Can the Government Break Up Big Tech? Should It?

Ever since the Cambridge Analytica scandal publicly exposed the data privacy abuse practices of social media giant Facebook, that company as well as other tech giants have been under increasing scrutiny due to the tremendous power these companies wield over our political, social and economic spheres. The public is now demanding transparency and accountability concerning the data harvesting practices of the tech companies.

Yet, how can the government break up these tech Goliaths? Any successful attempt at curtailing or breaking up the tech companies would depend on a number of factors.

Political Factors

No dissolution of big tech is possible unless the political will to battle some of the world’s biggest corporations exists. Is there any bipartisan support for reigning in the power of the tech companies? Surprisingly, there are calls for regulation from both sides of the aisle. It is a rare occurrence in Washington when both political parties agree on an issue of major importance.

The accord between the two parties on implementing regulatory or legal measures should worry the social media companies because there will be a united front against them. This is perhaps one of the reasons that Facebook is ramping up its public relations and legal teams in a manner not seen in its 15-year history.

Though there is general agreement that some form of regulation of the tech companies is necessary, there are differences not only between the parties, but between members within each party, as to the most meaningful way to insure these companies don’t eliminate competition or abuse their dominant market power.

Some Republican politicians don’t want to interfere in the companies operations, for fear that they will hamper the technological lead or edge the American companies enjoy.

Other Republicans, such as Missouri Senator Josh Hawley, one of the most vocal critics of Facebook, want to see more comprehensive restrictions on the ability of companies to collect and then sell customers private data. Hawley has suggested the idea of a “don’t call list,” similar to protections currently offered to eliminate unwanted marketing calls.

Should any such regulatory measure be enacted, it would cripple the lucrative business models of both Facebook and Google.

Democrats, especially those running for president have pledged to break up the large tech companies ,because of the undue power they wield over the economy as well as consumers.

Regardless of the differences between the parties, the areas of common interest are sufficient to enact some type of effective regulatory provisions.

Regulations

For the past decade, the tech companies have operated in an environment of complete and total laissez-faire. Their business practices were conducted in a zero regulatory environment.

This lack of scrutiny undoubtedly is what led to the massive data harvesting scandals that have occurred at Facebook and other companies such as Google. Over the past 10 years regulators were asleep at the helm while the large tech companies devised surreptitious ways to collect and sell consumers’ private data without their knowledge or consent.

Indeed, many of the tech companies highly lucrative business models rely on such techniques. Facebook became a $300 billion corporation by using its customers private data for targeted ads. The third parties to whom Facebook sold the information were never disclosed to users and in many cases was never authorized.

Any meaningful regulatory effort to diminish the power of the tech companies or force disclosure and mandatory transparency, would need to address the woeful lack of meaningful disclosure that exists currently.

In the absence of a anti-trust action, requiring comprehensive disclosure to users about the manner in which they collect, transfer and sell their private data would be highly effective in striking at the heart of tech companies ability to freely transfer its user’s data.

An effective regulatory regime that would need to address the current public outcry about tech companies data privacy practices would include stringent disclosure regulations. Specific provisions could require tech companies to disclose: how it uses customers data; identification of those to whom that data is transferred; how and that data cannot be sold without the user’s permission.

In the absence of an anti-trust action, enacting regulations that would impair the tech companies’ business models for harvesting and manipulating private data is the most viable solution for circumscribing their inordinate power.

Anti-trust

The only other viable solution for guarding against the unbridled power exerted by tech companies would be to break up the companies. The anti-trust laws haven’t kept pace with the unique anti-competitive business practices employed by social media companies in a surveillance capitalist economy.

The anti-trust laws need to be revised to address the unique unfair trade practice problems presented by dominant tech companies. Anti-trust regulations must now consider other factors besides monopolistic pricing as a measure of consumer harm.

The traditional measure of whether a company engages in monopolistic practices is that its operations are harmful to consumers. The dominant factor or element that has been a requirement for a finding of unfair trade practices under existing anti-trust law is that some type of consumer harm must be established and that has traditionally meant higher prices for the consumer.

This is precisely one of the reasons the Department of Justice settled its anti-trust case against Microsoft. Even though it had the dominant operating system at the time, the company was able to establish that consumers did had genuine choices and that Microsoft’s business practices didn’t lead to artificially anti-competitive higher prices.

It is important to note that even though Microsoft remained intact it was forced to change some of its business practices, changes which helped other new tech companies spawn. This aspect of the settlement could provide a template for restricting the power of companies such as Facebook, Google and Amazon.

Need to revise anti-trust law

Creative legal theories offered by some attorneys seek to apply traditional unfair trade practice component to the unique business structures of the 21st century tech leviathans.

Anti-monopoly lawyer Lina Khan argues that the Amazon store has become a de facto utility infrastructure that the company was subverting for its own benefit. This legal theory holds that Amazon’s online store gives too much advantage to Amazon the manufacturer. In light of recent acquisitions such as Whole Foods and the power of Prime membership, Amazon the store keeps getting bigger.

Columbia Law professor Tim Wu expresses the sentiment of many anti-trust lawyers and regulators when he says that anti-trust law can be relevant in the 21st century, only if it acknowledges that “big tech is ubiquitous, seems to know too much about us, and seems to have too much power over what we see, hear, do and even feel. It has reignited debates over who really rules, when the decisions of just a few people have great influence over everyone.”

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