for your leadership and 
oversight of some of the most challenging issues of today, such 
as the competitive impact of online platforms.
    We have submitted a longer statement for the record. In the 
interest of time, I just wanted to highlight a couple of the 
issues just for your benefit and the committee's benefit here.
    Recently, just this past week, we announced the formation 
of the Procurement Collusion Strike Force. It's an effort with 
U.S. attorneys across the country, the FBI, the Department of 
Defense's DCIS, as well as a number of inspectors general, and 
our efforts there are to detect, prevent, and prosecute 
criminal activity, especially when taxpayers are the victims at 
all levels of the government.
    I will place some of the other general matters of our 
statement in the record. We will, with your permission, 
supplement the previous statement. But I wanted to highlight a 
few of those, but I want to get into the issue that is germane 
to your particular interest in this hearing, which is the 
online platforms and our activity there.
    Related to that, I should also mention that we--that the 
United States sought and was granted the privilege of hosting 
for the first time the ICN's, the International Competition 
Network's annual conference. This is the most important 
conference of global competition enforcement agencies, and our 
host status for the 2020 ICN will allow the Antitrust Division 
and the Federal Trade Commission to showcase our ideals by 
promoting fundamental due process as well as a broad range of 
important policy issues, including digital platform competition 
and cartel enforcement at this event next May.
    Now on to the Department's activities in digital platform 
markets. I know the subcommittee continues to focus on the way 
that consumers engage with online platforms. I'm pleased to 
report that the division is hard at work reviewing business 
practices by market-leading online platforms, which we 
announced in July.
    To date, Facebook and Google have both publicly disclosed 
investigations by the division. These companies are not the 
only focus of our review. They are, however, an important part 
because of the significant role they play in the lives of so 
many American citizens and because they occupy a unique role in 
the modern era of personalized advertising supported by user 
data.
    The work we are doing is focused in part on understanding 
how personalized advertising transactions work and their 
competitive dynamics. We're looking at how these dynamics 
create value for advertisers, content creators, and the 
American consumers who use these advertising-supported 
platforms.
    By understanding these competitive dynamics, we can 
determine if the market leaders have monopoly power, how do 
they exercise such monopoly power, and whether the source of 
that power is from merits-based competition or if the source of 
that power is exclusionary or anticompetitive conduct.
    Other online platforms make money in other ways, and we are 
reviewing those other business models as well.
    The common thread is this: Online platforms bring together 
users who access information services on the platform with 
third party providers, products, services, or advertisement. 
We're concerned with the ways that the platform operators can 
manipulate the conditions for competition.
    In some instances, the platform operators may have the 
incentive to improve the platform for the benefit of all of 
those users. In other instances, the platform operator also may 
compete against users of the platform and may have an incentive 
to disadvantage or exclude competitors.
    Of course, the division did not begin its work 
investigating online platforms when we announced the reviews in 
July. Indeed, we've had a section dedicated to industries 
governed by information technology and network effects for more 
than 20 years.
    It was this section that in 2008 investigated and decided 
to file suit against Google and Yahoo for an agreement that 
would have eliminated Yahoo as an independent source of online 
search advertising. This tech section coordinated its 
investigation with 15 States and Canada, and ultimately, the 
parties dropped their plans for the agreement rather than face 
a lawsuit in this field.
    That section also dealt with online zero price business 
models and in 2012 litigated and won an injunction against H&R 
Block and TaxACT, that merger. The challenge was in part based 
on evidence that TaxACT was a maverick online startup that 
threatened the behemoth incumbent with a freemium business 
model in the market for online tax preparation services.
    The division also investigated and secured a settlement in 
Google ITA in 2015. That settlement resolved allegations in the 
complaint that Google's merger with a producer of airfare 
pricing and shopping systems would harm competition among 
online flight search platforms, resulting in reduced choice and 
less innovation for consumers.
    Although I'm not able to discuss the particulars of our 
ongoing investigations, I think these examples of past cases, 
along with some recent public remarks, can assure you that the 
Antitrust Division will ask the right questions as we 
investigate whether any platform acquired or maintained its 
monopoly power through anticompetitive conduct.
    I look forward to your questions.
    [The statement of Mr. Delrahim follows:]

    [GRAPHIC] [TIFF OMITTED]
    
    Mr. Cicilline. Thank you, Mr. Delrahim.
    Before we begin the questioning, I recognize the ranking 
member of the full committee, Mr. Collins, for his opening 
statement.
    Mr. Collins. Thank you, Mr. Chairman. I appreciate it.
    And thanks for being here. This is, again, one of the 
bright spots, and I appreciate the chairman and ranking member 
on our side, and also the full committee chairman, that we can 
continue this. This is something that's needed to be done and, 
Mr. Delrahim and others, I thank you for being here.
    This antitrust investigation is continuing to be one of the 
bright spots on this committee's agenda this term, and the 
importance of digital technology in our constituents' lives 
grows every day. The tech sector is one of the greatest forces 
for innovation and wealth creation in the world and our 
economy. Rarely in history have we witnessed such a 
transformative change in how we go about our lives.
    Much of that change is very much for the good, but not all. 
Among these changes are the ways that companies compete, both 
fairly and unfairly, to provide goods and services to 
consumers. It is, therefore, critical that we work on a 
bipartisan basis to understand whether our current antitrust 
laws or our antitrust enforcement agencies are able to keep up 
with the task of the tech sector in the present time. We will 
have accomplished something important together if we can 
determine whether our antitrust laws need updating for the 
digital economy or whether the antitrust agencies need 
Congress' help to assure vigorous antitrust enforcement in the 
tech sector.
    From the start of our inquiry, I made it clear that 
overarching principles are guiding me in this inquiry.
    First, while some tech companies have become very big, and 
big is not necessarily bad, companies that offer new 
innovations, better solutions, and more consumer benefit at 
lower prices often become big, and they benefit society. 
Proposals to break up big companies just because they are big 
risk throwing out the baby with the bathwater and are simply 
punishing success.
    Second, just like existing antitrust laws, proposals for 
new legislation should aim to keep the free market free. 
Proposals to construct broad new regulatory regimes should be 
viewed with caution. Experience shows that regulatory solutions 
often miss the mark, solve problems less efficiently than free 
markets, and can create new opportunities for anticompetitive 
companies to suppress competition through rent seeking. That is 
especially true when the regulations attempt to take on 
evolving problems in fast-moving markets.
    The principle is particularly important to me as we seek a 
better way to protect privacy of consumers' online data. I 
announced in July of this year that I would be introducing 
legislation this term to achieve better protection, and I'm 
working hard on that legislation, and it is strongly animated 
by the principles that I have just laid out.
    Other proposals, like laws adopted in Europe and 
California, threaten to entrench the market power of large 
incumbent tech companies under the cloak of protecting online 
data privacy. I want us to instead enact new Federal law that 
better protects privacy without making it harder for new and 
small innovative companies to enter the market, jostle with the 
giants, and strive to become the blockbuster companies of 
tomorrow. We've got to keep that pipeline open.
    The heads of the antitrust agencies before us today also 
have stated principles they believe should guide antitrust 
inquiries into the tech sector, and I'm looking forward again 
to hearing your thoughts. We have talked many times before 
about this, and I appreciate that as we go forward.
