Should governments break apart tech giants?
Too much power has been accumulated in the hands of people who own tech giants such as Google, Facebook, Twitter and Apple, and that seems to be a growing reason for concern.
Politicians, government officials and some experts have been sounding the fire alarms about the power Google and Facebook have to manipulate elections, search results and to censor content based solely on their vision of what is right or wrong, of what is “abusive speech”, and their determination of what is understood as speech that intends to “incite” to carry out violent acts, while allowing hateful speech in other instances.
The billion-dollar question here is, of course, who gets to determine what is acceptable speech and what is not. What words can be tolerated and what should be erased from public discourse.
Most of the time, speech is censored based on one premise: spare minority group members from feeling offended. Later, this premise evolves into something such as: Let’s censor for “the common good”, or worse, de-platform individuals and close their accounts so we can “keep coexistence alive”.
And what to say about Amazon, which is not in the communication business, for now. The company has amassed so much structural power that it has an excessive influence on various parts of the economy.
Those who support large technology corporations claim that companies like Amazon contribute hundreds of millions of dollars to the US economy and that its founder is a brilliant innovator.
They also warn that too much regulation can ruin a company and give some examples of how companies had problems, according to them, by the pressures of the authorities.
In that, these supporters are right, but the debate is not limited to just that. It is not only if jobs are generated or if the economy moves, because if it were just that, we can say with total certainty that small and medium-sized companies generate many more jobs than large corporations, and better yet, the wealth that is generated remains in the communities, instead of going to bank accounts in tax heavens.
It is not a coincidence that the power of these multinationals of communication and commerce, together with big banks, increased their power and coverage of the markets after globalization came to be, because globalization was made especially for them; and today it is their natural habitat.
There is no other option but to reduce their power and influence
Despite the resistance, the idea that seems to take more and more relevance is that Google, Amazon, Facebook and Apple need some limits.
These companies control the data of billions of citizens around the world, know what they buy, what they like and what they don’t, what they read, where they go on vacation, how much they earn, their photographic memories, if they are looking for a new car or running shoes. And they are also able to connect all that information and sell it.
Their platforms are the gigantic market of the new century, a space in which they act as judge and party, on an unimaginable scale just three decades ago and, therefore, very difficult to control with existing legislation.
The new giants set the rules, largely escaping the restrictions to which those more traditional businesses are subject. Do they play with an advantage?
“It is necessary for governments to regulate,” defends Michael Cusumano, a professor at the Sloan School of Management of the Massachusetts Institute of Technology (MIT), “as happened in the past with the rail, telecommunications or energy sector.”
Today, the nature of the system allows technology companies to grow very quickly and become indispensable leaders of their specialty.
“That’s why we have a dominant computer operating system like Microsoft, another for mobile phones, Android, a great search engine like Google, a social network like Facebook, a large real market Amazon and a large digital store like iTunes”, he explains.
“We need updated rules for the era of digital platforms and the Internet.” All of this, he insists, must be done carefully, without governments intervening beyond what is necessary.
The fundamental question is how to stop the unstoppable phagocytizing momentum of these companies. One response – until recently unthinkable – that begins to echo among experts, legislators and politicians is that somehow these giants have to be chopped to defend competition in the new digital economy.
The ban against big tech has been opened and its activity is being investigated in both Europe and the United States.
The same companies that a decade ago were hailed as “heroes of innovation” capable of breaking schemes and changing the uneasy business landscape today face growing criticism, although their business continues to thrive.
In the United States – a place much less likely than Europe to intervene in the markets – Elizabeth Warren, a Democratic candidate for the White House, is one of the voices that more firmly defend the need to fragment the giants.
She has promised to do so if she is elected president in 2020. Mark Zuckerberg, president and founder of Facebook, has already reacted with a warning: “We want to work with the Government and do good things. But if someone threatens something that is so existential, you go down to the ring and fight,” he said in a leaked recording referring to a hypothetical Warren victory. Fortunately for Zuckerberg, Warren will never win the election.
The electoral commission of the Democrat is in line with other actions: in June, the Judicial Commission of the House of Representatives announced an investigation to decide whether to tighten the legislation and narrow the siege of technology.
Soon after, the US Department of Justice announced another investigation in which they examine the business practices of companies such as Twitter, Facebook and Google to determine if they smother their rivals illegally. In addition, prosecutors from all states have launched a large investigation into the abusive practices of these companies.
