Warren unveils breakup plan for Big Tech firms

AFP-JIJI, Reuters

Democratic presidential hopeful Sen. Elizabeth Warren unveiled a proposal to break up Big Tech on Friday, saying firms such as Amazon, Google and Facebook hold “too much power” in society.

Warren said that as president, she would press for legislation to designate big online companies with revenues of $25 billion or more as “platform utilities” barred from owning “any participants on that platform.”

The Massachusetts senator, seeking her party’s nomination for 2020, said she would also appoint antitrust enforcers “committed to reversing illegal and anti-competitive tech mergers,” including acquisitions in recent years by Amazon, Facebook and Google.

“Today’s big tech companies have too much power — too much power over our economy, our society and our democracy,” she wrote in a blog post on Medium ahead of a New York rally where she later spoke about the plan.

“They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else.”

The proposal comes amid a growing “techlash” movement in the United States against the firms, which have grown to become the world’s most valuable, amid concerns on handling of private user data and dominance of certain sectors such as online retail and internet search, and a series of antitrust investigations in Europe.

Warren specifically said she would seek to unwind Amazon’s acquisition of the Whole Foods grocery chain and shoe retailer Zappos, Facebook’s WhatsApp and Instagram, and Google’s integration of the ad tech firm DoubleClick, “internet of things” maker Nest and mobile navigation application Waze.

“Unwinding these mergers will promote healthy competition in the market — which will put pressure on big tech companies to be more responsive to user concerns, including about privacy,” she wrote.

Warren said that as part of her proposal, Amazon Marketplace, Google’s ad exchange and Google Search would be considered platform utilities.

By doing this, she said, “small businesses would have a fair shot to sell their products on Amazon without the fear of Amazon pushing them out of business.”

Tech companies have come under fire because of their role in displacing existing businesses. Amazon has replaced many brick-and-mortar stores and has been criticized for poorly paying its warehouse workers.

Facebook has angered lawmakers for losing track of users’ data and for not doing more to stop foreign meddling in the 2016 U.S. presidential election. Google has clashed with smaller companies, like Yelp, over search placements and has raised concerns it would comply with China’s internet censorship and surveillance policies if it re-enters the search engine market there.

Congress held a series of hearings last year looking at the dominance of major tech companies.

It is rare for the government to seek to undo a consummated deal. The most famous case in recent memory is the government’s effort to break up Microsoft. The Justice Department won a preliminary victory in 2000 but was reversed on appeal. The case settled with Microsoft intact.

Warren also proposed legislation that would require tech companies like Google and Amazon that offer an online marketplace or exchange to refrain from competing on their own platform. This would, for example, forbid Amazon itself from selling on its Amazon Marketplace platform.

Warren’s plan sparked swift reaction from both sides of the issue.

“It’s not pro-consumer,” said Robert Atkinson, president of the Information Technology & Innovation Foundation, a think tank that follows the sector. Atkinson said the plan “reflects a ‘big is bad, small is beautiful’ ideology run amok. The proposal ignores the fact that many of the services big tech companies now provide free used to cost consumers money. Breaking up large internet companies just because they are large won’t help consumers.”

But Matt Stoller of the Open Markets Institute, a group focused on competition in the tech sector, said the plan is long overdue. “The @ewarren plan to undo mergers and conflicts of interest is the *moderate* approach. Keep in mind the Sherman Act is not just a civil statute but a criminal one. Monopolization is a crime,” he tweeted.

Charlotte Slaiman of the consumer group Public Knowledge welcomed the proposal. “While digital platforms like Amazon, Google and Facebook have allowed some businesses to flourish, this has granted them significant power over how other companies do business,” she said. “We’re very concerned about situations where a company has free reign to control the playing field on which they compete.”

Michael Carrier, a professor of antitrust law at Rutgers University, said the legal basis for taking on Big Tech would be shaky. “Under the antitrust laws, you can’t break up a company just because they’re big,” Carrier said, pointing out that the law requires monopolization and “exclusionary conduct.”

“Being big is not exclusionary conduct. While big tech companies could present concern, that’s not enough for an antitrust case.”