Democratic presidential candidate and senator Elizabeth Warren wants to “break up” growing tech monopolies owned by Amazon, Google and Facebook because they stifle innovation and hurt small businesses.
The Massachusetts senator on Friday published “Here’s How We Can Break Up Big Tech,” a plan to curtail tech giants’ digital dominance.
Her plan, posted on the online blog site Medium, would require regulators to break up several massive mergers including Facebook’s ownership of Instagram, as well as Amazon’s $13.7 billion deal two years ago to acquire grocer Whole Foods.
“Today’s big tech companies have too much power – too much power over our economy, our society and our democracy,” Warren said in the essay outlining her plan. “They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. … That’s why my Administration will make big, structural changes to the tech sector to promote more competition – including breaking up Amazon, Facebook and Google.”
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Big tech companies have snapped up would-be competitors and regulators have “waved them through,” she said. For instance, Facebook acquired social network Instagram and messaging tech company WhatsApp, in 2012 and 2014, respectively, and Google acquired advertising company DoubleClick in 2007 and mapping and traffic app Waze in 2013.
And tech giants use their platforms to limit competition, Warren says. Since the Seattle-headquartered online retailer is both a platform and a seller, Amazon “crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version,” she said.
Warren’s plan was quickly met with criticism. “The next wave of technological innovations will likely require enormous economies of scale to serve consumers. In the meantime, there are no barriers to entry for the next killer app or sector-disrupting entrepreneur,” said Jessica Melugin, associate director of the center for technology and innovation at the Competitive Enterprise Institute, a free-market advocacy group.
“The free market is working to lower prices, create new products, and leave consumers better off; politicians need to stay out of its way,” Melugin said in a statement.
Big tech companies provide many free services and should not be penalized “for earning market share and operating at scale—yet that is exactly what the Warren proposal would do,” said Rob Atkinson, president of the Information Technology & Innovation Foundation, a non-profit Washington, D.C. think tank, in a statement.
But supporters agreed with Warren that legislation is needed to ensure “a real opportunity for new, innovative competitors to succeed,” said Charlotte Slaiman, competition policy counsel at consumer advocacy group Public Knowledge. “We should proactively promote competition through prohibitions on discrimination, interoperability requirements, and, in some cases, structural separation like Sen. Warren’s plan may be warranted.”
Warren argues the U.S. faces challenges similar to Gilded Age reformers who passed antitrust laws to break up oil, steel, financial and railroad trusts, and eventually the dissolution of the Bell telephone system. “Reformers recognized that ownership of a network and participating on the network caused a conflict of interest,” she said.
Warren says her administration would recommend the passage of legislation requiring tech companies with annual global revenue of $25 billion or more be designated as “Platform Utilities” and not be allowed to have “any participant on that platform.”
Among the “anti-competitive” mergers Warren would ask regulators to break up are Whole Foods and Zappos from Amazon; WhatsApp and Instagram from Facebook; and Waze, Nest and DoubleClick from Google.
The senator’s proposal comes just two days after Facebook CEO Mark Zuckerberg proclaimed plans for a “privacy-focused” future for its WhatsApp, Messenger and Instagram apps. The social network has faced numerous privacy-invading incidents over the past few years.
Warren maintains that here anti-monopoly measures will not limit consumers’ options. “You’ll still be able to go on Google and search like you do today. You’ll still be able to go on Amazon and find 30 different coffee machines that you can get delivered to your house in two days. You’ll still be able to go on Facebook and see how your old friend from school is doing,” Warren said.
With such reforms, “small businesses would have a fair shot to sell their products on Amazon without the fear of Amazon pushing them out of business,” she said. “Google couldn’t smother competitors by demoting their products on Google Search. Facebook would face real pressure from Instagram and WhatsApp to improve the user experience and protect our privacy. Tech entrepreneurs would have a fighting chance to compete against the tech giants.”
Consumers also need additional privacy protections “over how their personal information is collected, shared, and sold,” she said.
And magazines, newspapers, musicians and other content creators need measures, Warren said, to “keep more of the value their content generates, rather than seeing it scooped up by companies like Google and Facebook.”
Law enforcement and intelligence agencies must “ensure that Russia – or any other foreign power – can’t use Facebook or any other form of social media to influence our elections,” she said.
Her plan, Warren says, “will allow existing big tech companies to keep offering customer-friendly services, while promoting competition, stimulating innovation in the tech sector, and ensuring that America continues to lead the world in producing cutting-edge tech companies.”
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Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.