Mandatory Construction Tech Platforms — Are They Illegal?

Subcontractors get a job. Then they’re required to use the general contractor’s platform. And then they get a bill and they have to pay for the platform. Can they do that?!

Short History of Tech Tollbooth For Subs

This subject first got my attention 10+ years ago when Textura sprang to success with their Construction Payment Management (CPM) product.

I had founded Levelset, offering a competing product and perspective, and wrote about it in articles like “Textura: Friend or Foe to Subcontractors” and “Is Texture’s Business Model at a Dead End?”

Textura was ground zero to a new, kind of nasty business model in construction technology. The model is this:

• Sell to big general contractors;
• Get GCs to force their subcontractors into a platform;
• Charge the subcontractors a fee.

Yikes.

Well, the model has stayed in vogue with numerous construction payment and pre-qualification platforms.

It makes sense for the contech platforms, creating a path to acquire revenue from subcontractors without building explicit products and value propositions for them. And it makes sense for general contractors, who can offset their technology and admin costs.

Subs? They’ve never liked the model.

For example, in the early Textura days, the American Subcontractor Association fielded tons of membership complaints, resulting in a letter from the President and a legal review by the ASA’s Attorney Council.

And I was recently reminded of how subs still hate it when AECO consultant Kevin Ferguson posted about mandatory platforms on LinkedIn:

And comments started flooding in.

Subcontractors don’t like it.

But often forced into it.

Is that legal!?

Mandatory Platform Law Implications

The idea that a technology platform can be “mandatory” is a bit new, but increasingly prevalent in industries like construction, where general contractors require subcontractors use specific tools, but shift the financial burden onto the subcontractors.

This is a funky business practice.

It can significantly impact subcontractors, adding administrative costs, creating barriers to entry, and shifting financial burdens unfairly. This is particularly painful because many subs are small businesses with limited bargaining power.

So, are there laws or policies against this?

Is there such a thing as “Mandatory Platform Law” that dictates how far the bigger GCs and their technology partners can go?

Antitrust and Price Collusion Violations?

When platform mandates restrict competition, limit market access, create monopolistic environments, or collude with other parties to fix prices, they may violate antitrust laws designed to promote fair competition.

We’ve seen interesting examples of this in the past few years.

In the tech world, app stores that require developers to use specific payment systems have sparked major lawsuits and regulatory scrutiny (Houston Law Review on App Store ‘Revenue Cuts’). In the non-tech world, price collusion has been found among realtors who took advantage of leverage points in their markets ($1.8 billion conspiracy amount realtors).

Are construction technology platforms creating a monopoly, and/or enabling price collusion between general contractors and the general contractor tech platforms?

Something interesting about the construction technology landscape is that it is a very concentrated environment, especially within each sector (i.e. commercial, residential, civil).

The biggest GCs are extremely valuable platform users. They bring huge project volumes. And they bring thousands or tens of thousands of leveraged subcontractors.

Are there features here that look like a monopoly, or that at least implicate price collusion questions?

Unfair Trade Practices

“Freedom of Contract” is foundational to United States law and heavily protected. However, there are restrictions. These restrictions are provided for by law and public policy.

The United States and every individual state prohibits companies from engaging in “unfair trade practices.” These are practices that can be seen as “exploitative.” For example, California’s Unfair Trade Practice Law provides, where applicable:

There are stiff penalties.

It’s not an absurd legal question at all to wonder whether requiring third parties to pay for a service they did not choose can be seen as exploitative, raising potential claims under unfair trade practice statutes.

Public Policy Considerations

Public policy favors open markets and fair business practices.

In construction, public policy considerations are very explicit.

This is because there have always been power imbalances between general contractors and subcontractors…and public policy has been fighting them since the very beginning of law!

In the United States, the overwhelming, public policy has chased this power imbalance to protect subcontractors, and has been passing increasingly protective laws for over 250 years.

State and federal laws protect subcontractors from the power imbalance through devices like mechanic lien laws, prompt payment rules, and retainage restrictions, among others.

When public policy makes pay if paid provisions illegal and pay when paid provisions toothless, will it really tolerate “pay to get paid” or “pay to get work” requirements?

Other Legal Arguments

Mandatory platforms implicate a few other legal frameworks, such as:

Unjust Enrichment: Are subcontractors paying for a platform that primarily benefits general contractors?

Tying Arrangements: Are general contractors improperly tying access tow work or payment (i.e. tying product) conditioned on platform usage (i.e. tied product).

Construction Trusts Obligations: There are some states (and some public or public/private projects) that require general contractors to be a legal “steward” of project funds, which creates complicates when passing through third party platforms and/or is tied to imposing fees and unrelated costs on subs.

Consumer Protection Statutes: Some states have broad consumer protection laws that could apply to small subcontractors as vulnerable parties.

Is It Really Illegal? Challenges To Argument

To be fair, there’s another side to this issue—and it’s one worth taking seriously. The strongest legal defense that general contractors and platform providers have is grounded in the concept of voluntary participation. Their argument is simple: subcontractors are not forced to accept these terms; they can choose not to bid or contract on projects that require use of a particular platform.

Further, these parties may argue that platform requirements create significant efficiencies—standardized documentation, audit trails, streamlined compliance, and fewer payment disputes. From their perspective, these tools improve outcomes for all parties, including subcontractors, even if the costs are shifted.

There’s also a broader market argument: if there is sufficient competition among general contractors or projects that don’t use these platforms, subcontractors theoretically have alternatives. Without demonstrable market dominance or coercion, some courts may view this as tough—but permissible—business.

This is the challenge: distinguishing between legitimate standardization for operational efficiency and impermissible coercion or exploitation. The legal line between the two is not yet well defined—and that’s precisely what makes this such a fertile ground for legal development.

Conclusion: Let’s Explore This Together

The question of whether mandatory construction tech platforms are illegal doesn’t yet have a definitive answer—but it’s an important one to ask.

If you’re a subcontractor who has been required to use and pay for a construction platform, I’d like to hear from you.

Not because I want to file a case, but because I believe this issue is important, and I want to understand all sides of it. Your experience could help shape the future of how this industry—and the law—evolves.

Reach out to me at scott@wolfelaw.com.