    Again, this is what we need to be doing, and I think we 
have had long conversations in this arena, and I believe that 
the disruptors in our economy, many of these in the tech 
sector, have brought forth many, many good things.
    But I think we're also dealing in an new age and a new 
environment, and this is a good look forward. Where are we 
right now?
    Mr. Delrahim, we've talked many times about many things, 
and especially through music last year. Again, I appreciate 
your concern there. I still reiterate I'm looking forward as we 
move forward on consent decrees and others that that is not 
something that can be done without a lot of discussion and talk 
as we move forward. So I do appreciate that. And thanks for 
being here.
    And again, Mr. Chairman, this is really a good time, and I 
appreciate your continued interest in this, and yield back.
    Mr. Cicilline. Thank you, Mr. Collins.
    We will now proceed under the 5-minute rule. I recognize 
the gentleman from Georgia, Mr. Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman.
    And thank you, Mr. Delrahim and Mr. Simons, for coming 
today to testify.
    The concentration of power in the digital marketplace is 
something that should concern every American, and your agencies 
are on the front line in addressing unlawful uses of market 
dominance. Digital companies are acquiring their competitors at 
an alarming rate. Few, if any, platforms are truly 
interoperable, and the collection of and capitalization on user 
data has reached unprecedented heights.
    I'm also concerned that barriers to bringing antitrust 
cases have grown too high for the average American. Since the 
1980s, case law has snowballed to create evidentiary standards 
that prevent harmed individuals from commencing meritorious 
suits with any hope of success.
    I'm looking forward to talking with you all today about the 
manipulation of market power through data and the FTC's efforts 
to enforce our laws.
    Mr. Delrahim, a year ago you argued in a speech that, 
quote, ``data, even large amounts of it, may not act as an 
entry barrier in every digital market,'' end quote. 
Specifically, you said, quote, ``while there has been a 
temptation to use data as a proxy for price when determining 
the anticompetitive effects of a merger or conduct,'' end 
quote, that the value of consumer data, quote, ``should not be 
confused with price.''
    But just last week in a speech at Harvard Law School, you 
indicated that large amounts of data can entrench dominant 
players in digital markets and cuts out emerging competitors. 
You said that data is, quote, ``analogous to a new currency,'' 
end quote, and that antitrust enforcers need to be vigilant 
about the collection, aggregation, and commercial use of 
consumer data, end quote.
    Has your view on the role of data in the digital 
marketplace changed since your speech last year?
    Mr. Delrahim. Mr. Johnson, thanks for the question. I think 
both of those statements, I stand by them. I think, one----
    Mr. Johnson. They tend to be inconsistent.
    Mr. Delrahim. Well, let me explain. Let me explain. I don't 
think that you can directly correlate data with a particular 
price, partly because data has multiple dimensions to it.
    For example, just the user data, your data or my data, 
could be collected by numerous people here in what we term as a 
nonrivalrous asset, meaning that its value does not diminish by 
the number of people who would have it. If I had a $10 bill, by 
the time I gave it to the second person, a dollar to the second 
person, it would be only worth $8.
    However, usage data is different, and that's something 
we're trying to grapple with looking at that. By that, I mean 
your data from 2015 to 2017, your viewing habits, your 
purchases is not something that could be replicated by a new 
entrant who could start in 2019.
    So your usage data has a completely different value, it is 
much more unique than your user data, so we have to be careful 
about what kind of data and how we look at it, which is why 
this, what you guys are doing in the oversight, is so critical, 
and what we continue to do to learn in this industry, the 
competitive impact of data, is so important.
    Mr. Johnson. Thank you.
    Do you believe that antitrust enforcers' past reluctance to 
view concentrated control over data as an entry barrier has 
been a mistake?
    Mr. Delrahim. You know, I think it would be unfair for me 
to critique my predecessors' involvement of these. Every single 
transaction has different dimensions, and, frankly, our 
understanding of the marketplace. This is a fast-evolving 
market, and I think what the agencies know today may not be 
what they knew 10 years ago.
    Mr. Johnson. Let me ask you this as my time is running out.
    Mr. Delrahim. Sure.
    Mr. Johnson. Do you believe that the FTC, Mr. Simons, do 
you believe that the FTC has an overbearance on a policy that 
indicates to me that you feel like the risk of litigation is 
something that is a primary consideration in deciding whether 
or not to file a complaint in the case of a merger or in 
anticompetitive conduct?
    Mr. Cicilline. The gentleman's time has expired.
    Mr. Simons. So we find ourselves in a situation where we're 
resource constrained. So when you live in that kind of 
environment, you want to be careful about the complaints you do 
file. You don't want to file---- you want to focus on the ones 
that have a better chance of success and also the ones that 
have the most impact.
    So in that sense, we are concerned about litigation risk, 
and if we had more resources, we could bring more cases.
    Mr. Johnson. Thank you.
    I yield back.
    Mr. Cicilline. I now recognize the ranking member of the 
subcommittee, Mr. Sensenbrenner.
    Mr. Sensenbrenner. Thank you, Mr. Chairman.
    Last week I was in Berlin and Brussels talking about 
privacy, talking about competition, expressing my fear that the 
Europeans, led by the Germans, are attempting to use their laws 
on this as a way of, number one, forcing us to adopt their laws 
rather than enforcing ours; and secondly, being used very 
subtly as a protectionist mechanism for European data 
platforms.
    Let me start out by saying that basically U.S. antitrust 
law was designed to protect consumers. European antitrust law 
is designed to protect the competition. I cast my vote with the 
consumers, and I think that 100 years ago our predecessors in 
Congress got it right. We have to improve and reform both our 
enforcement in an increasingly globalized economy as well as 
dealing with the policy differences that the United States and 
our foreign competitors have had.
    Let me say that I have expressed repeatedly that Europe's 
General Data Protection Regulation, or GDPR, has been designed 
to squeeze out competitors and help entrench large incumbents, 
and it has enervated innovation.
    Are either of your agencies looking at that, particularly 
leading up to this international conference that will be held 
here next May?
    Mr. Simons. So we're very focused on the privacy issue, and 
in particular we've encouraged Congress to consider and adopt 
Federal privacy legislation.
    But one of the things we're very focused on and concerned 
about in that effort is the issues that you've just raised with 
respect to GDPR in Europe. We're very concerned that adopting a 
program like that could end up doing exactly the opposite of 
what we're trying to do with our competition mission, which is 
to entrench the large dominant platforms at the expense of the 
smaller competitors and the new entrants.
    By requiring opt-in consent on such a widespread basis, you 
put the consumer in a situation where the consumer is probably 
only likely to consent--confine that opt-in consent to so many 
competitors in the marketplace, and of course, the dominant 
ones would be the most likely to be able to get the consent.
    And also they're consumer facing. So, for example, data 
brokers who aren't consumer facing would have a difficult time 
potentially getting that kind of opt-in consent and competing 
in the marketplace. And those are the folks that are providing, 
I think, at least in our country, data to new entrants and to 
smaller competitors as a kind of a substitute for what Google 
and Facebook collect.
    Mr. Sensenbrenner. Well, you know, let me express my 
concern that if the Europeans turn that screw too tightly, it's 
going to have a very bad impact on transatlantic commerce, 
which will end up having a result of a recession or worse on 
both sides of the Atlantic.
