Committee on Small Business Holds Hearing With Big Tech

The House Small Business Committee held a hearing called “A Fair Playing Field? Investigating Big Tech’s Impact on Small Business” on Thursday, November 14. The hearing, led by Chairwoman Nydia Velázquez (D-NY-7), was an opportunity to hear from both Big Tech and small businesses about small businesses’ opportunities to compete with large corporations.

In her opening statement, Velázquez noted that the committee had held a hearing on how online platforms promote entrepreneurship earlier this year, in addition to an Amazon roundtable on Prime Day in 2018. However, she noted, “That being said, the grip that big tech now holds over our daily lives and our competitive landscape at the same time is astounding but also concerning.”

The hearing was split into two panels, with representatives from Amazon, Google, and the Information Technology & Innovation Foundation on the first panel and representatives from Meadowmere Resort, Viahart Toy Co., Public Knowledge, Spa Destinations, Connected Commerce Council, and The App Association on the second panel.

As the hearing began, Velázquez called out Apple and Facebook’s noticeable absence, saying, “Their failure to appear not only impedes Congress’ mission, but also speaks volumes about the companies’ commitment to transparency and their very own customers… To Facebook and Apple — you reap what you sow.”

The chairwoman detailed the market dominance held by Big Tech, including Amazon’s control of 50 percent of the U.S. e-commerce retail market and Google’s control (along with YouTube) of nearly 90 percent of internet searches.

In his testimony, Dharmesh Mehta, Amazon’s vice president of customer trust and partner support, asserted that “Amazon’s mission is to be Earth’s most customer-centric company.” He continued by crediting Amazon with helping other businesses “realize their dreams.”

Amid recent announcements of antitrust investigations into Big Tech, Mehta claimed that “Amazon lowers barriers to entry for entrepreneurs, helps make retail even more vibrantly competitive, and continues to delight customers with new innovations.”

In the back-and-forth questioning, Velázquez challenged Mehta, asking if Amazon has an advantage over other businesses since the company acts as both a platform for businesses and a competitor. Mehta sought to justify Amazon’s dual role by comparing Amazon to other large retailers like Walmart and Target, which also sell their own private-label products. In response, Velázquez pointed to claims that Amazon consistently wins the “buy box” and the process is designed to favor Amazon over other sellers.

Representative Jared Golden (D-ME-2) asked Mehta if Amazon uses algorithms to favor sellers who use Fulfillment by Amazon. When Mehta denied that practice, Golden responded with testimony from a business in Maine selling products to help homes retain heat in the winter that has started missing out on search placement. Golden also asked Amazon to consider doing third-party testing on its algorithms in order for sellers to verify that Amazon in fact does not engage in the practice. Mehta said he would follow up on this request.

The House Small Business Committee hearing comes as Amazon admits to using “aggregated data” to inform the development of its own products in recently released answers to a series of questions from the House Antitrust Subcommittee. The Subcommittee, led by Chairman David Cicilline (D-RI), sent Amazon 158 questions following a July 16 hearing in which Cicilline questioned the corporate giant’s use of third-party sellers’ data.

Amazon’s written answers deny using data from individual sellers to inform Amazon’s own product development. However, the company admits to using “aggregated data,” defined as “data that is aggregated across all third-party sellers and Amazon’s first-party sales and is therefore not specific to an individual seller,” in development of its private label products. Amazon’s statement compared its use of data to other retailers, saying, “Just like other stores, Amazon uses public and aggregated data from its stores to identify categories and products with high customer demand over a given time period.”

As reported by CNBC, Amazon’s use of private data looms large in antitrust hearings. Misuse of data to assert market dominance over sellers, like small businesses, who rely on Amazon’s marketplace could play a key role in investigations.

Watch the full House Small Business Committee hearing, “A Fair Playing Field? Investigating Big Tech’s Impact on Small Business.”