Communications Privacy

Is it Time to Break up Big Tech?

  • author Mark Nestmann
  • calendar March 16, 2021

A slugfest is underway, with Uncle Sam and the states joined in a rare show of bipartisan unity against “Big Tech.” Both political parties are eager to unleash the government’s regulatory might against as the likes of Apple, Amazon, Facebook, and Google.

Last October, the Department of Justice, led by Republican Trump appointee William Barr and 11 state attorneys general – also all Republicans – filed a lawsuit against Google. It alleges the internet giant maintains a digital search and ad monopoly "through anticompetitive and exclusionary practices," in violation of antitrust laws. It also accuses Google of illegally maintaining monopolies in the markets for “general search services, search advertising, and general search text advertising.”

Also last October, a Democrat-controlled House subcommittee released a 450-page report following a 16-month investigation into the big four tech companies. The report concluded that the tech giants “not only wield tremendous power, but also abuse it by charging exorbitant fees [and] imposing oppressive contract terms.” Each of these companies “uses its gatekeeper position to maintain its market power.” And “through self-preferencing, predatory pricing, or exclusionary conduct, the dominant platforms have exploited their power in order to become even more dominant.”

The report lists Amazon’s sins as including having “monopoly power over many small- and medium-sized businesses” and “selling its Alexa-enabled smart speakers at deep discounts.” Apple earns criticism for having “monopoly power over software distribution to iOS devices.” Yet, the report also critiques Apple for operating an app store that gives iPhone users access to outside apps.

Then on December 16, Republican attorneys general from a slightly different slate of 11 states filed additional charges against Google. In this lawsuit, the internet search giant is accused of having monopoly power over the publisher ad server market and the display ad exchange market. Google is also charged with conspiring with Facebook to illegally divide up the online ad market.

The next day, a bipartisan group of 38 states and territories filed another lawsuit against Google. In this lawsuit, Google is cited for systematically degrading other companies’ ability to access consumers. And for “using its massive financial resources to limit the number of consumers who use a Google competitor.”

Also in December, the Federal Trade Commission filed a lawsuit against Facebook. The complaint alleges the social media behemoth maintains a monopoly position by buying up companies that present competitive threats, such as Instagram and WhatsApp. The lawsuit also accuses Facebook of restrictive policies that illegally hinder actual or potential competitors that it chooses not to (or cannot) acquire.

Now that Democrats are in control in Washington, D.C., the assault on Big Tech has intensified. In February, Senator Amy Klobuchar introduced what she calls “sweeping new legislation to reinvigorate America’s antitrust laws and restore competition to American markets.” Essentially, Klobuchar’s proposal would make it harder for companies to merge and redefine antitrust law to prohibit “exclusionary conduct.”

We’re skeptical about breaking up companies because we don’t believe “monopolies” are necessarily a bad thing if real competition exists. What’s more, calling the big four tech companies monopolies is misleading, if only because they’re not really monopolies by the historical definition of antitrust law.

Since the 1970s, to prevail in an antitrust claim, the government needed to demonstrate consumers were harmed by a company’s monopolistic practices; the so-called “consumer welfare standard.” But proving consumer harm is difficult in all but the most egregious cases. And in the case of the tech giants, there’s been enormous consumer benefit. The world is clearly a better place thanks to the innovations Big Tech has given us, although we have reservations we’ll share momentarily about their privacy practices.

As for lack of competition, Jessica Melugin of the Competitive Enterprise Institute (CEI) observes that, "three of the top five apps in the [Apple] App Store in recent weeks didn't exist when Facebook purchased Instagram. Parler, MeWe and TikTok are all proof that Facebook's social media business faces fierce competition in an innovative sector."

Those who advocate breaking up Big Tech often point out that the last time Uncle Sam made a serious effort to dismantle a monopoly was in 1984, when the government finally succeeded in breaking up telecommunications giant AT&T into seven regional phone companies.  

It took 35 years for the feds to break up AT&T. The first attempt in 1949 ended with a 1956 Consent Decree leaving the company virtually intact. But in 1974, the Justice Department struck again. After a long court battle, AT&T agreed in 1982 to be split up. The separation was completed two years later.

We didn’t think then (or now) that AT&T needed to be broken up. The divestiture occurred only a few years before AT&T’s landline business became obsolete thanks to the growing popularity of cellphones. And internet telephony would have killed off the company’s immensely profitable long-distance business by the following decade.

We have no doubt something similar will happen with today’s tech giants. Not that long ago, IBM, AOL and Myspace were accused of acting as monopolies. But IBM’s supposed monopoly on the market for personal computers turned out to be a façade. AOL’s business model was based on dial-up internet access, a technology that was obsolete once broadband connectivity became widespread. And Myspace, which dominated the social media space in the early 2000s, simply couldn’t compete against Facebook.

Our own problem with Big Tech is very different from the one that most politicians discuss: a phenomenon that has been dubbed “surveillance capitalism.” Its success depends on collecting your personal data (including facial features) without your knowledge or consent by companies that profit from compiling, analyzing, bundling this data – and ultimately reselling it to the highest bidder. We wrote about the phenomenon last year in this article.

New laws might slow down the surveillance capitalists, but there’s only one way to limit their unfettered use of our personal information. And that’s to establish an ownership right to our own data and forbidding use of it without our permission. Most of us would probably opt into certain forms of data sharing, especially if they received a benefit for or were paid for its use. But those who didn’t want to share their information could opt out.

In the meantime, we’ve long advocated that consumers interested in privacy protection should say goodbye to Google, use end-to-end encryption on their smartphones, and delete Facebook and other social media platforms.

As with everything else privacy-related, Big Brother and Big Tech have a vested interest in keeping tabs on you. No one but you has a vested interest in protecting your privacy. And there’s no better time to start than now.

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