Breaking Up with Big Tech: US presidential hopeful announces plans for breakup

October 23, 2019

2 min read

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What's going on here?

In March, US Democratic Presidential hopeful, Senator Elizabeth Warren, proposed her two-pronged plan to break up Big Tech companies: unwind pre-existing mergers deemed anticompetitive, and spin out (separate into a new independent corporation)  services of large platforms that are designated as “Platform Utilities”; services with over US $25bn in revenue.

What does this mean?

Warren accused companies like Google, Apple, Amazon, Facebook, and Microsoft, of placing their financial interests above Americans. She argued that these companies are too big, stifling innovation and smothering their competition. This sentiment is being echoed by Democrats and Republicans alike, including Bernie Sanders, Ted Cruz, and Nancy Pelosi.

In leaked recordings, Mark Zuckerberg promised to sue the US government if it tried to force Facebook to sell WhatsApp and Instagram. Like other critics, Zuckerberg argues that the US government should focus on better regulatory framework and properly enforcing it.

What's the big picture effect?

Even before the US Presidential Election starts, we can expect an increase in lobbying from the tech industry as possible antitrust investigations by the Federal Trade Commission (FTC) and Justice Department loom (antitrust law is essentially the term used in the US for com[petition law). Prepped by the fines received from the European Commission, they have already begun assembling teams of lawyers, including those joining from the FTC.

If Zuckerberg follows through with his threat of legal challenge against the US government, the stakes would be extremely high for both sides. With the possibility that it could set a dangerous precedent if the US government lost and open the door for more flouting of antitrust laws

Breaking up existing mergers and spinning off services may sound simple, but in reality, this may be far less feasible and difficult to find legal justification for these measures than expected. US antitrust law still relies on Acts passed over 100 years ago, which focuses on consumer pricing, making them less applicable to the current players of the market, who mostly offer their services for free. While it is difficult to measure anti-competitiveness based on innovation or competition, perhaps politicians should really be focusing on regulating these tech companies in relation to data privacy and customer protection, as well as the rise and spread of misinformation on the internet.

Report written by Hannah-Mei Grisley

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