Democratic presidential candidate Elizabeth Warren is proposing to break up the largest technology companies, including Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc., calling them anti-competitive behemoths.
“Twenty-five years ago, Facebook, Google, and Amazon didn’t exist,” Warren wrote in a blog post on Medium Friday. “Now they are among the most valuable and well-known companies in the world. It’s a great story -- but also one that highlights why the government must break up monopolies and promote competitive markets.”
The senator is calling for legislation that would designate the companies as “platform utilities” and the appointment of regulators who would unwind technology mergers that undermine competition and harm innovation and small businesses.
She proposes that some mergers by the biggest tech companies be unwound, including Amazon’s purchase of Whole Foods and Zappos; Facebook’s acquisition of WhatsApp and Instagram, and Google’s deals for Waze, Nest and DoubleClick.
Under her proposal, so-called designated platform utilities with more than $25 billion in global revenue would be prohibited from owning any of the participants on their own platform. That means that Amazon Marketplace and AmazonBasics would be split apart, as would Google’s ad exchange and its businesses on the exchange. Google Search would have to be spun off as well.
“Today’s big tech companies have too much power -- too much power over our economy, our society, and our democracy,” Warren wrote. “They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”
In the 1990s, Microsoft — the tech giant of its time — was trying to parlay its dominance in computer operating systems into dominance in the new area of web browsing. The federal government sued Microsoft for violating anti-monopoly laws and eventually reached a settlement. "The government’s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge, "Warren wrote.
"The story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive — which pushes everyone in the marketplace to offer better products and services. Aren’t we all glad that now we have the option of using Google instead of being stuck with Bing?" she added.
Last month, the Federal Trade Commission announced it was creating a task force led by senior competition officials to investigate potentially anticompetitive conduct by technology companies. The agency said it would consider all options, including scrutiny of completed mergers.
Even some Republican lawmakers, who generally oppose government regulation of the economy, have flirted with antitrust for tech. They cite concerns over both privacy and unsupported allegations of systematic silencing of conservative voices on social media, although those are separate policy issues from antitrust.
Warren said “weak antitrust enforcement” has resulted in a reduction of competition and innovation in the tech sector. She also said there is lax venture capitalist investment in new startups to compete with big tech companies “because it’s so easy for the big companies to either snap up growing competitors or drive them out of business.”
NetChoice, an e-commerce trade group whose members include Facebook and Google, said Warren’s plan would lead to higher prices.
“Senator Warren is wrong in her assertion that tech markets lack competition. Never before have consumers and workers had more access to goods, services and opportunities online,” said Carl Szabo, vice president and general counsel for NetChoice.
The president of the U.S. Chamber of Commerce, Tom Donohue, said breaking up the big tech companies would “take us back to the Stone Age.”
“This is not a vision for the future, but an archaic idea that should be dumped in your computer trash can,” he said.
The Computer and Communications Industry Association, a trade group that represents Amazon, Facebook and Google, said it was an “unwarranted and extreme proposal, which focuses on a highly admired and highly performing sector.” In a statement, Ed Black, the president of the group, added that it “is misaligned with progressive values, many of which are shared within the tech industry.”
Public Knowledge, a tech policy group, called Warren’s plan a step toward protecting the next generation of businesses, but stopped short of support for breaking up the tech giants.
Tech companies are some of the biggest political donors. Google spent $21 million to lobby in 2018 while Amazon spent $14.2 million and Facebook spent $12.62 million, according to their filings to U.S. Congress.
Some years ago, then-candidate Barack Obama appeared at Google headquarters during the early days of his 2008 campaign, hoping to tout his tech savviness particularly with younger voters. Now, though, the party’s White House aspirants in 2020 have become some of the Valley’s fiercest critics in pursuit of a different political edge.
Democratic Sen. Cory Booker last year raised concerns about corporate consolidation across industries, including tech. But Booker has long raised considerable money from the tech industry.
Warren’s proposal foretells a struggle among Democrats over how far to distance themselves from an industry they once considered an ally.
In recent years, members of the U.S. Congress have grown frustrated with the privacy mishaps at Facebook, which is now facing the prospect of a multibillion-dollar fine for mishandling its users’ data.
The Congress held a series of hearings last year looking at the dominance of major tech companies and their role in displacing or swallowing up existing businesses, among other things.
Facebook has angered lawmakers for losing track of users’ data and for not doing more to stop foreign meddling in the 2016 U.S. presidential election.
Amazon’s business model has displaced brick-and-mortar stores and the company has been criticized for poorly paying its warehouse workers.
Google has clashed with smaller companies, like Yelp, over search placements and has raised concerns it would comply with China’s internet censorship and surveillance policies if it re-enters the Asian nation’s search engine market.