Breaking Up Big Tech

break up big tech

Breaking Up Big Tech

Are tech companies growing “too big to fail”?

In 2018, 5 tech companies, known as FAAMG, earned revenues equaling 68% of US GDP growth:
Facebook: $55.0 billion
Amazon revenue: $232.9 billion
Apple revenue: $265.6 billion
Microsoft revenue: $110.4 billion
Google revenue: $136.8 billion

2019: Calls For Change
Google, YouTube, and Facebook are 3 most visited websites worldwide 一 Giving just 2 companies enormous influence
In March, Elizabeth Warren released a campaign ad calling for the break up of big tech companies — Facebook removed the ad, sparking bipartisan backlash
“Curious why I think FB has too much power? Let’s start with their ability to shut down a debate over whether FB has too much power” ー Elizabeth Warren
“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” ー Ted Cruz
Facebook-owned sites controlled a huge segment of social media & messaging
Global Traffic Share
Facebook: 61% ↓ 8% ↑
Instagram: 26% ↓ 25% ↑
WhatsApp: 16% ↓ 12% ↑
Messenger: 3% ↓ 5% ↑

In June, Tulsi Gabbard’s campaign ads were pulled from Google after “large spending changes” triggered an automated fraud alert

Gabbard is now suing Google, alleging her free speech was violated
In October, search results on YouTube reportedly removed Gabbard’s channel and videos ー BUT only for searches originating in the U.S.

Both incidents coincided with Democratic Presidential Debates

Nearly all Americans conduct searches using Google-owned platforms
Google Search: 88%
YouTube: 73%

“There’s been a profound change in the tech economy, and I think one that’s very dangerous for the United States’ economy” ーTim Wu, Law Professor at Columbia University & Author of The Curse of Bigness: Antitrust in the New Gilded Age

How Did We Get Here? Big Tech & Antitrust
Developing Antitrust Regulations
1890, Sherman Antitrust Act
Outlawed monopolies and cartels to promote economic competition
Prompted by consumer outcry against exorbitant prices and competitor upset by being unfairly shut out of production
1914, Clayton Antitrust Act
Amended prior legislation to add clear definitions and regulations
Prohibited anti-competitive mergers and predatory pricing
Allowed injured party to bring a private, antitrust lawsuit
Placed the Federal Trade Commission (FTC) and the Department of Justice (DOJ) in charge of enforcement
Microsoft’s Antitrust Case
1998, Antitrust Charges
When Microsoft began offering a free browser with its expanding software bundle, its chief competitor Netscape soon collapsed
Led the DOJ to file charges alleging monopolistic acts
2000, DOJ’s Ruling
Ordered Microsoft to be split into two companies
Windows operating system
Office software suite
The ruling was softened on appeal — BUT, through years of deliberations, Microsoft had lost ground to new competitors
While some believe the case against Microsoft was decided by the free market, others think the government’s case paved the way for new companies like Google and Facebook
Big Tech Today
Antitrust laws empower regulators to stop mergers that reduce competition
Yet, big tech companies face little push back on acquisitions
Amazon owns Whole Foods and Zappos
Facebook owns WhatsApp and Instagram
Google* owns Waze, Nest, DoubleClick, YouTube, and more
BUT some companies aren’t getting their money’s worth: In January of 2019, SoftBank invested in WeWork at a $47 billion valuation — but by September, investor skepticism led to a potential valuation of as low as $10 billion, prompting a further $1.5 billion “bailout” investment
According to the Department of Justice, a market share of at least 50% is needed before courts can declare a monopoly

Big Tech falls just short of this benchmark
FAAMG and Netflix captured 43% of global internet traffic
Apple sells nearly half of all mobile tech in the U.S., including
41% of smartphones
46% of smartwatches
Amazon captures 49% of U.S. e-commerce sales
BUT far more than half of Americans use these platforms
2 in 3 Americans have purchased something on Amazon
7 in 10 of Americans have a Facebook account
9 in 10 Americans use Google Search

“[R]ight now Big Tech is as much a part of the problem as it is a part of the solution.” ー Kenneth Rogoff, Professor of Economics & Public Policy at Harvard University

Proposed Solutions: The Future Of Antitrust
Platform Utilities
A new legal classification for big tech companies ㄧ regulated by breaking up the largest platforms and enforcing standards of fairness and nondiscrimination

Giants like Amazon would be broken into separate companies
Amazon Marketplace
Amazon Basics
Amazon Web Services

Google Search would have to treat all results equally
Google Reviews would have the same weight in search results bearing as reviews from Yelp and other review sites
Google’s Ad Exchange would become a separate company and no longer have an impact on search results

Reversing Mergers
Expanding the power of regulators to break up existing mergers, in addition to stopping new ones ㄧ making big tech more responsible to consumers’ concerns
Facebook, WhatsApp, and Instagram would be split apart
Users could continue to connect to these platforms
BUT, Facebook would face more pressure to improve with competition from other platforms
Consumers could still shop Amazon and get fast delivery
BUT, small sellers could use the platform without fear of predatory pricing from Amazon-owned brands
The Free Market
Rather than breaking up big tech, free market advocates suggest regulations to stop practices that harm consumers and limit competition
Data & Privacy: Regulations like could demand transparency from internet companies regarding their data practices
Free Speech: Regulators could develop guidelines for balancing free speech rights with the need to stop fraud and misinformation
Predatory Practices: Antitrust laws could be expanded to ban practices like hiding competitors content in search results
Net Neutrality: Would prevent internet providers from blocking, metering, or prioritizing certain websites or content 一 Big Tech needs the sames rules
2 in 3 Americans —regardless of political party— support the break up of Big Tech

What's Next for Big Tech?

What’s next for Big Tech?


Carrie Morris

Warren Dahl