    Now, I don't think from what I heard in Europe last week 
that they really have considered that very much. More 
importantly, they really don't care as long as the European 
platforms get a leg up on the American platforms.
    So when we're dealing with these issues, I think we have to 
be very, very careful that the unintended consequence of what 
we're doing is not to end up encouraging protectionist policies 
on the part of our foreign competitors in the name of, quote, 
antitrust enforcement, or, quote, privacy protection.
    You know, I agree with you, we need to have a Federal 
privacy law, which would make my arguments in Europe a lot more 
persuasive, I would say, but at the same time we've got to be 
very careful not only in what we want to accomplish, but making 
sure that it's limited to what we want to accomplish rather 
than having a lot of unintended consequences which hurt 
consumers on both sides of the Atlantic.
    And with that statement, I yield back.
    Mr. Cicilline. I thank the gentleman.
    I now recognize the distinguished gentlelady from 
Washington, Ms. Jayapal.
    Ms. Jayapal. Thank you, Mr. Chairman.
    And thank you both for being here.
    I wanted to start in a slightly different direction, and 
I'll direct these questions to you, Assistant Attorney General 
Delrahim, and that is to discuss no-poach agreements, which 
are, as you know, agreements that employers make with each 
other in which they agree not to recruit each other's 
employees. And these agreements have been found to inhibit 
competition among employers, which, in turn, harms workers.
    The FTC and the DOJ's joint guidance states that 
competition among employers for employees, quote, ``helps 
actual and potential employees through higher wages, better 
benefits, and terms of employment.''
    Three years ago, the Department of Justice's Antitrust 
Division took a formal public instance that no-poach clauses 
are, per se, illegal, correct?
    Mr. Delrahim. Correct.
    Ms. Jayapal. And that joint FTC-DOJ guidance explicitly 
states from an antitrust perspective, and this is a quote, 
firms that----
    Mr. Delrahim. Let me just clarify.
    Ms. Jayapal. Yeah.
    Mr. Delrahim. What we call naked no-poach. These are 
horizontal no-poach agreements. So there could be some 
variations to that. And these are vertical arrangements. 
Sometimes we see those in the franchise systems.
    Ms. Jayapal. Well, I am going to that. And the joint FTC-
DOJ guidance explicitly states from an antitrust perspective 
firms that compete to hire or retain employees are competitors 
in the employment marketplace regardless of--and this speaks to 
what you were just saying--whether the firms make the same 
products or compete to provide the same services, which seems 
extremely clear.
    But I've been a bit concerned that the DOJ recently has 
started to wobble away from that very clear position. And your 
Department actually actively argued in favor of more lax 
standards for franchise employers that use no-poach agreements.
    And I'm specifically going to refer you to a brief that 
your Department filed in Stigar v. Dough Dough in the Eastern 
District of my State, Washington State, arguing that franchise 
companies should be held to a different standard than other 
kinds of employers when they use no-poach agreements. Is that 
what you were arguing?
    Mr. Delrahim. We were arguing based on the law, and I'm 
happy to explain. Ultimately, we want to protect competition 
and the worker, and I'm happy to explain our reasoning for 
that.
    We argued in multiple cases, including the Duke-North 
Carolina, where we took an unprecedented step, for the per se 
treatment of that when the defendants, not only were they 
arguing for rule of reason treatment, but also seeking State 
action immunity. So we did that. Not only did we argue, but we 
intervened in that.
    In the franchise matters, we argued not so much that 
they're per se illegal, but that the rule of reason should 
apply when it's inside that system. And the reason for that 
is--some of you may know my background. I worked in my father's 
gas station for 8 years.
    Ms. Jayapal. Let me just, just because I have very little 
time, let me just----
    Mr. Delrahim. But this is really important for the workers 
that you're concerned about as we are.
    Ms. Jayapal. Right. And here is my question, I guess, is 
why the Department would choose to use this discretion that you 
have in situations, and in fact to the point where our attorney 
general in my home State of Washington actually had to submit a 
brief where they again explicitly clarified that no-poach 
agreements were per se illegal and that the distinction that 
you were making or that your Department was making was not 
consistent with past positions.
    The American Antitrust Institute actually wrote a paper 
directly disagreeing with your Department's stance on this 
issue.
    And so I guess the question I have is, when the agency is 
supposed to protect workers, and I believe that that's what you 
have been trying to do, from the harms of anticompetitive 
corporate behavior, why expend significant energy and precious 
resources in filing these briefs that allow large franchising 
corporate chains to get away with using no-poach agreements 
under, I would argue, under pretty flimsy justifications, 
having read some of the documents in this case?
    Because at the core of this is the fact that millions of 
workers are affected when employers make these agreements that 
undermine competition, and they, and we, I am really hoping 
that your agency intervenes on behalf of these workers.
    I want to give you just 5 seconds.
    And then I do have a question for Mr. Simons, if you want 
to say anything, very brief.
    Mr. Delrahim. Well, if I could ask the chairman, this 
requires more than a 5-second response, and I do not want to 
leave your constituents and this committee with the wrong 
impression that somehow that there's a distinction.
    I would like to explain--this stuff is, you know, it's 
complicated--but why it actually--our position actually 
benefits the exact worker that you are concerned about and the 
attorney general of Washington is concerned about--that's not 
what the case law is--and how our arguments actually protect 
those workers, not the reverse.
    So I'm happy to explain that. Would you like me to do that 
now?
    Ms. Jayapal. My time has expired, unfortunately, but I'm 
happy to take any information that you have on this.
    Mr. Delrahim. Mr. Chairman, can I just quickly explain why 
this is so important? Let me just give you one analogy, and 
this is Jiffy Lube.
    So if you're a franchisor and you have a franchise system 
and you have the folks who would invest, let's say, $350,000 to 
buy a Jiffy Lube franchise, and they would like to--and they 
invest that. So these are hardworking people employing locals.
    And if they want to train the new mechanic to do whatever 
they do, oil changes, the other car repairs, they need to train 
that and make sure that the competitor within that--the other 
Jiffy Lube 5 miles down the road is not going to now after 6 
weeks of training and the investments that they make to train 
that employee and probably have paid them, that that person is 
going to compete.
    So within reason, and we said this is why it's a rule of 
reason, not a per se illegality, it's important for them to 
have that assurance, that small business owner. Why? Because if 
they don't, and if the attorney general from Washington's rule 
is in place for those vertical restraints, what do you think 
will happen with that new small business owner?
    What they will do is say, you know what, employee? You go 
train yourself before I pay you and put you on the payroll, or 
I won't pay to train you to come in.
    This is a critical issue----
    Mr. Cicilline. I've let you go over 2 minutes.
    Ms. Jayapal. Yeah. And, Mr. Chairman, I just want to say 
that I think that this is a very important issue because it is 
a rewrite of previous Department policy and a different 
direction that the Department is going in making this new 
distinction.
    Thank you, Mr. Chairman. I yield back.
    Mr. Cicilline. I now recognize the gentleman from North 
Dakota, Mr. Armstrong, for 5 minutes.
    Mr. Armstrong. Thank you, Mr. Chairman.
    Mr. Simons, you said just earlier that consumers will only 
do a limited amount of opt-ins, when we're talking about that. 
