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Tech Upstarts Say Tech Giants Abuse Market Power to Stifle Competition

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01/17/2020 | 03:13pm EST

By Ryan Tracy

WASHINGTON -- Four midsize technology companies told Congress that industry giants use their market power to beat back their businesses, an unusual public airing of criticism that suggests antitrust probes of the companies are gaining steam.

Executives from wireless speaker maker Sonos Inc., mobile-phone accessory maker PopSockets LLC, business-software firm Basecamp LLC and tracking-device maker Tile Inc. told the antitrust subcommittee of the House Judiciary that Amazon.com Inc., Alphabet Inc's Google, and Apple Inc. had abused their ubiquity and outsize market share to stifle competition.

"It is apparent that the dominant platforms are increasingly using their gatekeeper power in abusive and coercive ways," said Rep. David Cicilline (D., R.I.), the subcommittee's chairman, at the hearing at the University of Colorado Law School.

He applauded the witnesses "for their courage to share their testimony in the face of potential retaliation by the dominant platforms." He added that lawmakers had spoken with other companies that weren't willing to testify publicly.

Four tech giants -- Apple, Amazon, Google, and Facebook -- have turned over documents to the House committee as part of its inquiry into whether antitrust laws need to be changed in the digital age.

In addition to the House inquiry, federal and state authorities with authority to sanction firms for anticompetitive behavior are investigating online platforms, with probes against Google and Facebook Inc. among the most advanced.

At Friday's hearing, each witness told the story of their startup's rise -- and their struggle to maintain it in an online marketplace dominated by a handful of giants.

"At some point, all companies will be competing with Big Tech simply because Big Tech is expanding to the point" where a few firms will control "absolutely everything", said David Hansson, co-founder of BaseCamp.

In an echo of Princess Leia's appeal to Obi-Wan Kenobi in the original "Star Wars" film, he said, "Help us, Congress. You are our only hope."

Patrick Spence, chief executive of Sonos, said his firm competed with Google and Amazon, which also sell internet-connected speakers. He accused them of selling their speakers below cost, potentially crowding out competition. "In the long-term, prices are sure to go up," he said.

Mr. Spence also said Sonos invented technology to enable both Google's and Amazon's voice assistants to work on its speakers simultaneously. Amazon didn't object, but Google refused to allow Sonos to use its voice assistant in that context, he said.

Sonos has a separate lawsuit accusing Google of stealing intellectual property, which Google is disputing.

"Sonos has made misleading statements about our history of working together," a Google spokeswoman said. "We deny their claims vigorously, and will be defending against them."

David Barnett, founder of PopSockets, said before his company stopped selling directly on Amazon, it was one of many sellers that relied on Amazon to reach many customers and faced coercion to follow Amazon's desires on pricing and other policies.

"While bullying is not technically illegal," he said, "one has to ask how is it that such a successful business maintains partnerships with so many companies while bullying them."

An Amazon spokesman said: "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."

Tile General Counsel Kirsten Daru said Apple "exploited its market power to advance its own interests at our expense," such as by designing the iPhone's operating system to make it more convenient for customers to use Apple's own device-tracking app.

An Apple spokesman said the company "builds its hardware, software and system level apps to protect user privacy and provide the best products and ecosystem in the world."

The House panel is reviewing documents turned over by the large tech companies last year and is expected later this year to call senior executives at the firms to testify.

Write to Ryan Tracy at ryan.tracy@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 0.36% 1524.87 Delayed Quote.13.39%
AMAZON.COM, INC. 0.68% 2170.22 Delayed Quote.16.66%
APPLE INC. 1.45% 323.62 Delayed Quote.8.63%
COLORADO 0.00% 57.9 End-of-day quote.2.86%
FACEBOOK -0.14% 217.49 Delayed Quote.6.11%
SONOS, INC. 7.20% 14.14 Delayed Quote.-14.08%
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