How Google and Amazon bankrolled a ‘grassroots’ activist group of small business owners to lobby against Big Tech oversight – CNBC

The logo of Google is seen on a building at La Defense business and financial district in Courbevoie near Paris, France, September 1, 2020.

Charles Platiau | Reuters

Clay Montgomery owns a small blacksmith shop called "Arrow M Enterprises" outside of Mingus, Texas, where he manufactures hand-forged metal works and grilling tools. He also sells a spicy barbeque sauce and a meat rub called "Bite My Butt."

In recent years, Montgomery's blacksmith shop has been listed as a member of a Washington, D.C.-based trade group called the "Connected Commerce Council" that claims to lobby on behalf of small businesses. On its website, the council describes itself as a non-profit membership organization with a single goal: "to promote small businesses' access to essential digital technologies and tools."

The group, which campaigns against aggressive regulation of big tech companies, also says it wants to ensure "policymakers understand the essential intersection of technology and small business," according to its website.

But there's just one problem: Montgomery says he's not a member and, in fact, has never heard of the Connected Commerce Council. The blacksmith told CNBC he would never join a tech lobbying group in Washington. "Technology is not exactly my forte," he said.

Montgomery isn't the only small business owner bewildered to find their names listed as a member of the Connected Commerce Council, which also goes by "3C." More than 20 other "members" contacted by CNBC said they similarly had never heard of the council and did not know why they were on their membership list.

The council, which pitches itself as a grassroots movement representing small business owners, is actually a well-financed advocacy group funded by tech heavy hitters Google and Amazon. The two tech companies are listed as "partners" on the organization's website. They are also currently the council's sole financial support, 3C spokesman Chris Grimm confirmed to CNBC.

Lobbying watchdog group the Campaign for Accountability called 3C an "Astroturf" lobbying organization, thanks to the tech giants' financial support. That's a bit of Washington slang for a group that claims to represent grassroots entities, but in reality serves as an advocate for big industry. It's a tactic used in Washington to push for specific legislative or regulatory goals using the sympathetic face of mom and pop organizations. The Campaign for Accountability described 3C in a 2019 report as an "Astroturf-style front group for the nation's largest technology companies."

"Big Tech knows that voters and their representatives aren't hugely sympathetic toward the complaints of trillion-dollar corporations, so they've decided to paint small businesses as the real victims of antitrust legislation," said Michelle Kuppersmith, executive director of the Campaign for Accountability.

To be sure, the group does have some active small business members, several of whom told CNBC they value 3C's offerings and agree with its issue advocacy in Washington.

Small business owners like Michelle Thom, owner of and a stylist at "A Wild Hair by Michelle" salon in St. Clair, Minnesota, are considerably more sympathetic to members of Congress than wealthy technology executives. The Connected Commerce Council listed her company on its website as a member, but Thom told CNBC she had never heard of the group and her business should not be on its roster.

The owner of Bud's Barbershop in Wylie, Texas, who declined to give his name, was similarly listed as a member even though he said he has never heard of the group.

Christine Little, whose company, 1058 Auto and Towing in Swansea, South Carolina, was also listed as a member, said she didn't know anything about the council either. "I'm pretty sure I'd probably remember" joining the group, she told CNBC. "We just tow."

And it's not just small firms that told CNBC they aren't sure why they were listed on the 3C website. Until this week, the council also had a page on its website listing its "partners" companies that the website suggested support the council's efforts. That page featured the logos of three tech giants: Amazon, Google and payment processor Square, which recently changed its name to Block.

But Block, which was created by Twitter founder Jack Dorsey, told CNBC it was not actually a partner of the Connected Commerce Council, despite the listing on 3C's website. The Connected Commerce Council pulled Square's logo from its website on Monday after CNBC contacted Block, which said it asked 3C to remove its name.

Grimm said 3C removed Square's logo Monday after CNBC's inquiry because Square is "no longer an active partner of the Connected Commerce Council."

In a statement to CNBC, Connected Commerce Council Executive Director Rob Retzlaff said all of the group's members "affirmatively sign up at events, online, or through a personal connection and thousands have opened emails, responded to surveys, attended meetings and events, and communicated with legislators."

Retzlaff said, "I sincerely hope you do not (a) mischaracterize our efforts or the views of small businesses by suggesting we are an astroturf organization that puts words in people's mouths, or (b) use outdated membership information to distract readers from legitimate concerns of small businesses and their engagement with policymakers."

In February, the group also quietly removed a list of thousands of grassroots members from its website. Grimm, the council's spokesman, said it pulled the list because it fell behind in updating its member list. He said the group has more than 16,000 current members but did not provide a current list of them.

The Connected Commerce Council does not charge fees to its members or bill them for services, Grimm said. It is not clear whether the group has any sources of revenue beyond donations from the large technology companies. Documents filed with the IRS show the group received more than $1.6 million in revenue in 2018. That year, it spent more than $100,000 on a strategic communications firm in Washington.

Spokespeople for Google and Amazon both confirmed that the companies are affiliated with the Connected Commerce Council. They declined to say how much the companies donate, but they did not deny donating.

Facebook was also listed as a partner of 3C as recently as 2020, according to The Washington Post, but has since discontinued its involvement, according to a person familiar with the decision who requested anonymity to speak more candidly. A spokesman for Facebook's parent company, Meta, declined to comment or answer questions about how much money the company has previously given to 3C.

