Author: Kevin Roose / Source: New York Times
Gabriela Bhaskar for The New York Times
AUSTIN, Tex. — Among the techies who attended the annual South by Southwest Interactive conference the past few days, the hottest topic of conversation — besides the swarms of drunken idiots careening around Austin on rented electric scooters — was Senator Elizabeth Warren’s ground-shaking proposal to break up large tech companies like Amazon, Google and Facebook.
In her proposal, which she released on the eve of the conference, Ms. Warren argued that these companies have abused their power and harmed competition in two big ways.
The first is by offering their own products on platforms they control: Amazon giving preferential treatment to its house brands, or Apple promoting its own apps inside the iOS App Store. Ms. Warren, a Massachusetts Democrat and presidential candidate, argues that the companies should be required to do one or the other — sell their own goods or run a third-party marketplace — but not both.
“You can be an umpire or you can own teams,” she said. “But you can’t be an umpire and own one of the teams that’s in the game.”
Ms. Warren also argues that by acquiring potential competitors, as in Facebook’s acquisitions of Instagram and WhatsApp, large tech companies have made it harder for smaller start-ups to compete on fair terms. She proposes appointing regulators who would undo such mergers, and break up the conglomerates.
Regulating big tech is quickly becoming a central theme of the 2020 presidential race. Senator Amy Klobuchar of Minnesota, Senator Bernie Sanders of Vermont and others have also talked about the need to rein in the tech giants. And Ms. Warren has demonstrated more technology literacy than most elected officials.
But many of the tech-industry insiders I spoke with in Austin, including some who agree with Ms. Warren that the big companies are too powerful, cautioned that some of the details in her proposal were too vague, and could backfire if put into effect as written.
Ms. Warren’s plan is a bold first stab at reform, and some of her proposals make a lot of sense. But I’d offer a few edits.
Apply specific fixes to specific problems. One shortcoming in Ms. Warren’s plan — and it’s an understandable one, given that this is a campaign proposal and not a final set of rules — is that it proposes broad solutions to narrow problems.
Lawmakers don’t typically craft regulations for individual companies. That’s for good reason: A law that specifically targeted Amazon, and not its competitors, would be seen as creating an unfair double standard.
Instead, Ms. Warren’s proposal targets technology companies with more than $25 billion in annual revenue that operate third-party marketplaces — a group that includes Apple, Amazon, Facebook and Google — and proposes a set of rules that apply to all of them, as well as any companies that meet the threshold in the future. (Microsoft, which makes more than $25 billion in annual revenue and has a third-party marketplace in the form of the Windows app store, was somehow spared.)
The problem with applying a one-size-fits-four model to tech, as the industry analyst Ben Thompson has written, is that the large tech companies have different business models that pose different anti-competitive risks. The stranglehold that Google and Facebook have on the digital advertising market is different from the way Amazon muscles out e-commerce brands, which is different from the way Apple uses its App Store to force burdensome terms on developers.
The possibility of unintended consequences means that tailoring regulations to address each of these problems is important. A law that banned Amazon from competing with third-party sellers on its platform could also cripple Chromebook laptops, or prevent iPhone users…
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