Elizabeth Warren. Photo: Chip Somodevilla/Getty Images
Elizabeth Warren is one of the most left-leaning progressives running for the democratic presidential nomination. Part of her 2020 platform? Dismantling the large tech companies she believes have a stranglehold on innovation in the United States. She wants to break up Google, Amazon, Apple, Microsoft, and others, even ISPs. Is her plan extreme, or exactly what American innovation needs?
In This Article:
Warren’s Plan
The core of Elizabeth Warren’s plan is simple. She believes that, by breaking up large and powerful companies, smaller businesses could fairly compete. Smaller companies, like Foundem and Yelp have had trouble when Google downranked their pages or stole their content solely to hurt their competition. Google’s large enough to do that. However, if a court ruling broke Google up, they’d be less capable of shutting down or buying small businesses. Then these businesses would be able to thrive. She points to the anti-trust case against Microsoft, who themselves benefited from an anti-trust case against IBM. The case against Microsoft helped Google and other companies thrive. Now her sights are set on Google.
Could tech simply need occasional culling?
Her plan comes down to two key moves. First, with new legislation, then, by unraveling companies that benefited from unfair mergers.
Step One: “Platform Utilities”
First, Warren would define “platform utilities.” These would be online stores tied to a particular hardware or operating Apple’s App Store, for example, would be a platform utility to iOS. The Amazon Marketplace is a platform utility for the Echo line of devices. These are networks that serve their devices, but also push a company’s own hardware and software. Apple’s App Store pushes Apple’s apps on users. Amazon’s Marketplace pushes Amazon Basics merchandise on people. Google’s Search pushes Google’s Maps, Shopping pages, ads, and more on users.
Warren’s legislation would specifically target companies making more than $25 billion. Companies making between $90 million and $25 billion would be allowed to have the same company own their platform utility, but they’d need to give their own products no benefit on the platform.
Retroactive Compliance
This would also split out companies that have purchased competitors to reduce competition and innovation. Google, for example, purchased Waze, a competitor to their Maps app. Warren’s plan would split out Google, Nest, Doubleclick, and other companies under Alphabet’s umbrella. Facebook, who bought WhatsApp after their sneaky VPN service found that many people were using WhatsApp instead of Facebook. They bought Instagram for similar reasons. Amazon would be broken up into Whole Foods and Zappos again. This would ensure companies don’t want to buy up smaller companies to stifle innovation.
Does Warren’s Plan Make Sense?
Elizabeth Warren makes some good points. By shrinking the power of the richest and most powerful companies, smaller businesses will be able to compete. Large companies won’t buy up smaller ones to end their ability to compete while increasing their data collection capabilities. This has happened in the past with everything from Microsoft and IBM to railroad companies. Not only do the company investors profit from the diversification, but the consumer space becomes more diverse. More companies sprout up.
Companies like Google simply bury their competitors, like Foundem, a company that did “vertical search,” that is, finding exactly what you need within sites, digging down for you. It was perfect for finding deals. Google was trying to do this, but Foundem beat them to it. Google then buried Foundem in their search results and released Google Shopping. They were large enough to stomp out a large competitor before Foundem could become a threat. That shouldn’t be something we allow to happen. Google broke a better product because they had the power to do so. It’s not the free market if companies can block our ability to find competitors.
Google has become an inescapably large data collection machine. Facebook has too thanks to its acquisitions. These are companies that have become so large they block the idea of a free market, acting more like an oppressive government than companies.
But Does it Go too Far?
Companies like Apple rely on tight integration. The iPhone needs to come with the App Store, but Warren’s plan would split it up. This would split up the very reason people buy Apple products. Breaking up Apple would be extremely dangerous to the resulting companies and consumers, who may lose one of only two choices in mobile operating systems.
Then there’s the fact that Apple and Google were able to succeed, despite Microsoft’s monopoly on desktop operating systems and Blackberry’s mobile domination. However, this ignores the fact that both companies were already large by this point, and that Apple struggled for far longer than most small companies could have survived for. In fact, Google bought the company that made Android. It wasn’t their creation, they saw a market they wanted to compete in so they bought one and made Android part of their business model. Now it’s almost impossible to use an Android device without some parts of Google remaining, tracking users’ every move.
A judge would have to decide each case on an individual basis. It’s clear that companies like Apple, which rely on tight integration, would be more difficult, but not impossible, to split up. In Apple’s case, for example, Warren could go after iTunes instead of the App Store.
Trust Busting
I started this article thinking I could never support Elizabeth Warren due to this plan. It seemed absurd. But that’s because I’m a product of my times. I’ve seen large tech companies rise up from nothingness, but that innovation has stuttered. Unlike those older than me, I haven’t seen the government break up large companies to keep competition fair. That largely hasn’t been done in the last 30 years, since Microsoft in the early 90’s. I haven’t lived in a world where competition was common and innovation grew rapidly, rather than slowly filtering out from a large company.
We’ve centralized our innovation and made ourselves vulnerable to being passed by smaller global markets with more diverse problem solving. It’s hurting consumers, innovation, and small businesses. Perhaps, on some level, Warren is right. It’s time to break up these large businesses. Not all at once, not irresponsibly, but carefully, ensuring it wouldn’t cause a disruption for customers and could push innovation? That could work.
Sources:
- Mitchel Broussard, MacRumors
- Richard Blumenthal and Tim Wu, The New York Times
- Charles Duhigg, The New York Times
- Ed Hardy, Cult of Mac
- Colin Lecher, The Verge
- Chance Miller, 9to5Mac
- Nilay Patel, The Verge
- Elizabeth Warren, Medium