And I'm curious about that, particularly because if they're 
standardized like a lot of them are on a platform, I mean, I 
would think after you've done 10, you won't care if you do 30. 
So I'm just interested in the rationale behind that.
    Mr. Simons. I mean, that's possible, but the other thing 
that might happen is people might not want their information 
spread so widely. It increases the risk of a breach.
    Mr. Armstrong. And I think that's an important part, and 
I'm actually going to disregard the privacy part when I ask 
these questions because that is one of--I mean, the flip side 
to sharing data is more people have my data.
    Mr. Simons. Right. Exactly.
    Mr. Armstrong. And I think that is an area where we 
continue to go.
    Mr. Delrahim, you gave a speech in Israel, and it discussed 
how not all data is alike. And I'm generally curious as to what 
types of data are more susceptible to being used in an 
anticompetitive manner. Because I think from somebody like me 
who doesn't----
    Mr. Delrahim. Sure.
    Mr. Armstrong [continuing]. I mean, understand this, which 
I think is most consumers, like, data is this one all-
encompassing word, but it's very different, correct?
    Mr. Delrahim. It is. It is very different. It takes many 
forms. And we have to take a look at that and its actual 
competitive impact.
    And as we look at the GDPR regime that Mr. Sensenbrenner 
raised, in addition to what Chairman Simon said, the other 
thing we look at is whether that regulatory regime actually 
creates barriers to new entry, is the cost of that collection, 
and whereas an incumbent may have already gathered certain 
data.
    But as I mentioned to Mr. Johnson, there is user data, 
there's usage data, and there's different qualities and 
attributes for each sets of data.
    Mr. Armstrong. And then I'm going to actually let you 
continue talking about the Washington versus--the franchise 
deal because, I mean, in a completely different sector, this is 
something we saw happen an incredible amount in North Dakota, 
which when our economy was growing is small businesses having 
employees taken by larger businesses after they invest.
    I mean, I think one thing that particularly with any 
specific skill set is the first 3 months, 6 months to a year 
when you're training a highly skilled employee, the investment 
you're putting into them from a business perspective far 
outweighs the return you get. So you're relying on that 
employment to pay off in year 2, year 3, year 4.
    And I know 5 seconds wasn't enough, so I'm going to allow 
you some time to answer it.
    Mr. Delrahim. The chairman was generous enough to allow me 
more than 5 seconds, which I did.
    But I think you raised a point that I think is really 
important, because we have to take a look at each of these 
restraints. Again, not a horizontal. We argued, we filed in the 
Wabtec case in Pennsylvania, we filed in the Duke-North 
Carolina case, a number of these, where we have gone in 
aggressively saying that this should be per se illegal. 
However, when it is within the system like franchise, as I 
explained, the rule of reason should apply. Are these 
reasonable restraints?
    If you're saying that you can never leave for the next 6 
years once I train you, well, I think a judge could find that 
unreasonable. However, there's limits and there's a test that 
our Supreme Court has put down, and I would submit what we have 
submitted is well within what the laws and the precedents, 
legal precedents are.
    Mr. Armstrong. And then would you expound on how that 
actually protects workers?
    Mr. Delrahim. It absolutely protects workers because it 
provides that small business owner the incentive to actually 
invest and train that employee. So the new employee who wants 
to enter the workforce can now get trained by that franchise 
owner because for those first 6 weeks that they're learning how 
to do a tune up or a brake you don't want them to walk across 
the street to the other competitor.
    And so those, within reason, can be--and every case is 
different. Every franchise, every restraint will be--should be 
treated differently. They should not be banned as per se 
illegal all the time because some plaintiffs' class has brought 
that case.
    Mr. Armstrong. And then so that's where you mean the 
reasonable test comes in.
    Mr. Delrahim. Yes. There's a set of tests in its duration 
and its effect, and we look at those, as do the courts. And 
there's a set of case law that guides the factors that go into 
analysis.
    Mr. Armstrong. And then I guess this can be for either one 
of you, but I'll ask Mr. Simons.
    As we talk about data sharing and how this creates a 
competitive edge, I ignored it for 4 minutes and 30 seconds. 
But how do we factor that privacy concern into this 
conversation?
    Mr. Simons. So you mean on the competition side?
    Mr. Armstrong. Well, if somebody has my data and we're 
requiring them to share my data, that means two people have my 
data.
    Mr. Simons. Right. So there's a tradeoff. I mean, you just 
have to balance one against the other. And if it's voluntary in 
terms of who shares--you know, whether the consumer's data is 
shared or not, that leaves it up to the consumer.
    Mr. Armstrong. So you're saying voluntary on the front end.
    Mr. Simons. Yeah. I mean----
    Mr. Armstrong. It has to be voluntary----
    Mr. Simons. I mean, a consumer can make a judgment--maybe 
there's an issue with how informed the consumer is--but the 
consumer can make a judgment about, do I want to be able to 
port all my data from one player to another, and now my data is 
in two places, and did I just double the risk of my data being 
breached?
    Mr. Armstrong. Wouldn't they do that on the front end, 
right? I mean----
    Mr. Simons. Yes.
    Mr. Armstrong. On whatever service they're getting, they're 
going to do it----
    Mr. Simons. Yes.
    Mr. Armstrong [continuing]. That's the first question 
they're going to get.
    Mr. Simons. Right.
    Mr. Armstrong. Thank you.
    Mr. Cicilline. I now recognize the gentleman from Colorado, 
Mr. Neguse, for 5 minutes.
    Mr. Neguse. Thank you, Mr. Chairman. Thank you for your 
leadership in hosting this important hearing.
    And thank you to both the witnesses for your testimony 
today.
    I just want to deviate from my prepared remarks for a 
minute because I'm struggling to follow this last exchange 
between Representative Armstrong and Mr. Simons. Help me 
understand your argument that informed consent--that 
essentially providing a GDPR-type condition here in the United 
States, that that would somehow put at risk data privacy. I'm 
not----
    Mr. Simons. And it's just something to consider. It's a 
factor to consider.
    And so the consideration is by requiring the consumer to 
opt--let me give you an example. Let's suppose, and this is a 
little bit stylized, but let's suppose you have a situation 
where you've got data that's not very sensitive at all, and you 
have data that's very sensitive. And let's suppose also that 
the data that's not very sensitive is data that's very kind of 
useful for doing targeted advertising, okay?
    And so if you had an opt-in for both of those categories, 
the sensitive and the nonsensitive, you might end up in a 
situation where a consumer is just, for whatever reason, maybe 
it's just inertia, they don't want to automatically give 
consent to every business that they come across on the 
internet, right.
    Because a lot of--like, for example, for smaller players 
and for new entrants for sure, they don't have a reputation 
maybe that's recognizable to the average consumer. So you're 
immediately reluctant to----
    Mr. Neguse. But how does that harm data privacy to the 
extent that a consumer decides----
    Mr. Simons. Oh. It doesn't necessarily harm data privacy so 
much, but what the harm is, is to competition. Because in my 
stylized example, you might have a situation where you don't 
really have harm from the nonsensitive data being used without 
opt-in consent to the consumer, but you have harm to 
competition because the small players and the new entrants are 
less likely to get access to it.
