Breaking up 'Big Tech' is the latest 'techlash,' but what would it actually do?

Breaking up 'Big Tech' is the latest 'techlash,' but what would it actually do?
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Recently, the attorneys general of 48 states announced an antitrust investigation into Google. Meanwhile, eight states and D.C. are engaged in an antitrust investigation into Facebook. These state investigations are on top of already-announced federal antitrust investigations into “Big Tech” by the Federal Trade Commission and the Department of Justice as well as congressional requests for information.

That leaves two questions: First, is antitrust action against big tech companies what we need right now? And second, what would breaking up big technology companies mean for the tech policy issues driving much of the “techlash,” like privacy and content moderation?

Antitrust is a powerful tool to preserve market competition and promote consumer welfare. In the late 19th and early 20th centuries, concerns over the dominant market power of the largest railroads and oil companies led to the introduction of antitrust laws giving the government substantial powers to intervene and protect healthy competition. Some practices, such as when competing businesses agree to charge the same prices or divide up geographic territory, are considered so clearly anticompetitive that they are deemed per se violations. However, other alleged anticompetitive conduct must be analyzed for its impact on consumer welfare.

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When it comes to tech’s “most wanted” — Facebook, Google, Amazon, and Apple — it’s hard to define a market that any one of them monopolizes. In most cases, it is easy to identify other major competitors.

Apple’s iOS and app store compete with Android and others in the mobile space. A variety of social networking and messaging sites exist in addition to Facebook. There are also a variety of online advertising options, and Big Tech still competes with some offline options like traditional media. So while they may be extremely successful and household names, they do not appear to meet the definition of monopoly, at least in the traditional sense.

Technology remains incredibly dynamic, and it’s not certain that regulatory intervention is the best solution to Big Tech’s market power. History shows how companies that seem unstoppable can be replaced by new competitors — or shift to entirely different types of services — more quickly than you might think thanks to innovation.

The Department of Justice brought separate multi-decade antitrust cases against IBM and Microsoft, yet it was dynamism in the market, not any court ruling or legal settlement, that undermined the power of their alleged anticompetitive conduct. Much as Generation X and Millennials embraced Google and Facebook, Generation Z is already embracing other tech players like Snapchat. The market and its players may have changed dramatically by the time the case ends. And today, simply defining the market and competitors is much more fluid and complicated than in the days of more established industries like railroads.

Advocates of the techlash point to a variety of social harms like privacy or the abuse and overuse of technology or social media, but, as law professor John Lopatka points out, antitrust is not designed to remedy these concerns. Tools like the unfair and deceptive trade practices authority or specific legislation are better designed to address them.

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In fact, as my Mercatus colleague Tyler Cowen points out, breaking up companies into smaller, walled-off versions of themselves might even make certain problems worse. These smaller entities might lack the resources they once had for security and content moderation, and they would have to generate revenue on their own because they would no longer be subsidized by the revenues of their parent companies. For instance, an independent Instagram without Facebook’s backing would have to clutter its feed with more advertising, leading to the same problematic financial incentives driving the popularity of “fake news” and other practices concerning user privacy.

Breaking up Big Tech could also bring renewed concerns about interoperability among different platforms, as well as a heavy regulatory burden to determine where acceptable limits are and what exactly is beneficial to consumers.

Antitrust serves an important purpose, but it’s not a magic bullet for every industry concern. Breaking up Big Tech may be the only satisfactory solution for its fiercest critics, but it would be a long and messy process in the courts, a failure at addressing alleged social and political ills, and would bring plenty of new problems.

Jennifer Huddleston is a research fellow with the Mercatus Center at George Mason University. She has a JD from the University of Alabama School of Law and a BA in political science from Wellesley College.