Calls to break up ‘Big Tech’ are misguided


In recent weeks, Americans have heard much about the problems with “Big Tech.” National politicians from President Donald Trump to many Democrats running to replace him have been public with their disdain for big companies’ collection and dissemination of personal information, as well as data breaches and censorship.

Alphabet, the parent company of Google and YouTube, constantly contends with accusations of bias against mainstream conservative accounts for not allowing monetization, deprioritizing videos in its search, and outright banning certain videos from its platform based on vague claims that content conflicted with its policy on “hate speech.”

Facebook banned several videos from the conservative non-profit media group, PragerU last year, but was pressured to apologize and ultimately restore the content. Facebook has also come under fire for the way it leverages its users’ personal information.

From the Cambridge Analytica scandal, to the everyday creepiness of seeing ads for products viewed while browsing other sites, or even spoken about aloud, Facebook has drawn much public ire for its business practices. This recently has come to a head now that some prominent politicians are calling for “breaking up Big Tech.”

Earlier this month, lawmakers in Washington announced that they had begun oversight into Facebook, Google, Amazon, and Apple over possible anti-competitive practices.

Chair of the House Judiciary subcommittee on antitrust, David Ciciline of Rhode Island, said at a news conference that his committee will be looking into how “we get competition back in this space” over the next 18 months. He plans to call officials from the nation’s top tech firms in to testify as well as subpoena their internal documents.

If only we could describe the tech space as lacking competition. Who could call Facebook a monopoly with a straight face?

In textbook economics, monopolies are understood to be “price setters”, gouging consumers because of an absence of competition from other firms. But, in order to attract antitrust action from government regulators, a company must not only be a monopoly, but it must violate the “consumer welfare standard” by setting prices or offering products in ways that harm consumers. It is yet to be determined, and remains highly questionable, whether the big technology firms meet this standard.

Even if we broke down the obtuse term “Big Tech” into more digestible, simpler parts like “Big Social” (Facebook, Twitter) or “Big Data” (Alphabet/Google, Amazon), observers would still have a hard time deeming these cohorts as “price setters” since their services are largely free. Even companies like Apple–whose products and services have become ubiquitous for American consumers–still have to contend with competition from other hardware and software producers.

Choice is very much still alive and well in the technology market. Just look at the progression of the price and quality of electronics over the last 20 years. According to the U.S. Bureau of Labor Statistics data, TVs bought in 2019 are 96% cheaper than TVs in 2000.

Imagine if Facebook or Twitter began to charge a monthly fee for users–or even just for advertisers–on their platforms. How many would leave and never look back? There would still be half-dozen other social media networks where businesses can create an account and start posting and spreading organic content for free. Why would anyone stay with Facebook when multiple, cheap, competitive alternatives exist?

Tech Pro Tip: Users of Facebook’s mobile application may limit the pseudo-deja vu product placement experiences stemming from private conversation by disabling the app’s microphone permissions under settings.

The question for politicians and regulators is: How can a firm be anti-competitive when its products are free to use? Is this a good-faith effort to level the playing field in the fast-growing technology space, or is it yet another virtue-signaling mission by politicians capitalizing on public attention to an issue?

Although some well-intentioned “leaders” may think that breaking up bigger companies will allow for smaller companies to compete, it could end up having a chilling effect on innovation as potential business builders watch how regulators treat their competitors.

This may seem overly simplistic, but tech policy can move us in one of two ways. It can either leave the door open to innovation, or barricade it closed.


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