Patrick Spence, president and chief executive officer of Sonos Inc., speaks during a Bloomberg Technology Television interview in San Francisco, California, U.S., on Monday, Feb. 11, 2019.
David Paul Morris | Bloomberg | Getty Images
On Friday, executives from four companies aired their grievances about the Big Tech giants to Congress without the protection of a closed door.
While criticisms of Facebook, Google, Apple and Amazon are far from uncommon these days among academics and politicians, as well as privately by developers and advertisers, it’s more rare to see these concerns raised publicly by companies that still rely on Big Tech’s services.
But witnesses at Friday’s testimony to the House Antitrust Subcommittee at the University of Colorado said they felt they were in a position to speak out despite potential risks to their businesses. Sonos CEO Patrick Spence, PopSockets CEO David Barnett, Basecamp CTO David Heinemeier Hansson and Tile General Counsel Kirsten Daru took the stand.
Spence said his company is “in the fortunate position where I think we’re strong enough financially” to speak out, though he said he is still “taking a risk.” Sonos filed suit against Google for patent infringement last week and alleges Amazon behaved similarly but that it does not have the capacity to sue both simultaneously.
“I feel that this is a big enough issue that people need to speak out,” Spence told lawmakers. “We have a responsibility to speak for those that can’t.”
The witnesses described some of the tactics that could make smaller players who rely on the large tech firms’ services wary of coming forward. Barnett accused Amazon of what he called “bullying with a smile,” for example. He claimed Amazon executives would call to pressure the company to lower prices on the platform or risk Amazon sourcing PopSocket products from third-party sellers. PopSockets ultimately ended their relationship with Amazon, but Barnett said they continued to have trouble communicating with the company after that about resolving their balance.
An Amazon spokesperson said in a statement, “We sought to continue working with Popsockets as a vendor to ensure that we could provide competitive prices, availability, broad selection and fast delivery for those products to our customers. Like any brand, however, PopSockets 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.”
Spence said companies like Google and Amazon use their dominance to both subsidize products in new markets they are entering and impose restrictions on third-parties to maintain their dominance. In his opening remarks, Spence accused Google of refusing to let Sonos integrate Google Assistant into its products if it implemented a feature that lets users host multiple voice assistants at the same time. As a result, Spence said, Sonos customers must choose a single voice assistant on their devices through an app (he said Amazon, which lets Sonos users access Alexa, did not place similar restrictions on that feature).
“There’s such a dominant power that exists with these companies that when Google or companies like that are asking for these things, you really, even for a company of our size, feel that you have no choice but to provide them,” Spence said.
A Google spokesperson said in a statement that “Sonos has made misleading statements about our history of working together. Our technology and devices were designed independently. We deny their claims vigorously, and will be defending against them.”
Hansson, the Basecamp CTO, blasted Facebook and Google’s advertising models, focusing in particular on Google’s search advertising, which he called a “shakedown.” Despite working to build a good reputation online for 20 years to show up in the first page of search results, Hansson said, “the only thing that matters is whether you buy the advertisement” at the top of the results.
“For trademarked terms like the name of a business, our policy balances the interest of both users and advertisers,” a Google spokeperson told CNBC is response to Hansson’s statements. “Like other platforms, we allow competitors to bid on trademarked terms because it offers users more choice when they are searching. However, if a trademark owner files a complaint, we will block competitors from using their business name in the actual ad text.”
Facebook declined to comment comment on the hearing.
Daru, of Tile, lodged her complaints against Apple for its restrictions on its App Store and for creating a product similar to Tile’s item-finding technology. Daru said the competition in itself isn’t the problem, but unlike a third-party app like Tile, Apple’s own “Find My” apps ship by default on Apple devices. Daru also said Apple’s new requirements for developers, which it touts as privacy advancements, further entrench its own technology instead.
Competing with Apple is like “playing a soccer game,” said Daru. “You might be the best team in the league, but you’re playing against a team that owns the field, the ball, the stadium and the entire league and they can change the rules of the game … at any time.”
In a statement, Apple said, “In regard to third-party apps, 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. 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.”
Lawmakers wrapped up the hearing by asking what they could do to alleviate the stress the witnesses have felt from Big Tech firms.
“These dominant companies can infringe the intellectual property and invention of other companies and they do it calculating the fact that if they have to pay down the road, if that’s enforced later on, they’ll pay the fee and by that point the competition will be out of it and they’ll be so dominant that it’s a rounding error at the end of the day,” Spence said. “So swift action on that front and material action is something that I think would help.”
“We don’t have the resources to fight Amazon. We didn’t sue Amazon. We never will sue Amazon,” Barnett said. “We could use some help.”