For the first 15 years of the 21st century, Democrats and Big Tech seemed to get along. There was something exciting and progressive about the likes of Mark Zuckerberg and Jeff Bezos that made them distinct from the Koch Brothers and Rupert Murdoch. They wanted to make the world more connected and to liberate us all from the bounds of society’s echo chambers. Big Tech capitalized on America’s naivety.
Only now have we started to think about the possible consequences of Google, Apple, Facebook, and Amazon (GAFA) controlling markets that we don’t know how to regulate. Meanwhile, those who stand to lose from a GAFA ‘breakup’ have been cultivating a persuasive current of fear. It’s something that the CEO’s like to talk about, a lot. They argue that breaking GAFA up would give competing Chinese monopolies the upper hand and ultimately lead to China’s global economic hegemony. But are America’s Big Four really fighting for the US? Does a monopolized industry stand a better chance against Chinese tech than a competitive one? No and no.
Do They Care About You?
Let’s start with a simpler question: Do these American companies actually care about American interests and values? Well, Amazon cares so much about the American economy that it has avoided paying any federal income taxes for two consecutive years. Google almost got away with developing a censored search engine for the Chinese government that would have inhibited content regarding human rights, democracy, and peaceful protest. Facebook got caught harvesting potential voter information of over 87 million Americans without their consent. And Apple has been repeatedly exposed for supporting horrendous working conditions in overseas iPhone factories. It is not hard to see that these companies are little different from Koch Industries in that they will do anything and everything to make a profit. Being “American” means nothing to them or their objectives unless it corresponds with larger proceeds.
The Argument for Monopoly (by Monopoly)
If you go online and search “will breaking up big tech help China,” Google will kindly offer you about four hundred articles claiming that our only defense against Chinese domination is equally abusive American mega companies. The most convincing of these arguments, though many offered no reasoning at all, is related to the power of monopolized data hoarding.
To summarize: these large American corporations are said to be incubators for the next generation of artificial technology (AI), which is the most important area of development for tech right now. Because of their size, these companies have access to an incredible amount of behavioural data from all their users. Therefore, they are better able to build effective AI algorithms. Many of China’s tech monopolies, such as China Mobile, Baidu, Alibaba (Chinese versions of AT&T, Google, and Amazon respectively), are state-owned. They are subsequently aided by anti-competitive government policies or unlimited access to cheap financing. This enables them to gather data in a monopolistic fashion similar to GAFA. While Chinese tech monopolies have largely been built by the government to serve the government, America’s have been nurtured by the naivety of regulators and a ‘pro-business’ conservative ideology. Pro-monopoly articles claim that GAFA will protect us from their Chinese counterparts, and can only do that from a position of strength. Meanwhile, Americans are expected to accept the fact that this means giving GAFA free reign over privacy policy, data protection, and anti-competitive behaviour.
The Argument against Monopoly (by the people)
Must Americans really be forced to accept these abuses? Surely there is a better way. Indeed, there is. Everything lies in the data, data that is yours but that GAFA claims as theirs. They hoard it in massive quantities, then use computers to analyse it and generate new efficiencies like more targeted advertising. Data hoarding, or big data, allows monopolistic markets to appear to be more beneficial than competitive ones. By forcing the monopolies to share data, the industry as a whole would benefit.
Ultimately, the case for monopoly collapses. It seems like an easy solution: The US could improve both its economy and its citizens’ rights at the same time. On a domestic level, tech companies would be competing on the same terms, growing at exponentially faster rates, and creating products and services that truly serve the customer. On an international level, American tech companies could easily outperform their Chinese competitors, who would be stifled by the major state-owned data hoarders.
If you don’t trust proven macroeconomic theory, just take a look at history. In the early 1980s American tech was stumbling in the face of large Japanese firms such as Sony and Sharp. What saved the American economy wasn’t a resurgence of the old Westinghouse days, it was the inevitable rise of start-ups like Apple and Microsoft. The protectionist policies that had initially suited Japan’s infant industries were no match for the ruthlessly competitive market in which American firms operated. Every time an old American giant died, an innovative phoenix would rise from its ashes. These smaller companies changed the game in a way that Japan’s state-nurtured giants could never have imagined, because imagination wasn’t necessary for their survival. The economy must put its faith in competitiveness and American innovation, not old Google.
De-Monopolizing Big Data
This argument against monopoly relies on the efficacy of data sharing. If you already believe it will work, then you can skip this section. But for the sake of being more comprehensive than the articles that argue for monopoly, it is explained below.
Internet governance expert Viktor Mayer-Schönberger has garnered considerable attention through his particularly detailed data-sharing mandate. At the request of small start-ups, large companies would be obliged to anonymize a small percentage of their data and share it with these possible competitors. By keeping this number low, it still incentivizes the GAFAs of the world to acquire useful data, but it also dramatically increases the field’s ability to find innovative solutions to the problems that they can now quantify. Additionally, a contractual system for data access could help the government ensure that these new companies are complying with regulation. This would simultaneously increase competitiveness and regulation, an incredible solution.
And don’t start to think that anything about data distribution is new. Facebook has been selling your data to advertisers for years, and Google is doing the same. The only difference under this mandate is that your data would be used to create better products, not to deepen GAFA pockets. Instead of being about who has the most data, the market would be about who could use it most effectively and barriers to entry would be dramatically reduced.
Data sharing is a great idea, but it’s one among many. An essential component of this conversation is accepting that, right now, lawmakers simply don’t know what the exact solution is. The tech industry operates in a largely unlegislated sphere. Companies sell ads, not products. Their profits do not come from the consumers themselves but rather the sale of their data to other businesses. To the average user, the cost of service is “free” or hidden. We have entered into unchartered territory. Congress does not have the option of relying on precedent, but must instead rely on constitutional values and the proven efficiency of competitive markets to create new laws, such as data sharing initiatives, and shape our economy to be fair and free.
When pushed for comment on the exact nature of future reform, House Antitrust Subcommittee Chairman David Cicilline was honest in acknowledging that there is currently “a major gap in our understanding [of] these problems.” Rather than propose a definitive solution, he wants to “diagnose problems in the digital economy” by first “build[ing] a record to document anti-competitive practices in this market.”
It is a time of uncertainty, but it is not a time for cowardice. Shying away from this conversation due to some blind fear of Chinese domination is absolutely not the solution. That’ll help the four big American companies and just about no one else.
Photo: Image via JD Lasica (Flickr)