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Statement of the Hon. Nydia M. Velázquez on A Fair Playing Field? Investigating Big Tech’s Impact on Small Business

Washington, November 15, 2019

I would like to start by thanking all our witnesses for coming to the table today to participate in this hearing, including those that traveled. And in particular, I want to thank Amazon and Google for deciding to appear today.  I know this was not an easy decision for your company, but I believe it was the right one.

As everyone can see, we also have two empty chairs to demonstrate the failure of Facebook and Apple—companies that somehow find the means to spend millions on lobbying and hire dozens of executives—to find the time to be here today. Their failure to appear not only impedes Congress’ mission, but also speaks volumes about the companies’ commitment to transparency and their very own customers. So, yes thank you Amazon and Google for being here today – and to Facebook and Apple – you reap what you sow.

It is important that everyone in the room understands that this Committee has a tradition of being fair and that will continue during today’s hearing.  Earlier this year, we held a hearing on how the digital ecosystem promotes entrepreneurship, and last year, we held an Amazon roundtable on Prime Day.   Both events showcased the benefits that tech platforms provide small businesses. Today, we will now look at this through another lens.

Yes, it is true that innovation and ingenuity built this country. In fact, one could argue that these qualities are uniquely American and have propelled our nation to produce the most successful companies and the foremost technologies. And I know that the companies we have on this panel—and the ones we don’t—started as an idea, in a basement or a college dorm room, and that entrepreneurship—the spirit that built your companies, is to be commended. 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.

Big tech platforms dominate search functions, the devices used by nearly every American, online advertising, and online messaging platforms. They are market leaders in cloud computing services to businesses and consumers, while also providing entertainment and other digital streaming services. Microsoft, Apple, Amazon, Alphabet, and Facebook are collectively worth over $4.3 trillion dollars. Those 5 companies comprise over 15% of the total value of the S&P 500, which tracks the market value of the 500 largest companies listed on U.S. Stock exchanges.

“To provide a little more context on the scope and reach of these companies, Amazon currently has approximately 50% of the U.S. e-commerce retail market. Nearly 90 percent of Internet searches go through Google and its subsidiary, YouTube, while Facebook pulled in 55 billion dollars in ad revenue last year. And, Apple sold over 217 million Iphones---in 2018 alone.

The sheer size of these companies, along with pervasive integration of these platforms, and concentration of power influencing online traffic, raises questions that should concern anyone who cares about market access, data privacy, small business development, entrepreneurship, and innovation.

And one only has to look to the decline in American start-ups to connect the dots. In 2006, 558,000 businesses were formed but the Census reported that only 414,000 businesses were started in 2015. And there is growing anxiety – not only in the U.S. but around the world – that the large tech companies pose a threat to innovation and competition.

When consolidation takes place in any industry and market power is increased – as it has in the tech industry – it’s simply too hard for new businesses to get off the ground. Many of the popular products and features of these companies have not been developed internally, they’ve occurred through merger and acquisition with the largest being Microsoft paying over $26 billion for LinkedIn. Do we want a country of entrepreneurs and inventors that dream of building something or dream of being bought by larger competitors? In my view, we need to reboot the start-up economy.

And when small businesses do get off the ground and are able to succeed, we need to ensure that they are treated fairly on online marketplaces and that consumers can find them on search engines. Small businesses need certainty and transparency when they are operating their businesses on digital platforms so that they can set competitive prices and still make enough money to continue to grow their businesses, create jobs, and invest in their communities. And when small firms do get into disputes with the powerful gatekeepers, they need a fair shot at resolving the problem so that they can continue to run their businesses.

And finally, I think we need to be clear that in a digital marketplace, that every firm, and especially the Big Tech firms here today are desperate for our data. Our data is an economic asset which garners more value as one collects more of it. The concentration of that data in fewer and fewer firms has implications for small businesses.

The Internet and digital platforms are so deeply woven into American lives that small firms cannot afford to be excluded and or treated unfairly. Small businesses need to be protected by policies that offer them the certainty and transparency they need to make meaningful business decisions. As consumers continue to increase their engagement with businesses through digital platforms, small firms need to be sure that they can be found when new and existing customers are looking for their business. We can’t allow our economy to become one that stifles innovation or make it impossible for small firms to compete.

I look forward to working with colleagues on both of side of the aisle to create meaningful policies that foster collaboration between small firms and digital platforms and ensure that small businesses have a fair opportunity to succeed.

 

 

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