The Connected Commerce Council has been active in shaping the debate around antitrust regulation in Washington. It's worked with an outside lobbying firm, called the Majority Group, for several years to advocate on small business and technology issues on Capitol Hill. In 2021, the group spent $400,000 on lobbying, according to the Center for Responsive Politics. In 2018, the Connected Commerce Council offered public comment to the Federal Trade Commission on antitrust issues, arguing that large technology platforms such as Amazon and others provide benefits to small businesses.

Google spokesman Jose Castaneda sent a statement when asked about the company's involvement in 3C. He said many small businesses are concerned "that Congress's controversial bills could harm the digital tools that they have relied on to adapt, recover and reach new customers throughout the pandemic. We encourage concerned businesses and the organizations that represent them to ask Congress to consider the unintended consequences of these bills for small businesses across the country."

The Connected Commerce Council, which has just 304 followers on Facebook, has been an active advertiser on the platform since its page was created in 2018. Since then, it's spent more than $600,000 on advertising in that time, including more than $9,000 in the last week, according to the company's advertising library, which discloses the sponsors and advertisements in such campaigns.

The ads sponsored by the Connected Commerce Council often support the same positions as the large tech companies that bankroll the group. The tech giants have also been advocating against several bills on Capitol Hill that would impose antitrust rules on the tech firms or make it easier to break them up altogether. One bill, for example, would block companies, including Amazon and Google, from pushing their own products in online marketplaces at the expense of their own competitors.

"Don't let Congress give away America's technological edge. Send a letter," reads one ad sponsored by the Connected Commerce Council in March that's been viewed more than 125,000 times, according to Facebook. A message in the same ad reads, "Harmful legislation in Congress will weaken America's economy and threaten our small businesses."

Another ad running in March refers directly to Amazon, which is one of the companies that finances the Connected Commerce Council. "Amazon Marketplace is at risk," the ad says. "Take this survey and stand up to Congress." The advertisement, which Facebook says has been viewed more than 8,000 times, also asks: "Are you a small business seller? We're counting on your experience to help fight harmful legislation in Congress."

An online survey run on Facebook by the council tells Amazon Marketplace users, "As you may be aware, some elected officials think Amazon is too big, and that is dangerous because we know Amazon helps our members and millions of small businesses sell more products and make more money!"

The council runs like a well-oiled advocacy group. By 2019, 3C's lobbyists had met with 50 members of Congress, filed seven official comments at regulatory agencies and sent two representatives to testify before Congress, according the Campaign for Accountability's 2019 report. The council also "published a raft of materials painting a rosy picture of the tech giants, complete with quotes from small business owners heaping praise on them," the report said.

"For the Connected Commerce Council to succeed, it needs to convince legislators that it's truly advocating on behalf of the more than 10,000 small businesses it claims to represent," said Kuppersmith, executive director of the watchdog group. "However, when you start to peel back the curtain on the organization just a bit, it's clear that this image of enthusiastic antitrust opposition is fueled by Big Tech cash."

The group pointed to plenty of small business owners who are legitimate members. Former 3C board member Mimi Striplin founded the Tiny Tassel in Charleston, South Carolina, which sells jewelry and accessories.

"They're a great resource as a small business to get access to digital tools," she says of the group. 3C "keeps me informed about new bills being passed." Striplin said new antitrust laws could negatively impact the affordability of the digital tools she depends on, such as social media and software to make her products more visible on Google.

Facebook Chief Operating Officer Sheryl Sandberg speaks during an event on the sidelines of the World Economic Forum in Davos, Switzerland January 23, 2019.

Reuters

Striplin's small shop caught the attention of Sheryl Sandberg, chief operating officer of Meta. In 2020, Sandberg designated the Tiny Tassel's earrings as one of her personal picks for Facebook's #BuyBlack Friday gift guide, which encouraged users to support Black-owned businesses. Striplin said the selection of her products by Sandberg was not connected to her membership in 3C.

Current board member Salil Gandhi operates a social media and digital marketing company called SBO Buzz in Chicago. He said the group provided a valuable platform for small business leaders during the Covid pandemic, including offering a regular Zoom happy hour for 15 to 30 small business owners to check in on each other.

"We would get together and have a cocktail and talk about problems we were having, PPP issues, or other problems we were having as small business owners," Gandhi said. "I'm still friends with a lot of the people I met through there."

Gandhi said he doesn't mind that the small business advocacy group is largely funded by big tech companies because small businesses already depend on Google and other firms for free tools to run their operations, including Gmail accounts. "When I look at issues, I look at them from my perspective," he said. "It's not like anybody's ever telling me what to say or what's going on."

Council member Alfred Mai, who founded ASM Games with his wife in 2017, said he relies on Amazon to sell his products and agrees with the group's push against antitrust initiatives in Washington. The company sells card games for social gatherings, including games called "These Cards will Get You Drunk" and "Do You Really Know Your Family?" He says Amazon has been crucial to the success of his business.

"These antitrust, quote unquote, 'break up Big Tech' bills can critically affect my business," Mai said. "This really isn't just about Big Tech it's also about small business."

He said he worries about unintended consequences of congressional action and the possibility that Amazon might be forced to shut down its third-party marketplace site, where he sells his card games.

"I'm not sitting here being brainwashed by an Amazon lobbyist telling me 'this is what you should believe,'" Mai said. "I truly believe it."

CNBC's Bria Cousins and Paige Tortorelli contributed to this report.

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How Google and Amazon bankrolled a 'grassroots' activist group of small business owners to lobby against Big Tech oversight - CNBC