    Mr. Neguse. Has the FTC done any kind of empirical study to 
demonstrate whether or not the new GDPR regulations implemented 
in Europe have resulted in a dilution of concentration of 
market power of various email providers and so on and so forth?
    Mr. Simons. It would be an increase in concentration. We 
haven't done any ourselves, but other people are doing 
analysis, and the preliminary work suggests that it's 
concentrating share in the dominant platforms.
    Mr. Neguse. So if you could provide----
    Mr. Simons. Sure. Be happy to.
    Mr. Neguse [continuing]. The specific study that you're 
referring to, that would be helpful for this committee to 
consider, obviously.
    Mr. Simons. There's a few of them, but it's preliminary.
    Mr. Neguse. Well, and given that last point then, I think 
it would be important for us to contextually remember that 
since it doesn't seem as though there's finality to that just 
quite yet.
    Mr. Simons. No. There's not finality.
    Mr. Neguse. I do want to just talk briefly about the 
settlement with Facebook earlier this year and give you an 
opportunity to kind of explain the methodology that the FTC 
used to reach the regulatory settlement that you reached.
    Obviously, as I'm sure you're aware, there are a number of 
us in both Chambers of the Congress who were deeply 
disappointed, in our view, with the terms of the settlement, a 
$5 billion settlement. As you know, Facebook generated about 
$56 billion in revenue just last year, in calendar year 2018. 
So by my estimates, the settlement would entail about a month's 
worth of revenue for Facebook.
    Mr. Simons. Yeah, about 9 percent.
    Mr. Neguse. About 9 percent.
    Mr. Simons. About 23 percent of their profits.
    Mr. Neguse. Well, yeah, in a single year. And again, there 
are a number of other aspects of the settlement that I'd like 
to get to, and my time is limited. But if you could perhaps 
explain the methodology as to how you reached that outcome.
    Mr. Simons. Yeah. So, first of all, let me say that I'm 
very disappointed that you all are disappointed. And let me try 
to explain why I think what we did was a terrific outcome for 
consumers.
    So we have--first of all, I think the settlement alone 
stands as very--as very aggressive and much more than anything 
anyone else around the world has done. They haven't even come 
remotely close. In fact, if you took all the enforcement 
actions from all the privacy authorities around the world and 
combined them, they wouldn't even get close. So that's one.
    Two, even if we wanted to do more, we don't have the 
authority to do more. We do not have the authority to impose 
fines or on our own increase the injunctive relief. We have to 
go to court.
    So what we did is we negotiated long and very hard with 
Facebook to get the best relief we could get in a settlement 
and compare--then compare that to what we would have gotten if 
we had gone to court. It would have taken several years to go 
to court. We may have won, we may have lost. But even if we had 
won----
    Mr. Neguse. I appreciate that. Let me reclaim my time.
    Mr. Simons. Even if we had won, we would not have come 
anywhere close to what we----
    Mr. Neguse. Sure. I'll reclaim my time. Sir, I wanted to 
give you a chance to be able to explain. I have limited time. 
And I appreciate your explanation. And what I was going to say 
is that ultimately one point that I think you and I both agree 
on is that the tools that the FTC has under existing statute, 
in my view, and I suspect perhaps in yours, could be 
strengthened.
    And given the trend lines that are moving in this direction 
and the challenges that your agency faces in terms of dealing 
with these particular disputes, I would think that this 
committee could provide some leadership on that front. And so I 
look forward to having more conversations in that regard.
    Mr. Simons. I would be thrilled to do that.
    Mr. Cicilline. And I'll just let the committee know we're 
going to do a second round, so you'll have some opportunity to 
follow up.
    I now recognize myself for 5 minutes.
    Chairman Simons, in a letter for today's hearing, Marc 
Rotenberg, the president of EPIC, states, and I quote, that 
it's increasingly clear that data protection, competition, and 
innovation are all on the same side in a healthy internet 
economy. The critical challenge now for the committee is to 
ensure that the Federal Trade Commission fulfills its mission 
and safeguards these interests. The current path is not 
sustainable.
    And, Chairman Simons, how do you respond to concerns that 
the FTC has failed to act in response to numerous antitrust and 
privacy complaints over the past decade and has effectively 
ignored the obvious cost to personal privacy that has resulted 
from consolidation in the digital marketplace over this period? 
And do you agree that market consolidation in digital markets 
is coming at the expense of strong user privacy?
    Mr. Simons. Well, first of all, I reject that argument.
    Mr. Cicilline. Which argument?
    Mr. Simons. Well, the one you just stated from EPIC.
    So first of all, on the privacy side, we have a hundred-
year-old statute that was not in any way designed to anticipate 
the privacy issues that we face today. My predecessors at the 
FTC did an amazing job inventing essentially out of whole cloth 
a privacy regime that is the most aggressive in the world.
    So I think if you want us to do more on the privacy front, 
then we need help from you. We've done as much as we can do 
with the tools we have. What I was trying to explain before was 
that we do not have authority even remotely approaching what 
GDPR has, what the California Act has as well. So if you want 
us to do more, you need to give us the authority.
    In terms of----
    Mr. Cicilline. So I----
    Mr. Simons. I'm sorry. Go ahead.
    Mr. Cicilline. So I take it from that, you do agree with 
the last statement that I made, that market consolidation in 
digital markets is, in fact, coming at the expense of strong 
user privacy. You're just suggesting you need some additional 
tools to respond to that.
    Mr. Simons. Well, what I've said before is that the privacy 
issue was a critical issue to the U.S., to our country, and it 
involves very significant social and societal values. And in 
order to do privacy the right way, it has to be done with those 
values in mind, and you need--that needs to be----
    Mr. Cicilline. My question was a simple one. You are seeing 
in your work that, in fact, user privacy has been harmed as a 
result of this market consolidation in the digital marketplace. 
You just said that part of the reason is, if we want you to do 
more to protect user privacy, you need additional tools.
    Mr. Simons. Right.
    Mr. Cicilline. So I take it that's made on some 
observations you're making about the marketplace.
    Mr. Simons. Well, we have ongoing investigations involved 
in the digital marketplace, and so that's under study. I mean, 
not study, they're under investigation. It's not a study.
    Mr. Cicilline. Thank you.
    Mr. Delrahim, in a speech that was referenced that you gave 
on Friday you quote Professor Shoshana Zuboff, who I've had the 
opportunity to meet with, and you say, in speaking of her 
research and her recent book, you say that she has termed the 
commercialization of predicting human behavior and the 
accompanying encroachment on privacy as a form of surveillance 
capitalism or the unilateral claiming of private human 
experience as free raw material for translation into behavioral 
data.
    And so as we consider ways to protect America's privacy, 
particularly in light of how these protections may reinforce 
market power, shouldn't we think about addressing this 
underlying business model on behavioral advertising?
    I mean, some have suggested we should ban it completely. 
Some folks, like Roger McNamee, have recently made statements 
about sort of recognizing the control of your data as a human 
right. And isn't that sort of the underlying problem that we 
have to address in some way in our responding to the work of 
Professor Zuboff and this behavioral data collection?
    Mr. Delrahim. Well, Mr. Chairman, you know, that's an 
important issue. That's a big public policy debate outside of 
antitrust. As I've explained, privacy and data protection could 
be a quality element for the purposes of antitrust, and if you 
have competition between different platforms, then you could 
compete on some of those avenues, particularly where there's a 
revealed preference by the user that they value privacy, and I 
think more and more consumers do.
