Sitting in front of the House Judiciary Antitrust committee Wednesday will be Mark Zuckerberg, Tim Cook, Sundar Pichai, and Jeff Bezos - four of the private citizens most responsible for our lopsided, monopolistic, selectively-opaque internet economy. In a more just system of government inquiry, each man would be asked to justify their company’s outsized place in American life at length, explaining why, under their leadership, it has gotten so much harder for the average person to start a business venture, advertise it, or network effectively. Unfortunately, since most of the CEOs will be testifying in the same session, lawmakers will only get a few moments with each. At best, they will scratch the surface.
However, Wednesday’s hearing is Part 6 of the Online Platforms and Market Power investigation. Plenty of interesting testimonies and figures have already been entered into the record. These come from the most immediately visible victims of the giants: business owners forced to compete in captured markets. Their testimonies over the past weeks more clearly demonstrate what Big Tech CEOs have come to represent: The Four Horsemen of a small business apocalypse, highly averse to fair competition. In the background of their continued success, at least one fifth of US small businesses have shut their doors for good in 2020, with millions more at risk of doing the same.
Four horsemen, four stories - each an anecdote of what it's like to do business under the thumb of one of America’s giant companies.
Amazon vs. Its Sellers
It would serve the subcommittee to ask Jeff Bezos about his company’s treatment of PopSockets, the phone accessory company.
Back in January, PopSockets founder and CEO David Barnett leveled some serious accusations against Amazon Retail management, regarding their treatment of smaller suppliers. Barnett testified that PopSocket was consistently “bullied” by Amazon to lower their prices. When Barnett pushed back, Amazon management threatened to source knock-off versions of his product and sell them at a discount. Ever since Barnett took a stand, thousands of counterfeit products started appearing on Amazon marketplace.
“One of the strangest relationships I’ve had with a retailer is with Amazon,” Barnett told CNBC. “The agreement appears to be negotiated in good faith, but what happens is there are phone calls where we get bullying with a smile.”
As the only real source for well-stocked of online shopping, Amazon has grown comfortable in treating smaller companies this way, and the abuse doesn’t stop there.
As WSJ reported in April, Amazon has also been accused of using its sellers’ data to promote their own versions of competing products. When LivingSocial, a deals website, partnered with Amazon, Bezos’ company began using seller data to contact LivingSocial customers and offer them better deals.
Such practices were adopted partly in response to aggressive goals set by management. Amazon executives were told to make sure that, by 2022, Amazon brands would account for 10% of all retail sales.
Google lets Basecamp suffer
In a January 17 testimony, David Heinemeier Hansson, co-founder and CTO of the web application service Basecamp, laid out how Google Ads hurt businesses everywhere. Though Google claims to be a search engine, Hansson told the subcommittee, Google essentially is an “ad engine”, with the core of its business still tied to digital advertising. Many businesses survive only by the traffic that online marketing brings them. This gives Google a tremendous amount of kingmaking power in just about every contested market.
The already fraught situation is made much worse by Google’s recent practices in ad placement. Companies often are compelled to bid against each other to be displayed higher up in Google search results, driving up prices across the board as rivals compete for space.
In Basecamp’s case, rival companies made great efforts to outbid them, then used their higher placement on results pages to denigrate them.
“A consumer searches for Basecamp,” said Hansson, “and all they see is an ad that blocks the entire screen, with some competitor telling consumers to ‘Dump Basecamp Now’, using our own trademark in the ad copy.”
That so many ads with Basecamp’s trademark go through shows that Google accepts advertiser money without sufficiently vetting their content. With negative results sitting on the front page of searches, Basecamp and companies across the country have to fight to get them removed. After an onerous process, Google will finally remove the ads in question. But, Hansson claims, they don’t act to punish perpetrators, leaving the door open for it all to happen again.
Hopefully, Sundar Pichai will be made to explain how such a business model could possibly benefit the American consumer and businessperson, in the face of such allegations.
Facebook throws Upworthy off a cliff
Mark Zuckerberg is likely to face questions about Faceboook’s acquisitions of WhatsApp, Instagram, and Giphy as well as the erroneous political advertising he has allowed to infest his website. While we are at it, it might be interesting to hear more about the case of companies like Upworthy.
In 2013, the media organization based on spreading positive, viral content had something like 90 million viewers a month. Then, one fateful day in November, Facebook slightly tweaked its news algorithm.
Overnight, Upworthy lost its place on the front pages of Facebook, along with about 75% of their viewership. Just about all of their metrics tanked, and the company never recovered.
Facebook engineers offered the explanation that Upworthy articles were “clicky but not sticky” - that people often clicked on the headline but declined to read the story. Their updated algorithm deprioritized this kind of content.
The near-death of Upworthy is not some huge loss for society, but the fact that businesses can be so affected by small changes to Facebook’s system should raise some eyebrows. When the Upworthy CEO explained the absurd situation to NPR, he said it was hard to be mad at Facebook. That would be like being mad at the weather.
It’s a great metaphor for a business that has gotten so big, it becomes unaccountable for how it affects normal people.
Apple puts the screws to Tile
Tile executives have alleged, both in EU courts and in front of Congress, that Apple is abusing its power in the Applications marketplace. In a January 17 hearing, Kirsten Daru, Tile’s Chief Privacy Officer, accused Apple of making it harder to use their device tracking application, favoring their own FindMy application in the App Store, and hiring away their employees to make Tile less competitive.
“Apple’s iOS 13 changes had the practical impact of making it more difficult for consumers to use our products than Apple’s own,” said Daru. “The iOS changes degraded the user experience for our customers, who must now navigate deep within their settings to enable their Tile products to function and gives users the impression that Tile’s services should not be trusted.”
Meanwhile, Apple has updated its own FindMy app to add lots of the functionality that Tile’s products brought to the market in the first place. According to Daru, Apple is also preparing the launch of new hardware that competes with Tile. These new features will be pre-downloaded into iPhones along with system updates.
Daru concluded by prompting Congress to take action, and hold Apple accountable: “The functioning of a robust, healthy app ecosystem is dependent upon open platforms that do not favor the owner of the platform. It is our hope and preference to work collaboratively with Apple to resolve these concerns and restore competitive integrity to their platform.”