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Recode Daily: Big Tech told Congress it has plenty of competitors. But does it really?

Plus: Amazon is back in the antitrust hot seat, this time in the EU. 

An Amazon logo seen outside a building in Toronto... Photo by Dinendra Haria/SOPA Images/LightRocket via Getty Images

We have the counterpoints to Google, Apple, Amazon, and Facebook’s antitrust defenses. The House grilled representatives from Big Tech companies during a much-anticipated antitrust hearing this week, where they asked about everything from the size of their businesses to their potentially anti-competitive practices. In response to the questioning, Google, Facebook, Amazon, and Apple had one consistent defense: If we’re so big and bad, how come we have so many competitors?

  • This isn’t new: Giant companies trying to convince Washington regulators to bless their mergers or regulate them less (AT&T and Time Warner are just one example) often do so by insisting that they have plenty of serious competition.
    [Rani Molla and Peter Kafka / Recode]

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Amazon is back in the antitrust hot seat, this time in the EU. The European Commission, the EU’s antitrust enforcer, said it will investigate whether “Amazon is abusing its dual role as a marketplace where independent sellers can offer products and as a retailer of products in its own right,” according to the Wall Street Journal. The probe will explore whether Amazon is using non-public data from the third-party merchants on its marketplace to compete against them.

  • What’s next: The investigation could lead to “formal charges, fines and orders for the company to change business practices.”
  • The background: The EU has led antitrust investigations into Google, fining the company $9.25 billion in three separate cases. Facebook was also fined $122.7 million over misleading authorities when seeking approval for its acquisition of WhatsApp.
    [Sam Schechner / Wall Street Journal]

Think before you selfie: Privacy concerns about FaceApp are legitimate, even if people are focusing on the wrong reasons. If you’ve been on the internet in the past day and a half, you’ve seen them: selfies of just about everyone you know looking like they just woke up from a 50-year nap. But FaceApp, which has been around since 2017, “differs from other photo-editing applications because it uses artificial intelligence to alter the photo, instead of slapping a filter on top of it,” according to the Washington Post. Almost as soon as the FaceApp #AgeChallenge went viral on Twitter, concerns over privacy started to come up — but people seemed more worried that the app is owned by a Russian company, rather than its questionable terms of service. The DNC even sent a security alert warning 2020 presidential campaigns not to use FaceApp because of its Russian connections, according to CNN.

  • What the app collects: According to these privacy terms, the app can collect: Any photos or other content that is uploaded and posted; information on websites the user visits and how they use the app; cookies and data that is shared with third-party advertisers to deliver targeted advertising; IP addresses, browser types, referring/exit pages and URLs; the number of clicks; and domain names, landing pages, pages viewed, and emails opened. And your metadata. But the app says it doesn’t identify individual users. *Whew*
  • What’s concerning: While that is quite a list of data the app is collecting on you, what has privacy experts on alert is that the app stores images in the cloud — which means it could access them even if you delete them from your app. On Wednesday, FaceApp told TechCrunch that images are typically stored on its servers only for 48 hours. (As Vox’s Kaitlyn Tiffany reports, Snapchat uploads user photos to its servers too, but it promises to delete them.)
    [Hannah Denham / Washington Post]

Netflix thought it would add 5 million new subscribers this quarter. Instead, it only added 2.7 million. And as Recode’s Peter Kafka writes, this sluggish growth happened before Netflix loses Friends and The Office. These are not great numbers for CEO Reed Hastings, who “depends on producing go-go subscriber additions every three months to keep Wall Street happy.” In fact, Wall Street dropped the value of Netflix shares 10 percent after Wednesday’s earnings report. Possibly more alarming is Hastings’s reason for the lower-than-expected numbers: “We think Q2’s content slate drove less growth in paid net adds than we anticipated.” As Kafka puts it, “We thought more people would like the stuff we make, like Triple Frontier, and the stuff we buy from other people, like The Office.”

  • What’s ahead: Netflix thinks this Q2 miss is simply a Q2 miss, rather than a sign of things to come. And the company is aiming to add 7 million subscribers in the third quarter.
  • This could just be the beginning: Things are going to get much tougher for Netflix over the next year, as Disney and WarnerMedia roll out competitive streaming services with popular titles they currently license to Netflix.
    [Peter Kafka / Recode]