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Apple, Google and Facebook used market dominance to cripple competition says smaller firms

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What you need to know

  • A group of small tech firms has told Congress that Apple, Google, and Amazon used market dominance to crush them.
  • Sonos, Tile, Basecamp, and PopSockets all appeared before a House antitrust committee on Friday, January 17.
  • They all told stories of how larger tech companies used their market dominance to cripple competition.

Sonos, Tile, Basecamp, and PopSockets have all testified to a House antitrust committee, stating that big tech firms like Amazon, Apple and Google used their market dominance and bullying business tactics to crush the competition.

As reported by Business Insider:

Google, Amazon, Facebook and Apple were the subjects of scathing criticism by smaller tech companies during a Congressional hearing on Friday.An assortment of tech firms that sell everything from speakers to phone accessories accused the tech giants of bullying business tactics.Sonos, Tile, Basecamp, and PopSockets all appeared Friday at a hearing by the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law. Speaking at so-called "field hearing" that took place at the University of Colorado Law School in Boulder, Colo., the executives called for Congress to implement tougher regulation of Big Tech.The executives told similar stories about how the larger tech companies had used their dominance in one market to cripple competition in its emerging products and tilt the field in their favors for its other product lines.

Basecamp CTO David Heinemeier Hansson (who famously blasted Apple Card's "sexist" credit limits last year) stated:

"At some point, all companies will be competing against Big Tech simply because Big Tech is bent on expanding until it does absolutely everything... Help us Congress, you're our only hope."

The report claims that companies testified to Apple's strict App Store rules that stifle innovation and drain resources, whilst Apple develops and boosts its own alternative products:

Tile makes stamp-sized Bluetooth trackers that help customers find their keys, wallets or phones. In some ways, the product competes with Apple's built-in Find My iPhone feature. According to Tile General Counsel Kristin Daru, the company has faced a series of stringent and arbitrary regulations from Apple that have drained its resources."Apple is acting as a gatekeeper to applications and technologies in a way that favors its own interests," Daru said. "You might be the best soccer team, but you're playing against a team that owns the stadium, the ball, and the league, and can change the rules when it wants."

It was also stated by Hansson that Apple's 30% App Store tax was "outrageous." Tile further testified to ways Apple exploited the App Store in its favor, such as by embedding the Find My app in iOS, and by burying Tile's setting in iOS 13. (An Apple statement to Business Insider claimed this was being rectified)

Sonos accused Google of having a marketing advantage "like nothing we've ever seen before" - CEO Patrick Spence alleged that Google pressured Sonos to allow its speakers to only sync with Google Assistant, rather than Amazon's Alexa.

Of Google's power over searching and its market dominance, PopSocket CEO David Barnett said:

"We could lose our listing in DuckDuckGo and we wouldn't even tell. We lose Google and we lose our business."

Basecamp also raised concerns that Google allowed competitors to buy ads that would run whenever someone searched for its trademarked name, claiming that Basecamp had to pay $70,000 a year in ads to counteract the problem.

According to Reuters, PopSockets chief exec also testified against Amazon:

Barnett said Amazon required PopSockets to pay almost $2 million in marketing so it could market its products as originals in the face of a wave of counterfeits. The online retailer "frequently lowered their selling price of our product and then expected and needed us to help pay for the lost margin," he said."On multiple occasions, we found that Amazon Retail was itself sourcing counterfeit PopGrips and selling them alongside our authentic products," he told lawmakers.

Both reports can be read in full, but if there's a foundation to the accusations being made by these smaller tech firms, they will serve as a damning report to congress about the way larger tech companies like Apple, Amazon, and Google conduct themselves

Stephen Warwick
Stephen Warwick

Stephen Warwick has written about Apple for five years at iMore and previously elsewhere. He covers all of iMore's latest breaking news regarding all of Apple's products and services, both hardware and software. Stephen has interviewed industry experts in a range of fields including finance, litigation, security, and more. He also specializes in curating and reviewing audio hardware and has experience beyond journalism in sound engineering, production, and design.

