Massachusetts senator and Democratic presidential hopeful Elizabeth Warren published a Medium post on Friday calling for the breakup of big technology companies in service of “protecting the future of the Internet” by encouraging competition and innovation.
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy,” Warren writes. “They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”
“I want a government that makes sure everybody — even the biggest and most powerful companies in America — plays by the rules,” Warren continues. “And I want to make sure that the next generation of great American tech companies can flourish. 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 then explains how tech companies achieved their level of dominance by using mergers and proprietary marketplaces to limit competition. She also writes that weak antitrust enforcement “has led to a dramatic reduction in competition and innovation in the tech sector,” noting that “the number of tech startups has slumped, there are fewer high-tech growth young firms typical of the tech industry and first financing rounds for tech startups have declined 22 percent since 2012.”
“As these companies have grown larger and more powerful, they have used their resources and control over the way we use the Internet to squash small businesses and innovation, and substitute their own financial interests for the broader interests of the American people,” Warren writes. “To restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last, it’s time to break up our biggest tech companies.”
Ironically, it was government action against one of the tech giants of the day — Microsoft — that opened the door for the emergence of today’s tech titans. Back in the 1990s, the government targeted Microsoft for monopolistic practices that violated the Sherman Antitrust Act. The world’s number one software company, headed by the world’s richest person, lost its case and with it its browser monopoly. But at the time the government’s decision to take on Microsoft was not a very popular one. Critics argued then as they do now that reigning in the power of such a powerful force in the tech world would stifle innovation and ultimately harm the booming economy. Of course, nothing of the sort happened. Quite to the contrary, what followed after a brief a stock market bust was nothing short of Web 2.0 and the emergence of Big Tech as a global economic and political force to rival the financial services industry.
Ethics In Tech agrees with Warren. EIT founder and former Amazon manager Vahid Razavi argues in his recently-released e-book Ethics In Tech and Lack Thereof: Sleeping Under the Cell Tower (click here for free download) that breaking up the GAFAs — Google, Amazon Facebook, Apple and their ilk — could even be a lucrative move for industry leaders like Amazon CEO Jeff Bezos. Razavi uses the example of Standard Oil, which was split into dozens of different companies in an epic 1911 trust-bust, to illustrate his point:
I would submit to Jeff Bezos that he would grow even richer if he were to break up the company. This is exactly what happened over a century ago when the government broke up Standard Oil into the “baby Standards,” chief among them Exxon, Mobil, Chevron, Amoco and Marathon. That epic trust-bust created 34 separate companies, and Standard founder John D. Rockefeller continued to own significant equity in these. As each of them grew on their own, so too did Rockefeller families fortunes grow. Rockefeller was the richest man of his time. Bezos is the richest man of our time. He would still be — and perhaps be even richer — if Amazon were split up.
Warren argues that “more competition means more options for consumers and content creators and more pressure on companies like Facebook to address the glaring problems. with their businesses. We agree. We’ll be diving deeper into the potential and pitfalls of breaking up the GAFAs in future posts. Stay tuned…