In the biggest legal challenge to the technology industry in decades, the Department of Justice and 11 state attorneys general filed an antitrust lawsuit against Google on October 20, arguing that the company holds an illegal monopoly over search and advertising and citing its contracts with Apple as a deterrent against innovation and competition. This was on the heels of a 449-page congressional report outlining a concerning set of business practices that advanced these companies’ power at the expense of newcomers and smaller players in the market, following joint testimony from the CEOs of Facebook, Amazon, Apple and Google this summer.
In order to recognize the missing pieces of this conversation, it is important to understand the history of monopolies as it manifests today. In a nod to the trust-busting Progressive Era of the late 19th and early 20th centuries, the report summed up the crux of the problem with these companies that “once were scrappy, underdog startups that challenged the status quo.” They have come to resemble the “oil barons and railroad tycoons” of the 1900s, “not only wield[ing] tremendous power, but … also abus[ing] it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them.”
The major trust-busting instruments of decades ago were the Sherman Antitrust Act of 1890 and Clayton Antitrust Act of 1914, the former criminalizing any restraint on or monopolization of interstate commerce through “anticompetitive conduct” and the latter prohibiting anticompetitive mergers or acquisitions as a civil statute. However, particularly in the case of the Clayton Antitrust Act, this was framed with respect to the consumers; in contrast, October’s report argues for updated antitrust laws that are “designed to protect not just consumers, but also workers, entrepreneurs, independent businesses, open markets, a fair economy, and democratic ideals.”
Neither the lawsuit nor the report come as a surprise — the refrain “break up Big Tech” has been growing louder over the past few years, marked particularly by Sen. Elizabeth Warren’s plan from her presidential campaign, President Trump’s claims that they “discriminate” against him and post-2016 concerns of election interference with Facebook and Cambridge Analytica.
The pandemic has only underscored the need for this shift in regulation, especially as many of these tech companies and their leadership have seen an increase in net worth while small businesses across the country have been forced to shut down. In normal times, new startups that could even possibly compete with these stalwarts are often passed over by venture capitalists, partially because of the ease of mergers and acquisitions or even a push toward eventual bankruptcy. According to research from Warren’s team, “the number of tech startups has slumped … and first financing rounds for tech startups have declined 22% since 2012.”
To say the least, this is a problem. However, there are a few notable points of consideration. These mammoth companies do still compete with each other, and they did all begin as start-ups in their own right — innovating to rise to the dominance they claim today and offering a model to start-ups to create new value of their own on top of this infrastructure of innovation. More importantly, these monopolies are complicated and multifaceted. Even if Amazon Web Services was split from https://amazon.com e-commerce, the issues remain within each individual type of marketplace — AWS will remain the behemoth player in cloud services, competing as it already was with Google and others, while smaller merchants on https://amazon.com would still feel marginalized.
So while decoupling WhatsApp and Instagram from Facebook, for example, might be an important first step, these components of the problem begin to hint at the bigger picture: Breaking up Big Tech will do little to disrupt the technocratic power dynamics that largely drive the pulse of this country. The real conversation should be focused on the soft power that these companies exert, culturally and politically. This is the only way to compensate for the fact that, in the words of prolific tech journalist Kara Swisher, “Tech does not play by the rules only because there are no rules to speak of”; these rules do not exist because “state and federal governments — on both sides of the partisan divide — charged with protecting small businesses and encouraging innovation did squat.”
The conflation of this vast array of companies, in and out of Silicon Valley, into the singular “Big Tech” does blur some of the important differences in the unique problems they each pose to society, but there is an overall disconnect between governance and an understanding of the intersection of corporate tech and politics — we are talking about the wrong issues and responding to them in the wrong way. Fines are merely a slap on the wrist; these companies have the resources to continually innovate something novel, bigger, and better (think Google Brain); and senators have no clue about how their business models actually work, making hearings quite ineffective.
These companies create products that are beyond fundamentally entrenched in society — 70% of American adults are on Facebook and over half consume their news from the platform. The average American is not profoundly affected by these companies’ dubious business practices — the target of current antitrust regulation — but their lives are significantly shaped by this systemic disconnect between leadership and ethics in business practices as well as an inability for governments to engage with this ecosystem.
Unfortunately, at least under the current system of incentives, we cannot currently expect privately held companies to make decisions for the good of the general public when their first responsibility is to shareholders and the bottom line. However, when their goods and services directly impact the lives of many, whether through misinformation or privacy breaches, we need to account for the resulting externalities in a way that resembles a public good instead — even though a conversation about how capitalism works is also worth having. These companies are making decisions about free speech (often too late) and public safety and influencing domestic policy and foreign relations. This power is shaping the arc of humanity and raises questions far deeper than any start-up out of a garage ever would have dreamed of addressing, and it is this unchecked influence that is the root of the problem we choose to just call and limit to an antitrust issue right now.
The sooner we address questions surrounding what responsible innovation looks like and build better systems of governance that actually understand the intricacies of the tech industry, the faster we will actually be able to accomplish what trustbusting is attempting but in the wrong playing field: a reckoning with and reshaping of the disproportionate share of societal power held by “Big Tech.” And so, while this lawsuit is an exploratory step in the right direction, the real test is in what comes next: how the next generation defines and chooses innovation for good and blazes a more ethically responsible path of leadership to shape technology in society.
Image by Zhiyue Xu is licensed under the Unsplash License.