- Big Tech shouldn’t be broken up.
- Antitrust law can’t be applied to Big Tech companies, as the times have changed.
- There’s no fair tax that can help to control Big Tech.
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Let us ask ourselves one simple question. Why is there any thought at all that we should break up with Big Tech? Some analysts, experts, industry by-passers and even common people say Big Tech should be broken up because they collect our data. There’s too much data that they use to their advantage.
But if you think about it, it’s not a problem. Yes, it may be unpleasant for some people, but it is part of the world we live in. Companies like Google, Facebook, Twitter, and many others use our data to make profits, but it’s a feature of our times. Just as in the Middle Ages, feudal lords used peasants, and in the industrial age, capitalists used workers in their manufacturing plants. Big Tech is just a natural result of the evolution of economics, society, and technology.
In essence, those who propose to break up Big Tech are proposing to stop history. Literally. Turn back time and start with a clean slate. But it doesn’t work, because Big Tech didn’t emerge because of anyone’s evil efforts, these companies were able to accumulate resources and influence in an extremely competitive market where almost anyone could win and become a leader.
Let’s take Facebook as an example. I don’t really like this company, I don’t like its services and I don’t enjoy any of its products (maybe just Instagram, heh). But why did Facebook win the competition, because there were other competitors in the field. You can talk as much as you want about Big Tech limiting competition, but the example of Telegram demonstrates that even Facebook’s WhatsApp cannot directly compete with promising startups.
Or we can take Google. The company has a carload and a wagon of unsuccessful projects, when the company lost the competition to much smaller competitors.
Those who propose to break up with Big Tech usually point to antitrust laws to be applied to Silicon Valley companies. In fact, from an economic point of view, this is absurd. Antitrust laws were developed in the era of the industrial economy. The best example is of course Standard Oil. The company simply dumped prices and there was nothing to stop it. Whether you’re 10 times a genius entrepreneur, manager, or visionary, but in the industrial era, you need a lot of capital to enter the competition. And even more to not lose.
In fact, the trusts in the industrial age can grow as much as they want and there will be nothing to stop them because they can just buy competitors and dump prices.
This was a time of high return on investment when capitalists put their money into the growth of classic industries.
And at that time Sherman Act and everything that followed it was very appropriate, we can even confidently say that it was the turning point when the world and the economy as we know it today emerged.
The post-industrial era is a completely different conversation. Today the return on investment is declining all over the world and we see it in the “financialization of the economy,” with more and more money being invested in the stock markets. In this situation, the venture capital business is growing as well. Today almost anyone who has an idea can have a chance to put it into practice. Yes, maybe then he will get an offer from Big Tech and sell his business. But there is no way Big Tech can dump prices just to buy a competitor for their cash.
And that is a tangible difference.
Maybe a tax that could fix Big Tech?
Again, no. Taxes should be fair and should not be used as one of the measures to limit the development of certain companies. That is, Big Tech giants, like Facebook, should pay fair taxes. But it should not be discriminatory taxes, which would be Big Tech just to be Big. We have to look at it a little differently, I think.
Big Tech from public good point of view
The first thing we must do is look at the problem from the perspective of public welfare. Let’s go back to the days when the first antitrust laws were passed, the first of which was the Sherman Act.
Then we could see tangible damage to the public welfare: price dumping, monopolization of the economy, then a shift to monopoly profits (monopolist markups), and wage cuts.
Do we see this now? I don’t think so. But what problems can we see now?
Maybe Big Tech holding our data? Maybe, but you have to go live in the woods so you don’t have to face it. Unfortunately or fortunately (depending on how you take it) it’s just part of modern life. Just as 100 years ago people couldn’t imagine that most people would live in cities, the next generations will take it as a given. I just don’t see the societal damage or the damage to the individual.
The only threat to Big Tech is control of information. Google can decide what you see in a search, social media can control your feed.
However, I think this problem can be solved with a simple effort, without drastic action. To do so, all we need to do is make Big Tech’s authority to regulate and filter content clear and make it transparent to all people.