Warren wants to break up big tech companies

Warren wants to break up big tech companies
© Stefani Reynolds

Sen. Elizabeth WarrenElizabeth Ann WarrenWarren warns another 'economic crash' is coming The Hill's Morning Report — Mueller Time: Dems, GOP ready questions for high-stakes testimony Biden's lead narrows in early voting states: poll MORE (D-Mass.) called for breaking up Silicon Valley's largest companies on Friday, saying that the tech giants have gained "too much power over our economy, our society, and our democracy."

"To restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last, it’s time to break up our biggest tech companies," Warren said in a post on Medium.

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Warren is the first major 2020 Democratic presidential candidate to call for breaking up companies like Facebook, Google and Amazon, though the idea has gained traction among progressives in recent years amid growing concerns about data privacy and the potential to use social media to spread disinformation.

Warren is also hoping to shine a light on the firms’ market power and how it has been used to influence the economy and society as a whole.

"I want a government that makes sure everybody — even the biggest and most powerful companies in America — plays by the rules," Warren wrote. "And I want to make sure that the next generation of great American tech companies can flourish."

"To do that, we need to stop this generation of big tech companies from throwing around their political power to shape the rules in their favor and throwing around their economic power to snuff out or buy up every potential competitor," she continued.

Such an effort would be a massive undertaking for any administration, likely resulting in years of court battles. But Warren argued that the U.S. has a "long tradition of breaking up companies when they have become too big and dominant " like AT&T, JPMorgan and Standard Oil.

Amazon and Facebook declined to comment. A Google spokeswoman did not immediately respond when asked for comment.

Warren's plan is sure to set off shock waves among the largest tech companies, which have been under siege by policymakers around the world.

"The Warren campaign’s call to breakup big tech companies reflects a 'big is bad, small is beautiful' ideology run amok," the Information Technology and Innovation Foundation, a tech policy think tank, said in a statement.

"Breaking up large Internet companies just because they are large won’t help consumers," the group added. "It will hurt them by reducing convenience, reducing quality of service and innovation, and in some cases leading to the introduction of priced services."

NetChoice, a trade association that represents Google and Facebook, blasted Warren's "hipster" views on antitrust and argued the internet economy is not lacking in competition.

"Never before have consumers and workers had more access to goods, services, and opportunities online,” Carl Szabo, the group's general counsel, said in a statement.

In her post, Warren outlined a two-pronged approach to cracking down on internet giants. One part of the plan is to pass legislation that would designate certain large online services as “platform utilities” — companies with annual revenue of more than $25 billion that “offer to the public an online marketplace, an exchange, or a platform for connecting third parties.”

Under her proposal, any company that owns such a platform would be barred from owning any entity that participates on that platform.

For instance, Amazon would be prohibited from selling its own generic products on its marketplace — which has become a growing source of revenue for the company. Critics say the practice is unfair to competitors who do not have the same access to mass troves of data on consumer behavior.

Under such a law, Amazon would be required to sell off its generic products business, and Google would be forced to split into separate search and advertising entities.

And under Warren’s plan, platform utilities would also be prohibited from selling or transferring data to third parties.

The second part of the plan acknowledges that such an undertaking would largely fall on the nation’s antitrust enforcers at agencies like the Department of Justice and the Federal Trade Commission.

Warren vowed to nominate officials who would unwind past mergers that have been approved by regulators. She singled out as potential targets Amazon subsidiaries Zappos and Whole Foods; Google’s Nest and DoubleClick; and Facebook’s WhatsApp and Instagram.

“The steps I’m proposing today will allow existing big tech companies to keep offering customer-friendly services, while promoting competition, stimulating innovation in the tech sector, and ensuring that America continues to lead the world in producing cutting-edge tech companies. It’s how we protect the future of the Internet,” Warren wrote.

Updated at 11:12 a.m.