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Forget breaking up big tech—the U.S. needs empowered consumers

Experts argue that antitrust will fail to address many of the underlying concerns about privacy, prejudice, and power at tech giants like Google, Amazon, Facebook, and others.

Forget breaking up big tech—the U.S. needs empowered consumers
[Source photo: Smilja Jovanovic/iStock]
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The United States has become a nation of monopolies.

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Nowhere are the effects of growing market concentration felt more acutely than in the tech sector. It’s become the poster child for monopoly in recent years.

Based on estimates, more than 90% of internet searches are conducted via Google, and over 70% of all internet referrals go through entities owned by Alphabet or Facebook. At the same time, Amazon controls more than half of both e-commerce and cloud computing, and there are virtually no mainstream alternatives to Apple’s and Microsoft’s operating systems.

There is nothing inherently wrong with monopolies, per se. In fact, they can be the most efficient way for an industry to organize itself, particularly where high capital costs or network effects make competition more trouble than it’s worth.

However, monopolies can also wreak havoc on the economy if left unchecked.

Whatever happened to “Don’t be evil”?

This is particularly true in the tech sector where dominant companies have gotten up to all kinds of anti-consumer mischief.

In its search for profits, big tech has skewed entire elections based on racial profiling, leaked private discussions to eavesdropping data scientists, and shared the H.I.V. status of dating app users to third parties.

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As a result, many are questioning whether the tech industry has become too powerful for its own good.

For a growing set of voices from the political left, the answer is a resounding yes. Elizabeth Warren already set out a plan to break up big tech if she gets elected. President Trump has also been remarkably consistent to voice his displeasure with Google, and a number of far less bombastic Republicans have joined him in calling for scrutiny into the business practices of Facebook.

The mounting bipartisan concern has prompted an urgent scramble to rethink America’s approach to antitrust policy, prompting Bloomberg to call it the “Great Anti-Trust Awakening.”

If Warren has her way, Bloomberg may soon need to update its prognosis to full-blown Armageddon.

Why theory is better than practice

The underlying idea behind breakups is simple. Separating platforms from products would stop tech giants like Amazon and Google from double-dipping in their own platforms and restore competitiveness to markets from where smaller players have largely been driven off.

The problem is that breakups are unlikely to deliver hoped-for results. In fact, experts such as FTC Commissioner Noah Phillips argue that antitrust will fail in addressing many of the underlying concerns about the tech sector at large.

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Breaking up “no-fault monopolies” has never found widespread support from academia due to the uncertainty of actual benefits to the economy. In fact, critics such as Tyler Cowen have recently argued that big-tech-breakups would be a misapplication of antitrust laws that would only make things worse.

As a result, breakups should be applied as blunt instruments of last resort, if at all.

When in doubt, legislate

The tech industry is not a monolith, and there is no single fix for what ails big tech today. However, there are several no-brainer measures we should be considering before even talking about breakups.

Key among them is setting up a modern framework for how data is protected and used.

One particularly appealing way forward would be to follow the European Union and issue comprehensive data protection laws that empower consumers to protect themselves and incentivize big tech to curb its anti-consumeristic antics.

The United States needs its own General Data Protection Regulation (GDPR) This is not a new idea—even Facebook’s Mark Zuckerberg has urged global leaders to prioritize setting up harmonized data privacy and data protection frameworks.

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It’s not rocket science

Simple measures, such as requiring informed consent before data can be shared and giving users direct visibility over how their data is commercialized, would go a long way in upgrading consumers from an exploited commodity to active collaborators.

More importantly, giving users stronger visibility and control over their own data, and making companies more accountable over breaches, would greatly reduce the harm that even the most dominant firms could cause.

The same goes for data portability.

Allowing users to vote with their feet by taking their data from one platform to another would be a much stronger incentive for big tech to shape up than the distant prospect of breakups that would take years to litigate.

Finally, establishing a dedicated data protection agency to augment the much-maligned FCC and FTC would be another game changer that political reformists, such as Ralph Nader, have long since called for.

Not so fast, trustbusters

While the current administration has opted for a laissez-faire approach that most notoriously brought us the end of net neutrality in 2017, the tides are shifting on Capitol Hill.

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Two proposed bills—the Consumer Online Privacy Rights Act and the Online Privacy Act—stand out in particular. While it is unlikely that either bill will pass as is, they have already succeeded in setting the tone of discussion and focusing efforts on modernizing our data protection rules and establishing new regulators, such as the Digital Privacy Agency.

Even if federal laws never come to be, states are not standing idle.

In fact, California has already taken matters to its own hands by issuing the California Consumer Privacy Act, which enacted a broad set of changes to how tech companies operate in the state. New York has also taken action on data privacy by passing the SHIELD Act, and it is only a matter of time before other progressive state legislatures follow suit.

In the interim, politicians on both sides of the aisle would be well served by keeping their trustbusting instincts in check and remembering that sometimes complex problems have simple solutions.

And in 2020, nothing should be simpler than ensuring that American consumers have the most basic of rights over their data and that they are treated with dignity and respect even when online.


T. Alexander Puutioi s a PhD researcher at the University of Turku and an adjunct for macroeconomics and finance for New York University. He currently works on complex transactions with the United Nations Secretariat.