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Congress is moving to ensure that the smart home space is not monopolized by Google and Amazon.
Saying that the smart home industry has a monopoly problem, Senator Amy Klobuchar (D-Minn.), Kicked off an anti-trust hearing of the Senate Judicial Subcommittee on June 15 that brought together Amazon executives. , Google and Sonos to testify. The hearing addressed the growing presence of large tech companies in the smart home market, along with concerns related to privacy / data sharing, interoperability and patent infringement, among other topics.
The Competition Subcommittee looked at the problems that arise when a handful of companies become powerful enough to distort competition in the market, Klobuchar said. So far we have seen that excessive market power benefits few companies that are able to exercise it at the expense of consumers, businesses and workers.
Our current antitrust laws have not been effective in stemming the rise of monopoly power or its abuse by dominant corporations. As a result, we see sector after sector competition problems throughout our economy. Today we will look at an emerging industry that could fall prey to this same dynamic: connected home technology. Millions of Americans already have connected devices in their homes, including speakers, smart TVs, systems to control lighting or temperature inside the home. And we are only at the beginning. These technologies will continue to develop for things like connected refrigerators and washing machines. In the years to come, they will play an even more important role in our lives.
The hearing was dubbed Protecting Competition and Innovation in Consumer Choice on Home Technologies and was also overseen by Mike Lee (R-Utah).
You shouldn’t choose which devices you want based on whether they work well with Google’s or Amazon’s digital assistant, or whether Google or Amazon have locked them in an exclusive contract, ”says Senator Amy Klobuchar (D-Minn.).
Klobuchar admitted that she considers herself a fan of smart home technology, but said: We need to anticipate the situation. The American people are counting on us [the federal government] to protect competition.
He cited figures that at least 94 million Americans have at least one connected speaker. He asked whether Amazon and Google will continue to allow third-party devices to connect via their voice assistants even if it threatens their domain.
He noted that in the future, US households will likely have up to 20 connected devices in their homes, and we want those devices to interact seamlessly.
You shouldn’t choose which devices you want based on whether or not they work well with Google’s or Amazon’s digital assistant, or whether Google or Amazon has locked them into an exclusive contract, he said. We’ve seen what happens when the largest and most powerful tech companies make their own interoperability decisions. They hug him as long as it helps their bottom line.
Solved Google and Amazon privacy issues
The third area of concern raised by the panel concerned the default settings, which most consumers do not change.
Market leaders benefit from having their service pre-installed. Imagine a household with a connected refrigerator that automatically replenishes the supply of certain groceries. Do we want Amazon to create its own Whole Foods or Amazon Fresh stores as the only place to buy these groceries? Absolutely not, consumers should choose non-vertically integrated tech giants.
Finally, I have privacy concerns, Klobuchar said. Connected technologies should make our lives easier, but that shouldn’t come with the price of fundamental rights to privacy.
He noted how connected devices already collect information about what we say to each other, what we eat, how often we do laundry, and how well we sleep at night, among other things.
Such highly personal and sensitive information should not be aggregated and auctioned to the highest bidder. In home technology, we see some of the most powerful companies today dominating technology ready to dominate the future [of the smart home]. We hear concerns about Amazon and Google’s growing market power with connected speakers. We have also heard concerns about the use of consumers’ personal information.
He stressed that the hearing was not about punishing companies for their success.
Testimonial from Google, Amazon, Sonos Execs
Testifying for Amazon was Ryan McCrate, vice president and associate general counsel; Wilson White, senior director of public policy and government relations for Google; and Eddie Lazarus, Sonos’ chief legal officer. Both Amazon and Google defended their practices, with McCrate describing the Amazon Works with Alexa program that allows other companies to integrate. Googles White said the tech giant places both consumer choice and privacy first.
Later in the hearing, Sonos’ Lazarus sued both Google and Amazon over their alleged Sonos patent infringements.
For Google and Amazon in particular, the smart home, this new and growing interface between their online businesses and consumers, represents both a threat and an opportunity, Lazarus said. The threat is that if other companies are successful in the smart home space – and particularly if they are successful with control devices that connect directly to the internet – they could stand between dominant companies and customers. The opportunity for these companies is to dominate another major consumer market and, even more critically, to use their smart home systems to collect large amounts of consumer data that can be monetized on their already dominant platforms and hugely profitable, he said.
Lazarus also warned that both Google and Amazon have in the past flooded the market with subsidized equipment to kill off the competition.
“Amazon and Google have now come to control about 85% of the US smart speaker market. This is terrible for innovative dynamics ”.
– Eddie Lazarus, Sonos
A common strategy of Google and Amazon is to take on a competitor by producing and then flooding the market with similar (I could say imitative) products sold at highly subsidized or even gifted prices, he told the committee. Anyone who has followed the smart speaker space in recent years has witnessed this practice. In fact, at least one of these companies said in the congressional minutes that the products themselves are losers. But Amazon and Google, unlike Sonos or other smart speaker manufacturers, can afford to lose money on speaker products because they don’t rely on the profits from the sales of the products themselves. Instead, they make their money by protecting the dominance of their monopoly products and the rich treasure trove of personal data these microphone-enabled products suck from consumers.
Speakers are mostly just a conduit for their dominant advertising and e-commerce platforms and thus can profit from those platforms and subsidize the speakers themselves. Amazon and Google have now come to control about 85% of the smart speaker market in the United States. This is terrible for innovative dynamics because it hinders those companies that have better products that cannot be sold at a loss and consumers lose, he added.
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