Why the 2020 US election campaign will be brutal for Big Tech

If there were any doubt that Big Tech was going to be a major issue in the next American election cycle, it was erased when 2020 Presidential candidate Elizabeth Warren called for the largest technology companies to be broken up.

Her targets include Google, Amazon, and Facebook which, she says, have become anti-competitive behemoths that are crowding out the competition. She wrote on Medium:

Today’s big tech companies have too much power - too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.

The Massachusetts senator is calling for legislation that would designate the companies as “platform utilities” and the appointment of regulators who would unwind technology mergers that undermine competition and harm innovation and small businesses. The senator noted that nearly half of all e-commerce goes through Amazon and more than 70% of all Internet traffic goes through sites owned or operated by Google or Facebook. Warren wrote:

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. 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.

Warren’s plan would make two major structural changes that would totally transform the business models of Google, Amazon, and Facebook:

Require large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform. Companies with annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as “platform utilities.” These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties. Wrote Warren:

Many big tech companies own a marketplace - where buyers and sellers transact - while also participating in the marketplace. This can create a conflict of interest that undermines competition. Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version. Google allegedly snuffed out a competing small search engine by demoting its content on its search algorithm, and it has favored its own restaurant ratings over those of Yelp.

Appoint regulators committed to reversing illegal and anti-competitive tech mergers. Facebook has purchased potential competitors Instagram and WhatsApp. Amazon has used its immense market power to force smaller competitors like Diapers.com to sell at a discounted rate. Google has snapped up the mapping company Waze and the ad company DoubleClick. Rather than blocking these transactions for their negative long-term effects on competition and innovation, government regulators have “waved them through.”

Warren points to the turn of the 20 ^th century when there was pressure to “break up” huge conglomerates like Standard Oil and JPMorgan and AT&T. In response to the rise of these “trusts,” Republican and Democratic reformers pushed for antitrust laws to limit these conglomerations of power to ensure competition. Instead of nationalizing these industries - as other countries did - Americans in the Progressive Era decided to ensure that these networks would not abuse their power by charging higher prices, offering worse quality, reducing innovation, and favoring some over others by requiring a structural separation between the network and other businesses, and also demanded that the network offer fair and non-discriminatory service.

Warren is not the first, and certainly won’t be the last, 2020 Presidential contender to take on Big Tech. Minnesota Senator Amy Klobuchar has made oversight of Big Tech a central part of her platform and has introduced roughly twice as many bills targeting the tech giants as any other candidate.

My take

What Warren is demanding is not that Google, Amazon, or Facebook go out of business, just that they abide by rules that prohibit them from stifling, bullying or gobbling up every competitor or supplier in their path to dominance. In short, stop being monopolies.

Radical? Sure. Impossible? Maybe. But, crazy, it is not.

As Warren cagily points out in her article, if the government had not sued Microsoft in the 1990s, we would all be using Bing instead of Google. That’s compelling enough or me.