Presidential hopeful Elizabeth Warren has a new plan to break up big tech companies. The proposal entails appointing a bunch of regulators to undo mergers that her administration would deem anti-competitive. Warren's plan would classify any company that runs a marketplace and makes more than $25 billion a year as a "platform utility" and prohibit them from selling their own products.
Considering the prevalent knee-jerk loathing of big tech and capitalism in general, it's likely to be a popular idea. Many conservatives, angered at social media platforms, will also find the notion of breaking up these companies agreeable. But there are number of good economic and idealistic reasons to oppose Warren's plan.
For starters, Warren's plan wouldn't only strip the incentive for big companies to invest in growth and innovation; it would inhibit small-business innovation, as well. It's true that big tech frequently swallows enterprises to eliminate competition. Yet many times smaller tech firms don't have access to capital that allows them to bring big ideas to fruition, or they simply can't take the risk. Big corporations can do both.
Does anyone believe a gaggle of technocratic political appointees are going to do a better job of allocating investments?
"Twenty-five years ago," Warren writes, "Facebook, Google, and Amazon didn't exist. Now they are among the most valuable and well-known companies in the world. It's a great story—but also one that highlights why the government must break up monopolies and promote competitive markets."
The fact that Facebook, Google, and Amazon didn't even exist 25 years ago tells us the exact opposite. It highlights how quickly innovative ideas can transform the marketplace in an era of relative deregulation. I'd tell you to ask the executives at Woolworth's or Blockbuster—and soon AOL, MySpace, and Sears—but there aren't any.
Apple or Amazon were early adapters of the market's new realities. Now, some of their businesses are forced to compete with other giants like Walmart or Samsung. This has been beneficial for consumers. Now, if Twitter and Facebook want to stay on top, they probably should stop antagonizing half of their marketplace. Then again, in 25 years, it's quite likely that a bunch of new platforms will overtake both, no matter what they do.
That hasn't stopped Warren from acting as if tech companies like Google are the new Standard Oil. "I want a government that makes sure everybody—even the biggest and most powerful companies in America—plays by the rules," Warren claims. This misleading turn of phrase has become standard on the left, which often acts as if companies are breaking the law or using "loopholes" when they fail to adhere to the imaginary regulations. Tech companies aren't breaking any rules by ignoring Warren's fictitious strictures. We already have a place to adjudicate the usefulness of mergers, and it's called the Justice Department. They already do a terrible job without any more help. And if the DOJ is susceptible to partisan pressure—Democrats are now arguing that Trump ordered it to block the Time Warner/AT&T merger—surely a second regulatory body based on capricious progressive concepts of the common good would likewise be ripe for abuse.
A number of voters, regrettably, seem to believe that increasing regulatory oversight helps alleviate the destructive relationship between government and business. Yet, by giving politically motivated regulators expansive powers to dictate how and when companies can grow, Warren would not only imbue government with more power to pick winners and losers, she would further incentivize CEOs to placate government officials and politicians rather than do what's best for their companies and consumers. It would be a lot more productive if we left markets to compete and instead broke up government power.
"Curious why I think FB has too much power?" Warren recently asked on Twitter after Facebook took down some of her ads. "Let's start with their ability to shut down a debate over whether FB has too much power. Thanks for restoring my posts. But I want a social media marketplace that isn't dominated by a single censor."
A person doesn't need to be exceptionally perceptive to notice that Warren's grievance regarding a "single censor" shutting down debate on social media is weakened by the fact that she went to a competing social media platform to perpetuate the debate. Nor did it take much work to find out that virtually every major news site had thoroughly covered her plan to break up Big Tech.
Her own tweet debunks the notion that a sole social media site can dominate news coverage or a national debate. Taking Instagram away from Facebook would do nothing to induce the social media giant to embrace truly open debate. However, forcing a private entity to run ads that call for its own destruction is an unambiguous attack on free expression.
In the end, Facebook contends that they removed Warren's ads because they violated company rules against use of its corporate logo. "In the interest of allowing robust debate, we are restoring the ads," the company explained. That makes the tech giant a far more robust space for free expression than your average news channel. And as sure as state intervention into TV news "fairness" would backfire so, too, will opening the door to big tech intervention.
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