Google, Amazon fire back: Rising tide lifts all boats

Adam Cohen, director of economic policy at Google, argued that, when it comes to the tech sector as a whole, there is record-setting venture capital activity, with over 8,000 venture-backed companies raising more than $130 billion in financing last year—the highest amount in more than a decade. Similarly, the technology sector has had one of the highest rates of business formation and job creation in the country during the past three decades.

Cohen cited a recent Silicon Valley Bank report that 69 percent of startups surveyed successfully raised capital; the number that plan to hire is at a five-year high.

Cohen added that former Google employees have built more than 2,000 start-ups, “and the U.S. continues to be the home of so-called ‘unicorns’—businesses that came from nowhere and are now each valued at over $1 billion.” In the first quarter of 2019, a record 147 private American companies reached this status. Over the past decade, this list has included AirBnB, Lyft, Pinterest, Plaid, Reddit, Square, Stripe, Snap, WeWork, Uber, and many more. “That’s a rate of new business success unrivalled in the U.S. economy, creating new companies that compete with established technology businesses across many areas.”

“Beyond competition from emerging firms, we compete against other large tech firms in a wide range of business activities,” he added. “Competition extends across many existing and developing fields: operating systems, mobile devices and applications, voice assistants, artificial intelligence and machine learning, virtual reality, enterprise services, cloud computing, office applications, digital advertising, mobile, video sharing, and much more. In our core search business, consumers can choose among a range of options: Bing, DuckDuckGo, Yahoo, and many more. Specialized search services are strong competitors, too, including companies like Amazon, eBay, Kayak, Travelocity, Yelp, and others.”

Nate Sutton, associate general counsel at Amazon, also punched back against anti-competition claims. His company, he said, accounts for a mere 1 percent of global retail sales; 4 percent in the U.S., lagging far behind Walmart and other big box mainstays.

“Online is just one of many ways consumers shop for products—studies demonstrate that most consumers buy, and most sellers sell, in and from multiple locations both online and offline,” he said. “In fact, according to data from the U.S. Census Bureau, the vast majority of retail sales—90 percent—still occur in physical stores. In addition to thousands of other retailers around the world, our competitors include many large and well-known companies such as Walmart, Target, Macy’s, Safeway, and Kroger.”

“Of course, the role of technology in retail continues to change and evolve. E-commerce has grown steadily over the years and selling online is now extremely common for all retailers,” Sutton added. “Technology has only made retail more competitive, as numerous multichannel retailers offer customers a wide range of online and offline experiences. In fact, as Target and Best Buy recently announced, one of the fastest-growing consumer practices is to order products online that they later pick up in a physical store. Third-party sellers now sell online in the dozens of marketplaces in the U.S. and around the world, such as eBay, Alibaba, Walmart.com, Rakuten, and Wayfair. And at the same time, online retailers are moving into physical retail, adding brick-and-mortar stores.”

Important to the debate: The success of Amazon’s stores depends on its partnership with third-party sellers.

“There are millions of small and medium-sized businesses around the world selling in Amazon’s stores—including more than a million third-party sellers in the U.S. alone,” Cohen testified. “Sales by these sellers are growing twice as fast as Amazon’s own sales in our own stores.

”… Nearly 200,000 entrepreneurs worldwide surpassed $100,000 of sales in our stores in 2018, and more than 50,000 of those entrepreneurs exceeded $500,000 in sales. We estimate that third-party sellers have created over 1.6 million new jobs around the world.”

“If we did not invest and innovate in ways to improve the experience for our selling partners, they would sell fewer of their products in our stores and more through the myriad of other options available to them both online and offline,” he added. “We have dedicated teams assigned to supporting sellers directly, continually launch new tools that make it easier for our seller partners to sell, and spend significant resources to root out bad actors and prevent fraud and abuse that harm both sellers and customers.”

Matt Perault, director of public policy for Facebook, doubled down on the bigger is better mantra. “Facebook is where it is today because we have worked hard and taken risks. Our efforts have resulted in significant success, and America does not punish success; it rewards it,” he testified. “Facebook is working hard every day to meet the challenges we face. In tackling issues like terrorism, misinformation, hate speech, and harassment, we view our size as an asset: we can dedicate 30,000 people to keeping our users safe, invest in industry initiatives to jointly combat terrorism, and develop the new technologies that are needed to confront these evolving threats.”