Democratic presidential hopeful Elizabeth Warren wants to break up Big Tech giants like Amazon, Facebook and Google — and solidified her antitrust crusade as part of her 2020 platform in a new blog post on Medium. But will it help her campaign?
Using the 2001 US v. Microsoft case as the basis for her argument, Warren outlines why she believes Big Tech’s behavior is anticompetitive, anti-innovation, monopolistic and thus hurts small businesses and consumers.
“[Microsoft’s] story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive — which pushes everyone in the marketplace to offer better products and services,” she wrote. “Aren’t we all glad that now we have the option of using Google instead of being stuck with Bing?”
By buying up smaller edge providers like DoubleClick, Instagram, Waze and WhatsApp, Facebook and Google undermine competition, she argues.
“Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version,” she wrote. “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.”
To restore competition to the tech industry, she argues, regulators must break up the dominating companies as they did with Standard Oil back in 1911. Warren also calls for edge providers like Facebook and Google to be treated as “utilities,” like electric and water companies.
“These companies would be prohibited from owning both the platform utility and any participants on that platform,” she wrote. “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.”
The Competitive Enterprise Institute, a right-leaning think tank, dismissed Warren’s plan as a “doomed regulatory experiment.”
“The free market is working to lower prices, create new products, and leave consumers better off; politicians need to stay out of its way,” CEI’s Center for Technology and Innovation Associate Director Jessica Melugin said.
But Warren — and most economists— say the tech industry does not operate as a truly free market due to the dominance of a few platforms.
Aram Sinnreich, chair of communication studies at American University, believes government’s role is to ensure markets are truly free. When a few companies dominate an industry, responsible government should step in.
“Trust-busting is an American tradition (under every administration),” he told InsideSources. “It’s democratic and free market pragmatism. It’s not radical, it’s not socialism.”
But Sinnreich isn’t sure antitrust law will adequately handle the problem.
“Antitrust is a difficult tool to use,” he said. “First of all you need a regulatory apparatus capable of handling that and you also need courts to support them. Even 20 years ago in US v. Microsoft, it was very difficult to explain to judges about what the problem was. There’s a bunch of political and logistical hurdles to accomplishing this, but I commend her, I think her analysis of the problem is spot on, and antitrust is probably, out of the many unpalatable options, the least unpalatable.”
Furthermore, he added, “the threat of antitrust has the capacity to lead to effective self-regulation to a certain degree.”
Warren’s stance on Big Tech could hurt her campaign. The tech giants she calls out in the blog post are also lobbying giants, and she declared war on them. It could make her unpopular not only in Silicon Valley but also in D.C., as Amazon prepares to launch its second headquarters just over the river in Crystal City, Virginia.
“Whatever beneficial PR she might get from putting this out, it’s dwarfed by the threat of poking a bunch of tigers in the eye,” Sinnreich said. “It remains to be seen what the political consequences of that might be [but] it’s unlikely to benefit her traditionally.”
Still, Warren’s comments align with the testimonies and research of many (not all) economists who study antitrust. She wants to review and break up tech mergers like Facebook and Instagram, something both Republican and Democrat senators discussed at a recent antitrust hearing.
“It’s not that [Big Tech is] evil, it’s that they’re corporations and their job is to make profits for their shareholders,” Sinnreich said. “They have a fiduciary to behave anticompetitively, which is why the government needs to step in to create the conditions for necessary competition to occur.”