Was the Obama Administration Too Soft on Big Tech?

Then-Google CEO Eric Schmidt (right) was friendly with the Obama team. Photo: Saul Loeb/AFP via Getty Images

The biggest Big Tech companies have played an increasingly commanding — many think too commanding — role in most Americans’ daily lives over the last few years. Could companies like Amazon, Google, and Facebook have been reined in before they became corporate superpowers? On the latest episode of the Recode Decode podcast, Kara Swisher spoke with Gene Sperling, director of the National Economic Council under President Obama and the author of a new book on how to reform the U.S. economy, about whether the administration was too friendly with Silicon Valley and the best path forward now.

Kara Swisher: One of the things I’ve written about in the Times is that Big Tech is bigger than ever, and I fear it more than ever. I think some politicians agree that we still need to keep on a regulatory road, and there’s some people who feel that antitrust is the answer. How do you imagine breaking up these companies if you’re comparing them to the Vanderbilts and the Rockefellers?

Gene Sperling: My comparison there was the degree to which these platforms become so essential that people have to be on them. Whether you’re going to break up the companies or put structures that limit your ability to be a buyer or a seller, or require interoperability or ensure nondiscrimination — I’m not trying to say there’s a one-size-fits-all. But if I was advising a new president what to do, I would say you should have a bias for competition. Have a bias against people being able to dominate platforms and allow them to be able to just win by brute force.

Listen, I recognize that there’s great value in many of these companies, and I’ve gotten great value in my life from them. But it’s not clear to me that Facebook needs to own WhatsApp and Instagram. But I think it is clear to me that when Facebook was making bad decisions about political ads or bad decisions about privacy, we would have been a better country if Instagram and WhatsApp could have offered competitive alternatives. And I don’t think that makes you anti-competition or Big Government. It’s about how we structure competition.

Swisher: I think the Obama administration didn’t get enough attention for not holding these companies back when they were growing. Now we have to deal with them as these monsters, essentially. I don’t want to say monsters — these giants. There was a lot of back-and-forth between the tech industry and the Obama administration. It was very tech-friendly — Eric Schmidt showing up and having drinks or whatever. Was there too much cooperation? I always felt there was. Why was that, from your perspective? You all could have done something, and you didn’t. You didn’t do anything at the FTC, the Justice Department — nothing happened.

Sperling: I think there’s fairness to that. I think it’s tricky in some ways. First of all, I think we spend a lot of time relitigating — what exactly did we know in 2011 or 2012? I think, in some fairness, a lot of these problems became more apparent in the last few years. It’s hard, because even if you’re in the White House, these things are being controlled by places you’re not supposed to talk to. The FTC, the antitrust division of the Justice Department — there’s a degree of independence. So we can relitigate whether Obama had known more or done more. And I think it’s completely fair to raise those issues.

But I think the right question is, with what we know now, with what we’ve seen, what type of an economy do we want? And I think one thing you’ve said, which I think is right, is, you can’t rely on the kindness or the good spirit of others. People will compete in the way they are allowed to compete. It’s up for us to put structures in place. And I think you were right that we didn’t see what could happen with Big Tech. Whether we should have been able to see that early enough or not, we can debate.

Swisher: I’m going to keep debating, because it was apparent. I wrote stuff back when Google was getting bigger. I know how Washington works; there are ways of signaling. This was a very tech-friendly administration, to the point of, I found, embarrassment, in terms of not seeing that this was coming. You could have seen it with Google, how important they were to the economy as a whole. Same thing with Amazon, and Walmart, too. I’d love to know: Why didn’t the administration say something? Because they never said word one, until the end.

Sperling: Well, I think the point I’m raising is an important point for the next administration, which is, how do you allow the policy-making processes at the White House? Despite what you say, the fact is, somebody like myself — you don’t call in independent agencies, and you certainly don’t call the Justice Department.

Swisher: You can set the tone from the White House.

Sperling: Yes. I think people are going to have to figure out how to set the tone and have to both have a policy perspective from the White House and to choose people and send the signals as to what the right policy is, even if the political operation shouldn’t be intervening. But I’m not going to overargue this with you. I mean, I think it’s fair to say that we missed a lot of this, that we didn’t see some of these dangers, that there was too much friendliness. It would seem to me that this became more apparent with time. And there’s no doubt we were focused on saving the economy from the Great Recession.

But my view, Kara, is that part of trying to talk about what your end goal should be is that none of us should hold on to past policy positions. We can debate what one should have done or should have known. But I think we know now that this is a real issue in our economy.

Swisher: Okay.

Sperling: It threatens our basic values, and I think what has been good is to see the rise of a kind of new antitrust policy that is reminding people that it’s not just about price and consumer welfare. That these values of economic power and preventing domination and humiliation were part of what drove our initial antitrust laws and they should infuse our values now, as well.

Swisher: So you’re in favor of new, fresh thinking on antitrust for some of these companies?

Sperling: Absolutely.

Swisher: Which companies?

Sperling: Look, I don’t want to say that I know exactly what to do. I think it’s hard for me to believe that Facebook needs to own and control both WhatsApp and Instagram. And I say that as somebody who has very close friends, like Sheryl Sandberg, who worked there. I understand their arguments, but I just feel that the benefits you get from the competitive pressure are important.

And I think traditional antitrust policy developed over the years by Robert Bork and the Chicago School of Economics should take a back seat to people like Lina Khan and Tim Wu and Barry Lynn. I don’t think they should be treated as outside the mainstream. I think they are trying to bring back the actual driving values of antitrust.

And not to plug my book, but part of my point was that when you get to the progressive era, there was this great realization that all of our values of individual liberty and dignity were protections from the government. And now people are realizing that if you don’t have those protections from the private sector, they actually become meaningless in your life. And this leads not only to the rise of child-labor laws and minimum-wage laws and safety laws but it’s what I think drives us to start breaking up the trust. Teddy Roosevelt is not affected by some economic theory of consumer welfare. He’s affected as the chief of police of New York — going through the tenements, seeing humiliating conditions, and that there was no ethics or values or respect for the dignity of workers from the people who were making profits.

It’s up to the government to set those rules, to ensure that level of economic dignity. So ensuring that there’s not too much economic domination in the private sector is not a new or fringe issue. It was the driving issue of the progressive era.

Swisher: Yeah. And it should still be. The only thing I think that could send that signal now would be Vice-President Elizabeth Warren. That would just make everyone in Silicon Valley come down with the sweats.

Sperling: Well, I’m a big Elizabeth Warren fan, but I have many friends who are on that list. So I will stay relatively neutral for now.

Swisher: I’m just saying. That’s the only one that will really send them into shivers. I’ll tell you, she just drives them crazy. I get a lot of pleasure from it — I’m sorry.

Sperling: Yeah, but I think the interesting thing is that I think you’re seeing a movement. Someone like Joe Biden — maybe he didn’t lead this antitrust movement, but he is very sympathetic to it, and I think his administration will be. I think he has spoken out pretty strongly already. And if you have a divided government, there’ll be a lot of focus on what he could do administratively, and taking on economic concentration will be one of them. And I hope that if we do have a united government, it’ll be one with a big D in front of it.

This transcript has been edited for length and clarity.

Was the Obama Administration Too Soft on Big Tech?