Monopoly Deal: How big should Big Tech be?
Photo Courtesy: InvadingInvader via Wikimedia Commons
2023 has been the year that big tech was put on trial. Both Alphabet (Google) and Amazon are currently facing major antitrust lawsuits, while Microsoft has endured over a year of legal battles during its acquisition of Activision Blizzard.
This points to the increasing dominance such companies hold, both over their industries and over different aspects of modern life. It also points to the difficulty – and increased importance – of keeping them in check.
What are the accusations?
September 12th was the first day of the U.S. government’s trial against Google, a 10-week-process expected to be the biggest U.S. antitrust trial in a quarter-century. The prosecution claims that Google has had a monopoly on search engines since 2010, and that it now pays companies like Apple billions of dollars a year to maintain default status. Google argues that it simply provides a superior product, and that a user can easily change default settings if they wish to.
On September 26th, the U.S. Federal Trade Commission filed an antitrust lawsuit against Amazon. Their complaint accuses Amazon of forcing sellers to use its resources and delivery services, thereby increasing costs for consumers and sellers: “Amazon…exploits its monopolies in ways that enrich Amazon but harm its customers”. David Zapolsky, Amazon’s senior vice president of global public policy, has argued that it is rather FTC’s lawsuit which could harm consumers, by forcing Amazon to “make Prime [and other services] more expensive and less convenient”.
And on October 13th, Microsoft completed its acquisition of Activision Blizzard – the company behind gaming franchises such as Call of Duty. Microsoft announced its plans to buy in early 2022, for the price of around 70 billion dollars, but the deal was delayed after almost two years of inquiries and lawsuits – including FTC’s attempt to block the deal entirely. Microsoft now owns Activision Blizzard, Xbox, Minecraft, 343 Industries, and many other prominent developers, and it remains to be seen how this will affect competition with rivals Sony and Nintendo.
To what extent can/should we control big tech?
The outcome of Google’s trial is difficult to predict. On the one hand, Google handles ~90% of global searches - when Microsoft lost its own antitrust trial in 1998, arguably facilitating Google’s rise, it held 90% of the market for operating systems. On the other hand, many popular search engines exist, and it is easy to switch to a different one on an iPhone. The case against Amazon is stronger, because the company has significantly raised costs for consumers and sellers, but many still consider the platform too important to quit.
Whatever their outcome, such cases highlight the arduous process of trialling big tech - 2023 has presented one trial which has just begun, one which will soon begin, and one in which big tech emerged victorious. They also question what should happen next. Even if such lawsuits are successful, and big tech are found guilty of monopolising, what can be done? People know how to break up traditional companies, but how do you topple the modern-day tech monopolist?
Recent decades have seen two contrasting approaches. America has adopted a laissez-faire policy, counter-intuitively leaving big businesses to get bigger. Europe, led by the EU’s antitrust chief Margrethe Vestager, has adopted a strong-arm approach, imposing extensive and strict regulation. On November 1st, Europe introduced its Digital Markets Act, which aims to regulate big tech upfront rather than with retrospective antitrust cases.
But has either approach been successful? Despite the evidence of 2023’s antitrust cases, tech markets seem open to competition. Facebook is struggling to keep users engaged, and TikTok has emerged as a more attractive alternative for young people. Microsoft’s Bing - powered by advances in AI - is now challenging Google. And companies that were expected to monopolise their markets - like Uber and Netflix - have instead started to decline.
This is what you want. The aim of antitrust cases is to ensure that big tech faces meaningful competition, thereby keeping markets open and exciting, and consumer prices low. Interestingly, this is not thanks to European regulation. Rather, recent history suggests mega-corporations are brought down by failing to master major changes to their market. The best way to control big tech seems to be to not intervene, as America supposedly predicted, and let new technologies and innovation do its thing - it was the ingenuity of Bing and TikTok that led to their growth. Antitrust cases should only be utilised when there are serious issues of stunting competition.
New responsibilities
It must be remembered, however, that big tech’s reach extends far beyond the economy. It is worth questioning how to keep markets competitive, but this can no longer be the sole aim of modern trustbusters. Big tech has become so big that it has taken on new, almost state-like responsibilities.
This has been displayed on several occasions in recent weeks. Elon Musk, owner of X, joined world leaders as a key voice at the UK’s AI Summit. The EU warned TikTok, X, and Meta about the spreading of disinformation following Hamas’ attack on Israel, including doctored images and mislabelled videos. And attorneys general in 41 US states are suing Meta for knowingly endangering children and fuelling addiction to Facebook and Instagram - read this for more information.
Historically, trustbusters would not have had to think from this perspective, but the influence of big tech will only increase. This year alone, Alphabet, Amazon, Apple, Meta, and Microsoft have invested $280bn, equivalent to 9% of American business investment. And this is only the start of their owners’ lofty ambitions. After renaming Facebook as ‘Meta’ in October 2021, Mark Zuckerberg outlined his plans for the metaverse: an online platform through which “you'll be able to do almost anything you can imagine”. Similarly, Elon Musk’s decision to rebrand Twitter as ‘X’ belies his intentions to create the “everything app”: a WeChat-like platform which “does everything - sort of like Twitter, plus PayPal, plus a whole bunch of things, and all rolled into one”.
In the build-up to Google’s trial, Matt Schruers, president of the Computer & Communications Industry Association, stated that he expects it will be difficult for the US government to prove consumers have been hurt. This is key because “US antitrust law does not protect competitors from their competition. It protects the competitive process in order to protect consumers”. Big tech already dominates this world and it is clear that will only continue. Trustbusters must continue stimulating fair competition and innovation - even if that often means leaving mega-corporations alone. But big tech must also be held responsible for their increased socio-political responsibilities, protecting consumers in all senses of the word.