Standing Up for the Startup
By George Harris
Google Home speakers are "smart," to use the language of our times. They're also stolen.
That's according to a recent ruling from the U.S. International Trade Commission that found Google infringed on five patents from Sonos, a speaker company. The ruling prohibits Google from importing products that infringe on the patented technology -- a decision that could have multimillion-dollar consequences for the folks in Mountain View.
Google's case is no outlier. In August, a federal jury slapped Apple with a $300 million verdict for stealing a smaller company's patented technology.
For years, Bay-area Goliaths have worked to roll back U.S. intellectual property rules. Now, large firms have adopted a "willful infringement" strategy, knowing that nascent companies seldom have the cash for heavyweight representation in the courtroom.
Preventing this dynamic from continuing unabated isn't just about combatting Big Tech's sense of greed and entitlement. It's also about protecting our economy.
Tech startups have long been dynamic centers of American job creation. A sliver of all U.S. companies -- around 3% -- are startups in the technology sector. Yet these firms account for an outsize share of American job growth. Nationwide, new jobs created at startups have prevented net job losses in prior years.
Tech startups also pay well, and their employees' wages are growing faster than those at all other tech companies, underscoring how these small firms keep our economy from stagnating.
They build an economy that's resilient. As countries work to recover from the devastating economic losses from the pandemic, tech startups offer massive dividends. As a recent Canadian study found, they are uniquely positioned to drive the post-Covid recovery.
Protecting small tech companies' intellectual property directly boosts innovation in the tech sector. Monopolistic leviathans like Apple, Facebook, and Google simply aren't innovating in the same ways that smaller tech firms are, despite their own public narrative. Start-ups tend to invest more heavily in R&D than older firms.
Why does this disparity exist?
Often, it comes down to value. Tech entrepreneurs and investors know that any startup's value is strongly correlated with the intellectual property it holds. According to The Economist, American companies "derive 80% of their market value from intangible assets such as patents and brands."
Tech hegemons know this. It's part of the reason they continue to prey on their smaller neighbors, believing they won't have enough cash to fight back.
Big Tech's incursions are immoral. They're also an increasingly bad business strategy. Sonos, which won a battle over Google Home speakers, has a market capitalization nearly five-hundred times smaller than Google's.
We can't let predatory behavior towards small firms escape the spotlight. Lawmakers are right to question the power that sprawling tech giants have in Americans' lives. Courts and regulators must insist that Big Tech plays by the rules -- or pays a price for breaking them.
George Harris is a small business owner, the publisher of Liberty Watch Magazine, and a U.S. Army veteran based in Las Vegas. This piece originally ran in the Detroit News.
