The tech industry is already under siege by the press, the public, and regulators around the world. But on Friday, Democratic presidential candidate Elizabeth Warren lobbed a bomb onto that battlefield, designed to crack the fortresses that have formed around tech monopolies like Google, Facebook, and Amazon. In a Medium post, the senator from Massachusetts laid out her presidential platform for breaking up these big tech companies, unwinding their past mergers, and preventing giant platforms like Amazon from also selling their own products on those platforms, potentially stifling competition.
“As these companies have grown larger and more powerful, they have used their resources and control over the way we use the Internet to squash small businesses and innovation, and substitute their own financial interests for the broader interests of the American people,” Warren wrote in the post. “To restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last, it’s time to break up our biggest tech companies.”
Several of Warren’s fellow candidates, including US senators Amy Klobuchar and Bernie Sanders, have recently spoken out about tech monopolies and mergers. But Warren’s stance is by far the boldest articulation of how the country might go about dismantling the businesses that have insinuated themselves into every part of our lives. It’s also the clearest sign yet that Big Tech is in big trouble going into the 2020 primaries.
“This is a pace-setter,” says Matt Stoller, a fellow at the anti-monopoly think tank Open Markets Institute, who applauded Warren’s proposal. “This is going to be a real party debate. 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. Any platform utility that makes at least $25 billion in annual revenue would be prohibited from simultaneously owning and participating on that platform. It would also have to commit to “meet a standard of fair, reasonable, and nondiscriminatory dealing with users,” though it’s still unclear how that would be defined. This means, for instance, that Amazon’s private label product division, called Amazon Basics, would have to be spun off into its own company or be prohibited from selling on Amazon’s marketplace. Google’s ad exchange and Google Search would also have to be split up under such a policy. Companies that make less than $25 billion a year wouldn’t have to split up, but would still be monitored for fairness and nondiscrimination.
Warren also wants to unwind what she calls “anti-competitive mergers,” specifically naming Facebook’s acquisition of Instagram and WhatsApp, Amazon’s acquisition of Whole Foods and Zappos, and Google’s acquisition of Waze, Nest, and DoubleClick. Though it wasn’t mentioned in the post, Warren’s campaign also confirmed to WIRED that Google’s acquisition of YouTube would be reviewed, and that YouTube could be considered a platform utility in its own right.
Finally, Warren seeks to prevent these so-called “platform utilities” from sharing data with third parties. That would simultaneously shift Facebook and Google’s position as the center of the data economy and also go a long way toward protecting user privacy.
Several tech advocacy groups jumped to condemn Warren’s proposal as anti-consumer. “Consumers now benefit greatly from having one Amazon, one Google, and one Facebook,” Rob Atkinson, president of the Information Technology and Innovation Foundation, said in a statement. “The goal of competition policy should be to enhance consumer welfare, not penalize companies for earning market share and operating at scale—yet that is exactly what the Warren proposal would do.”
Ed Black, president and CEO of the Computer and Communications Industry Association, said that while he agrees competition enforcement is important, “this unwarranted and extreme proposal, which focuses on a highly admired and highly performing sector, is misaligned with progressive values, many of which are shared within the tech industry.”
Still others were more reticent. The Internet Association, which represents Facebook, Google, and Amazon, declined to comment on the plans.
According to Frank Pasquale, a law professor at the University of Maryland and co-author of the book The Black Box Society: The Secret Algorithms that Control Money and Information, these reactions from the industry ignore a key principle of market dynamics. “The more competitors that have a chance on proprietary marketplaces, the better off consumers are in terms of quality, variety, and price,” he says. “I don’t think you can say whatever Big Tech wants is best for consumers.”
Pasquale says the country’s regulators need to reassess the definition of consumer welfare, which guides antitrust decisions in the United States. It’s what has traditionally led to the assumption that lower prices are always better for consumers. But, Pasquale argues, there are other aspects of consumer welfare to consider. “The newer forms of antitrust coming out in Europe, particularly with respect to German authorities, say that privacy is a social value,” Pasquale says.
Across the country, the last few years have seen a growing understanding that the tech industry’s interests and the interests of the public aren’t always aligned. Warren’s declaration of war with tech monopolies says as much about her as it does about the state of Silicon Valley’s reputation. Warren has been one of Congress’s most vocal tech critics for years, having delivered impassioned speeches on breaking up big tech in 2016 and 2017. Given that context, she can hardly be charged with opportunism. And yet, the timing also seems fortuitous. For all the talk of reining in Wall Street that took place in the 2016 Democratic primaries, the tech industry’s unchecked power was scarcely mentioned. Now, just three years later, it’s hard to escape. That may make it feel less risky for Democrats to take on an industry that has disproportionately swung left with both its campaign donations and its votes.
This week, Sen. Klobuchar told The Washington Post that the United States has “a major monopoly problem,” and that the biggest one is in the tech sector. Even Sen. Cory Booker, who as mayor of Newark worked closely with Facebook CEO Mark Zuckerberg and received substantial backing from tech industry employees in 2018, recently spoke at an event about corporate monopolies, saying, “It’s no coincidence that after the most sustained period of merger activity in American corporate history, entrepreneurship has reached a 40-year low.”
Warren’s proposal is undoubtedly the most aggressive, but it’s clear she won’t be the only candidate in the race pushing for a national discussion on these issues. That includes President Trump, who has accused Facebook and Google of being biased against conservatives and is presently engaged in a mud-slinging battle with Amazon CEO Jeff Bezos (or as the President recently called him, “Jeff Bozo”).
If tech giants think the years since the 2016 election have been rough on them, the path to 2020 is about to get a whole lot bumpier.
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