On Friday, members of Congress heard businesses complain about blatant intellectual property theft, predatory pricing, and other unfair business practices. The target of the complaints wasn’t China, however, but U.S. tech giants Apple, Amazon, Google, and Facebook.
One by one, executives of smaller tech firms pleaded for action to the House Subcommittee on Antitrust, which had traveled to the University of Colorado in Boulder to hear from entrepreneurs about the growing dominance of the biggest tech firms in the U.S.
“Venture capital firms are well aware of the kill zone that surrounds start ups that pass within striking distance of the dominant platforms,” Patrick Spence, CEO of smart speaker maker Sonos, told the committee.
Spence claimed his company had been browbeaten by Google, which he claims deliberately infringed on its patents and refused to provide access to its popular Google Assistant voice service, unless Sonos also blocked consumers from having simultaneous access to Amazon’s competing Alexa tool.
David Barnett, the CEO of phone accessory maker PopSockets, described how Amazon allegedly ignored blatant counterfeits to his company’s products, while also pressuring him to pay for discounts that PopSockets had never agreed to under contact. Barnett also described it as his “weirdest relationship” with a retailer.
“It’s bullying with a smile,” Barnett testified, adding that Amazon’s demands invariably came by telephone from representatives who followed a strict script. When PopSockets decided to terminate its relationship with Amazon, he said the Seattle giant responded by saying it wasn’t leaving the relationship, then punished it by withholding funds it owed and by cutting off all its licensed resellers. “I found this unbelievable,” Barnett said.
Barnett and Spence joined executives from two other small tech firms who detailed abusive behavior by the four giants, and who pleaded for lawmakers to act.
“Help us Congress, you’re our last hope,” said David Hansson, the founder of project software service Basecamp who also decried Google’s practice of showing ads for competing services when customers searched for his company.
Congress appears to be listening to the smaller businesses’ call for help. Committee members repeatedly expressed sympathy for the companies, and described their own misgivings that the tech giants may be stifling innovation and abusing their monopolies over data.
The most worrisome development for the big tech firms is that Congressional concern seems to be emanating from both sides of the aisle. Ken Buck (R-Co), a staunch conservative and small government advocate indicated Congress is ready to take concrete measures to address dominance by big players.
“There is great bipartisanship in the examination of this,” said Buck. “It’s clear there’s abuse in the marketplace and a need for action.”
Such words likely came as welcome news to Kirsten Daru, the vice president of Tile, which makes a gadget that helps consumers keep track of personal items like keys and wallets. She described how Apple has recently decided to create a similar product, and that it has tilted the scales in favor of its own service—a not uncommon complaint since last year when complaints arose that Apple promotes its own products first in its App Store.
Basecamp’s Hansson likewise decried Apple’s behavior in controlling the App Store, saying companies are at mercy of an app review process that “would make Kafka blush.”
All of this would seem to portend trouble for the big tech players, but for the fact that the members of Congress also expressed uncertainty about what the remedy should be. Buck and others raised the possibility of rewriting antitrust laws, or increasing funding to the agencies charged with antitrust enforcement, but offered few specifics.
In an interview with Fortune after the hearing, Buck said he was keen to obtain more information before committing to any specific actions. Meanwhile, subcommittee Chairman David Cicilline (D-RI), told Fortune he believes the antitrust agencies are sorely underfunded, but also suggested he was wary of drastic measures such as breaking up the large tech companies.
Cicilline pledged action in the coming months, saying the subcommittee would present its findings to Congress by the end of March.
It seems unlikely, however, that major legal challenges will affect the tech giants anytime soon. As of Friday, the share prices of Apple, Amazon, Google and Facebook were all at or near their all-time highs.
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