Big tech companies such as Facebook and Google have touted their efforts to help small businesses struggling during the coronavirus pandemic — but those efforts may eventually take customers away from the small businesses they were supposed to help, according to a new report.
Facebook and Instagram Shops were announced this week to help shuttered or wounded small businesses create an e-commerce platform on the two popular sites, Axios reported.
The feature lets people shop on stores’ Facebook and Instagram pages, and marks the company’s largest move yet into e-commerce, Markets Insider reported.
Many such efforts to bring business onto big tech companies’ platforms start out free or inexpensive, but costs often rise as the businesses become dependent on the platforms, according to Axios, which can cut into their profits or even sink their operations.
Facebook CEO Mark Zuckerberg told CBS Evening News that the company was only trying to help.
“What we are seeing are a lot of small businesses are moving more of their business online, and we want to make it easier for them to do that, too,” he said.
“Facebook Shops allows a small business to easily set up a shop inside our apps. And it will be a very fast experience for people to discover their products and be able to buy things directly.”
Amazon as well had already taken large shares of small businesses in the past decade as more people shop online.
And Colorado Republican Rep. Ken Buck, who sits on the House Judiciary antitrust subcommittee, said this week he’s concerned about large tech companies like Amazon crushing small businesses, the website reported.
Buck signed a bipartisan letter from the committee demanding that Amazon CEO Jeff Bezos testify after The Wall Street Journal reported last month that the company used third-party sellers data to develop its own products.
“I feel very strongly that we need to make sure that we are looking at antitrust laws as a tool to increase prosperity across the marketplace to incentivize small businesses, and to make sure that the large businesses don’t use their platforms and their position to disincentivize the kind of innovation that comes from small businesses,” Buck told the Internet Accountability Project, which has pushed for antitrust action against big tech companies.
Google and Yelp have also offered small business aid, but mainly in the form of ad credits.
Facebook has distributed ad credits as well, and also made $100 million in cash available to 30,000 small businesses, according to Axios.
Lauren Lang, a volunteer organizer with Help Main Street, allows users to support local businesses by ordering online, buying gift cards, or donating cash, said not all tech companies hurt small businesses.
“While third-party delivery companies are definitely predatory, there are some other corporations like Instacart that are actually helping to provide supplementary income for restaurant workers that have been laid off,” Lang told Axios.
“It’s not full-time work and it’s not solving the unemployment crisis by any means, but it’s additive, flexible income that can be a bridge in the interim.”
Meanwhile, shares of Facebook and Amazon hit all-time highs in intraday trading on Wednesday, Markets Insider reported.
Facebook surged more than 6 percent to a record high of about $230 per share. The company announced a day earlier that it would roll out Facebook and Instagram shops this week.
Amazon shares also hit a record high, surging as much as 1.5 percent to nearly $2,490 per share.
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