Big Tech Under the Gun
It was not too long ago that big tech and its leadership had the status of public heroes.
Those who founded and ran these companies were considered exemplars of two great American virtues: innovative thinking and entrepreneurial spirit. At one point, Mark Zuckerberg was held in such high esteem that media figures encouraged him to run for president (of the United States, not Facebook where he already held high office). But of late, the public mood has changed. Firms often referred to as “big tech” – Amazon, Apple, Facebook, and Google – were recently dragged before the House Judiciary Committee’s subcommittee on anti-trust to respond to accusations about their business practices. Hostility there was bipartisan, though concerns were different on either side of the isle. And this is not all. A group of state attorneys general has begun a probe into the four firms, as jointly have the Department of Justice and the Federal Trade Commission.
A curious irony surfaces in this change in public and official attitudes. When these firms and their executives were in favor, success and wealth lay at the heart of heart of their celebrity. These accomplishments were considered a kind of proof that they brought great value to the economy and society. Now in these widespread attacks, that wealth and success has become a reason to suspect these firms of underhanded and unfair behavior. The new mood wants to limit both the power and wealth that the old mood praised, largely by using anti-trust law to break up these firms.
Anti-trust measures, though clearly popular in Congress these days, are going to be a tough pull in the cases of these four. Though the notoriety of the “big tech” firms may make them look like monopolies, and they clearly have great market power, it is not clear that their position resembles that of the classic monopoly against which the anti-trust laws were written. Amazon, for instance, though it seems entirely dominant, still only controls 5 percent of the U.S. retail market, and even in e-commerce, controls only half. Walmart has a larger overall share and a significant position in e-commerce as well. Apple, though dominant, is not without competitors, in smart phones, computers, or the applications about which congressmen and congresswomen questioned its CEO, Tim Cook. Even Google and Facebook, though one controls some 70 percent of search and the other has a vast number of users in social media, cannot restrict entry into their respective markets as a true monopolist would. Facebook openly worries that it is losing youth business to competitors, while Zoom’s sudden rise during this period of quarantines and lockdowns demonstrates how new social media entries can come to dominate with no effective interference.
Anti-trust action would have to jump other high hurdles as well when it comes to this lot.
At one time, the two major pieces of anti-trust legislation, the Sherman and Clayton Acts, left so much judgment to the courts that action could easily follow the mood of Congress. But for the past 50 years, applications of the laws have held to a more objective, less politically-manipulated standard. Under this regime, action can only go forward on proof that customers (not other businesses) have suffered harm. The reasoning behind this now well-accepted standard rests on the reasonable conclusion that monopoly becomes undesirable when it uses its market power to overcharge customers or otherwise fail to give them their money’s worth. Since most of the products involved with these tech firms are free, including many applications offered by Apple, it is hard to accuse the four members of “big tech” of the “price gouging” typically associated with a monopoly. Nor has anyone yet complained that these firms have “gouged” those who buy advertising on their platforms.
Some in this matter have said that free or not, these firms cheat their customers by taking their information, on buying patterns for instance, and selling it. These accusers claim that the customer should benefit from that sale, not the technology firm. This seems reasonable on the surface, but two additional considerations complicate the matter. First, it is not the individual consumer’s information that has much value or is sold. What is valuable and what is being sold is the aggregation of the information. A second reason to doubt such justifications for anti-trust action is that for years retailers have sold buying pattern information and used it themselves for marketing, and no one has considered the practice a valid anti-trust complaint. Other points of accusation, such as the use of acquisitions to stop the growth of potential competitors, dwell on practices that all sorts of firms have used in the past and that have never elicited calls for a breakup. To be sure, it is illegal to undercut competitors’ pricing in order to drive them out of business and then raise prices, as it seems Amazon may have done with the sale of diapers. But the scale of any such behavior is so small that it might provoke a fine or restitution more than it could justify a breakup of the company.
The nattiest problems stemming from the new anti-big-tech mood has little to do with anti-trust.
These are the vague accusations that these firms, on the one hand, do too little to police hate speech and, on the other, that they do too much to police speech. It makes matters still more complicated that the staffs of some of these firms have entered the lists in this dispute. Since it is something neither law nor regulation can safely resolve, it would seem likely that these complaints, if they do not simply die, will perhaps elicit an industry-wide code enforced by an industry association, as has occurred in other industries, motion pictures, for example or finance. Government action is always possible, of course, if these complaints continue to gain momentum. But then political pressure, if it gets intense enough, might also force action on anti-trust, however weak the legal case. Should it come to this, the politics would prevail. It would not be the first time.