Breaking up (tech companies) is hard to do
The end of true love is here and we are talking about breaking up. Yes, that is the current status of the big tech companies – a situation prompted by their never-ending assaults on user privacy and perhaps too-big-to-continue market growth. At the head of the line of reverse matchmakers is US presidential candidate Elizabeth Warren. She has garnered headlines for her plans to break up the big techies –, Amazon, Facebook, and Google. Even more, she has ideas about even unwinding some previously approved mergers for their anti-competitive impact on the market.
Say hello to a “platform utility”
Warren wants legislation that would have large tech platforms with a turnover of over $25 billion to be designated as “Platform Utilities” with the platform function divided from that of users. This threshold would make Google’s ad exchange, Google Search, and Amazon Marketplace into platform utilities – and have to be spun off. In addition, she would have regulators take a look at past mergers such as the Amazon acquisition of Whole Foods; Facebook’s purchase of WhatsApp, and Google’s addition of Waze and DoubleClick for their anti-competitive impact.
Let’s unwind together
This would cut down the vertical integration of these tech giants – and could also reduce their use their position to knock out potential competitors and compile vast data files on about everyone. At least, that is the idea. As she wrote in the blog, “More competition means more options for consumers and content creators, and more pressure on companies like Facebook to address the glaring problems with their businesses.” And that glaring problem is user privacy.
Elections are coming, but …
Warren’s proposal may just seem like pre-election posturing, but she is a known policy wonk. She comes up with policies and regulations that are designed to work – not just win elections. Like it or not, she was a leading figure in the establishment of America’s Consumer Financial Protection Bureau. While her recent proposal was welcomed by Robert Reich, a former US secretary of labor under Clinton, she is ahead of the pack in calling for a breakup. But she is not the only person complaining about the behavior of the Big Tech companies. Across the political aisle, Josh Hawley has spoken out against Google collecting location data on Android phones – even after the user tries to disable the tracking function.
Look out for those Europeans
Outside of the USA, the big tech companies still have no breathing room. Margrethe Vestager, the European Commissioner for Competition, is digging into whether Amazon has been using the data collected from businesses selling products on its platform to shape its own competing sales activities and undercut them on prices. She would like to take action before her term ends in October. In 2017, she hit Google with a $2.7 billion fine for steering customers to its own Google Shopping services. This is the sort of issue that Warren is addressing with her plans to divide the platform from the subsequent sales activities. However, in a Washington Post interview, Vestager downplayed the possibility of the EU trying to breakup the Big Tech companies via legislation, stating that it would be an issue of the “very, very, very last result.” A substantial fine might be another issue.