Press Release Platform Competition

Harold Feld to Testify Before Small Business Committee On Big Tech’s Impact on Small Business

November 13, 2019 , , , , ,
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Public Knowledge Senior Vice President Harold Feld will testify before the U.S. House Committee on Small Business Thursday, November 14 at 1:00 p.m. His testimony in the hearing on “A Fair Playing Field? Investigating Big Tech’s Impact on Small Business” will urge Congress to set necessary safeguards that balance providing a stable and competitive environment for small businesses with preserving the valuable features of digital platforms for consumers. 

Without these critical safeguards, digital platforms may engage in anticompetitive behavior that stifles small businesses and raises prices for consumers. But even without anticompetitive intent, giant digital platforms run the risk of creating unanticipated and disastrous impacts on the small businesses dependent on them. Antitrust law is not enough to promote a level playing field for small businesses.

The following is an excerpt from the testimony:

“No one can doubt that digital platforms, including ‘big tech’ platforms such as Google, Amazon, and social media platforms such as Facebook, have created enormous opportunities for small businesses. Not only have these services allowed small businesses to extend their existing reach, but they have also created exciting new opportunities for entirely new small businesses. 

“At the same time, the dominance of a handful of massive companies in online retail, online search, online video, and social media creates enormous problems for small businesses. . . For example, there have been repeated reports that Amazon harvests information from third-party vendors to develop competing products. In 2017, the European Commission antitrust authority found that Google violated EU antitrust laws by favoring its affiliated content in its ‘Google shopping’ service.

“Importantly, however, small businesses that use digital platforms as necessary inputs for their businesses can face enormous costs and barriers to entry even when they do not compete against the platform. Giant platforms, lacking competition and focused on maximizing their own revenue and preserving their own quality of service, can cause havoc with small businesses through poorly implemented decisions or imposing cumbersome and expensive processes. For example, rivals have been known to sabotage each other on platforms such as Amazon and YouTube with fake complaints, forcing small businesses to undertake expensive and complicated appeals processes. Changes in monetization policies or search algorithms can cause small businesses — through no fault of their own — to experience a sudden unanticipated drop in revenue.

“In other words, giant platforms present a danger to small businesses not simply when they deliberately try to put them at a disadvantage. Like the proverbial bull in the china shop, giant digital platforms are simply incapable of controlling how even their rational business decisions can have unanticipated and disastrous impacts on the small businesses dependent on them.

“[Today,] I discuss important reforms Congress should consider to protect small businesses in cyberspace comparable to those they enjoy today in the physical world. While we must increase antitrust enforcement and improve antitrust law, we must also recognize the limits of antitrust law.”

You may view the full testimony here. You may also view “The Case for the Digital Platform Act” for more information on regulating digital platforms.