On Friday morning, on Medium, the blogging platform of choice for all presidential candidates, Democratic presidential candidate Elizabeth Warren debuted a plan to “break up Big Tech.” Silicon Valley, she writes, has “too much power — too much power over our economy, our society, and our democracy.” The problem? Not enough competition. Taking a page from the “hipster antitrust” movement, Warren bemoans the “weak antitrust enforcement” that’s allowed tech megaplatforms to accumulate power without having “to compete as aggressively in key areas like protecting our privacy.”
But she’s got a plan to change all that. Warren’s proposal centers around what she believes have been two major obstacles to healthy market competition in Silicon Valley: (1) that mergers like Facebook’s acquisition of Instagram in 2012 have limited competition in the tech industry; and (2) that platforms that own “proprietary marketplaces,” like Amazon or the App Store, can also participate in those marketplaces, giving them intense competitive advantages.
To combat the first, Warren would appoint regulators charged with “reversing illegal and anti-competitive tech mergers” (and, no doubt, preventing new ones). To address the second, Warren would propose legislation that would designate tech platforms with a total global annual revenue of $90 million or more as “platform utilities,” subject to specific regulations. Once they reached revenues of $25 billion or more, they would no longer be able to participate in the marketplaces they own. (For example, Amazon would be obligated to spin off Amazon Basics.)
It’s an aggressive proposal, to say the least, and the first of its kind in the presidential race. Max Read and Brian Feldman, two of Intelligencer’s technology writers, read through the proposal and detailed their reactions to some of its more interesting ideas.
“Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as ‘platform utilities.’”
Max: I like the idea of ensuring that businesses of a certain size are subject to specific regulations.
Brian: Yeah, I think that’s right. I’m not an expert on what metric to use to measure a company’s bigness (revenue? Daily Active Users? Monthly Active Users?), but Big Tech has maintained this perception for too long that they are startup-type skeleton crews. They’re very big! They should be regulated like big business.
Max: Warren is seeking to regulate them even more intensely than big business — with good reason, I think!
“Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users”
Max: To me this is the most interesting line in the whole proposal.
Max: She appears to suggest establishing a category of business somewhat akin to “common carriers” — businesses that are subject to extremely stringent regulations about their obligations to the public.
Max: On the one hand, I love this, in part because establishing that standard obligates a level of transparency that platforms traditionally don’t uphold …
Brian: On the other hand … is Facebook suppressing conservative speech??
Brian: The main problem is that common carriers, as far as I understand, fulfill exact requests. Algorithmically powered services like Google search, or posts ranked in the Facebook News Feed, haven’t really figured out what is fair or unfair.
Brian: Common carrier regulations work because the people using common carriers know what they want, whether that’s a channel to watch or a number to dial. If I search “coffee” on amazon, I am asking for options, not a specific coffee.
Max: Sorting algorithms are, by definition, discriminatory — their whole purpose is to sort content (search results, photographs, products, people) from most to least relevant (or whatever other standard). Creating a legal standard of nondiscrimination is going to take a lot of work, and is going to be a politically extremely tricky prospect
Max: And yet! I think it’s necessary work. To the extent that sorting processes define our commerce, our media, our social lives, surely there should be some level of transparency and public accountability, right?
“Platform utilities would not be allowed to transfer or share data with third parties.”
Max: This seems unambiguously good — and also not really enough. There’s no reason why in a plan focused on market competition you would start talking about individual data rights and protections, obviously, but data rights and protections need to be part of any discussion about a better internet.
Brian: I think one of the benefits of this, from a competition standpoint, is that it prevents the platforms from picking winners and losers, like when Zuckerberg cut Vine off from Facebook. If you make it so that platform utilities can’t share any data, they become neutral, in a sense. Unless I am misinterpreting this.
Max: No, I think that’s right. I think it also reinforces the public responsibility requirements of a utility… it has your data, it won’t do anything with it besides create a better service for you
Brian: This proposal might explain Zuckerberg’s rush to slam FB, IG, and WhatsApp together into some The Fly-like monstrosity that’ll take decades to untangle.
“Injured private parties would have the right to sue a platform utility to enjoin any conduct that violates these requirements, to disgorge any ill-gotten gains, and to be paid for losses and damages. A company found to violate these requirements would also have to pay a fine of 5 percent of annual revenue.”
Max: This is how the standards would be enforced. You’re looking at a LOT of very shadily funded lawsuits over “discrimination against conservatives” filed by right-wing Facebook duo Diamond and Silk, on day one.
Brian: Chief Justice Barron Casts Deciding Vote in Diamond and Silk v. Zuckerberg.
Brian: At the very least, it might force tech companies to make some disclosures, if not publicly, at least to regulators, about how their systems work. A lot of this “unfairness” is masked by them being proprietary, or trade secrets, or whatever. Some adjudication of whether these “objective” systems are unfair would be helpful.
Max: Yes, absolutely. My sense is that a law like this would be a huge political headache in the short term, and potentially have some unwanted outcomes, but would in the long term create a much healthier internet, public sphere, commercial market, etc.
