Washington DC and many gadflies in the tech industry live in a make-believe world when it comes to big tech companies.
In this fantasy world, the tech industry is completely dominated by four big companies: Alphabet (the holding company of Google), Amazon, Apple and Facebook. Some people have also started to include Microsoft in the mix, given that they’re the second most valuable company in the world – and big is bad, from that perspective.
These companies have stifled innovation, reduced opportunity, hurt consumers and hurt society. The only way to limit their harm is to expand the definition of antitrust to suit the specific circumstances of these companies, then use these new antitrust violations to impose fines and behavioral remedies, and to unwind acquisitions. past. To that end, a congressional subcommittee last week pushed six separate tech antitrust bills through the markup, paving the way for one or more of them to become law.
This week’s events should offer a cold splash of reality to defenders from this perspective.
On Monday, a district judge dismissed antitrust complaints that the FTC and 48 state attorneys general had filed against Facebook. U.S. District Judge James Boasberg, in a notice mingled with overwhelming sarcasm, didn’t just dismiss the FTC’s complaint about a technicality or rule of law – it undermined the cornerstone of the argument by ruling that the FTC did not prove that Facebook had a monopoly or market power.
“The FTC complaint says next to nothing concrete on the key question of Facebook’s real and current power in a properly defined antitrust product market,” the file said. “It’s almost as if the agency expects the court to simply wink at the conventional wisdom that Facebook is a monopoly.”
Indeed.
On Wednesday, the tech industry saw five companies debuting on public stock markets. One of them, Chinese ride-sharing giant Didi, is worth nearly $ 70 billion. Two others, Taboola and Integral Ad Science, are competing in the online advertising industry, one of the markets reportedly ruined by Alphabet (in particular) and Facebook.
More generally, this year has seen the most dynamic IPO market in years, and investors continue to accumulate in start-ups at an all-time high.
It doesn’t look like a wasteland of stifled innovations and shattered dreams.
Meanwhile, the general public does not see technological power as a particularly pressing issue. In one investigation funded by a tech industry group, 44% of respondents ranked tech industry regulations as the lowest priority on a list of five options, behind the economy, public health, climate change and infrastructure. Yes, 53% of those polled thought that legislation was a good idea. But that doesn’t mean the public wants Congress and the courts to point the antitrust canon at these giants.
As I wrote four years ago, antitrust is the wrong approach here.
None of these companies have a monopoly in relevant markets defined in any meaningful way – you have to really stretch and tighten market definitions so that their dominance is clearly visible. The real state of the tech industry is an all-out trade war between the Big Five, an ever-changing landscape of rivalry and gossip – think of the European Great Powers before WWI – with many well-funded competitors of all sizes. waiting to seize any opportunity and fill any loophole they leave open.
For example:
- Google dominates search and Facebook is by far the biggest social media company. But the main source of their income is online advertising, and they vie hard for every dollar of online advertising available, with Amazon quickly coming behind. And yet, there’s still enough space for TikTok, Twitter, Snap, and a dozen smaller ad tech competitors to build long-lasting and successful ad-supported businesses.
- Amazon, Microsoft and Google are locked in a three-way war for supremacy in cloud computing infrastructure. And yet, there are dozens of companies providing successful cloud services on or alongside these platforms, including Snowflake, which debuted last year and is now worth over $ 70 billion, and Zoom. , which went public in 2019, and is worth almost $ 115. billion.
To be perfectly clear: yes, it is in the public interest to more strictly regulate these tech giants.
For example, Google’s Facebook and YouTube wield enormous influence over public discourse and politics by allowing disinformation to spread almost unchecked.
Amazon and Apple control extremely valuable markets that touch hundreds of millions of people, and can use that control to pit suppliers against each other and extract arguably onerous fees.
Union advocates allege Amazon illegally interfered in a recent attempt to organize in Alabama, and many workers complained about working conditions in warehouses and delivery vehicles.
All companies have used acquisitions to enter adjacent markets and, arguably, to stifle potential competitors before they get too big – a tactic also used by companies outside of the Big Five, like Oracle in recent years and Salesforce more recently.
Many of their founders are now 100 billionaires, a prime example of the rampant income inequality that many progressives say needs to be brought under control.
But all of these activities can be addressed with targeted regulations or stricter enforcement of existing laws. Antitrust is a brutal instrument intended to remedy the major market distortions created by genuine monopolies. Being tall, in and of itself, is not illegal. Applying antitrust law to these companies is misguided, flawed, and will not have the desired effect of significantly restricting their power.
But hey, it’s great for avocados.
