Lawmakers Get Earful About Big Tech Biz Practices From Smaller Tech Players

Too big, too dominant — and anticompetitive, to boot.

To that end, at a House Judiciary Committee “field” hearing in Colorado, titled “Online Platforms and Market Power: Competitors in the Digital Economy” a number of smaller tech firms called out Big Tech giants such as Amazon and Google for what they said were unfair business practices.

The hearing comes against the backdrop where the subcommittee has been gathering testimony from various market participants and observers on how the tech landscape has changed across search, hardware and software, how data is collected and how it is used.

The roster of witnesses testifying against Big Tech’s business practices on Friday came from smaller firms such as Sonos, which makes smart speakers; Basecamp, which focuses on business software; Tile, which makes tracking devices, and PopSockets, which in the past sold mobile device accessories through Amazon.

The testimony of those executives alleged that Big Tech has been abusing its dominance of various marketplaces to stack the playing field against small-to-midsized companies.

“It is apparent that the dominant platforms are increasingly using their gatekeeper power in abusive and coercive ways,” U.S. Rep. David Cicilline of Rhode Island, who serves as chairman of the House Judiciary antitrust subcommittee.

“It is far too common to hear horror stories from startups and other small businesses about how a dominant platform’s abrupt changes have destroyed their business,” he said in remarks.

In his testimony, David Heinemeier Hansson, chief technology officer and founder of Basecamp, voiced concern that “the power that these Big Tech companies wield over small tech companies is terrifying.  If your presence ends up displeasing any of these conglomerates, they can make you essentially disappear from the marketplace with the press of a button — by relegating your position in their search engine to page 42, or by banning your application from their app stores altogether.” And in an example of the reach Big Tech has over smaller firms, he said that 40 percent of Basecamp’s marketing traffic comes from the result of a Google search.  Other search engines such as Yahoo barely break 1 percent, he said.

The Internet’s ‘Front Door’

Hansson contended that the monopoly Google enjoys in search, “which amounts to controlling the front door of the internet, allows Google to shake us down for protection money with ease.”  He said that Google has allowed the company’s competitors to purchase ads “on our trademark, blocking and misdirecting consumers from reaching our site.”

Separately, Patrick Spence, chief executive of Sonos, took note of Amazon and Google in his remarks and said Google and Amazon have responded to the rise of the smart speaker market, having flooded the market with dramatically price-subsidized products. The longer-term will see price increases even while new entrants are prevented from entering the market. And drilling down a bit, he said that Sonos had developed the ability for both Amazon and Google voice assistants to be deployed across smart speakers concurrently. Google has demanded as a condition of allowing Sonos to feature Google Assistant that such concurrency never be allowed with any other voice assistant.

The company has a lawsuit unrelated to those practices, and centered on intellectual property, in place against Google.

PopSockets’ Barnett said that his firm, which has sold 165 million PopGrips through six years, began a relationship with Amazon’s retail team through the tech giant’s third-party platform, Seller Central, beginning in 2016, and despite explosive growth, the relationship “never felt like a true partnership,” spurring PopSockets to end that relationship in 2018.

Barnett said in testimony that in the wake of that decision to end the relationship with Amazon, the firm was unwilling to require sellers to provide proof that PopSockets products it was selling were indeed authentic. In his remarks, Barnett estimated that in 2019, his company lost an estimated $10 million in revenue as a result of not selling through Amazon Retail and Amazon’s actions.

In the testimony provided by Kirsten Daru, the general counsel of Tile, said that Apple and her firm had enjoyed a mutually beneficial relationship for years, beginning when the Tile app became available through the Apple App store and Apple also began selling Tile devices in retail locations.

In April of this past year, she said, Apple launched a competitive “Tile-like” hardware offering and enhanced its “Find my iPhone” app into one that resembled Tile’s. Then the tech giant said that it would no longer sell Tile products and hired a Tile engineer away from the firm.

Said Hansson: “Help us, Congress.  You’re our only hope.”

Elsewhere Around the Globe

Moving beyond U.S. shores, add Australia to the list of countries that will not embrace Libra, the cryptocurrency being developed by a consortium of entities including Facebook. As noted in The Financial Review, the Reserve Bank of Australia has said that there are risks tied to the stablecoin, and that global efforts for any digital coins (Libra included) must address those risks before launch.

The bank also said that Australia is already “well served by a range of low-cost and efficient real-time payment methods, such as the NPP, that utilize funds held in accounts at prudentially supervised financial institutions,” it told a committee on financial and regulatory technology.

“Moreover, while Australians may not have been well served by banks providing cross-border payment services in the past, a number of new non-bank digital players have entered the market in recent years offering significantly cheaper and faster money transfer services,” said the bank in its statement.