To rein in Big Tech, we need new rules
It was an awkward show. Jeff Bezos, Tim Cook, Sundar Pichai and Mark Zuckerberg, the CEOs of Amazon, Apple, Google and Facebook, each sat on a web call this week to face an antitrust panel in Congress.
The already less-than-ideal format, in which politicians often grandstand more than ask probing questions, was only made more strange by the COVIDinduced situation of having everyone phone in to the panel. The whole thing would have felt a bit sci-fi if the stakes weren’t so very real.
Because the fact that these four men, who collectively run companies worth about $5 trillion and reach around half the world’s population, were hauled in front of a congressional panel at all signifies the deep worry about tech’s growing power. And while this specific hearing was to focus on questions of competition and antitrust, inevitably the panel strayed into issues of speech, censorship and influence.
Yet, watching the whole affair, it was hard not to get the sense that governments are working with a set of outdated rules. For one, a group of U.S. politicians could only ever defer to the idea of fostering competition. But what the hearings may have inadvertently revealed is that what separates Big Tech from other kinds of companies is that they are platforms — historically unique entities that need their own set of rules.
Despite the strangeness, there was some real tension. Under the glare were a series of troubling patterns from the companies. Amazon’s Bezos came under fire for his company’s practice of being a platform for smaller third-party sellers to hawk wares but also using the data from those sales to compete with them. Similarly, Rep. Pramila Jayapal brought receipts of early emails when Facebook was considering acquiring Instagram, showing that Facebook essentially threatened the then much smaller photo-sharing app.
It was indicative of just how much Big Tech has gotten away with as we were lost in its haze over the past decade or so.
But Jayapal, who represents part of Seattle, also took the time to thank Bezos for his contributions to the city and suggested that all she wanted was more Amazons, rather than one behemoth. It pointed to the bind we are in: Worried about tech companies, but also beholden to them and how essential they have become to both our lives and the economy at large.
Can you actually have more than one Amazon, though? The trouble is, large technology companies don’t just offer a service or product to consumers in the way that Ford or Sony might. Rather, they offer a platform — that is, a thing on which other services and businesses are built. Facebook is not just a way to connect with friends, it is also full of neighbourhood groups, buy and sell clubs, news, videos, messaging, digital payments and more. Something similar might be said of all big tech companies. Apple has its app store, from which it takes a 30 per cent cut of sales, and is why you cannot buy a book from Amazon or Kobo from your iPad (those companies refuse to let Apple take a cut). They aren’t merely companies as much as a kind of infrastructure for both themselves and other companies.
Making matters more complicated is that platform companies only really work when they have scale. What would be the point of joining Facebook or setting up a business on Amazon if there weren’t hundreds of millions of people also on those sites? It’s a phenomenon called network effects: The value of a platform to someone goes up the more people are on it. The trouble is obviously that such scale helps to prevent competition. If a network is only good when it has hundreds of millions of people on it, how can you set up a competing one?
That’s why these companies can’t be reined in using traditional rules about antitrust, or even rules for traditional media or utilities. They are new and, as such, need to be treated with new rules.
Even breaking up companies wouldn’t have the desired effect.
The closest analogy we have to platform companies are utility companies. Organizations that, in places like Canada, are tightly regulated in no small part because they form the backbone for so many other things.
That is how platform companies like Facebook or Google should be regulated: as if they are infrastructure, because that’s what they are. But, because of network effects, we will need new rules: Limitations on what platform companies can do in regards to competition, their users’ data, and the availability of that data to potential competitors and governments, too. Yes it will be awkward and it will be hard. But we can’t tackle one of the biggest problems of this century if we are stuck using tools from the last. David Olive will return