Breaking up the tech giants is one of the few major issues that cuts across party lines in Washington, D.C., and it even reaches into Silicon Valley itself.
Now that Senator Elizabeth Warren, a Massachusetts Democrat, has published a proposal on how to break up some of America’s tech giants including Amazon, Google, and Facebook, big-tech antitrust and regulation has officially become a 2020 issue. But the larger Washington machine has already begun to turn its cannons west.
Warren, who released her proposal before a rally in New York’s neighborhood where Amazon abruptly canceled its so-called HQ2, called for appointing new regulators and passing legislation to “unwind tech mergers that illegally undermine competition” and prohibit companies from selling their own goods in marketplaces they operate, a clear reference to Amazon’s dominant business.
What to do about the enormous wealth and power of the big tech firms is a question all the 2020 candidates will likely have to answer.
Warren’s proposal didn’t come out of nowhere. There has been increasing scrutiny and calls to regulate and even break up big tech as Silicon Valley itself has turned from a collection of charming stories of success to a dystopian collection of some of America’s most powerful and untouchable people.
Big tech’s reputation is in decline among Americans, to a degree. Due in large part to a series of privacy scandals, Facebook’s reputation has fallen farthest. According to the just-released 2019 Harris Poll Reputation Quotient, a survey measuring the reputation of the 100 most visible American companies, Apple fell three spots to 32, Google dropped 13 places to 41, while Facebook fell this year from 51 to 94, almost at the bottom. Amazon, meanwhile, fell just one place—to number two.
“I want a government that makes sure everybody—even the biggest and most powerful companies in America—plays by the rules,” Warren said. “To do that, we need to stop this generation of big tech companies from throwing around their political power to shape the rules in their favor and throwing around their economic power to snuff out or buy up every potential competitor.”
Warren’s plan is a long road. As president, she would aim to appoint to appoint “regulators committed to reversing illegal and anti-competitive tech mergers” including Facebook and Instagram, Google and DoubleClick, or Amazon and Whole Foods.
Targeting companies with global revenue over $25 billion per year, Warren would also promote legislation making services like Amazon’s marketplace and Google search into “platform utilities” needing to be spun off from the core business and prohibiting the companies from “owning both the platform utility and any participants on that platform.”
“Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users,” Warren’s proposal reads. “Platform utilities would not be allowed to transfer or share data with third parties.”
The proposal further opens up the ability of federal regulator, state-level Attorneys General, and private citizens to sue the companies for violating the requirements. Fines would reach 5 percent of annual revenue, a direct shot at criticism that regulation against big tech has so far failed to ding their bottom line.
Facebook, Amazon and Google declined to comment on the record about Warren’s proposal. Internally, however, tech giants have long been gearing up for increasing hostilities in D.C. Facebook has been hiring an army of lobbyists and policy experts in the capital, Amazon is pouring millions into lobbying, and Google set records last year for lobbying spending that reached over $21 million.
The call for antitrust scrutiny has been heard in all corners of Washington—and around the world. Last year, European regulators fined Google $5.1 billion for antitrust violations. France, meanwhile, plans to impose a tax that specifically targets American tech companies. Back in the U.S., pressure has been building for months.
Vermont Senator Bernie Sanders, who is also running for the 2020 Democratic nomination, said last year that Amazon had become too big and required closer scrutiny. Senator Amy Klobuchar, another 2020 Democratic candidate, offered up a new data privacy bill earlier this year targeting the big tech companies as well. Democratic Senator Mark Warner, a frequent critic of Silicon Valley excesses, has laid out 20 different regulations to bring big tech to heel.
On the Republican side of the issue, animosity against big tech has risen rapidly in recent years, built on a foundational persecution complex where Republicans argue that Silicon Valley is waging a cultural war against American conservatives. The data privacy concerns, however, are a bipartisan issue driving toward potential federal regulation.
“When it comes to big tech companies, is it really any wonder there is increased pressure for antitrust enforcement activity when these companies behave in the way they do?” Missouri Senator Josh Hawley, a Republican, said earlier this week, prior to Warren’s announcement. “When they spy on their consumers, when they take data without disclosing it, when they use it for things consumers have not approved. Every day brings a creepy new revelation. Of course, the public will want action to defend their rights, it’s only natural. Unless their behavior changes, I can’t imagine that pressure will stop and it shouldn’t.”
President Donald Trump has spent the last several years loudly accusing big tech companies of abusing their power as part of that war against conservatism. In between ominous tweets warning tech companies to “be careful,” Trump’s cabinet has said they’re “looking” at regulation of Silicon Valley. Nothing has materialized from the White House so far.
On the schism between Silicon Valley and U.S. conservatives, companies like Google, Facebook, and Twitter have consistently denied anti-right-wing bias in their algorithms or moderation efforts. In the political battle, however, they’ve been losing ground.
Here’s one major question emerging from today’s conversation: How much of this is campaign bluster? Is there a real possibility of antitrust regulation? And do Americans actually want it? While their reputations may be declining, big tech companies remain some of the most “beloved brands,” according to Morning Consult’s 2018 survey, which put Amazon at number four and Google right at number one.
Lina Khan, who shot to global prominence with her 2017 Yale Law Journal article “Amazon’s Antitrust Paradox” and is among the leading advocates for regulating the tech industry, recently joined the House Subcommittee on Antitrust, Commercial, and Administrative Law. “As consumers, as users, we love these tech companies,” she told the New York Times last year. “But as citizens, as workers, and as entrepreneurs, we recognize that their power is troubling. We need a new framework, a new vocabulary for how to assess and address their dominance.”
Khan served as an adviser in 2018 to Rohit Chopra, a new Democratic commissioner at the Federal Trade Commission, to address questions about competition, data, privacy, and antitrust. Khan’s new position on Capitol Hill is yet another signal about how the conversation around big tech has fundamentally changed, particularly in Washington.
“It’s a critical moment for antitrust hearings, hearings investigations, and oversight” she tweeted earlier this week.
Khan is the tip of the iceberg. The Federal Trade Commission has a new 17-member tech antitrust task force tasked with examining meaningful action against tech giants. In December 2018, the FTC launched a new set of public hearings dissecting Silicon Valley’s vast power and possible necessary adjustments to competition and consumer protection law, among other topics, according to FTC Chairman Joseph J. Simons’s testimony before Congress in December. Meanwhile, the FTC is reportedly gearing up to hit Facebook with a multibillion-dollar fine for privacy violations.
Breaking up big tech has also been an increasingly loud conversation even inside Silicon Valley itself. Roger McNamee, a venture capitalist and early Facebook investor turned big tech critic, outlined how the industry got so big and avoided government scrutiny in his recent book, Zucked.
“Left unchecked, the internet platforms will do what they do,” McNamee wrote. “The unintended side effects of their success will continue to harm more than two billion users every day, undermining society around the world. While we should pursue all avenues of regulation, antitrust may be the one with the fewest political obstacles.”
As we barrel toward 2020 and beyond, even those obstacles may fall.