Small business owners discuss harmful practices that enrich Big Tech and cut small business competition
Congress is considering legislation that will help protect small business owners from unfair practices by Big Tech companies. On Sept. 22, U.S. Representative Ken Buck, along with a panel of small business owners and representatives, gave a briefing on how Big Tech companies and their anti-competitive practices are hurting small businesses by self-preferencing their own products and services as well as limiting competition. Rep. Buck is the ranking Republican member of the U.S. House Judiciary Antitrust subcommittee and a principal author of the bipartisan legislation, the American Innovation and Choice Online Act.
The goal of the bill is to ensure fairness for small businesses and options for consumers. It would prevent companies like Amazon from engaging in practices such as burying a small business’s product in search results unless the business agrees to purchase thousands of dollars in Amazon advertising and use Amazon’s expensive, low-quality fulfillment services. Practices like this allow Big Tech companies to operate consumer services like Prime at a loss, ballooning their monopoly status and making small businesses foot the bill.
“Presently Google controls 90% of all online searches, and in 15 of 23 major product categories Amazon accounts for 70% of online transactions,” explained Mitch Relfe, NFIB’s Manager of Government Relations. “This dominance mandates that virtually all small businesses must rely on these companies in some capacity for access to consumers. They truly are the modern gatekeepers over the internet. Unfortunately, monopoly status is leading to increased anti-competitive behavior by Big Tech.”
Take Action: Tell Congress that as a small business owner, you support reining in Big Tech companies and ensuring a fair and level playing field for small business users.
If you would like to learn more about this issue you can watch the full briefing to hear from all five panelists and Rep. Buck
NFIB member Tim Rexius was on the panel and is the President and CEO of Rexius Nutrition Inc. He owns multiple businesses including Rexius Nutrition Stores with 40 locations in eight states.
“Tech platforms are so necessary for small businesses because it legitimizes the businesses to the masses right now, and a lot of people don’t understand that particular position,” Tim explained. “One of our products, Omaha Protein Popcorn, we had on Amazon. We did fulfillment through them. They took such a huge chunk of [our revenue], I was actually losing over a dollar a unit. . . After a couple thousand bags sold on Amazon, we decided to not change the product, not change the description, not change anything, just ship it out of our own warehouse in Omaha because we can do one to two-day fulfillment across the United States. We went from selling 1,200 bags [of popcorn] to selling one. Nothing changed but you can’t even find it in the search ranking.”
NFIB member Greg Niewold is President and CEO of Power Planter, Inc. which is a 34-year-old, three-generation garden and landscape auger company. Greg talked about his experience selling on Amazon and the anti-competitive, price fixing use of the Buy Box, the clickable add to cart option, as opposed to the “see all buying options” that is found on certain products.
“Several of our products had been winning the Buy Box,” Greg explained. “I went in, even though there was a 5% increase in charges [by Amazon], I increased the price of one item – one cent. It went from $49.98 to $49.99. I received an email daily that I needed to make my price more competitive. They’re asking small businesses to incur 5% more in charges because their overhead is more. . . but to increase something even one penny, I lost the Buy Box. So, sales on that item dropped at least 25%, basically overnight.”
Amazon is not the only Big Tech platform that uses anti-competitive behavior to try to limit small businesses. Christine Bannan is a Public Policy Manager at Proton, which is a tech startup that provides easy-to-use encrypted e-mail, calendar, file storage, and VPN, while protecting your data. Bannan discussed the dominance of Google products which limits consumers choices and how the American Innovation and Choice Online Act would fix this.
“The bill says that [Google] can’t rank their own products more favorably in a discriminatory way against competitors,” Bannan explained. “So, what the bill would do is make it easier for users to choose a competitor or switch to a competitor. The majority of smartphone users worldwide are Android devices… but you have to use a Google account to configure your device and to download things from the Google Play Store. We just want users to be able to choose an option if they want to.”
This panel and many other small businesses across the nation have been forced to use Big Tech services to compete, but with the help of the American Innovation and Choice Online Act, fair practices can be put in place to create a more equal playing field for small and large businesses alike.