Breaking up big tech would be a big mistake
Congress, with some goading from their competitors, appears eager to apply antitrust enforcement to Facebook, Apple, Google and Amazon (FAGA).
This would be a terrible misuse of the law for market-dominance problems that emerging technologies will resolve and for privacy and security issues where bigness contributes little.
To put one complaint aside — the increasing size of American tech companies has not caused stagnant wages. Among FAGA, Amazon’s fulfillment centers are a significant employer of low-skilled workers, and those pay $15 an hour.
The more fundamental complaints against FAGA are privacy — tracking user web travels, purchases and physical movements to hawk products, fake news from malefactors like the Russians, price gouging and bullying smaller competitors — and increasingly profiling and targeting individuals with specific ads.
Websites of all sizes harvest data and make it too difficult for users to opt out. That’s wrong.
However, busting up Google or Facebook, or splitting off Instagram or WhatsApp, won’t fix that.
The solution lies in Congress passing a law similar to the EU General Data Privacy Regulation, which requires that users know, understand and consent to the data collected about them.
Facebook is a natural monopoly, and Google’s search engine comes close. Folks are going to gravitate to the platform with the most participants. This “network effect” requires regulation like the above mentioned EU rules or outlawing platforms where folks congregate to post news — the latter poses serious First Amendment issues.
Fake news would be just as easily propagated — and much tougher to screen and regulate — on a more fragmented internet through web crawling bots, whose messages smaller firms would have fewer resources to screen. The real problem is what to censor without, again, tripping over the First Amendment.
Apple has taken hellacious price increases, and its share of the global cellphone market, 12%, is hardly dominant.
Apple is the target of a class-action suit for taking 30% of the revenue from sales on its App store and limiting apps used on its phones to those sold through its stores. Many retailers mark up wholesale prices by more, and Apple earns much of its profits, not by selling users’ personal data, but through those fees. It further protects privacy by screening who can do business on its phones.
As for Amazon’s monopoly pricing — it has only about 5% of the total retail market — and you try consistently beating its prices, especially including the cost of driving to stores that may or may not have the items you want on the shelves.
As for abusing its suppliers through the information it gleans about their sales on its platform and then establishing competing brands, Amazon offerings often sport lower prices — just like supermarkets’ house brands.
Most everyone appears aghast by the growth of Google’s ad businesses
— at the expense of local radio, TV, magazines and newspapers. Now Google’s ad business is threatened by Amazon and individually targeted TV ads on streaming TV platforms.
The evolution of technology will have more consequences for curbing market power than ever could be achieved with antitrust law.