Google, Amazon Defend Platforms Against Small-Business Criticisms

Google and Amazon representatives defended their platforms’ impact on small businesses before the House Small Business Committee Thursday. Retailers highlighted what they said were pitfalls of doing business in a landscape that Amazon and Google dominate.

Amazon is ultimately a good company, but it focuses on what’s legal, not ethical, testified Viahart Toy CEO Molson Hart. His company’s Amazon-related expenses went from 33 percent in 2013 to 50 percent in 2018, when it paid Amazon $2 million, he said. Even so, his company’s sales have grown 33 percent yearly. Whether the playing field is even is a complicated question, he said, noting Amazon Basics products sometimes knock off his. He called that dynamic unfortunate but OK.

Amazon's very similar to traditional retail, testified Dharmesh Mehta, its vice president-customer trust and partner support. Walmart, Costco and other major retailers have private label businesses that compete with other companies in their stores, he said. Amazon’s private label is about 1 percent of its business, he said. Other retailers have private labels representing 18-85 percent of their total sales, he said.

Google’s domination of online search and its pay-to-play tactics harm small-time hoteliers, testified Meadowmere Resort owner Allyson Cavaretta. The platform says it’s proud to work with small businesses, but that’s not always true, she said. She blamed a March algorithm change prioritizing paid placements for driving business away from small hoteliers and directing users to the highest bidder, with users not knowing. She asked the committee to hardwire a fair playing field for small businesses and hoteliers.

In 2018, Google search and ad tools helped spur $335 billion in economic activity nationwide, testified Google Community Engagement Head Erica Swanson. About 1.3 million U.S. businesses and nonprofits use Google tools annually, she said: Small businesses' online future is bright, and Google has a role.

Chair Nydia Velazquez, D-N.Y., suggested companies that compete with third parties on their own platforms have an inherent advantage. She highlighted the dominance of big tech firms. Amazon controls 50 percent of the e-commerce retail market, she said. About 90 percent of internet searches go through Google, she said. Facebook collected $55 billion in ad revenue in 2018, she noted. Apple sold 217 million iPhones in 2018, she said. The sheer size and pervasive integration raises questions for anyone who cares about market access, data privacy and innovation, she argued.

Focus on four short-term solutions to help even the playing field, testified Public Knowledge Senior Vice President Harold Feld. Lawmakers should require nondiscriminatory algorithms, interoperability, protection of proprietary information and due process so businesses can better plan decision-making based on company policy changes.

Small and large companies need each other to continue the unprecedented economic expansion of the past three years, said ranking member Steve Chabot, R-Ohio. Several lawmakers began opening statements by thanking Amazon and Google for building data centers in their districts or investing there. Rep. Kevin Hern, R-Okla., noted that Amazon's operating in Tulsa has been a major boon for the area. He also asked tech CEOs like Facebook’s Mark Zuckerberg and Alphabet’s Larry Page not to forget their humble beginnings.

The focus shouldn’t be protecting businesses from competition, testified Information Technology and Innovation Foundation Senior Fellow Joe Kennedy. Instead, antitrust enforcers need to determine if consumers are being harmed, regardless of whether certain businesses are shuttering. In some cases, though, it appears competition policy isn’t working, said Rep. Dwight Evans, D-Pa.

Platforms also shouldn’t favor one size firm over another, Kennedy said, arguing there naturally will be losers who will criticize. Rep. Jim Hagedorn, R-Minn., asked who’s auditing Google to ensure it’s not filtering certain businesses into obscurity. The company's constantly improving search, asking independent reviewers to see if the platform's delivering answers that are most relevant, Swanson replied. Hagedorn said he’s not big on regulation, but there should be some transparency on this front: Google probably wants to be the one making the decisions, not Congress.