They are the world’s largest companies with swollen valuations that stretch into the trillions of dollars.
Critics say the likes of Facebook, Amazon and Google have become far too powerful, squashing competitors, wreaking havoc on small businesses, stifling the innovations of their rivals and harming our democracies.
Yet for years, politicians in Washington DC have struggled to come up with a coherent strategy to rein in the power of Silicon Valley’s biggest technology companies.
Now, after years of dithering, it seems they are finally coming up with a serious plan to deal with antitrust concerns.
Calls for the break-up of businesses like Google and Facebook might struggle to win cross-party appeal, but the US House Antitrust Committee appears to have settled on a new strategy to deal with technology companies and the platforms they run.
On Tuesday, Democrats on the committee put forward proposals for what has been described as a “Glass-Steagall Act for Big Tech”, alongside a series of other proposals including a presumptive block on mergers and acquisitions by the big tech companies, and forcing them to let people move their data to different services.
The basic principle would be to destroy the ability of technology companies to create and run their own platforms while using them to sustain their own monopoly control of specific businesses. In extreme circumstances, this could include forcibly separating the companies’ operations by breaking them up.
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Amazon would likely need to choose to either operate its e-commerce site or sell its own products. Apple would have to choose if it’s an iPhone seller or an app developer. Google could still offer search results, but couldn’t use them to promote links to its own shopping results.
The proposal has already been welcomes by Change To Win, a federation of US labour unions.
“The investigation has already unearthed major admissions and revelations on the depth of Amazon’s destructive anti-competitive behavior that working people have been sounding the alarm on,” says Michael Zucker, the organisation’s chief executive.
Using a Depression-era legal intervention to curtail hi-tech businesses may seem like a surreal concept. The original law, passed in 1933, separated commercial and investment banking. It forced financial institutions to decide if they were one thing or the other.
Politicians hoped that the act would restore public confidence in the US banking system and block banks from using their own assets to invest in potentially risky products.
Replicating this structure for the world of technology could be used to block technology companies from creating platforms and then using those services to promote their own goods.
Tuesday’s report painted Amazon, Facebook, Google and Apple as similar to past oil and railroad monopolies, which exploit their dominant positions.
“These firms typically run the marketplace while also competing in it – a position that enables them to write one set of rules for others, while they play by another,” it said.
But does the current situation require heavy-handed legislation like this? Matthew Lesh, the head of research at the ASI think tank, says the proposals could be “disastrous for consumers.”
“It would be like telling supermarkets that they can’t sell own-brand products, which would be ridiculous,” he says. “Consumers benefit quite a lot from Amazon, both as a marketplace as well as from the products that Amazon sells directly.”
The debate over the proposals centres on whether there’s a competition issue that needs to be addressed.
“When it comes back to antitrust issues, the key question should be whether or not there is identifiable consumer harm,” Lesh says.
If brought into law, Glass Steagall for technology would dramatically reshape the world’s largest companies, severely curtailing their product development and cleaving off entire divisions. The hope is that doing so would allow smaller, more nimble companies to make headway.
But a significant stumbling block comes in the lack of support for the proposal from the Republican members of the committee. One Republican member has already expressed his concern over the revised Glass Steagall proposal.
But the landscape could change dramatically over time.
“You will have a lot more movement on this if Joe Biden wins the presidency,” says Mike Clauser, the US head of technology lobbying firm Access Partnership, “especially if he brings Elizabeth Warren into his cabinet like he’s discussed, possibly making her the Treasury Secretary or Fed chairman one day.”
A separate concern over the proposals is that forcing technology companies to choose a single core service could bring an end to widely available cheap products.
Amazon can see consumer searches for goods on its marketplace, in theory allowing it to tailor its own products to fill these niches. Similarly, Apple can see which apps are rising in popularity on its App Store, allowing it to make its own free versions of popular services.
Democrat members of the committee will need to show that platform companies using their platforms to increase the services they offer is a problem which leads to competition concerns that shut out smaller businesses.
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