House Panel Hears Stories of Alleged Abuse by Tech-Platform 'Giants'

"Companies across the online ecosystem, both large and small, have found themselves dependent on the arbitrary whim of these platform giants, one algorithm tweak away from ruin,” said Chairman David Cicilline, D-R.I. "It has become clear that these firms have tremendous power as gatekeepers to shape and control commerce online.”

“We have seen the largest platforms continue to expand and increase their market power,” raising concerns “about how that power is being used,” said Rep. Ken Buck, R-Colo. Congress shouldn’t forget benefits innovation has brought for consumers and that big isn’t always bad, he said. “Any legislative proposals … should be consistent with maintaining a free and competitive marketplace. Proposals to create broad new regulatory regimes must be viewed with caution. … Burdensome regulations often miss the mark.”

“The market conditions that allowed us to innovate and thrive over the past two decades are being endangered by the rise of a small group of dominant companies with unprecedented power,” said Patrick Spence, CEO of smart speaker company Sonos. “We believe that this committee needs to act urgently to rein in the power of these dominant companies.” The company is suing Google (see 2001070041).

Big players so dominate the market, “they have become essential business partners for every company,” Spence said. Getting access to their platforms is becoming “more and more of a take it or leave it proposition.” The companies have even asked Sonos to suppress its inventions, he said. “The most recent example of this is Google’s refusal to allow us to use multiple voice assistants on our products simultaneously,” he said: “We need to rethink existing laws and policies.”

PopSockets had enormous success initially when it sold on Amazon, said David Barnett, CEO of the company, which makes removable grips for smartphones. Then, counterfeits became an issue and “we discovered that Amazon itself had sourced counterfeit product and was selling it alongside our own products,” he said. “At one point, we were recording a thousand listings a day of fakes.”

Amazon bullied PopSockets, Barnett said. Amazon sets the price and “they come back to us and demand funding for their lost margin when they lower their price.” Barnett said at that point, the “bullying begins.” PopSockets decided to end the relationship. Amazon’s response “was, ‘No, you’re not leaving the relationship,’” he said: “I found that unbelievable … after we told them that bullying was the main reason we were leaving.” The company left anyway and Amazon removed listings of its PopSockets’ resellers, he said. Other companies continue to do business with Amazon, he said: “It’s because of the power asymmetry that companies tolerate this, they have to tolerate it.”

“PopSockets has been a valued retail vendor at Amazon and also supplies its products directly to other major retailers,” an Amazon spokesperson emailed. Like any brand, the company is “free to choose which retailers it supplies and chose to stop selling directly through Amazon. Even so, we’ve continued to work with PopSockets to address our shared concerns about counterfeit, and continue to have a relationship with PopSockets through Merch by Amazon, which enables other sellers to create customized PopSockets for sale.”

David Hansson, chief technology officer of software company Basecamp, said that when company launched in 2004, the internet offered a largely free and open market. That's “no longer true,” he said: “The internet has been colonized by a handful of big tech companies that wield their monopoly power without restraint. This power allows them to bully, extort, or, should they please, even destroy our business.” Big platforms control whether “customers are able to find us online” and “can access our software using their mobile devices,” Hansson said. “The promise that the internet was going to cut out the middleman has been broken.”

Google has an almost complete monopoly over internet searches, Hansson said. “Their multibillion dollar bribes to browser makers like Apple ensure no fair competition will ever have a chance to emerge.” With its app store, Apple owns “one of the only two mobile application stores that matter” and the other belongs to Google, he said: This “cozy duopoly” means Apple can charge “exorbitantly high” 30 percent fees for processing payments. “Help us, Congress, you are our only hope,” Hansson said.

“We created the App Store with two goals in mind: that it be a safe and trusted place for customers to discover and download apps, and a great business opportunity for all developers,” an Apple spokesperson emailed. “We continually work with developers and take their feedback on how to help protect user privacy while also providing the tools developers need to make the best app experiences." Google didn’t comment.

Cicilline has heard too many “horror” stories from small companies that an abrupt change from one of the platforms has destroyed their business. “It is apparent that the dominant platforms are increasingly using their gatekeeper power in abusive and coercive ways,” he said: “Because these platforms function as bottlenecks for online commerce, they are able to set the terms and conditions of competition, giving them immense power to pick winners and losers in the online economy.”