    As for a broader debate of whether or not we should, you 
know, ban that type of marketplace, as Professor Zuboff 
advocates, or place some limits or at least some disclosures, I 
think that's a debate for this body to have. I just enforce the 
laws that you write.
    Mr. Cicilline. But do you view that there is, in the 
consideration of competition and the effectiveness of the 
market, whether there's competition, that the impact on privacy 
is a factor? I think you already said that.
    Mr. Delrahim. Absolutely.
    Mr. Cicilline. How do you think that about that issue in 
your competition enforcement work?
    Mr. Delrahim. Well, we look at it, and there is--you know, 
what I'm happy about, with respect to some of this public 
discussion about antitrust, is there's this misconception that 
somehow, you know, the standards by which we enforce the laws 
is limited to price effects or just quantity effects, and it's 
not. The courts have repeatedly said quality, innovation, 
choice are elements of this, of antitrust, and the consumer 
welfare standard. It's just that I think we have to hone our 
skills, as well as familiarize the judges more with it because 
we haven't had many cases on those, certainly not as many as we 
readily prove with price effects. So I think we have to take a 
look and describe these types of harms as the Division has done 
in other cases.
    Mr. Cicilline. Thank you. My time is expired.
    I now recognize Mr. Armstrong, the gentleman from South 
Dakota, for 5 minutes.
    Mr. Armstrong. Still North Dakota.
    Mr. Cicilline. Still North Dakota.
    Mr. Armstrong. There's been suggestions that companies with 
large data repositories be forced to share that data with 
smaller competitors, especially since data is nonrivalrous. 
That seems, to me, like an extreme intervention from the 
government. I'm going to just start with, do those proposals 
concern you?
    Mr. Simons. Yeah. So it's nonrivalrous in the sense that 
you can duplicate it without diminishing the other--you know, 
the initial copy. The problem is it may be expensive and costly 
to produce the data set in the first place. So one example of 
that that we've had in our enforcement involves title plants. 
So it's all publicly available, right, because that's where--
you know, the title plants are collecting title information and 
they're getting it from public sources either online or they go 
to the courthouse and have to get it.
    So it's expensive, though, to create that title plant in 
the first place. And if you made the person who creates the 
title plant in the first place duplicate it for free, then 
what's the incentive to create it in the first place?
    Mr. Armstrong. Do you----
    Mr. Delrahim. I agree with that. You know, look, that's not 
to say that somehow the laws would not allow us to force that. 
We have a high burden to meet, should we want to force data 
sharing, but I agree with Chairman Simons that we should be 
very wary about doing that. Now, if there's a merger and you 
have two data sets, and we look at those as assets, and there's 
an overlap where they would have too much data, then that's one 
where we could say, you must sell this off--one of the sets off 
before we allow the merger to go through.
    But as far as a company who has invested and gathered that 
data through investment and hard work, we should be, you know, 
very careful to not force that sharing upon them as the Supreme 
Court has warned us in the past.
    Mr. Armstrong. And again, I'm just prefacing this, that 
this is not even discussing the privacy part of that 
conversation, which is a whole different issue. And I think 
that's important in that when we talk about this, we always 
have to make sure that--again, that privacy is part of that 
conversation. Because forcing somebody to sell their data or 
share their data is running into that as well.
    Mr. Delrahim. Unless they acquired it illegally, and that's 
a whole different story.
    Mr. Armstrong. Well, then we're talking criminal law, and 
then I can actually probably sound fairly smart about it.
    So when dealing with artificial intelligence and machine 
learning often the benefits of innovation, an increase with 
larger data sets, that provides a benefit to consumers in a lot 
of instances, and we're going to continue to go down this road. 
How do we approach large collection of data in the sense that 
it harms consumers or is used anticompetitively but also in 
certain circumstances can benefit consumers?
    Mr. Delrahim. Mr. Chairman?
    Mr. Simons. So I think it's very fact-specific. It depends 
on the circumstances, and you have to weigh one against the 
other.
    Mr. Armstrong. Which gets into our problem, is if you get 
to be so fact-specific that it's a little difficult for us to--
I mean, we have to give you guys the tools--I agree with Mr. 
Neguse when he left--but also at the same time, at some point 
in time, we have to draw some kind of bright line laws. I mean, 
that's regardless of where you're at in any situation. At some 
point in time, we have to find some area where the regulation 
hits a certain point.
    Mr. Simons. Well, our whole statute and the whole statutory 
regime is based on reasonableness. And so reasonableness means 
fact-dependent.
    Mr. Delrahim. Well, you look at the effects and you look at 
the harms. I think that's what we--you know, in balancing that, 
at least for competition. That's not to say that should you 
come up with some kind of a regime that affects that. But we 
should be very careful because there are some--lots of consumer 
benefits, lots of efficiencies, lots of transactions.
    We just had our trilateral meeting in Ottawa just a few 
weeks ago, where, you know, the Canadian enforcement officials, 
the Mexican enforcement officials, Mr. Chairman and I, had the 
privilege of attending. And, you know, to my surprise at least, 
the president of the antitrust authority in Mexico said she 
welcomed for the first time Amazon's entry into their market. 
They liked that because it lowered the price to the consumers, 
because Walmart had such a big market share in Mexico.
    So I think we have to be careful about the possible 
positive effect some of these technologies could have. We have 
to just make sure that we're eliminating the harm that they'll 
create.
    Mr. Armstrong. Well, and I agree, and I agree with the 
reasonableness and fact-specific, but also, at some point in 
time, if there isn't some guiding, I mean, roadmap, then--
reasonableness is a great word because it sounds great, but 
reasonableness can vary significantly depending on who is 
hearing the case, and it's hard to continue to build a company 
or to start innovation if your sole basis is, well, we'll cross 
that bridge when we get there.
    Mr. Simons. Yeah. So one of the things we've done in the 
past and we're going to do in the future is put out guidelines 
or commentaries that try to explain what are the things we look 
at, and give the, you know, the private bar and business 
community a better sense of what is--what is over the line 
versus what is not over the line.
    Mr. Armstrong. Thank you.
    Mr. Cicilline. Thank you. The gentleman's time is expired.
    I recognize the gentleman from Georgia, Mr. Johnson, for 5 
minutes.
    Mr. Johnson. Thank you.
    In the digital marketplace where data is the currency and 
one player has developed not just a corner on the market, but 
is the market, and the cost of acquiring the data has long 
since been exceeded by the profit, by the multibillion dollar 
profits that have been made, how can you promote competition in 
that digital marketplace if allocation of data from the only 
market player is off the table?
    Mr. Simons. Well, you want to make sure that they acquired 
their position lawfully, because if they didn't--if they 
didn't----
    Mr. Johnson. It's a given that they--well, I mean, assuming 
that the data was acquired in a legally permissible manner.
    Mr. Simons. If it's acquired in a legally permissible 
manner and it's used in a legally permissible manner, then----
    Mr. Johnson. But would anticompetitive----
    Mr. Simons. No. Well, if it's used for an anticompetitive 
purpose, then we could go after it, and we would.
    Mr. Johnson. Okay. All right. Okay.
