The latest big tech antitrust hearing is being held by US lawmakers today and Sonos is the main party testifying. Many of the company’s antitrust concerns revolve around Google and Amazon, but Sonos’ chief legal officer also called out its issues with Apple in his testimony.
We last saw Tile, Spotify, and more testify to the US Congressional Subcommittee on Competition Policy, Antitrust, and Consumer Rights in a hearing back in April. Apple and Google’s counsel also joined.
Today’s hearing titled “Protecting Competition and Innovation in Home Technologies” includes Sonos sharing its concerns along with Amazon and Google presenting their cases. With Apple not being a central part of this hearing, it didn’t send a representative. However, that’s not to say Sonos didn’t share some concerns about how Apple handles its Siri and HomeKit business.
At the outset, Sonos chief legal officer Eddie Lazarus shared platform openness as key to its success vs. “a walled-garden experience.”
Our success is based in significant part on elevating the idea of an open platform facilitating consumer choice rather than a walled-garden experience. Sonos customers can choose audio content to play on our systems from more than 100 streaming services, such as Spotify, Deezer, Tidal, Apple Music, Amazon Music, and Google’s YouTube Music. They can also choose between one of the two leading voice assistants, Amazon’s Alexa, and Google Assistant. Moreover, we provide these services with a strong emphasis on quality and privacy, focusing on using customer data to enhance their experience rather than aggressive monetization.
Lazarus continued by saying that the “battle for the future of the smart home is upon us, and we very much welcome this Committee’s attention, as Congress can play an extremely salutary role in determining what that future will look like.”
Sonos says it sees two scenarios for how that future will play out:
We see two possible futures for the smart home. In the first scenario — resulting from the current trajectory we’re on — every smart home will be controlled by one of a few dominant companies, Google, Amazon, or perhaps Apple or Facebook will squeeze in too. These behemoths will exert overwhelming control over the direction of innovation and what new ideas make it to market, ultimately replicating a market structure that history tells us inhibits innovation and competition. Consumer choice will also wither. Consumers will find themselves channeled into the siloed ecosystems of a Google or an Amazon in a self-reinforcing dynamic of network fueled dominance.
In an alternative scenario, revamped antitrust law and enforcement level and broaden the playing field. The second future is one in which companies like Sonos and countless others innovate and bring novel experiences to customers. A multitude of companies will compete based on the merits of their products and services, with the best ideas rising to the top. Consumers will enjoy greater choice not merely to choose alternatives to the systems provided by the dominant companies, but also to mix and match seamlessly among their and other offerings. We believe that Congress has a vital role to play in determining which future we create. Due to strong network effects, technology markets can tip quickly. So time is short.
While Sonos highlights Amazon and Google as its biggest concerns, it didn’t leave out Apple. Beyond general worry about Apple dominating the smart home market alongside the other tech giants, Sonos called out its tightly controlled ecosystem – specifically how it’s making Siri available to third parties through HomePod which it says includes “interoperability” issues and a possible conflict of interest.
Nor is Google alone in limiting interoperability. Take Apple’s announcement that it will now license Siri to third parties in the smart home. As reported in The Verge, Apple will only license Siri to companies that utilize the HomePod as a central hub to connect with Siri. Thus, Apple is conditioning interoperability with Siri on companies placing a competitive Apple product alongside their own.
Sonos also said the new smart home standard Matter is not helpful in leveling the playing field:
The standard Matter is working on, as I understand it, is basically a creature of Google and Apple code. That is hardly a formula for fair competition or more creative invention. It’s a formula for further entrenching the dominance of the very few.
In closing, Sonos’ Lazarus urged US lawmakers to “act soon”:
We urge Congress to act soon. Entrepreneurship is at risk, and venture capitalists are loath to invest in startups that drift too close to the “kill zone” by dominant platforms, while at the same time pumping money into firms that have a chance of being acquired by these platforms. The gatekeepers already control important sectors of the economy, and we are in grave danger of them extending their existing monopolies.
There are many other companies that have suffered from anticompetitive conduct by these platforms. But many are too afraid of retaliation for speaking up. We hope that in raising our voice, we will call attention to the need to support innovation in America.
Thank you for your consideration.
Notably, the new American Choice and Innovation Act was just officially unveiled (formerly the Ending Platform Monopolies Act) and if passed could introduce serious regulation on Apple, Google, Amazon, and Facebook.