'Too much power': US Senator takes aim at Big Tech firms
Standard Oil was one of the largest companies the world has ever known. Co-founded by tycoon John D Rockefeller in 1870, it grew in tandem with the rise of the motor car, and by the second decade of the 20th century, its dominance looked unshakable.
But then, in 1911, Standard Oil was no more. In a landmark ruling by the US Supreme Court, the corporation was deemed to be a monopoly. It was broken up into multiple companies, which came to be known as the ‘Seven Sisters’, and many of today’s big-name brands – including Texaco and Esso – can trace their origins to that break-up.
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US presidential hopeful Elizabeth Warren cited the example of Standard Oil when she talked about a need to end the monopoly of some of the world’s biggest companies. In a move that has caused reverberations in Silicon Valley and beyond, the Democrat senator is calling for drastic change and an end to the dominance of the tech giants who have only come into being within the past 25 years.
“Facebook, Amazon and Google have vast power over our economy and democracy,” she tweeted last weekend. “Time to break up these companies so they don’t have so much power over everyone else.”
The hashtag she chose, #breakupbigtech, mirrored the views of many tech-watchers around the globe.
Warren, who is considered to be one of the more progressive thinkers of her generation, outlined in detail on Medium – the online publishing platform – about how such a break-up could happen and why it is so urgently needed. “Today’s Big Tech companies have too much power – too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.
“I want a government that makes sure everybody – even the biggest and most powerful companies in America -plays by the rules. And I want to make sure that the next generation of great American tech companies can flourish. To do that, we need to stop this generation of Big Tech companies from throwing around their political power to shape the rules in their favour and throwing around their economic power to snuff out or buy up every potential competitor.”
Warren’s argument resonates strongly with Daragh O Brien, founder of Castlebridge, an Irish company specialising in information trust. “I was pleasantly unsurprised when she said that, because she’s echoing what European Commission has been saying,” he says. “These tech companies are, effectively, monopolies with a huge impact on smaller business and competitors trying to enter the market. Right now, they tend to be dependent on these big conglomerates to build a competing product.
“The big issue is the level of invasiveness, the tracking, the gathering of information of individuals. And that arises because of the interconnectedness that exist between the various arms of these businesses.”
He is especially concerned with the growth of Facebook. “Mark Zuckerberg [Facebook founder] has come out to say that he wants to integrate WhatsApp and Facebook Messenger, which is the very thing he was told he could not do by the European Union, but he’s announced that he’s going to go ahead and do it anyway.
“The issue there is Facebook would have access to all the meta data, and what that means is all the information about who you communicate with, how often, how frequently – not the content – but the strength of connection in your network. And that’s incredibly useful to them for advertising.”
O Brien says the business model of the tech giants is “leveraging a dominance in one area to generate cash flows and income in another area” and argues that, from an EU perspective, it’s a “classic definition of an abusive monopoly”.
He believes now is the time to break up the likes of Facebook and Google, before they become even bigger and yet more entrenched in everyday life. “We are at a point now where it would be possible to break apart or to prevent the merger of different aspects of these companies, such as taking the advertising business of Facebook and making it a completely separate entity to the social, communication and community aspect of Facebook.
“In three to five years time, I don’t think it will be possible. There’s a very narrow window here. I’m not against technology. I don’t want to appear to be a Luddite – the problem is the underlying business model. That business model has grown to a huge degree by becoming increasingly anti-competitive.”
Digital marketing consultant and trainer Damien Mulley is sceptical about #breakupbigtech. He believes fit-for-purpose regulation is what is required and says the critical problem at present is that regulators are playing catch-up. “I think the problem is these tech companies are unregulated and they’re way ahead of the regulators that we do have.
“If you look at Facebook, the data protection commissioner here has hired way more staff just to deal with Facebook and all the issues around their data. The had a year-long investigation into the privacy settings of Facebook, but nothing has changed really. Facebook has gotten bigger and their attitude to privacy hasn’t changed.”
He believes it would be exceptionally difficult to split up Facebook, which besides the titular social media platform, is also owner of Instagram and WhatsApp, and wonders if such a move would have much impact on Facebook’s stance on privacy. “I don’t think it would slow the growth of the existing Facebook or change their attitude to privacy or anything like that.
“What we need to see is proper regulation and Facebook already has the know-how to self-regulate as it sees fit,” he adds, citing the experience of Elizabeth Warren, this week. Comments she had posted on Facebook about #breakupbigtech were removed by the social media giant. It later reinstated them, saying it welcomed “robust debate”.
Her post immediately got suspended thanks to Facebook’s internal triggers,” Mulley says. “They’ve got the know-how to regulate what goes up already, but they don’t want to do that, because even if Nazi stuff goes up there, it will attract comments and those comments can be monetised. They don’t want to regulate because it will cost them money.”
Mulley believes Amazon may be easier to break up. “It has so many companies that people just don’t realise [the extent of its interests].
“They own companies that you might think they’d be in completion with – such as Abe Books, the second-hand books website that’s the biggest in the world – and they’re able to crush smaller companies like diapers.com, who they had tried to buy and then undercut in price until they got the firm for a knock-down price.”
He argues that the conversation needs to focus on why companies like Amazon become so enormous. “It’s not just about crushing the opposition and taking over hundreds of companies,” he says, “it’s asking what sort of wages they’re paying their warehouse staff and what conditions are like for them.”
Last year, it was reported that some staff were not taking toilet breaks for fear that they would lose their jobs.
Meanwhile, Daragh O Brien is hopeful that the example of Standard Oil – and the break-up of steel and rail industries in the early 20th century – will lead to a Big Tech shake-up. “Ultimately, despite appearances at the moment, America is still a democracy,” he says. “We’ve been here before, where large industries have been broken up. EU and America are not that far apart when it comes to the approach to the tech giants. It needs to happen.”
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