“Amazon Marketplace, Google’s ad exchange, and Google Search would be platform utilities under this law. Therefore, Amazon Marketplace and Basics, and Google’s ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.”
Brian: I might be very dumb but I don’t entirely understand how Google’s ad exchange would be split off from the search engine it’s integrated into.
Max: Me neither, really. I think it would require some complicated untangling — but the way I imagine it is that search and its advertising product, Ad Words, would be one business, while the ad exchange would be a separate one
Max: I think this is probably the item that will attract the most interest from Silicon Valley and the least interest from most internet users. Google really would not like to split its incredibly lucrative ad business in two (or three), and Amazon won’t want to lose all the efficiencies of vertical integration. But unless I’m not really understanding something, I don’t think this will really affect most people who are buying things on Amazon, or searching for things on Google.
Brian: Yeah, the appeal of Amazon Basics is that it’s usually the cheapest, not that it’s got amazon in the name (except of course, I now assume that anything named “Amazon Basics” is the cheapest option).
Brian: Anyway, here’s a question I have about all this: What does it mean for app stores?
Max: Well, they’re marketplaces, so companies wouldn’t be allowed to compete on them. I think Apple would definitely need to spin off its paid software products, so Final Cut would become independent.
Max: And … maybe … Apple Music? It’s not technically a paid app, but it is a paid subscription service, and you could make the case that Apple shouldn’t be allowed to make it available it on its own marketplace.
Brian: Couldn’t all first-party free apps also been seen as unfair competition?
Max: You mean the default Apple apps, like “Notes” and “Calendar” and whatever else? I think arguably, yeah …
Max: I mean, if you want to get really galaxy-brain on this, isn’t iOS itself a “platform utility”? And wouldn’t that mean the App Store would need to be spun off, too?
Max: I have to say I like how aggressive this proposal is! The fact that Apple would be be forced to consider its products on this many levels (not to mention regulators) is a good thing
Brian: Yeah, I’d rather we spend a few years coming up with bad answers to questions instead of continuing to say that the questions are too complicated, if that makes sense.
“My administration would appoint regulators committed to reversing illegal and anti-competitive tech mergers”
Max: This is an extremely aggressive action, and yet it seems, frankly, relatively uncontroversial, and even relatively simple, compared to what’s contained in “platform utilities” proposal.
Max: RELATIVELY, of course.
Brian: I both think it’s a good idea and I’m unsure what effect it will have on anything. So that’s nice
Max: Say more. Why don’t you think it’ll have an effect?
Brian: This might be getting too in the weeds, but given how Instagram and WhatsApp both recently had their original founders forced out and replaced by Zuck’s inner circle of Facebook executives, I don’t even know what competition would look like. A couple of years ago, it might be a really interesting prospect. But now? I truly dunno.
Brian: And regarding excising DoubleClick from Google, I don’t have a good picture yet of how that solves the problem of Google’s stranglehold on online advertising.
Brian: I could easily be wrong on this. Am I wrong on this?
Brian: Also like … are Zappos and Nest that dominant?
Max: Well, I agree that Instagram’s current executive management is … less adept than it used to be, and might not be in a great position to compete against Facebook. But maybe an independent Instagram crashing and burning means that Snapchat re-emerges, or TikTok, or something entirely new. The real hope would be that Facebook and Instagram can’t reinforce and protect each other anymore in the way they have over the last seven years.
Max: As for the advertising market, I don’t have any idea. I don’t even know what the various Baby Googles that would be created by this whole proposal would look like, or be.
Brian: Overall, I think it’s a good thing. I guess I really just think that unwinding these acquisitions isn’t nearly as important as rejecting new ones in the future
“Here’s what won’t change: You’ll still be able to go on Google and search like you do today. You’ll still be able to go on Amazon and find 30 different coffee machines that you can get delivered to your house in two days. You’ll still be able to go on Facebook and see how your old friend from school is doing.”
Max: Do we believe this to be true?
Brian: I kinda do? It feels like a back-to-basics approach. I read it like, these companies will have to stick to and improve their core competencies in order to stay relevant, not just buy or squash newer things.
Max: Yeah. I think the biggest questions for me coming out of this are (1) what does a broken-apart Google look like? (Since its business is the most opaque to me), and (2) what do standards of fairness mean for platform utilities?
Max: (1) is relevant to the question of whether or not you’ll still be able to use Google the way you want. For example — one thing I like about Google is the extent to which it itself provides information. If I search “New York Yankees” it gives me a box score and a schedule and I don’t need to click through anywhere. If I’m reading this proposal right, it will not longer be allowed to do that.
Max: We may end up with a more vibrant and competitive internet — but at the expense of a fair amount of convenience.
Brian: I’m honestly fine with that, even if I feel like a luddite saying it. I can’t speak to specifics but I generally feel like adding a slight amount of friction to most web services would improve the online experience.
Brian: Like, I don’t think it’s a bad thing that Google would have to refer people to places outside of the Google ecosystem, even if you’ve gotta wait another five seconds for a page to load.