Is breaking up big tech the solution to online hate or election meddling?

Is breaking up big tech the solution to online hate or election meddling?

Photo illustration by Matt Field. Photos by Senate Democrats, Lorie Shaull, and Andrew Bossie licensed through Creative Commons via Wikimedia Commons.

The backlash against Silicon Valley’s tech titans is nearing full force. Massachusetts Sen. Elizabeth Warren, surging in the polls for the Democratic presidential race, put up a billboard in San Francisco blasting out her call for the government to break up big tech. While Warren’s out front in making the argument that Google, Facebook, Amazon, and others have accumulated too much wealth and power, several of her rivals agree with the premise. And it’s not just presidential candidates who have knives out: Two federal agencies are prepping antitrust investigations into several tech companies, and the House of Representatives is looking into the matter, too.

But can the same antitrust powers that the government used to break up Standard Oil in 1911, then one of the richest and most powerful companies around, be applied to Facebook? Would breaking up the companies even solve the problems that many have with the tech sector? Certainly, some critics point out potentially anti-competitive behaviors—like Amazon gathering data on merchants that market through Amazon’s site and then rolling out competing products. But other issues, for instance Russia’s exploitation of social media to meddle in the 2016 US presidential election, seem removed from the notions of competition and consumer prices that are the typical concerns of antitrust regulators. Facebook co-founder Chris Hughes made a big splash with an op-ed in The New York Times recently calling for his former company to be broken up. Companies that get too big, he argued, “get sloppy and careless; and that leads to things like poor privacy practices, enabling foreign actors to meddle in elections, the spread of violent rhetoric, fake news, and the unbounded drive to capture more of our data and attention.”

But the antitrust process, which typically involves lawsuits that slowly wind their way through the court system, might not be the right way to deal with many of the problems people point out with big tech, University of Chicago law professor and antitrust expert Randy Picker said. I talked with Picker about what antitrust law could and couldn’t do to deal with companies that, as Warren says, have “too much power over our economy, our society, and our democracy” and have “bulldozed competition, used our private information for profit, and tilted the playing field against everyone else.”

Professor Randy Picker teaches law at the University of Chicago. Photo credit: Randy Picker.
Professor Randy Picker teaches law at the University of Chicago. Photo credit: Randy Picker.

Matt Field: What’s happening now to spur interest in using antitrust laws against the big tech companies?

Randy Picker: I think the answer to that is we’re trying to figure out what if any is the right social and legal response to the big tech companies. Antitrust is one tool we can use, there are other tools we might use. Antitrust has the great virtue that it’s a fairly flexible system. It’s in place. It doesn’t require new legislation. It requires you to sort of persuade the court as to why this might be captured in a situation. I think that’s why antitrust is seen as maybe a first-wave tool.

MF: Sounds like you are saying that the call for antitrust action is a response to our anxieties about the role big tech plays in our society these days?

RP: When you look at the largest companies by market capitalization in the world, most of those are the leading tech companies. That’s true in the United States, it’s true in China. I think that’s the sense in which they are especially prominent. And that’s not abstract in the sense that we stare into these devices all day so the technology and these companies are very much in our presence.

MF: A lot of the complaints people raise about the tech sector relate to privacy, to hate speech, to problems that don’t seem to have to do directly with business and competition. Why then are people turning to antitrust as a solution?

RP: I think there are any number of topics which antitrust is not the solution for. If you live in Europe and you think there is too much hate speech on these platforms, you are probably going to regulate that directly, and Europe has been more willing to try to push the platforms to deal with the hate speech. Australia, in response to the New Zealand massacre in Christchurch, they passed new legislation. That’s not antitrust legislation. That’s legislation about what’s appropriate and inappropriate content on these platforms.

MF: Are any of the complaints you hear about the tech sector in the United States appropriately dealt with under antitrust law?

RP: I think antitrust is not simple and I think these questions are pretty complicated. Europe, for example, right now is looking at the question of whether Amazon is in some sense acting anti-competitively–abusing a dominant position is probably how the Europeans would frame it–with regard to seeing sales by third-parties on their website and saying, “oh that product seems to be selling pretty well, maybe we should make that product too.” That’s something Europe is investigating …

MF: What ideas have you heard about using antitrust law to deal with concerns over Facebook?

RP: Something that people talk about, but often pretty casually, is whether or not in some sense the Instagram and WhatsApp mergers, purchases, should be undone … It’s a fairly concrete situation where you might say, “well we could use antitrust to do that.”

I think on careful analyses that turns out to be a lot harder than one might think. In the sense that both the Instagram and WhatsApp purchases by Facebook, the antitrust authorities looked at those when those took place. There’s a process in the United States called Hart-Scott-Rodino pre-merger notification–that’s a mouthful–which says that basically when you’re buying a firm and it’s sufficiently big you’ve got to say, “hey government we’re buying this firm, what do you think?” And in both of those cases, that kind of process was run in the United States and in Europe and they all said, “those are fine.” Now people seem to think that was a mistake and that maybe we should break those up. But the reality is I’m not aware of any substantial situation where we have had mergers go through this heads-up process—Hart-Scott-Rodino–and then broken them up after the fact when we approved them the first time.

MF: As popularly conceived, antitrust law has to do with breaking up monopolies and big companies, right?

RP: We broke up AT&T in 1982. AT&T agreed to be broken up … We did not break up Microsoft. So there was a moment where we thought in response to the Microsoft antitrust lawsuit, which the government won, that we might break up Microsoft [but] that went away.

We did break up Standard Oil in 1911. We did do a variety of breakups in an earlier era, but the critical point to note there… In that era there was not this pre-merger notification regime so firms would just merge and then the government would say, “you guys shouldn’t have done that; we’re going to break you up.” There were many more breakups of that sort in the old days. We haven’t really done very much of that. I’m not aware of any important example of that since we went into this heads up regime for mergers that we currently run …

MF: The government’s beginning to consider antitrust actions against companies that are very different from one another. Is it right to lump them together?

RP: I think your definitely right to say Google, Facebook, Apple, and Amazon, throw Microsoft into the mix, those are very different companies. Google and Facebook are essentially media companies, advertising is the vast bulk of their revenue. They’ve moved into other things, but advertising has been the heart of those businesses. Apple is obviously first and foremost a hardware company, they’re expanding into other things, they’re moving into services, that seems to be in part their future. Amazon, in one way, I think of it as Sears. Sears and Montgomery Ward were the great catalogue merchants of their era. And Amazon was initially just that … I think people are being causal when they lump them together but the reason they lump them together is that’s what they see on their phones, so that’s why they’re focused on them …

MF: Does talk of taking antitrust actions against the big tech companies have to do more with the presidential election and the political moment we are in rather than any legitimate antitrust concerns?

RP: I think there is a broader concern about the level of inequality in our society. [In] the tech firms you see enormous amounts of wealth coming into the hands of a small groups of people, and that’s the sense in which I think that those firms are matched to–maybe it’s a political moment, it’s an economic moment–a political/economic moment. I do think that’s the way in which those firms, precisely because they are the most valuable firms in the world and a relatively small group of people have made an enormous amount of money, that they are politically front and center.

MF: It sounds like you think antitrust laws are the wrong tools to make the changes many want to see made with regard to the tech sector?

RP: I’m not saying there aren’t antitrust issues, the driver of much of this, the concerns you just identified, we’re sort of going at them with a hand tied behind our back if we’re using antitrust rather than more direct tools.

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