WASHINGTON – At today’s Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights hearing on connected home technologies, U.S. Senator Amy Klobuchar (D-MN), Chairwoman of the Subcommittee, highlighted the need to promote competition in the emerging connected home technology industry.
“In home technology, we see some of the most powerful firms that dominate tech today poised to dominate the platforms of the future. We hear concerns about Amazon’s and Google’s growing market power with connected speakers – over 50 percent for Amazon, 30 percent for Google...Americans are counting on us to protect innovation and competition,” said Klobuchar.
Witnesses at the hearing included:
- Ryan McCrate, Vice President and Associate General Counsel, Amazon
- Wilson White, Senior Director for Government Affairs and Public Policy, Google
- Jonathan Zittrain, Professor, Harvard Law School
- Matt Crawford, Research Fellow at the Institute for Advanced Studies in Culture at the University of Virginia
- Eddie Lazarus, General Counsel, Sonos
The full transcript of questioning as given below and video available for TV download HERE and online viewing HERE.
I call this hearing of the Subcommittee on Competition Policy, Antitrust, and Consumer Rights, on “Protecting Innovation and Consumer Choice in Home Technologies” to order. Good afternoon. Welcome to our witnesses. This hearing continues Senator Lee and my and our committee members’ bipartisan review of America’s monopoly problem. And I thank Senator Lee and his staff for working with our staff to plan this hearing.
The Competition Policy Subcommittee has been examining the problems that arise when a handful of companies become powerful enough to distort competition in the marketplace. So far, we have seen that excessive market power benefits the few companies able to wield 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 companies. As a result, we see competition problems in industry after industry, across our economy.
Today, we will examine an emerging industry that could fall prey to the same dynamic: connected home technology. Millions of Americans already have connected devices in their homes, including speakers, smart televisions, and systems to control lighting or temperature within the home. I just -- Senator Lee used my own remote vacuum cleaner just the other day to scare my daughter as she was watching TV. It wasn’t a big deal, but, just to do it. And we are just 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 ever larger role in our lives.
Many people are understandably excited about these technologies -- I like them. But we must get ahead of this. So many of the things we talk about, when we are in this room when it comes to antitrust or over in the House, are looking back at things that should have been done differently: privacy rules, doing more when it comes to apps, doing more when it comes to what some of these acquisitions were. I just used the examples of Instagram and WhatsApp but at the time, people didn’t see ahead. But we have this moment with this kind of technology to look around the corner and to see ahead. And as we’re looking ahead -- Senator Lee just introduced a bill with Senator Grassley, I have a bill with several members of this subcommittee, we have tech bills that we’re all working on over here -- we have to think of these bills in the context of what's happening in this area as well given this incredible movement and growth that we’re seeing.
In home technology, we see some of the most powerful firms that dominate tech today poised to dominate the platforms of the future. We hear concerns about Amazon’s and Google’s growing market power with connected speakers -- over 50 percent for Amazon, 30 percent for Google. We are also hearing concerns about use of consumers’ personal information -- that would be privacy. Of course privacy legislation on the federal level has somehow eluded us, and mostly would be handled in the Commerce Committee, but that’s the other piece of this puzzle in addition to the work that needs to be done on antitrust.
Americans are counting on us to protect innovation and competition. To go over the stats, 94 million people in the U.S. own at least one connected speaker, which they can use to play music, ask about the weather, or tell their kids to come down for dinner. In the years to come, connected devices in our homes will become even more sophisticated.
These devices work with each other through technology interfaces, often digital voice assistants like Alexa.
I want to highlight a few key concerns that we will explore at the hearing today.
First, many consumers use their connected speakers to operate other connected devices, like asking the digital assistant to lower the thermostat by two degrees. They should get the very best digital voice assistants available, whether that is Amazon’s Alexa, Google’s Assistant, or a new entrant. But will Amazon and Google use their market power to block that new digital voice assistant from being installed on the connected speakers that are already in consumers' homes? Or will they let competition flourish, even if it threatens their dominance?
Second, in a few years, people might easily have 20 or more connected devices in their homes -- from a vacuum and a fridge to speakers and lights. We want those devices to work with each other, seamlessly. In other words, they need to “interoperate.” You shouldn’t have to choose the right devices for your home based on whether they play nicely with Google or Amazon’s digital assistants. Or whether Google or Amazon has locked them into an exclusive contract.
We have seen what happens when the largest and most powerful tech companies make their own decisions about interoperability: they embrace it as long as it helps their bottom line. But when interoperability threatens their own products and services, they change their tune and start boxing out competitors. This has real potential harm, both to competition and innovation.
Third, concern about self-preferencing. The market leaders benefit from having their services pre-installed, because many customers never change the default settings. Maybe I know a little bit about that. Imagine a household with a connected refrigerator that automatically replenishes the supply of certain groceries. Do we want Amazon to set Whole Foods or Amazon Fresh, the grocery stores it owns, as the only place to purchase those groceries? Absolutely not. Consumers should choose, not vertically-integrated tech giants.
And finally, I have concerns, as I mentioned, about privacy. Connected devices can make our lives easier and more efficient, but that should not come at the cost of basic privacy rights. Digital voice assistants could collect data from multiple connected devices in the home, giving already data-rich companies even more insight into who visits us or lives in our homes, what we listen to, what we say to each other, what foods we eat, how often we do our laundry, and how well we sleep at night. That highly personal and sensitive information must not be aggregated and auctioned off to the highest bidder. That data is ours.
Given these problems facing the connected home industry, we need to act now to protect competition, innovation, and consumers.
Step one is to give our antitrust enforcers the resources they need to do their jobs. We took a big step with the bill we passed out of this committee, Senator Grassley and my bill to change the merger fees filling structure. That has now just passed the Senate as a part of a major bill in the last week. That bill is now going over to the House. We have every reason to believe it will pass and then we have to look through the appropriations and budget process for more resources.
Secondly, updating our antitrust laws, as I mentioned we have some good ideas on that front but that has to be part of the solution.
And third, federal privacy legislation.
Let me be clear: this isn’t about punishing success or going after companies just because they are growing. This is about learning from what we have seen in the recent past instead of just complaining about it after the fact. We have a chance to include what we know about this market as we look at legislation and enforcement actions going forward. I want to thank you so much and I turn it over to Senator Lee.
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