“What company that started a business out of their garage can afford to lose $10 million?” he asked in an interview. “We’re lucky we’re in a position we’re profitable and could take a stand.”
Barnett’s story could resonate with federal regulators: Such tales of Big Tech’s debatably brash, bullying tactics are set to take center stage when he and his corporate peers testify at a high-profile congressional hearing here Friday. The session could elicit the most convincing public evidence to date that Apple, Amazon, Facebook and Google have become too big and powerful — and need to be restrained.
Since June, House lawmakers led by Democratic Rep. David N. Cicilline (R.I.) have trained their sights on the four tech giants, exploring their ascendancy as the world’s most popular and profitable online services. Even in a capital wracked by partisanship, Democrats and Republicans have come to share heightened concerns the industry’s biggest players may have stifled competition, enriched themselves on Americans’ personal data or locked in their digital dominance unlawfully.
The hearing — to be held not far from PopSockets’ headquarters in Boulder — could ultimately serve to put a new, personal face on long-standing calls for tech titans to be regulated, penalized or broken up, galvanizing those who believe Congress needs to toughen federal antitrust laws to prevent abuse.
“You think about the market share that some of these platforms have,” Cicilline said. “You change an algorithm, you exclude someone from a platform, and you can put them out of business.”
Joining those witnesses will be a senior official from Tile, best known for its technology that helps people track keys, wallets and other objects they’re liable to lose around the house. Company officials contend Apple’s software tweaks stifle competing services.
Ahead of the hearing, tech giants vigorously defended their practices. Amazon in a statement said its seller rules benefit consumers, and it took issue with PopSockets and some of its claims. Google said its ad policies are fair and it never infringed on Sonos technology. Apple pointed to past comments saying it seeks to protect consumer privacy through its software updates, not undermine rivals. Facebook did not comment.
(Amazon founder and chief executive Jeff Bezos owns The Washington Post.)
The bipartisan congressional inquiry illustrates the precarious regulatory environment that looms over Silicon Valley, once the darling of a tech-obsessed Washington. The industry’s rapid rise and record-breaking profits, long heralded as an engine of American economic growth, now are seen as evidence of the dangers of corporate consolidation.
In response, federal antitrust regulators have started to ponder action: The Justice Department and Federal Trade Commission last year divvied up competition oversight of the country’s top tech companies. Nearly every state attorney general, meanwhile, has banded together for wide-ranging probes targeting Facebook and Google. On Thursday, Colorado Attorney General Phil Weiser announced he had appointed three experienced lawyers to help with antitrust issues and investigations.
And Cicilline, the top Democrat on the House Judiciary Committee’s antitrust-focused subcommittee, has spent seven months leading the panel as it peers under the hood of Big Tech.
So far, members of Congress have obtained millions of documents with the goal of putting forward bipartisan recommendations in the next few months. Cicilline said this week lawmakers soon also seek to question “the CEOs of some of the major technology companies,” threatening an uncomfortable public grilling for Apple, Amazon, Facebook and Google.
The tech industry’s top lobbyists say they understand the scrutiny. But they disagree vehemently with those who say that consumers have suffered and tech companies should be broken up as a result.
“There’s no question that the disruptive innovations have created some winners and losers,” said Matt Schruers, the president of the Computer and Communications Industry Association, which represents Amazon, Facebook and Google. “I don’t think there’s any doubt members of Congress are hearing from those who have been on the losing side of some of these disruptive innovations, but consumer response to these products speaks for itself.”
Not everyone sees it that way.
Tile long had benefited from Apple’s good graces: The company behind those tiny trackers for your most important possessions even had a rare shout-out onstage at the iPhone giant’s annual developer conference in 2018.
But the relationship soured as Apple inched closer toward rolling out a tool — built into its smartphone operating system — that seemed like “something that’s going to resemble our service,” Kirsten Daru, Tile’s general counsel, recalled in an interview ahead of her testimony Friday.
The result was “Find My,” an enhanced effort by Apple to help its customers better locate their lost devices. Not only does it mimic many of the features long offered by Tile, but it also has a major advantage: Apple turned on the location tracking that makes “Find My” functional by default. Rivals like Tile, meanwhile, must obtain users’ permission in deep, hard-to-find smartphone settings, Daru said, then reauthorize it when presented with follow-up reminders.