In the EU, the European Commission has made it one of its priorities to stop these companies: it promotes the debate on how to tighten the regulation and imposes multi-million dollar fines, especially on Google -three penalties, for a total of 8,230 million euros, in two years.
These sanctions punish, among other things, that the tool hides in its search engine the results that its creators do not want to highlight. Google, as insiders have proven, possesses blacklists of websites that they literally banned from searches conducted utilizing its search tool.
It is also not surprising that the Competition Commissioner, Margrethe Vestager, has been investigating Amazon’s business practices for alleged misuse of data from independent vendors operating on its platform.
In Brussels, there is another front, focused on technology companies paying the taxes that correspond to them in the place where they operate.
How to stop the runaway power and appetite of these companies? Among the formulas raised by experts there are:
1. Limit the number of sectors in which the giants act; that is, preventing them from entering, for example, in the financial market or transport, areas in which they are already beginning to enter.
2. Control their compulsive absorption of potential competitors – the purchase of WhatsApp and Instagram by Facebook or YouTube by Google, are two examples of it.
“We should weigh the possibility of tightening controls on mergers when these operations are carried out by dominant companies in a market that systematically buy start-ups that could be rivals,” says Heike Schweitzer, Professor of Economics at the University of Humboldt in Berlin.
“When competition rules are applied, we must be careful to protect and not hinder innovation,” says Schweitzer, one of the three experts to whom the European Commission asked to create a report published in the spring on how to regulate the new market.
3. Chop up companies, separate some of their businesses into different companies. But some people think that fragmenting the business has its risks.
For example, if this was applied to Apple and the part of the services and applications were separated from the rest of the mobile device business, the sector with more business prospects (applications) would be segregated from the manufacturing of the devices in those that work, a more mature area and, therefore, with less potential growth.
“I don’t like the idea of punishing companies for being successful,” warns Cusumano. It seems that “divide and conquer” is not the only formula to defend competition and punish bad practices.
Schweitzer believes that it would be useful to create a series of simple rules specific to digital platforms, such as prohibiting preference for their own products, demanding interoperability with other complementary services and forcing them to implement a more stringent data portability regime.
In any case, a revision of the rules is necessary, because the current ones have become obsolete and can get stuck in processes that last for years in court.
They were not intended in any case to try to tame the technological giants, whose business overflows what is known until now.
“The dynamics of artificial intelligence, algorithms, online commerce take the competition to an unknown terrain,” explains Ariel Ezrachi, a professor at the University of Oxford.
The offer available on the platforms is wide, it seems at times unbeatable, but it is not transparent.
The new market dynamics have generated a “mirage of well-being,” Ezrachi warns. The imbalances are almost always in the form of an algorithm and both Google and Facebook have great power to set the prices of the ads.
To this is added the thorny issue of the use and / or abuse of data, which opens the question of how they are marketed and who makes money from them. In terms of competition, how can we be sure that hegemony positions are not reinforced and perpetuated thanks to data control?
A firm that controls data can have ample advantage over other competitors in sectors where it is not even active.
New information intermediaries, be it Google Search, products as in the case of Amazon, or media such as Facebook or YouTube, can potentially direct the attention of consumers in a way that benefits their interests.
In a world in which having the right information is essential to compete, in which power is not only limited to the financial but to obtain data from real or potential customers, experts argue that companies should be forced to share the data with its rivals, without having to cut them to avoid monopolies.
A better option, however, is what has been suggested by Dr. Robert Epstein. Both Google and Facebook, to cite two of companies, must reveal their index, so that fair competition can be made available. This is a less punitive measure for the tech giants and a move that would allow hundreds, if not thousands of smaller companies to appear with new products and services.
“Fragmenting companies is an attractive solution for people who are tired of monopolies, but it is not always the best option,” says Christopher Sagers, a member of the American Antitrust Institute and a professor at the University of Cleveland, who is very critical of the conduct of Big Tech companies.
If the Google search engine is divided, what will prevent people from continuing to use only one of the resulting new search engines? “If you break the companies and do nothing else, the situation does not really change,” he adds.
What exactly is a monopoly of the 21st century? Comparisons with past models do not work at all: new technology companies are platforms that allow millions of users to interact and thousands of companies to offer their products.
They grow at a pace and scale never seen thanks to the positive effects of being in a network. That is, for the user it can be very difficult not to enter: how not to have WhatsApp if everyone has it?