Big Tech's Antitrust Problem

August 16, 2021

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If you're around my age, charting the dominance of Facebook starts when you graduated from high school (and MySpace) and got into the habit of uploading dorky dorm pics from your digital camera to share with your friends in other college towns. Nowadays, you might use Facebook, but perhaps only to list furniture in the site's Marketplace section or upload pictures from your weekend away to Facebook’s popular sister site, Instagram. As you navigate new apps, websites, and publishers online, you probably use your Facebook (or Google) to log in at each.

Facebook as well as Google, Apple, and Amazon (aka GAFA, Big Tech, or The Four) are so ubiquitous in our lives today that it’s almost comical to remember their origins as the college social network or the used bookseller. Their ubiquity has earned them roughly $7TN in combined monetary power and a reputation for being anti-competitive, Big Brother-esque, super surveillant, and all-(too-)powerful.

Here's a summary of the latest opinions regarding whether these companies should stay intact or be broken up.

First, history

Antitrust laws go back to President Teddy Roosevelt’s Sherman Act of 1890, during the era of Shipping Barons & Oil Tycoons. The law was meant to stop competitors from making secret arrangements that would limit competition–think collusion and price-fixing–in the ultimate interest of the consumer. Then came the Clayton Act in 1914, after companies figured out they could merge to dominate the landscape. The Federal Trade Commission (FTC) was created to keep an eye out for these unfair business practices.

Tough Cookies

With a long list of acquisitions under GAFA’s belts, it's not hard to see how these laws might apply to them. So far, however, lawsuits stacked against them haven’t cracked them. According to a recent opinion piece written by Joel Thayer, this reality might be due to judges' interpretations of the laws meant to protect “consumer welfare” through pricing. These interpretations might be leaving out the more nebulous cost associated with "free" offerings, as is the case with social media. What consumers aren’t paying for in fees, they are exchanging for increasing amounts of data. Rather than introduce new antitrust laws, Thayer argues we need to consider whether these products offer fair value for the monetary benefit they earn the owners through their ever-increasing data scraping.

Everyone’s a Critic

For Big Tech critics in positions of political power, there is no time like the present to introduce legislation that would reshape how lawsuits affect the Big 4. The Biden administration is prioritizing the issue, calling capitalism without competition exploitation. Biden recently signed a sweeping executive order empowering the FTC to break up mergers and encouraging the FCC to restore net neutrality.

Bipartisan factions of the House and Senate are introducing legislation as well. Last week, Sens. Richard Blumenthal (Dem), Amy Klobuchar (Dem) & Marsha Blackburn (Rep) introduced The Open App Markets Act in the Senate, designed to regulate app stores. Klobuchar is working on other legislation specifically meant to rein in the power of technology giants.

In tech, there’s the Coalition for App Fairness, whose members include lawsuit instigators Epic Games and Spotify, joining forces with legislators to share their side of the story in GAFA’s supposedly anti-competitive landscape. Even members of the reigning 4 have it out for each other, with Facebook and Apple continuously criticizing one another’s privacy measures.

What happens next for these giants is still a work in progress. Stay tuned for more insights.