Breaking up the tech giants? How that could affect publishers
Digital Context Next
By Mark Glasser – March 21, 2019
The drip, drip, drip of ideas to regulate tech companies continues. And when it comes to privacy, even the tech giants realize that regulation is coming and want to help craft those regulations. But 2020 presidential candidate Sen. Elizabeth Warren went even further, calling for the breakup of large technology companies with her Medium manifesto and a #BreakUpBigTech hashtag.
Her idea in a nutshell is to make any company with a marketplace of goods or ideas and $25 billion in revenues into a “platform utility” that cannot participate in the marketplace with its own goods or services. “Amazon Marketplace, Google’s ad exchange, and Google Search would be platform utilities under this law,” Warren writes. “Therefore, Amazon Marketplace and Basics, and Google’s ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.”
That means Facebook would lose Instagram and WhatsApp and Google would lose Waze, Nest, and DoubleClick.
Whoa. Does that mean that suddenly publishers get their online ad mojo back? Not exactly. Those independent companies would still wield outsize power, and this campaign manifesto has a loooong way to go before it becomes real-life public policy and legislation.
Breaking Up is Easy to Love
But before we come down to Earth and reality, let’s look at just how attractive this #BreakUpBigTech idea is to so many people in media and public policy – and how it even crosses ideological boundaries. After Warren released her plan, she gave a keynote at the South by Southwest Conference in Austin on March 9. To say it was a phenomenon would be an understatement. The SXSW conference had already been trending against big tech, and Warren’s proposal and keynote lit the match for even more heated discussion and argument.
She won converts such as high-profile investor Roger McNamee, an early Facebook investor who slammed the company in his new book, “Zucked.” At SXSW, he said that, “I think Warren’s proposal is brilliant. There’s a behavior that’s rampant in the industry of people owning a marketplace and then participating in it. They do so in the detriment of competitors.”
And it wasn’t just the Democrats and those on the left cheering on Warren’s proposal; she also gained some strange bedfellows on the right who have been suspicious of the growing power of tech giants. Their arguments have not typically been about economics but about how social platforms are biased against speech from conservatives.
Even Ted Cruz supported Warren’s idea on Twitter: “First time I’ve ever retweeted @ewarren But she’s right — Big Tech has way too much power to silence Free Speech. They shouldn’t be censoring Warren, or anybody else. A serious threat to our democracy.” He was referring to Facebook actually taking down some ads Warren ran on the platform to promote her #BreakUpBigTech ideas – though they blamed the takedown on her use of Facebook’s logo.
Criticism from Tech and Media Pundits
But of course: the devil is in the details. Warren’s broad plan was an easy target for tech pundits like Ben Thompson to point out its shortcomings. Thompson notes that “the reason why all of these companies have escaped antitrust scrutiny to date in the U.S. [is that] here antitrust law rests on the consumer welfare standard, and the entire reason why these companies succeed is because they deliver consumer benefit.” In other words, they remain free services that people largely like, and it’s not realistic that Apple would sell you an iPhone without apps or an App Store.
From the right, the National Review’s Rich Lowry says Warren has hit on the perfect catnip for liberals and conservatives by calling for the breakup of tech giants, but her prescriptions wouldn’t work and are too draconian. As Lowry wrote for Politico, “Their business practices aren’t above scrutiny. But any real offenses should be addressed with fixes addressing specific conduct, rather than with a massive politically imposed reorganization across the industry.”
And in the media and journalism world, an anti-trust breakup wouldn’t really move the needle for smaller local publishers who are dealing with much more intractable issues. As Free Press director Tim Karr told Sludge, “Even under a scenario where the largest online platforms are broken into their component parts, digital advertising will remain under the control of non-news media; newsrooms will continue to be shuttered and reporters laid off.”
While Warren’s proposal is a great thought experiment that builds more momentum to regulate tech giants, it is mostly a half-baked proposal that needs more details and a better way to support independent media outlets. Yes, it’s nice to dream about a more level playing field when it comes to online ads, privacy and trusted information, but we also have to realize that tech giants have armies of lobbyists and change will happen incrementally.