Patrick Spencer, CEO of Sonos, a leading digital speaker maker, will testify before the U.S. House of Representatives antitrust subcommittee, which has been reviewing the digital market for seven months. A week after suing Google for infringing five of its patents, Sonos is expected to raise the issue of unfair competition between Google and Amazon, both of which sell “smart speakers” driven by voice assistants.
Last week, Sonos sued Google for infringing its patent rights, saying it used a technology developed by Sonos that allows smart speakers to play music wirelessly in different rooms. Companies such as Google and Amazon are now eating into the Market for Sonos by selling smart speakers.
“Google has been an important partner in our successful collaboration over the years, and last year we introduced the Google Assistant Smart Assistant service to the Sonos platform, but Google has been blatantly and knowingly copying our patented technology to develop its audio products,” Sonos said in the complaint. Despite our repeated and extensive efforts over the past few years, Google has shown no willingness to work with us to find mutually beneficial solutions. We have no choice but to file a lawsuit to protect our inventions, customers and innovation, which is what we did. “
For Sonos fans and users, they may feel sympathy for the company, but it remains to be seen whether its antitrust views are justified. Sonos is just one of a large group of innovative companies that are ceding their market share to big technology companies.
Other members of the companies include smartwatch maker Fitbit, sports camera pioneer GoPro, set-top box maker Roku, streaming service Spotify Technology, and a host of corporate software companies, and perhaps many more than we’ve never thought of. The companies have resisted with varying degrees of bravery against the “bundled” interrelated services offered by Google, Amazon, Apple, Facebook, Microsoft and other large technology platforms.
About six years ago, industry insider Brad Stone installed Sonos speakers at home for the first time, enjoying a rich “multi-room” sound system, all controlled by a smartphone app. But soon after, there was an earthquake in the home speaker world: Amazon launched the Echo, a relatively inexpensive, easy-to-connect smart speaker that supports music and other tasks that can be performed with basic voice commands. Suddenly, the relatively clumsy Sonos became less important. Later, when Stone moved, he naturally switched to echo.
Like Stone, other users in droves have opted for voice-activated speakers (smart speakers). Although the Echo has a relatively poor sound quality compared to Sonos, Bose and other audio equipment makers, Amazon is now the world’s best-selling seller of home speakers
Sonos responded by trying to integrate Amazon’s Alexa and Google Assistant into its products, but it was a questionable strategy, which amounted to the introduction of a middleman in their relationships with users. As the media points out, Sonos only recently acquired its own voice assistant five years after Alexa’s debut, and has no plans to make generic voice products that compete with Amazon.
So is there anticompetitive behavior on Amazon and Google (with Google Home entering the speaker market at the end of 2016)? Let’s put aside Sonos’ patent infringement allegations against Google and last week’s intellectual property theft lawsuit filed by smartwatch maker Masimo against Apple. In fact, the real unfair advantage stake for tech giants is their deep resources, technological depth and ability to outpace small companies. This is a difficult thing to regulate.
In contrast, there are some “hands-on companies” that are doing very well in a market that is not very favourable. Spotify, for example, has not only stood up for itself, but has filed an antitrust complaint against Apple in the European Union over its 30 per cent App Store tax. Roku continues to surpass Amazon Fire TV, Apple TV and Google Chromecast, in part by integrating its software into smart TVs. And Netflix defends its streaming presence by licensing and producing billions of dollars in original programming and movies.
Sonos’ share price is now about a third lower than its 2018 high, but with a market capitalisation of $1.7 billion, it won’t easily pull out of the race. Even in this tech-dominated era, these “hands-off companies” are likely to survive and thrive, which is clearly positive, because Congress may not help them any time soon.