Apple said the changes are about protecting privacy, citing a need to prevent app-makers from using consumers’ data without their knowledge. “Apple has not built a business model around knowing a customer’s location or the location of their device,” spokesman Fred Sainz said in a statement.
But Tile said the changes for now have resulted in a “confusing and frustrating experience for our users,” according to Daru, adding: “We’re looking to Congress to level the playing field.”
David Heinemeier Hansson has a similar message for lawmakers. The well-known programmer and co-founder of Basecamp, which offers Web-based product management tools, said he plans to stress Friday that it’s time for regulators to “broaden your definition of what antitrust enforcement is."
For Basecamp, the trouble centers on Google’s dominant search engine, which aided the tech giant in amassing $117 billion in ad revenue in 2018. Basecamp’s competitors have been purchasing ads on Google against the company’s own name, he said, meaning people who search for Hansson’s company see rivals unless they scroll down their results page. To Hansson, it means Google requires companies “to pay protection money” — or risk obscurity.
“They built their monopoly by having a great search engine‚” he said. “Now that they have that monopoly, they’re exploiting it to reap monopoly profits.”
In response, Google spokesman Jose Castaneda rebuffed Basecamp’s claims. He said competitors are allowed to “bid on trademarked terms because it offers users more choice when they are searching,” but he added Google will remove their names from text if they file a complaint.
By airing their criticisms publicly, many of Big Tech’s biggest challengers seek to change the political calculus. Scores of companies long have been willing to grouse about their bigger tech brethren only privately, afraid of squandering much-needed relationships or scaring off investors wary of open warfare.
But renewed antitrust interest in Washington has some corporate boardrooms rethinking their plans, as they labor to attract the attention of regulators who say they are ready to do something about it. The troubles aired at the hearing Friday could later shape state and federal probes, leading to significant penalties, lawmakers and experts said.
“I don’t think we’ve ever faced a situation where there’s such a small group of companies with such unprecedented size, scale and dominance,” said Patrick Spence, the chief executive of Sonos.
This month, the audio company revealed in court documents it is suing Google, alleging the search giant copied its technology. Google has denied the charge and this week claimed Sonos has made “misleading statements.” But Spence said Google’s behavior reflects a culture where big companies are “doing the math” and determining they can act as they please and survive the punishment. Sonos previously kept the standoff quiet for years, a sign to some about the fear of challenging the largest tech companies publicly.
“It might be life or death for them,” Spence said.
To the average Amazon shopper, it might not have seemed anything was amiss with PopSockets, either. Their small, circular handles, attached to the back of iPhones and Androids, were readily available on the e-commerce site. But that obscured a lengthy, tense relationship between the two companies that later cost PopSockets millions of dollars, said Barnett, the leader of PopSockets.
In its earlier days, PopSockets tried to get Amazon’s attention about counterfeits sold there, only to be browbeaten by the tech giant into spending more on marketing, according to Barnett. Adding to the headaches, PopSockets fretted about Amazon policies that essentially left it little choice but to sell directly to Amazon, which then determined the prices of the products it later sold to customers.
For its part, Amazon disputed that it asked PopSockets to pay more to help with counterfeits. And it attributed the larger debacle to the fact that PopSockets ran afoul of its rules. Those policies require some popular Amazon brands to sell their products to the e-commerce company, which then sells them to consumers. Amazon contends PopSockets instead sought to sell its smartphone accessories through an intermediary.
“Amazon obsesses over our customer experience, and we have policies for brands to ensure they are consistently meeting customer expectations,” said Jack Evans, a spokesman at Amazon.
But Barnett said the restrictions proved too limiting. While he since has sought to restart his relationship with Amazon, the PopSockets leader recalled Amazon officials at one point trying — unsuccessfully — to strong-arm the company even after it reached its breaking point.
“They acted as if it wasn’t in our power to break up with them,” he said. “For most businesses our age, it’s not in their power to break up with Amazon. It’s not within their power to find an alternative.”