Before becoming a writer Stephen studied Ancient History at University and also worked at Apple for more than two years. Stephen is also a host on the iMore show, a weekly podcast recorded live that discusses the latest in breaking Apple news, as well as featuring fun trivia about all things Apple.

  • Can't comment on the other two, but I would absolutely agree on Amazon. There are things that cannot be bought any way other than Amazon. If you're selling, you'd better have big bucks to pay Amazon for marketing or your product, in my case books, go nowhere. I've heard over and over how local stores are folding, malls and main streets going out of business because while people may shop there, they buy from Amazon because Amazon sells at a price lower than the local retailer can possibly match. (Amazon uses their cloud services to support their retail business). Of course there's the environmental cost. It produces far less pollution per item to ship a truckload of them to a local store than ship them one at a time to each house, then ship them back when they are returned. And then there is what happens to that returned stuff. A local retailer might put it on the Scratch and Sent shelf and sell it at a discount. I read an article last month where Amazon just trashes most of it because it's too expensive to try to refurbish. Like I said I can't comment on Apple or Google, but I've hated the way Amazon does business for ages. I try not to do business with them because of it. But I'm not sure how much longer that will be possible. Already I'm finding products where I have no choice for the product OR the alternative.
  • If Amazon sells things cheaper, then that's where the consumer will go, that's just standard business. It's the reason why I user Uber taxis, they're cheaper than the rest. Uber might be putting other taxi firms out of business, but if the others won't lower their prices, then that's just how things go
  • It isn’t just the lower prices. It’s WHY are they lower. Amazon has a history of moving into a business field, losing money until the little guys die off, and then raising prices. They have their cloud services to bankroll their forays into new areas. That isn’t just business, it’s a predatory company distorting the market, and in the process harming people. Ask the people who used to have thriving businesses in small towns, who now earn much less at Walmart. Better yet ask them when Walmart has pulled out of town because nobody there has any money and it’s no longer profitable. That’s what I saw them do in towns all over the midwest. Amazon in many ways is even worse because they take the business but have no local presence, or jobs, at all. As far as Uber, I do not and never will use them. Yes their prices are less, but it is because their drivers have no benefits, no security, no living wage, no hope of long term employment. It is the kind of degrading piece-work that was stamped out a hundred years ago.
  • It's up to the governments to put laws in to stop these things from happening, but the governments are also the ones taxing consumers to death, so a consumer with an average wage relies on getting a cheap price for the items and services they purchase. It's not my job to help Uber drivers, it's the government's. Even if I stop using Uber, thousands of others will continue and that doesn't help me or the Uber drivers, so from where I stand, I will continue to use Uber as the extra money saved can be spent on more important things or even just recreational activities
  • For the "products only on Amazon" I don't think it's right to force a company to sell elsewhere if they don't want to. Would you rather work with Amazon to promote your book once/self promote, or work with 500 book stores to promote? Environmental impact is hard to measure. A few warehouses are easier to make "green" than 1000+BestBuy/Barnes&Noble/Booksamillion stores. Not to mention lost revenue from products that go bad/out of need (phone cases). How often do you think BestBuy has to RMA product because they thought they'd need 500 at every store, but only sold 200? They then have to ship it back to be thrown out. Amazon could have 50000 for the US and I'd be willing to bet less are wasted since everyone takes from the same pile. Also for products, it's easier to sell on Amazon. Aside from the entrepreneurs who buy opened Amazon stuff for pennies then resell it. BestBuy never does that. Can't find the quote, but it's "Robert California (James Spader)" on The Office saying "I either buy it online for as cheap as I can, or want someone local who can explain it to me." You're also ignoring the small stores that sell on Amazon. Krikzz for example sells his SD-to-(RetroSystem) adapters on Amazon now. Better than fragmentation, and easier to trust Amazon with the card than to worry about if Krikzz is as good with his online shopping security as he is with his products.