Power

Sonos CEO says Amazon is breaking the law by selling Echo smart speakers below cost

Patrick Spence called Echo discounts "predatory pricing" and said his company was working on future Ikea products.

Patrick Spence holding a Sonos speaker

Sonos CEO Patrick Spence argues that companies like Amazon and Google are only able to engage in these kinds of price wars because of their ability to make up for losses from hardware sales.

Photo: Andrej Sokolow/picture alliance via Getty Images

Sonos CEO Patrick Spence believes that Amazon is breaking the law by selling its Echo speakers below cost. "That's predatory pricing," Spence told Protocol on Wednesday. His comments came in response to last week's Big Tech hearing, which included Amazon CEO Jeff Bezos' first appearance on Capitol Hill.

During the hearing, Bezos was asked by Rep. Jamie Raskin whether Amazon priced the Echo speaker below cost. "Not its list price, but it's often on promotion," Bezos responded, adding: "And sometimes when it's on promotion, it may be below cost, yes."

"That's illegal," Spence said Wednesday. He argued that companies like Amazon and Google are only able to engage in these kinds of price wars because of their ability to make up for losses from hardware sales. "They just take money from their monopoly business, they just subsidize, subsidize, subsidize," he said.

The Sonos CEO took part in a hearing of the House antitrust subcommittee in January and has been a vocal critic of both Amazon and Google in recent months. Sonos sued Google for patent infringement in early January, and it's also at the center of an International Trade Commission probe over Google's alleged patent infringement. Google responded with a countersuit in June.

Spence said that he was looking forward to the ITC hearing next February and to any legislation that may come out of the House. "We were encouraged by the hearing last week," he said, while pledging to continue to be involved in the process. "You gotta stand up to bullies."

Protocol caught up with Spence ahead of the release of the company's fiscal Q3 2020 earnings. During the quarter, Sonos' revenues were down 4% year-over-year, totaling $249.3 million, due to COVID-related retail closures. At the same time, Sonos saw direct-to-consumer sales grow by 299%, contributing to a 2% revenue growth guidance for fiscal 2020. "We benefit from the fact that people are at home and are investing in their home," Spence said.

The company's partnership with Ikea was hit particularly hard during the recent quarter, as the furniture chain closed almost all of its stores worldwide. However, Spence said that Ikea would continue to play a big role for Sonos, including with "future products" that he said are now in the works.

In the past, Sonos executives have hinted at efforts to launch additional out-of-home products, including via partnerships. Spence said that some of the company's roadmap had to be adjusted to account for the new reality of homebound life under COVID, but he reiterated that Sonos was looking to replicate the Ikea partnership model with other companies in the future.

Correction: This post was updated at 2:30 p.m. PT to correct the percentage of direct-to-consumer sales and to clarify that it contributed to revenue growth guidance.

Entertainment

Why Microsoft needs to drag Call of Duty into the future

Microsoft’s biggest challenge with Call of Duty has nothing to do with Sony. It’s about modernizing the franchise for a cross-platform and subscription future.

Microsoft’s potential ownership of the series presents a particularly thorny set of problems for Sony.

Photo: Jerod Harris/Getty Images for Activision

Microsoft and Sony have been waging an increasingly bitter battle over Call of Duty. Over the past two weeks, the feud has spilled out into the public through regulatory filings in countries like Brazil and New Zealand, which, unlike the U.S., publish such documents for all to see.

Microsoft’s goal is to convince regulators worldwide that its landmark acquisition of Call of Duty parent Activision Blizzard for close to $70 billion should get the greenlight. Sony's goal, on the other hand, is to raise the alarm about its primary gaming rival owning one of its biggest cash cows, and whether the PlayStation playbook of platform exclusivity might be turned against Sony if Microsoft decides to make Call of Duty exclusive in some way to Xbox or its Game Pass subscription service.

Keep Reading Show less
Nick Statt

Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

Sponsored Content

How cybercrime is going small time

Blockbuster hacks are no longer the norm – causing problems for companies trying to track down small-scale crime

Cybercrime is often thought of on a relatively large scale. Massive breaches lead to painful financial losses, bankrupting companies and causing untold embarrassment, splashed across the front pages of news websites worldwide. That’s unsurprising: cyber events typically cost businesses around $200,000, according to cybersecurity firm the Cyentia Institute. One in 10 of those victims suffer losses of more than $20 million, with some reaching $100 million or more.

That’s big money – but there’s plenty of loot out there for cybercriminals willing to aim lower. In 2021, the Internet Crime Complaint Center (IC3) received 847,376 complaints – reports by cybercrime victims – totaling losses of $6.9 billion. Averaged out, each victim lost $8,143.

Keep Reading Show less
Chris Stokel-Walker

Chris Stokel-Walker is a freelance technology and culture journalist and author of "YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars." His work has been published in The New York Times, The Guardian and Wired.

Entertainment

'Never Have I Ever' is back for season 3, and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Image: Netflix; FitXR; Knopf

This week is all about magic: “Light & Magic” on Disney+ takes us behind the scenes of Disney’s special effects unit; “The Swimmers” reminds us how magical life can be; and “Never Have I Ever,” Mindy Kaling’s Netflix comedy, invokes the magic of “Gilmore Girls,” but for Gen Z.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Enterprise

CJ Moses is CISO at AWS, but service leaders own their own security

Moses, a former FBI tech leader and one-time AWS customer, thinks Amazon’s culture of ownership helps him secure AWS because executives are taught that they are directly responsible for the security of their services.

"That mental model, that starting from scratch building and continuing to do so and never wavering … that model is why we are the most secure."

Photo: AWS

AWS customers are used to hearing about the cloud provider’s “shared responsibility” model when it comes to security, which means that while AWS promises customers it won’t allow its servers and networks to be compromised, customers still have to do the work of securing their own applications. Inside the company, however, the buck stops with the head of each service offered by AWS.

“Service leaders are responsible for the profit/loss, success/failure and, most of all, the security,” said CJ Moses, AWS’ chief information security officer (CISO) since January. “There are no excuses or finger pointing, so leaders don’t leave security success to chance, but rather actively own it.”

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Fintech

A shake-up could be coming for banks working with crypto

The OCC is facing calls to pull guidance allowing banks to conduct some crypto-related business.

Lawmakers including Sens. Elizabeth Warren and Bernie Sanders fear crypto could introduce systemic risk to banking without strict guardrails.

Illustration: Christopher T. Fong/Protocol

As efforts to pass federal crypto legislation are maybe, finally picking up steam in Washington, so, too, is the debate about how traditional banks should approach the sector.

A group of progressive senators including Elizabeth Warren and Bernie Sanders are calling on a federal banking regulator to pull Trump-era guidance that gives banks limited clearance to engage in crypto-related business.

Keep Reading Show less
Ryan Deffenbaugh
Ryan Deffenbaugh is a reporter at Protocol focused on fintech. Before joining Protocol, he reported on New York's technology industry for Crain's New York Business. He is based in New York and can be reached at rdeffenbaugh@protocol.com.
Latest Stories
Bulletins