Short Read

Should Big Tech Be Broken Up?

The Big Four. GAFA – Google, Amazon, Facebook and Apple. These are the four companies that make up Big Tech. They have been dominating the technology industry, and you would be hard-pressed to find someone who hadn’t heard of every one of them.  They have a combined worth of nearly $3.5 trillion, and the gap between them and mainstream media is widening. At the end of 2018 and 2019, the gap was level at about $1.48 trillion, but by the start of 2020, the gap had widened to nearly $2 trillion.

People’s concerns are growing along with the tech monopolies. Individuals from both the Democratic and Republican parties have expressed their worries about their lack of accountability and accumulation of power.

Presidential candidate Elizabeth Warren has made the break-up of Big Tech a staple of her campaign, stating that they have too much power over the economy, society and democracy. President Donald Trump has similarly shared his distress about this “bad situation”, claiming “something is going on in terms of monopoly”.

And they’re right. Well, partly. Big Tech does have a significant amount of influence on the average person’s day to day internet activity. Google gets more than 92% of all global search queries, Amazon accounts for nearly 40% of all e-commerce spending in the USA, Facebook has 2.4 billion monthly users, and Apple became the first company to cross into $1 trillion in market capitalization.

These companies do have a fair degree of control over us, and they’re not going down without a fight. Facebook CEO Mark Zuckerberg revealed in a leaked recording that he doesn’t want to “file a lawsuit against the government”, but that he was “prepared to fight”.

While few would doubt Warren’s claims over the power these companies have acquired, we shouldn’t go around breaking them up because politicians think it might be a good idea – have these firms broken any antitrust laws?

By our current definitions – no. A monopoly is only illegal if they’ve engaged in anti-competitive behaviour. The Sherman Antitrust Act in 1890 and the Clayton Antitrust Act in 1914 outlawed cartels and monopolies, which were responsible for the break up of American Tobacco Company and Standard Oil in 1911 due to oppressive and anti-competitive business practices.

These antitrust laws still apply today. However, examining Google shows that they have reached their monopoly because people want to use Google – their searches yield the best results, and it’s free. Why would anyone not want to use it?

But this doesn’t paint the full picture. These laws are old – very old. So old that to these lawmakers the Internet was nothing more than an incomprehensible dream. As a result, many have been calling for an updated and more relevant set of antitrust rules that can take into account the constantly evolving nature of the internet.

One strategy to prevent these tech monopolies from growing too large in the first place is to look closer at the mergers and acquisitions used to eliminate competition. You only have to look at the acquisitions of Instagram and Whatsapp for $1 billion and $19 billion respectively to see how Facebook has increased its market share by swallowing up rivals.

However, it’s difficult to predict which mergers have the potential to form a monopoly. After all, a study in the Harvard Business Review found that between 70 and 90% of mergers and acquisitions fail, and stopping these mergers to pre-emptively breakup monopolies could set a dangerous precedent.

Another problem that tends to arise with Big Tech monopolies is the difficulty that arises when trying to define their market. Amazon has expanded from e-commerce into the supermarket industry with the acquisition of Whole Foods in 2017, and Google is famed for having fingers in many different pies, from self-driving cars to smartphones. This makes it difficult to establish their domain, making it more challenging to regulate their activities.

One method that could be used to stop these monopolies’ expansion into other markets is to isolate what is known as the bottleneck resource – or the source of that company’s monopoly power. For Google, this would mean allowing them to continue in search while blocking them from adjacent markets.

This method could help combat the control of these monopolies, as the reason the search engine market is vastly dominated by Google is because of everything that is part of Google. When browsing the web, Google has Google Docs, Google Drive, YouTube and Chrome (to name a few) all rolled into the Google package. By breaking up Google, one would effectively be relieving all of these separate services from the search engine, which would go a long way for competition from other search engines.

Perhaps the reason so many people are distrustful of Big Tech is the amount of power we’ve allowed them to gather over us. Google and Facebook are well known to collect vast amounts of data on their users. Google and Facebook have often stated how their users’ privacy is paramount and that the data collected is only used to improve their services.

Nevertheless, the sheer quantity still has people apprehensive. Elizabeth Warren has promised more control over how people’s information is shared and sold through the dissolution of these tech monopolies. While shutting down Big Tech might seem like an easy solution on the surface, it will do little to solve the problem of the ease of access that corporations have to our data. We instead need to take a long look at how we can give consumers more control over how their data is used and processed. Neglecting this could have serious implications, not only for our privacy but potentially for democracy itself.

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