Meet The Women Taking On Big Tech Monopolies
“If you are a form of infrastructure, you shouldn’t be able to compete with all the businesses dependent on your infrastructure.”
Three women, 2020 Democratic hopeful Sen. Elizabeth Warren, EU Commissioner Margrethe Vestager and 30-year-old antitrust expert Lina Khan, are leading the front lines in the debate on Big Tech and data regulation.
From Facebook’s Cambridge Analytica scandal to the revelation Amazon paid zero taxes in 2018, breaches of privacy and abuses by Big Tech have raised public awareness of the need for a new regulatory framework to match the 21st-century economy.
The business model of the major tech firms is based on the monetization of user content and data. The rapid rate of technological change has outpaced societal understanding of how tech firms can exploit that data, and it is time for a public conversation on the relationship between democracy and the increasingly digitized economy.
Elizabeth Warren Takes on Monopolies
In the U.S., Warren has made the reintroduction of antitrust laws a central tenet of her presidential platform. From agribusiness to finance the Massachusetts senator has frequently criticized the consequences of market concentration, but her recently unveiled plan to tame big tech has perhaps gained the most attention of any of her anti-trust efforts.
Warren’s legislation would make it illegal for companies with more than $25 billion in annual revenue to act as owners of a platform while simultaneously competing on it. This would most directly impact top firms like Amazon, which runs the most dominant e-commerce marketplace in the world while selling its own name-brand products on its platform. Vendors have accused it of copying and undercutting competitors. Google’s ad exchange competes on Google’s platform with other ad tech companies, and its search engine uses the leverage of its ownership to deprioritize sites like Yelp, according to Warren.
Warren’s concept is that the owners of a marketplace give preferential treatment to the products they sell on it. In the words of Lina Khan, “If you are a form of infrastructure, you shouldn’t be able to compete with all the businesses dependent on your infrastructure.”
Lina Khan and Margrethe Vestager
In Europe, EU Commissioner Margrethe Vestager has brought competition cases to tech giants like Apple, Amazon and Google, punishing them with massive fines for abusing their market dominance. Vestager is in the process of deciding whether or not Amazon will be further investigated for taking advantage of sensitive information about its competitor’s products.
Both Vestager and Warren have influenced Lina Khan, a 30-year-old antitrust scholar who rose to prominence after her academic paper, Amazon’s Antitrust Paradox, went viral while she was still at Yale Law School. Khan’s work challenged the mainstream view of monopolies — that they were justified by lowering prices for consumers — by illuminating the hidden, long-term negative effects of concentrated power. In Big Tech’s case that means using predatory strategies to undermine competitors and consumer choice.
Since her paper gained traction, Khan has met with Warren, joined the House Subcommittee on Antitrust, Commercial and Administrative Law, consulted with EU officials, and begun work with the center-left think tank, the New America Institute. Barry Lynn, a senior fellow at the think tank at the time, hired Khan immediately out of law school.
But in 2017 after Lynn wrote a complimentary statement for the EU’s Margrethe Vestager’s-led €2.4 billion antitrust fine against Google, he was ousted from the think tank. Lynn alleged his firing was at the request of Eric Schmidt, former Google CEO and New America’s biggest single donor (both Schmidt and New America denied the accusation). Lynn, Khan and other antitrust experts would later start the anti-monopoly Open Markets Institute (which critics have labeled “hipster antitrust”), but the episode was illustrative of the outsized power the major tech firms hold in shaping public opinion.
“I’m interested in the economists who were actually studying power…. [T]hat’s something that gets channeled out in the contemporary version of economics,” said Khan in an interview with the Financial Times’ Rana Foroohar.
An April 3, 2019, article from The Economist, titled, “The IMF adds to a chorus of concern about competition,” corroborates Sen. Warren’s criticism of market concentration in the tech sector. “Top firms with higher markups pay a smaller share of the economic value they create to workers. And the fund warns that market power could yet put a brake on innovation, should incumbent firms get too cozy. That might happen if regulators are slow to respond to structural shifts in the economy, or too lax in policing mergers that allow incumbents to pick off potential competitors.”
Warren, Vestager and Khan Face Pushback
Critics of the Warren proposal include tech expert Ben Thompson, who says the antitrust act would have negative repercussions on innovation and convenience, like leading Apple to ship its phones without apps: “Was Apple breaking the law when they shipped the first iPhone with only first-party apps? At what point did delivering an acceptable consumer experience out-of-the-box cross the line into abusing a dominant position? This argument may make sense in theory, but it makes zero sense in reality.”
But as David Dayen of the Intercept argues Apple is primarily a hardware manufacturer, and Warren’s plan would not require it to divest completely from the App store. But the tech giant has had major antitrust issues, and regulation could even the playing field. Spotify has complained about Apple taking a 30% cut from all its revenues on the iPhone app and limiting its operations, arguing it uses its platform to boost its own music streaming service Apple Music.
Other prominent critics say Warren’s plan would turn the “internet into a sewer,” referring to tech platforms as utilities and arguing the regulation would weaken “the crown jewels of the U.S. economy,” and hurt American society in the process. While these arguments must be seriously considered, it is important to recognize that all of the aforementioned critics, including the American Enterprise Institute, the International Center for Law and Economics and the National Review, take money from Google.
People must decide what their vision of liberty is in regard to what data tech firms can store, use and what level of transparency they must provide about what they do with the data. If clear rules are not established, a select few could use their monopoly ownership of private data for unprecedented power. Sen. Warren, EU Commissioner Margrethe Vestager and Lina Khan have led the first wave of this debate, and it is time for the public to engage in the conversation of how to manage technology democratically.
In the words of Lina Khan, “If markets are leading us in directions that we, as a democratic society, decide are not compatible with our vision of liberty or democracy, it is incumbent upon the government to do something.”