Flat White

Break-up Big Tech? It’s complicated

15 July 2020

5:00 AM

15 July 2020

5:00 AM

There are only two unity tickets in United States politics at present. 

These are distrust of China and distrust of “Big Tech.”  

Both are being increasingly felt here and in Europe. 

Big Tech in this article means Facebook, Amazon, Apple, Microsoft, and Google (or its parent, Alphabet). 

From a cultural perspective, it has morphed into a phrase which includes enabling businesses such as lobbyists 

In late July, the executives of Google, Facebook, Amazon and Apple will face a congressional grilling in relation to their operations.  

There are a number of compelling public policy issues for consideration, which the Australian Competition and Consumer Commission (ACCC) covered extensively in its landmark 2019 report into digital platforms. To quote Rod Sims in relation to the privacy policies of Facebook and Google: 

Indeed what consumers, Australian consumers, see and read is largely in the hands of two very profit focused commercial entities that largely say, ‘Trust us’ but they don’t take sufficient responsibility for the platforms they created and the algorithms they control from which they make great wealth.

The market power of Big Tech is often compared to that of the nineteenth century US railroad barons and their companies.  

This comparison, however, underestimates the global reach and market power of Big Tech. A more accurate comparison would be the British East India Company. 

The reach of these corporations is unparalleled in world history. Facebook had 2.6 billion monthly active users at the end of March. After death, the Google search engine has the closest thing to a global monopoly on earth with an estimated 91.75% of the global search engine market.   

Like everything else in America, Big Tech is also on the frontline of the cultural civil war. 

If you are a Democrat, you are concerned about social media platforms enabling hate speech and the working conditions of Big Tech employees. 

If you are a Republican, you are concerned about the “progressive” bias of Big Tech and their expansion into traditional media such as the Washington Post. 

Concern about Big Tech though is uniting Democrats and Republicans with some innovative legislation coming forward. An example is the Designing Accounting Safeguards to Help Broaden Oversight And Regulations on Data (DASHBOARD) Act. The Act is designed to force social media companies to disclose to consumers how they monetise personal data.  

Big Tech has expanded as a result of acquisitions, not just organic growth. Such is their appetite for smaller tech companies, that the operating model of some “venture” capital funds includes finding and selling unprofitable start-ups to them. Welcome to modern-day alchemy. 

Given market power; user privacy considerations; the number of “bolt-on” acquisitions made and political influence, the argument for at least one Big Tech break-up is clear. 

There are two primary issues however which make “breaking-up” Big Tech companies problematic. 

The first is that “breaking-up” is an amorphous term which means quite different things to different people.  It sits on a spectrum of actions rather than being a single defined action. 

The second and more substantial problem is that in the battle to win the AI war, breaking up the Big US Tech companies could see the United States materially weaken its competitive position in relation to China.  

Why? AI development in China is fundamental to their geopolitical goals and exists within the context of “Military-Civil Integration.”  

Consequently, while Big Tech will likely be subject to more regulatory oversights, some acquisition limitations, and technologies such as Blockchain may enable greater user control, breaking up Big Tech is simply not going to happen. 

If the United States was prepared to rehabilitate former SS officer Wernher von Braun to win the space race in the 1960s, it is unlikely the US is going to break up the technology companies which may help the US win the AI race of the 2020s. 

The AI race with China is the saviour of Big Tech 

The risk for the United States is that as Big Tech becomes increasingly critical to government in the cybersphere a “digital” version of military industrial complex emerges.  

It’s complicated, but Big Tech will not be broken up. 

Got something to add? Join the discussion and comment below.

Got something to add? Join the discussion and comment below.

Show comments