Senators push Amazon, Google on connected IoT device market

Openness and interoperability

At the beginning of the hearing, Sen. Michael Lee, R-Utah, echoed Klobuchar's concerns and questioned if the connected IoT device market is one more way for big tech firms to "expand their already significant market power."

Wilson White, senior director of public policy and government relations at Google, described the connected device industry as fast-moving and hypercompetitive, but nascent. In his opening statement, White said Google believes open platforms enable competition and the company has pushed for openness across the broad range of connected devices.

You need companies that are Switzerland-like companies that sit at the intersection of all of these major ecosystems. That's the kind of interoperability we need.

To wit: In 2019, Google helped stand up an independent working group focused on building an open connectivity standard for smart home devices, according to White. Last month, the working group announced an interoperable secure connectivity standard called Matter, which he said Google plans to integrate into its Android and Nest products.

"Open standards foster competition by leveling the playing field for smaller players and new entrants, simplifying product development and increasing choice for consumers," White said.

Ryan McCrate, vice president and associate general counsel for Alexa and Echo at Amazon, said the company's invention of the Echo smart speaker and investment in developing Alexa has "meaningfully increased competition in the voice assistant and smart home space."

As the number of voice assistants grows, McCrate said it's "critically important" that customers can choose several assistants based on preference or task, rather than be tied to a single product. That was the driving force behind Amazon's Voice Interoperability Initiative, which includes more than 80 companies working to give customers "access to multiple, simultaneous voice services on a single device," McCrate said.

Despite these efforts, Eddie Lazarus, chief legal officer at wireless speaker provider Sonos, argued neither Google nor Amazon have lived up to their interoperability commitments. At Sonos, providing access to different voice assistants is not aspirational.

But, "Google contractually prohibits us from using that technology," Lazarus said. "And the Voice Interoperability Initiative, which is an excellent idea and we appreciate that Amazon is partnering with companies, is just an onramp into the Amazon ecosystem because you can't mix and match between the big companies. That mixing-and-matching ability is crucial when you talk about interoperability."

White argued there are challenges with having a single speaker offer multiple assistants that need to be worked through, such as data privacy and consumer confusion.

Data collection concerns

Lazarus pushed for greater antitrust enforcement to prevent tech giants from dominating the connected IoT device market -- a market that's less about product sales than it is about data, which is an area lawmakers focused on as well.

Klobuchar asked White and McCrate if Google and Amazon store data generated through connected IoT devices such as their smart speakers, as well as how they monetize the collected data.

Google's White said, while the company does not break down profitability by product area, recordings are not stored, unless consumers decide to store them. "Then we give users transparency and control over the data that's being collected by Google Assistant," he said.

At Amazon, the company does not sell customer data or voice recordings, according to McCrate, but it monetizes the data "when customers use paid Amazon services, like our Amazon music subscription," he said. It also uses the data to improve the Alexa product overall, he added.

It's not just consumer data collection practices senators were worried about. Sen. Richard Blumenthal, D-Conn., asked questions about company practices when it comes to data from third-party competitors.

Both McCrate and White said preserving trust with third-party partners is critical. Blumenthal pushed back, saying the companies have access to "troves of sensitive information about their competitors," and neither use tools like firewalls to protect third-party data from being collected and used.

Jonathan Zittrain, professor of international law and computer science at Harvard University and a witness at the hearing, agreed with Blumenthal that tools like firewalls between connected IoT devices and app stores could help restore competition to the marketplace.

Striking a regulatory balance

Sonos' Lazarus argued companies need to be allowed to create bridges between the walled gardens of tech giants to offer consumers more choice and to increase competition.

"You need companies that are Switzerland-like companies that sit at the intersection of all of these major ecosystems," he said. "That's the kind of interoperability we need, and we hope that in reforming the [antitrust] laws, we set some rules of the road that allow it."

However, Zittrain suggested caution as federal lawmakers look to regulate technology giants, particularly when it comes to data privacy concerns. He advised lawmakers strive to strike a balance between interoperability and consumer data protection.

"We could have a privacy apocalypse here," he said. "Some of the concerns about privacy are about asking the big players not to be sharing their data. And then, in the same breath, we're asking them to make sure that any data they make use of, the competitors have use of that, too. Figuring out how to square that circle is a big part of how to get policy right in this area."

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.