Jul 12, 2021

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Tech Agenda: Big Tech's small business squeeze

Illustration: Annelise Capossela/Axios

While Apple, Google, Amazon and Facebook all started as tiny operations in garages and dorm rooms, it's hard to imagine any of them being displaced by new startups today. President Biden's sweeping new executive order targeting big business is the most ambitious effort yet to clear space for challengers to thrive — but still faces daunting odds, Axios' Kim Hart reports.

Why it matters: Biden's order calls for federal agencies to take action to reduce industry concentration, but today's tech industry is built around a "big fish eat little fish" ecology that will be hard to change.

The big picture: Big Tech has long had a complicated relationship with small tech companies. The big platforms play outsized roles not only in their own markets, but also in reaching consumers and accessing today's necessities for small businesses, such as cloud storage, payment processors and app stores.

Innovate or die: Tech giants have been a bountiful source of innovation, but that's given them the means to tamp it down elsewhere, argue progressives who favor reining in the biggest companies' power.

  • The "kill zone" is a term venture capitalists use to describe areas they won’t fund because the big players have an edge or could easily squash a startup, or decide to buy it on the cheap in order to build out the business themselves. 
  • As big firms take on new lines of businesses in search of growth, they leave less room for new entrants.

What's happening: Tech giants generally have had a reputation for being friendly to entrepreneurs.

  • Today's small business playbook often includes buying ads on Facebook and paid search on Google, selling a product on Amazon, renting cloud-computing power from Google, Microsoft or Amazon, putting an app on Apple, or placing a promo video on YouTube.
  • These services help startups instantly reach millions of potential customers at relatively cheap rates. But as the market gets more saturated and the platforms can command higher prices for the services, they can become a new form of overhead.

Be bought or be crushed: Through data analysis, algorithms and contracts, the platforms have the ability to drive consumers to their own products over smaller rivals’ products.

  • That was the basis of the EU’s 2017 case against Google Shopping, with regulators claiming Google downlinked competitors' services in order to favor its own.
  • Last year, more than 30 state attorneys general filed an antitrust lawsuit against Google alleging, in part, that it disadvantaged rival search companies like Yelp or Tripadvisor by favoring its own results.
  • The District of Columbia recently sued Amazon for allegedly undercutting third-party merchants with pricing contracts that result in artificially high prices for those sellers' goods.

The other side: Big Tech companies like Google and Amazon say they do have to vigorously compete for consumers — against each other, as they are constantly entering each others' turfs.

  • Their defenders say their large scale make them more efficient, and that consumers want the ability to share the same network, have compatible devices and interact with others all on the same platform.

"When I have a firm that buys a startup, and the startup has very little business, no profits, just a few people and maybe isn't even in the same space as anything the acquiring firm is, it's possible that that startup might in the future become an important competitor and might succeed and might get contracts. It's an awful lot of mights," said Bruce Hoffman, former head of the FTC's Bureau of Competition, who is now a partner at Cleary, Gottlieb, Steen & Hamilton LLP.

  • "In our system, the government doesn't rule by decree. You have to actually prove a case," he told Axios' Margaret McGill.

What to watch: In a joint statement, the DOJ and FTC on Friday said they'd be taking a hard look at merger guidelines "to determine whether they are overly permissive."

2. "Ransomwhere" project tracks payment demands

A new project, Ransomwhere, aims to put a dollar figure on the profit-driven attacks that have become a headache for businesses, governments and non-profits around the globe.

Why it matters: While ransomware is clearly a growing problem, there hasn't been a good way to keep tabs on how much is being paid, and to whom.

How it works: Ransomwhere is an "open, crowdsourced ransomware payment tracker" launched by Jack Cable, a former government cybersecurity expert who now works as a security architect for Krebs Stamos Group.

  • Anyone can enter a payment demand they have received, though people are required to submit a screenshot of the ransom note as one means of verifying the legitimacy of claims posted to Ransomwhere.
  • The site also keeps a running tally of bitcoin payments by taking advantage of the public nature of blockchain ledgers.
  • As of Sunday night, Ransomwhere had tracked just over $60 million in ransomware payments.

What they're saying: Cable told Axios that he launched Ransomwhere because no one was really tracking the total impact and it's hard to address what you can't measure.

  • "Without knowing the full details of ransomware economics, it's hard to tell if actions have an effect on criminal behavior," Cable said. "Knowing that bitcoin is entirely public, I started building Ransomwhere as a method to crowdsource information on ransomware payments."

Go deeper: Ransomware epidemic intensifies

3. Ray Ozzie gets funding to add 5G to everything

Photo illustration: Axios Visuals

Blues Wireless, the latest startup from Lotus and Microsoft veteran Ray Ozzie, is announcing $22 million in Series A funding today.

Why it matters: The company, whose launch we first reported back in 2019, aims to build 5G modules that can easily add wireless connectivity to all manner of devices.

  • The round was led by Sequoia Capital and Lachy Groom, with Bill Gates increasing his existing investment in the company.
  • The company previously had raised $11 million in a seed round.

Between the lines: Blues Wireless announced its first product, Notecard, late last year.

What they're saying: "We offer a simple, affordable solution to a complex and costly problem: helping companies connect their products to the cloud, securely and with minimal effort,” Ozzie said in a statement.

  • Ozzie is among the pioneers of PC software, creating Lotus Notes, an early program for helping corporate employees manage email and calendar tasks.
  • In 2005, he sold his startup Groove Networks to Microsoft and rose to succeed Bill Gates as the company's chief software architect before leaving at the end of 2010.
  • In 2015, he sold another company, voice communications startup Talko, to Microsoft.
4. Report: Microsoft to pay $500 million+ for RiskIQ

Microsoft is close to a deal to pay more than $500 million to acquire San Francisco-based security software company RiskIQ, Bloomberg reported on Sunday.

Why it matters: The move comes amid a crush of ransomware attacks (see above) and as Microsoft is looking to protect businesses, organizations and individuals from both profit-driven and politically motivated attacks.

  • A deal could come in the next few days, Bloomberg said.
  • Microsoft declined to comment to Axios on the report.
5. Take note

On Tap

  • VentureBeat is hosting its Transform 2021 conference online this week.


  • Twitter is taking steps to meet India's legal demands for social media companies, including appointing a local compliance officer and publishing transparency reports.
  • Five former Kaseya employees tell Bloomberg they warned the company before a massive hacking attack about issues related to its security practices.
6. After you Login

And if you are looking to be whisked away to a time before ransomware, you might want to check out this fun collection of desktop background images that Microsoft is offering.

  • Spoiler alert: Even Clippy is there.