    Mr. Simons, Facebook has repeatedly misrepresented how it 
uses individuals' data, and I worry whether the FTC's 
settlement releases Facebook for misrepresentations that the 
public is only now learning about. For example, TechCrunch 
reported in September that Facebook had publicly exposed the 
phone numbers of 133 million U.S. users. Assuming Facebook had 
not told users it would be exposing their phone numbers this 
way, and assuming Facebook exposed their numbers before the 
settlement was finalized in June, would Facebook's misconduct 
be released from liability under the settlement agreement?
    Mr. Simons. It would be released under the settlement 
agreement to the same extent it would be released if we went to 
litigation and won. No difference.
    Mr. Johnson. In August, Bloomberg reported that Facebook 
had paid contractors to transcribe users' audio chats. Did the 
FTC settlement release Facebook from liability for that 
conduct?
    Mr. Simons. I'm sorry, could you repeat that? I didn't 
catch that.
    Mr. Johnson. Facebook paid contractors to transcribe users' 
audio chats. Did the settlement release Facebook from liability 
for that conduct?
    Mr. Simons. It released Facebook from order violations that 
occurred prior to June 12 that did not continue past June 12. 
It did not release Facebook from Section 5 violations that we 
didn't already know about.
    Mr. Johnson. Just yesterday, CNET reported that when some 
users scroll through Facebook's app on their iPhones, Facebook 
activates users' cameras and starts watching them. Did the FTC 
settlement release Facebook from liability for that----
    Mr. Simons. I can just say what I just said and also remark 
that it's inappropriate for me to comment on whether or not 
we're conducting nonpublic investigations and----
    Mr. Johnson. Well, no, I'm just asking whether or not----
    Mr. Simons. And that's all part--that's all part of----
    Mr. Johnson [continuing]. That misconduct had been exempted 
by the settlement agreement.
    Mr. Simons. I don't know enough to know the answer to that 
question because I don't know enough to know--I don't have 
enough facts to know.
    Mr. Johnson. Does the FTC----
    Mr. Simons. But let me say one thing--and I'm sorry to 
interrupt you--which is that you can be assured that if there's 
something in the press that raises a privacy issue, our staff 
is either already looking at it or we'll immediately start 
looking at it when they see the media report.
    Mr. Johnson. Okay. But yet you need more manpower in order 
to be able to respond to these complaints that seem to 
proliferate continuously?
    Mr. Simons. Yes. We could use more resources, definitely.
    Mr. Johnson. Thank you.
    Does the FTC list anywhere the full universe of known order 
violations and known Section 5 violations for which the FTC 
granted the release to Facebook?
    Mr. Simons. No.
    Mr. Johnson. You do not list those offenses?
    Mr. Simons. I'm sorry, maybe I didn't understand your 
question.
    Mr. Johnson. Yeah. Does the FTC list anywhere the full 
universe of known order violations and known Section 5 
violations for which you granted Facebook a release?
    Mr. Simons. I believe they're in the complaint.
    Mr. Johnson. In the complaint. All right. Thank you.
    Mr. Cicilline. The gentleman yields back.
    I now recognize the gentlelady from Georgia, Mrs. McBath, 
for 5 minutes.
    Mrs. McBath. Thank you, Mr. Chairman. And thank you all for 
being here today.
    And I want to discuss what your work means for consumers. 
In our past hearings, we've talked about the consumer welfare 
standard, the idea that antitrust enforcement should focus on 
helping our consumers. We've discussed how that approach can 
sometimes overlook other effects such as employee mobility in 
the wages.
    But what's striking to me is that even with this standard 
that is supposed to be putting consumers first, consumers are 
still losing out. They're still far behind. A recent New York 
Times piece reported that consolidation is estimated to cost 
the typical American household about $5,000 per year, and with 
few competitors, huge companies can keep charging us all more 
without more worrying that we'll actually--that we will 
actually take our business elsewhere, actually be able to do 
that without considering that we can take our business 
elsewhere.
    One place that we've seen this is with the merger of 
Ticketmaster and Live Nation. Anyone who's bought a ticket 
online can tell you that the price that you see at first is 
often much less than what you'll pay at the time--by the time 
all the fees are included and all the fees that are added on. 
So in 2016, the New York State attorney general said that, and 
I quote, these fees constitute evidence of abuse of monopoly 
power, end quote.
    So my question today is for you, Mr. Delrahim. Your office 
recently acknowledged that it's investigating whether Live 
Nation flouted the 2010 consent decree it agreed to when 
merging with Ticketmaster. Reporting by The New York Times 
suggests that Live Nation has actually retaliated against 
venues that use ticket platforms other than Ticketmaster, 
violating the consent decree and undermining competition. So 
behavioral remedies like this consent decree are essentially a 
promise that a company won't abuse its increased market power 
following a merger. In your view, is this a cautionary tale 
about the wisdom of using behavioral remedies?
    Mr. Delrahim. Absolutely, Congresswoman, it is. And I gave 
a speech almost 2 years ago about the problems with behavioral 
remedies. Now, to assure you we have tried to do certain 
things, we have--all of our consent decrees the last 2 years 
have four new provisions in there that make them actually more 
enforceable. That particular consent decree is still active, 
and other than acknowledging what I acknowledged at the 
previous hearing, I won't comment on it.
    Mrs. McBath. Okay. Also, you've been deeply critical of the 
use of behavioral remedies in the past, observing that they are 
merely temporary fixes for an ongoing problem. Yet the 
Division's proposed remedy for the Sprint-T-Mobile merger, 
includes a long list of things that T-Mobile must do. These 
include offering operational support, handling billing support, 
and meeting specific traffic management requirements. And the 
Division says that its settlement requires the merged entity to 
divest to Dish, yet the success of the remedy is contingent on 
all of these behavioral conditions. How can you square this 
with your stated commitment to structural remedies?
    Mr. Delrahim. Well, Congresswoman, as you just mentioned, 
the actual remedy itself is structural. There's transition 
agreements to effectuate and maximize the success of such 
structural remedy, just as we did in Bayer-Monsanto where we 
divested about $11 billion of assets. But through that period, 
Bayer and Monsanto had to provide transition services to BASF, 
and I've never said that those should be somehow shied away 
from.
    But the actual ultimate remedy, like we had in Comcast-NBCU 
or Live Nation-Ticketmaster or some of the host of some of 
these, we should be careful. We should be something of a last 
resort. If there's a structural remedy available, that's what 
we should be going for.
    Mrs. McBath. Okay. Thank you.
    And, Mr. Simons, the FTC held a workshop earlier this year 
to address concerns about the online ticket sales. At that 
event, numerous participants called on the FTC to mandate 
transparent upfront pricing. What is the FTC doing to address 
this call to action?
    Mr. Simons. We're still putting together the results of the 
workshop, and so the staff will make a recommendation to us.
    Mrs. McBath. And may we have a live update or may we have 
access to that information to this committee once that's made 
available?
    Mr. Simons. The committee can ask for, you know, can ask 
for anything, and we're very responsive.
    Mrs. McBath. Okay. So then for the record, I'm asking that 
you make that----
    Mr. Simons. Well, I mean, the chairman----
    Mrs. McBath [continuing]. Available to the committee.
