10 August 2020

The New York Times: “What Years of Emails and Texts Reveal about Your Friendly Tech Companies”

The Big Tech companies insist that their rise to power has been the first story, a saga of ingenuity and courage, and that their market dominance is a byproduct of continued excellence. They may be giants, the story goes, but they are friendly giants. Their immense size and power is simply what is necessary to offer users the best possible services.

The subpoenaed documents destroy that narrative. No one can deny that these are well-run companies, loaded with talent, and that each at some point offered something great. But it appears that without illegal maneuvers — without, above all, the anticompetitive buying of potential rivals — there might be no Big Tech, but rather a much wider array of smaller, better, more specialized tech companies.

Tim Wu

While it is still unclear if and how the US government will act against Big Tech, the investigation so far has brought many damning revelations to light. Facebook bought Instagram to neutralize emergent competition – I guess they were actually afraid of what was back then a small startup. The same thing happened when Amazon acquired Diapers.com. Another set of emails from Apple reveal the decisions around the subscription policies on the App Store back in 2011, which led to Amazon removing the option to purchase e-books directly from iOS apps and many other complaints from the developer community over the years.

The greater scandal here may be that the federal government has let these companies get away with this. Dazzled by the mythology of Silicon Valley and blinded by a fixation with economic price theory (which suggested that the only potential problem with an acquisition would be an increase in prices paid by consumers), the government in the 2010s allowed more than 500 start-up acquisitions to go unchallenged. This hands-off approach effectively gave tech executives a green light to consolidate the industry.

Tim Wu

What is more remarkable about the situation (some might say astonishing, but I think we are well past the point of giving Big Tech the benefit of the doubt) is the extent to which Big Tech is continuing to exploit their power against other companies through anticompetitive tactics. While Trump is threatening to ban TikTok from the United States, Facebook just launched a clone and force-fed it to their entire Instagram audience. Apple openly rejected any competing game services on iOS, drawing condemnation from Facebook and Microsoft. An earlier story revealed how Apple demanded its App Store fee from apps offering virtual classes during the pandemic, including from hard-hid Airbnb. In a stunning display of corporate hypocrisy, Tim Cook released statements before the congressional hearing saying that App Store has opened the “gate wider” for developers – yeah right, and Apple was waiting there at the gates to collect its toll! Meanwhile Google is busy bullying European publishers for reader data and copyright owners to reduce payments to composers and songwriters.

It’s rare to see Congress cover itself in glory, but believe it or not, that’s what happened. While a few Republicans, like ranking member Jim Jordan, spent the hearing yelling about the supposed persecution of conservatives on social media, most of the subcommittee focused on genuine business problems. Even most Republicans focused on anti-conservative bias recognized that the ability to constrain conservative voices originated as a function of market power.

As David Cicilline put it: These companies as they exist today have monopoly power. Some need to be broken up, all need to be properly regulated and held accountable. And then he quoted Louis Brandeis, who said, We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.

Matt Stoller

On top of this, tech companies announced record earnings the day after the hearing, growing even richer and more powerful while the rest of the economy shrinks – exactly as you would expect from monopolies. Whatever the US Congress is planning to do, it cannot come soon enough!

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