Warren’s call for breaking up Amazon,
represents a real threat to those companies, even if she doesn’t
- Her proposal threatens to put a spotlight on those companies
and their business practices, one that could expose them to
- Moreover, it represents an attempt to gain support for a
rethinking of antitrust policy, one in which regulators scrutinize
the effects of concentrated corporate power on things other than
just consumer prices.
- Amazon, Facebook, and Alphabet’s power looks benign if only
viewed from the lens of consumer prices.
- Their power looks much worse if its broader effects are taken
It’s been a long time since antitrust policy has been a major
topic of a presidential election.
Elizabeth Warren is trying change that — and it’s bad news for
Amazon, Facebook, and Google parent Alphabet.
declared Friday that if she’s elected president, one of her
will be to break up those three big-tech firms. She wants to
unwind their past mergers and split up other parts of their
business to rein in their power and increase competition.
Right now, Warren’s still
a long shot to secure the Democratic Party nomination, much
less win the 2020 election, so the tech firms aren’t in immediate
danger. But Jeff Bezos, Mark Zuckerberg, and Larry Page would be
foolish to dismiss the threat she just unleashed.
Warren is tapping into public angst about tech’s influence on
our lives and channeling it into a legal mechanism that, however
rusted it’s become over the years, has the capacity to subjugate
even the most powerful businesses.
With a two-year election cycle just getting started, the tech
industry is now officially America’s number one corporate villain
— more dangerous than Wall Street bankers or Martin Shkreli —
and the debate is now focused on real reforms centered on
legitimate antitrust policy rather than mere populist rage.
That’s bad news for Big Tech. Even if she’s not elected
president, Warren’s move has increased the chance that the rulers
of the tech universe are going to draw damaging fire, no matter who
Warren wants to shine a spotlight on the big tech companies
The tech industry has really never faced this kind of scrutiny.
Yes, certain companies in the industry have faced antitrust
actions, including Microsoft in the famous trial at the turn of the
last century. And some of those actions, including the Microsoft
trial and the AT&T breakup of the 1980s drew widespread public
But discussion over what to do about those companies’ conduct
was generally left up to the courts or federal agencies. It wasn’t
a big topic of debate in a presidential election. In 2000, for
example, George W. Bush said little about the then-ongoing
Microsoft trial, and it was an open question when he took office
how his administration would approach the case. When his Justice
Department agreed to a settlement that stopped short of breaking up
the company, the decision came as something of a surprise.
Warren’s doesn’t want antitrust policy to be ignored this time
around. Instead, she wants antitrust policy to be in the spotlight,
and she wants a public debate about how these big tech companies
should be regulated. If she succeeds, it would be one of the first
times that corporate concentration of power has been a major
election issue since the Progressive Era of the early 1900s.
Part of the danger for the tech companies is what the bright
light that Warren wants to shine on them is going to reveal about
them — and how the public is going to react to what they see.
Neither Facebook nor Microsoft looked good in lights
For Facebook, we already have a good sense of this. The social
networking company spent much of the last two years with a Klieg
light shining on it. The company’s reputation wilted under the
intense lights, which exposed its casual treatment of customers’
private data, its questionable business practices, and the way its
core product, the newsfeed, had been hijacked to spread dangerous
Amid these revelations, Facebook’s user growth has stalled in
the US and Europe, its revenue growth has slowed, and people are
using it less. It’s also facing a major fine from the Federal Trade
Commission, and the exposures have bolstered calls by critics to
impose new restrictions on its business.
A similar thing happened with the Microsoft antitrust trial two
decades ago. When the government first started scrutinizing the
software giant, it was among the most respected and loved companies
with the public at large. But the revelations from the trial about
its ruthless business practices and particularly the sheer
arrogance and disdain that then CEO Bill Gates displayed in his
testimony in the case helped sour public perceptions of the
Arguably, the reputational hit that Microsoft took from the
trial created as much of an opening for its competitors as did the
restrictions the government placed on its business as part of the
settlement that ended the case. In the wake of the trial, consumers
and businesses were much more willing to try rival services such as
Google’s search engine and, later, its suite of productivity
Meanwhile, other corporations were much more guarded about doing
business with Microsoft, not wanting to put themselves in the same
beholden position as the PC makers in the 90s, where the software
giant dictated all the terms of the relationship.
Amazon and Google could face similar trouble if Warren’s able to
focus the spotlight on them too.
Warren’s trying to fundamentally change antitrust policy
But Warren’s call represents a bigger danger for Amazon,
Facebook, and Google, because she’s trying to fundamentally change
the terms of the debate. Under the influence of conservative
economists from the University of Chicago, the federal government
in the early 1980s completely rethought how it scrutinized
Instead of viewing concentrations of corporate power in a dim
light, federal regulators generally came to view them favorably.
Rather than worrying about the effects of such power on competition
in particular markets or other potential problems of corporate
concentration, they started focusing on just one aspect: price. In
general, they only worried about enforcing antitrust laws if a
company used its market power to raise prices on consumers or was
likely to do so.
But in recent years, a growing collection of academic experts on
the left have pushing back against this focus on price. Such a
limited lens ignores the broader harms caused by concentrated
corporate power, they argue. Backed in many cases by extensive
research, they contend that curtailed competition across a broad
range of industries has
kept wages low, discouraged the formation of new companies and new
job growth, hindered innovation, and undermined democratic
To date, the debate over whether to take a broader view of
antitrust policy has largely been confined to academic circles and
policy wonks. Warren, whose proposals are built on the research and
arguments of the left-wing advocates of renewed robust antitrust
enforcement, is making a bid to take their view of competition
policy mainstream by putting it front-and-center in the
Amazon, Facebook, and Google would prefer to stick with prices
That’s something Amazon, Facebook, and Google — not to mention
other corporate giants that dominate their own markets — really
If antitrust policy continues to focus just on price, Amazon,
Facebook, and Google could easily argue that they don’t pose a
problem. Facebook and Google offer their services for free to
consumers, and Amazon is renowned for the low prices it charges on
But if regulators start scrutinizing the broader effects of
their power, and how it’s distorting their respective markets,
they’re much more likely to see the need to crack down on the
The European Union, which isn’t fixated on consumer prices, has
already found that Google illegally tried to thwart competition by
rivals and has
fined it billions of dollars. Publishers have complained for
years that Facebook and Google’s
dominance over the digital advertising business has left little
room for them to build sustainable businesses.
And retailers and goods makers have accused Amazon of
undermining their businesses. In part due to Amazon’s power over
ecommerce, they feel compelled to offer their goods on its site.
But they charge that Amazon uses information it collects about
their sales to identify their most popular products and offer
competitors that undercut them on price.
Google, Facebook, and Amazon would almost certainly rather not
have to defend such practices to regulators or before a court. But
thanks to Warren, they may soon have to.
Warren may never be president, and she may never get a chance to
put in place the policies she proposed Friday. But she’s raised the
chances that Amazon, Google, and Facebook are going to see a
comeuppance whoever takes the White House.
- Read more about Elizabeth Warren’s proposal:
Warren says she wants to break up big tech companies, including
Amazon, Google, and Facebook
Warren’s plan to break up tech giants would force Amazon to roll
back its acquisition of Whole Foods
- Warren’s plan
to fight big tech directly threatens one of Amazon’s most
Warren wants to force Google to divest its acquisitions of Waze,
Nest, and DoubleClick