Written by Sanjana Gupta
The calls to break up big tech companies like Facebook, Apple, Amazon and Google have become increasingly louder in the wake of the multiple scandals and allegations against Facebook and the realization of the amount of personal data that these companies collect. This seems to be the one issue that both sides of the political spectrum can agree on with President Trump saying that “something’s going on in terms of a monopoly” and calling it “a bad situation” and several Democratic presidential candidates including Elizabeth Warren, Bernie Sanders, Amy Klobuchar and Cory Booker promising stronger supervision, stricter laws and even breaking up the tech giants.
In light of the recent scandals, there is no denying that tech companies need to improve their data privacy policies and increase transparency about data usage. Policymakers may play a role in strengthening privacy laws, thereby setting boundaries for these companies.
However, the negative rhetoric surrounding big tech have lead users to forget its benefits that make these companies a net positive to society. Anindya Ghose, Heinz Riehl Chair Professor of Business at NYU Stern and Director of the Master of Science in Business Analytics program emphasized the value that tech companies have created. Google has become the one-stop shop for online search, Amazon has permanently changed the retail industry and social media companies like Facebook have made it easier for people across the world to find and connect with their friends and family. They have also become instrumental in raising awareness and funds for countless social causes and have become a platform for like-minded people to unite.
As the saying goes, there is no rose without a thorn and perhaps we have discovered the metaphorical thorn of the tech industry. However, this does not justify burning down the garden. Before calling to break up the tech giants, it may be worthwhile to examine the legality and consequences of this course of action.
As far as the legality of the operations of these companies is concerned, there are several antitrust investigations into the tech giants. Amazon is being scrutinized for improperly favoring its own products over that of third party sellers, critics have analyzed Apple’s use over the AppStore, Google is being investigated for its control over the flow of information through online search and there are inquiries into Facebook’s acquisitions of WhatsApp and Instagram that have essentially led to the unprecedented consolidation of social media.
Antitrust investigations can continue for several years, and prosecution can take even longer. However, it remains unlikely that any of them have actually violated antitrust laws. This is because, at its core, the aim of antitrust laws are to ensure that consumers are not hurt by a lack of competition in the market. For a company to be guilty of monopolization, they would have had to attained their monopoly without providing better products at cheaper prices. Given that search engines, online marketplaces, social media platforms and app stores are free and that tech companies are constantly innovation and improving their offering, it would be difficult to prove that they are harming the consumer.
In fact, to prove that a company has actively violated antitrust laws, government agencies will have to prove that they have taken positions which cannot be justified for business reasons and were adopted only for hurting a competitor. Knowing that their size and power makes them a target for antitrust investigations, large tech companies have devoted considerable resources to ensure that they are on the right side of the law and thus, investigations into them are unlikely to prove successful.
Moreover, it is extremely difficult to determine what industries these tech companies operate in. For example, if Amazon is considered an e-commerce platform, its US market share is 49% which is high, but if it is considered a retailer, it is responsible for less than 10% of the retail sales in the US. Similarly, Google is a search engine, but also a phone manufacturer and Apple creates tech products but has now also launched Apple Pay. Since most large tech companies operate in several industries, it becomes difficult to accurately estimate their market share, which in turn will make it harder to legally break them up.
Another factor to consider before breaking up tech companies is how integral they are to our way of living. The average person spends 1 hour and 51 minutes on Facebook’s social media platforms and conducts 3-4 Google searches a day. Users accuse tech companies of collecting and owning too much data which allows them to control our lives, our choices and even our democracy but we often forget that we are also a part of the problem. We expect a customized service from these companies and so willingly sign away our rights, accept the terms and conditions of usage and sell our data to use these companies. Now, we don’t expect this data to be used to manipulate us, as was done by Cambridge Analytica, but we do sign off on it being used to target us with content we might find interesting.
Statistics have shown that Gen Z is less concerned about privacy that older generations. According to a survey published by Mobile Marketer, 32% of respondents said that “they’re not concerned that companies will use their personal online data in a way that could harm them” and 38% want online ads to be “relevant to their browsing history or the kinds of the entertainment they prefer.”
Society is at a crucial juncture where it has to define the role of tech in the modern world. We have to find the delicate balance between managing the power that large tech companies have but also allowing users to experience the complete benefit of using their products and services. Maybe, after further consideration, we realize that some companies have too much power to control and the answer is to break them up. But instead of calling for the executioner, we must understand the holistic situation.