Break Up Big Tech? Some Say Not So Fast
ABOUTRoger McNamee (@Moonalice) is the author of the New York Times best seller Zucked: Waking Up to the Facebook Catastrophe. He spent 34 years as a technology investor and was an early investor in Facebook and an adviser to Mark Zuckerberg.
Now the Covid-19 pandemic has exposed intolerable flaws in the status quo across the economy, including poor pay and protection for the most essential and dangerous jobs, an inability to increase personal protective equipment manufacturing and testing capacity, and a health care system that continues to struggle to adapt. Worst of all, internet platform monopolies sabotaged the nation’s pandemic response by amplifying disinformation.
Economic policy and the concentrated power that resulted from it are partially to blame for our failure to contain the pandemic. We need new policy that encourages competition, innovation, and adaptability, with less focus on shareholders. The hearing is an early test of Congress’ readiness to join its constituents in demanding a new vision for America.Google, Facebook, and Amazon have exploited their popularity as a shield from regulators, but that may be ending. The harm they cause to suppliers, competitors, and advertisers, the threat they pose to the economy and consumer welfare, can no longer be excused. Having four CEOs testify together ensures the hearing will accomplish little of substance. Each CEO should be subject to his own multiday hearing. Still, the hearing can increase awareness of harmful business practices.
Among Google’s many monopolies, those of ad tech infrastructure and web browsers do particular harm. Google is rapidly displacing the open web with a closed environment of its own making, undermining news and many other industries that depend on advertising and web traffic.
Congressman Jerry Nadler of New York has already begun to prepare his Judiciary Committee, under the leadership of David Cicilline of Rhode Island, to probe anti-competitive consolidation in the tech industry, building on Nadler’s earlier observation that companies like Facebook “cannot be trusted” to regulate themselves.
Facebook has exploited its market power to crush partners and would-be competitors, limiting innovation and leaving our democracy vulnerable to extremism.
Amazon’s dominance of online commerce has created convenience for customers, but at great cost to other forms of retail, suppliers, and employees, who have no power to fight back.
The issues with Apple are different and, in my view, not comparable. Apple’s anticompetitive behavior in the AppStore does not threaten the economy or society, and its approach to privacy and consumer protection, especially compared with Amazon, Facebook, and Google, is exemplary.History shows that eliminating monopolies and encouraging competition is good for the economy. Consumers and investors benefit. This has been the case in tech since 1956, when the Justice Department Consent Decree with AT&T limited the monopoly to regulated telecom markets, creating the computer industry as we know it. Subsequent antitrust interventions played a role in enabling separate industries for software, personal computers, data networking, mobile communications, and the internet.
If you don't have a plank on tech platforms, it will be very notable." Warren's plan envisions a new category of company called a "platform utility." This would include companies "that offer to the public an online marketplace, an exchange, or a platform for connecting third parties." That includes, of course, Facebook, Google, and Amazon.
The nation’s antitrust laws were created in response to the anticompetitive business practices of monopolies in oil, railroads, steel, banking, and other industries. No one denied that Standard Oil and the other “trusts” created value that benefited society. The issue was whether monopolies were the best way to grow an economy. Trustbusters argued that monopoly, which had historically been a tool of autocratic governments, undermined democracy by concentrating economic power. The Sherman (1890), Clayton (1914), and Federal Trade (1914) Acts created rules to govern business practices that broke up monopolies and ushered in a long period when corporations were required to respect the interests of consumers, suppliers, and communities.
In the 1970s, solicitor general Robert Bork popularized an alternative theory of antitrust that eliminated all considerations except for one: consumer prices. So long as prices didn’t go up, there’d be no violation, irrespective of other harms. The Reagan administration embraced Bork’s interpretation, triggering a 40-year trend of consolidation that concentrated economic power. This has reduced consumer choice, undermined the balance between employers and workers, and left the economy unable to respond to a shock like the pandemic. Brittle supply chains and short-term thinking boosted stock prices, but they are also partially responsible for the country’s unique inability to control the spread of Covid-19.