    Mr. Simons. Yeah. If the chairman wants it, then we give 
it. It's done very simple.
    Mrs. McBath. Okay. Thank you. My time is expired.
    Mr. Cicilline. Thank you.
    And that gives me a moment to say thank you, Chairman 
Simons. Your staff has been terrific in providing technical 
assistance on our drug pricing effort to reduce prescription 
drug prices, so----
    Mr. Simons. And we are thrilled to do it.
    Mr. Cicilline. Thank you. Thank you for that.
    I now recognize myself for 5 minutes.
    I want to turn, as you both know, Google is under--
currently, under really immense antitrust scrutiny by State and 
Federal enforces as well as this subcommittee. And 
notwithstanding the scrutiny, Google has nevertheless announced 
a series of data-driven transactions over the past several 
months, including its multibillion dollar acquisition of Fitbit 
and Looker. As I've said before, Google's proposed acquisition 
of Fitbit would threaten to give it yet another way to surveil 
users and entrench its monopoly power online.
    Earlier today, a coalition of public interest 
organizations, including Open Markets, Public Citizen, and 
EPIC, sent a letter to the FTC urging it to block Google's deal 
to buy Fitbit. As they note, ``the hubris of the executive team 
to pursue an acquisition of this size, a proposed $2.1 billion, 
while under Federal and State antitrust investigations is 
astonishing,'' end quote.
    So I'd ask you, Chairman Simons and Mr. Delrahim, do you 
think we need to consider a merger moratorium for dominant 
platforms during the course of these ongoing investigations?
    Mr. Delrahim. Well, Mr. Chairman, I think there's a lot 
that can be done short of a merger moratorium. I think by doing 
that, we might risk actually harming consumers, because there 
could be--there could be mergers and transactions that could be 
procompetitive. That is not to say that if they're gaining more 
market share in the same defined market----
    Mr. Cicilline. So how about a qualified moratorium, a 
moratorium unless it was demonstrated that it was 
procompetitive?
    Mr. Delrahim. Flipping the----
    Mr. Cicilline. It seems like your answer is no, but it 
seems like in this context where there is significant harm 
being imposed upon consumers, it seems like something worth 
considering, but I take it you disagree?
    Mr. Delrahim. I don't necessarily disagree. I don't have a 
clear administration position on that, but we'd be delighted to 
explore that with you or, look, there's burdens of proof that 
you can play with as well, if people have certain market power.
    Mr. Cicilline. Chairman Simons.
    Mr. Simons. And we're looking at the uncon--we're looking 
at consummated mergers as part of our Technology Enforcement 
Division mandate.
    Mr. Cicilline. Thank you.
    Chairman Simons, I'm particularly concerned about the FTC's 
investigative process and whether the FTC makes best efforts to 
identify the full extent of the violations, especially when it 
comes to assessing individual liability. And so my first 
question is, did the FTC depose Mark Zuckerberg or Sheryl 
Sandberg rather than other senior employees or outside counsel 
who may lack decisionmaking authority at Facebook as part of 
the investigation into Facebook's 2012 consent decree 
violation?
    Mr. Simons. It's inappropriate for me to talk about the 
specific details of the investigation that haven't--in a public 
forum that haven't been released before.
    Mr. Cicilline. An investigation that's concluded?
    Mr. Simons. Yes. So, for example, we don't turn over the--
we don't make public the----
    Mr. Cicilline. I'm not asking you to make public--I'm just 
asking were they deposed, did an action happen? Did the FTC 
depose Mr. Zuckerberg or Sheryl Sandberg as part of that, 
rather than--or did they depose either of them?
    Mr. Simons. Oh, okay. So I understand actually that was 
been public already, so, no, we did not.
    Mr. Cicilline. Okay. Did the FTC depose any high level 
executive at Facebook as part of this investigation?
    Mr. Simons. That's not public.
    Mr. Cicilline. Well, at the FTC's press conference, Jim 
Kohm, Associate Director of the Enforcement Division of the 
Bureau of Consumer Protection, suggested that the FTC used its 
power to depose Mark Zuckerberg as leverage to secure a larger 
settlement sum. He said, and I quote, ``part of getting this 
tremendous result is we didn't need to depose him, but we could 
use that to get more protections for the public.''
    And so my question is, is it FTC practice to use 
depositions as a bargaining chip to secure a higher settlement 
sum? And if the purpose of a deposition is to gather more 
facts, isn't it problematic to trade that away? How can the FTC 
determine what would constitute an appropriate settlement if 
the FTC hasn't finished gathering all the relevant facts 
particularly from the executives of the company?
    Mr. Simons. So we looked at millions and millions of pages 
of documents, and even if you--even if we didn't look at his 
specific files, there would be emails between him and somebody 
else. And we would have the somebody else's files, right, and 
their documents.
    Mr. Cicilline. You can understand why this would be of 
concern to the public, that we would have traded away the right 
to question the decisionmaker at Facebook in a piece of 
litigation that you are trying to determine if they violated a 
consent decree.
    Mr. Simons. Well, so we know they violated a consent--the 
consent order, and then that's why--that's why we prepared a 
complaint and were prepared to sue them. And the settlement 
that we reached, in my mind at least, I was assuming that if 
we'd gone to litigation or investigated more--we were already 
investigating plenty and it was taking a long time, and I 
wanted the consumers protected. I didn't want this to go on 
forever. So my own view was that even if we had discovered 
several more or a handful or even a lot more violations of the 
consent order, we still wouldn't have gotten nearly the relief 
we got if we had gone to court.
    Mr. Cicilline. So let me just ask my last question, Mr. 
Chairman, in 2008, the FTC approved Google's acquisition of 
DoubleClick, despite many red flags that the deal raised for 
user privacy and which groups like EPIC pointed out. At the 
time of the transaction, Google made certain privacy 
commitments that it broke within a few years. And again, with 
this notion of repeat offenders, when reviewing transactions, 
how does the FTC factor in a history of misrepresentations and 
broken promises by one of the merging parties?
    Mr. Simons. Yeah. So one thing is clear, they don't get the 
benefit of the doubt. We assume the worst.
    Mr. Cicilline. Okay.
    Mr. Simons. And we conduct ourselves accordingly.
    Mr. Cicilline. I want to thank our witnesses.
    I hope you understand that the passion of this subcommittee 
and these questions are because these are issues we care deeply 
about, and we're reflecting the concerns of our constituents on 
all of these issues, and I hope this will continue to be an 
ongoing conversation because you both play a very important 
role in this work.
    This concludes today's hearing. Thank you again to our 
witnesses.
    Without objection, all members will have 5 legislative days 
to submit additional written questions for the witnesses or 
additional materials for the record.
    And before I gavel out, I'd just ask unanimous consent that 
a letter from the Electronic Privacy Information Center be made 
a part of the record and a letter to Chairman Simons and 
Commissioners Chopra, Phillips, Slaughter, and Wilson be made 
part of the record.
    Without objection, the hearing is adjourned.
    [The information follows:]

      

                      MR. CICILLINE FOR THE RECORD

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    [Whereupon, at 3:32 p.m., the subcommittee was adjourned.]

      

                                APPENDIX

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                       MS. JAYAPAL FOR THE RECORD

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                        MR. BUCK FOR THE RECORD

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