Sonos Tells Congress How Amazon and Google Unfairly Pressure Smaller Companies
Tech giants are using unfair and potentially illegal practices to squeeze out competition Sonos CEO Patrick Spence told the House Antitrust Subcommittee on Friday. Spence joined executives from PopSockets, Basecamp, and Tile in testifying at the University of Colorado during a congressional “field hearing” that Facebook, Google, Apple and Amazon are using their dominance to limit competition from smaller companies who need their services. The tech giants then use their leverage to stop those companies from complaining about those practices, the witnesses alleged.
Voice Tech Battle
The executive witnesses explained how they feel that the biggest tech companies exploit their economic power to force other companies to do what they want. Spence cited the way Amazon and Google have leveraged their many sources of income to subsidize building a large range of smart speakers and selling them at prices well below what would be required to make a profit. To be able to compete, Sonos had to submit to rules dictated by the larger companies. Google even told Sonos what features to include in their products. Spence told the committee that Sonos had created a way for Amazon Alexa and Google Assistant to concurrently operate on Sonos smart speakers, but Google had insisted that this ability be removed if Sonos wanted to have Google Assistant available on its smart speakers at all.
“[T]he fact that a handful of very large companies are essential partners for pretty much every technology business — and because they are so essential to reach consumers these companies can, and sometimes do, engage in practices that again unfairly harm competitors,restrain innovation, and ultimately harm consumers,” Spence said in his witness statement.
Lawsuits and Risks
The tech giants feel they can get away with all kinds of uncompetitive practices, Spence said, referring to how Sonos sued Google this month for patent infringement. Sonos claims that Google’s smart speakers and related products use Sonos patents without permission. Sonos has said that Amazon also used its patents without a license, but that it couldn’t risk suing both at the same time. The sheer size of the biggest tech companies makes smaller firms reluctant to speak up, according to the witnesses. Testifying meant risking subtle retaliation. The executives said they were only able to do so because of the relative stability of their companies.
“We debated long and hard about whether to file suit and we spent years trying to reach a fair accommodation with Google precisely because they are such an important partner,” Spence said in his witness statement. We enjoy working with their teams and using their products, and we’ve built relationships with their employees. At some point, though, we just couldn’t keep turning a blind eye, even at some risk of retaliation that would hurt our business. A lot of companies can’t take such risks and are left to suffer silently.”
“Over the years, we have had numerous ongoing conversations with Sonos about both companies’ IP rights and we are disappointed that Sonos brought these lawsuits instead of continuing negotiations in good faith,” Google spokesperson Jose Castaneda said in a statement about the lawsuit. “We dispute these claims and will defend them vigorously.”
Google, Amazon, and other tech giants already face questions from regulators and consumer groups about non-competitive practices. As the smart speaker market grows and their dominance becomes more apparent, those questions are expanding into that arena as well. This will almost certainly not be the last time Congress will discuss the topic, but any adjustments to the voice AI market are not going to happen quickly.
“Right now, many markets have not yet reached a tipping point beyond which government action would be rendered ineffective,” Spence said. At the same time, action is required before the “network effects” intrinsic to the digital age fully insulate dominant firms from future competition. There is no doubt that technology quickly evolves — but that does not mean responsible scrutiny and enforcement is not possible.”