top of page

DIVIDE ET IMPERA?: THE BIG TECH DEBATE

In recent years, consumer privacy and antitrust have emerged as issues with controversial and dualistic support. In light of the antitrust investigations by the Federal Trade Commission (FTC) against Big Tech companies Google and Facebook for allegedly abusing their monopoly power, many argue that little progress has been made on the issue of privacy protection.


This latest Rostra Debate will focus on how Big Tech development affects consumer welfare, and whether the breaking up of these companies would result in a quick fix or instead do more harm than good. One Editor–Stefania-Ruxandra Pila–will defend the views as presented by the antitrust agencies, whilst the other Editor–Julia Collado Serrano–will argue against this idea.


Consumer welfare


Julia:

The products and services offered by Big Tech companies remain popular because they continuously evolve, innovate and invest in more valuable and sophisticated experiences for everyone. These corporations are BIG because they offer exceptional opportunities and tools for consumers, but this doesn’t mean that they don’t compete with others. Facebook, Google, Apple, Twitter, Snapchat, Amazon, TikTok and Microsoft are all world-class competitors that are forced to innovate and improve constantly. Aren’t we all glad that now that we have the option of using Google instead of being stuck with Bing? As long as a robust competitive landscape remains in place, acquisitions are part of the everyday industry and should not be obstructed, provided that they increase consumer welfare.


Antitrust laws are in place to protect consumers and promote innovation, not to punish successful companies. Frequently the antitrust discourse assumes that large firms are automatically harmful to competition. This assumption is wholly mistaken and must be clearly pointed out. The purpose of antitrust is to prevent businesses from deliberately creating monopoly power. As such, consumer welfare should be the core consideration of any antitrust action, as it looks at the impact on consumers and economic efficiency. For decades, this standard has been used to assess whether a business can act in an anti-competitive manner by observing how much power it can assert on prices. The logic is simple: the higher the prices, the worse off are the consumers.


So far, our Big Tech companies are fully in line with the consumer welfare standard, as they continue to innovate and deliver real benefits to consumers. The key idea is the following: their services are entirely free to use. From home delivery service to face-calls and online-learning, these unique free tools open up infinite ways for people and companies to communicate, share and grow. Namely, Facebook allows more than 200 million businesses to freely connect with customers, hire new employees and advertise their products. Most of Facebook’s advertisers are small firms that have benefitted by moving online to reach their customers during the pandemic. Thus, these platforms not only provide extraordinary opportunities and services to consumers, but they also foster growth and innovation in our market economy as a whole.


Antitrust laws are in place to protect consumers and promote innovation, not to punish successful companies.

Stefania:

From the Sherman Act to the present day, the United States of America have tried to depoliticise several aspects of competition with a guiding pillar, namely the consumer welfare standard. Little was it known back then on how fast-paced and evolved the new technologies would turn out to be and how their influence would not become a matter of price but of other significant aspects of a consumer’s welfare such as privacy.


The apparent guidance of the consumer welfare standard is rendered of little importance in this context, as platforms such as Google and Facebook are free of charge. We are now stuck with a relatively obsolete standard in the light of nowadays’ markets and consumers. However, one may still wonder what we can instrumentalize to assess the well-being of consumers in today’s society. The answer is simple: leave the prices out. After all, those who use or have ever used Google, Apple, Amazon, and/or Facebook (which is clearly an exorbitant number of people) often struggle to find a suitable alternative that would match some privacy criteria better than these Tech Giants. Therefore, by virtue of the market power that Big Tech now possesses, the consumers are hurt simply by having “friendlier” alternatives excluded from their sight. It is futile to explain how the exclusion occurs with such prominent technological networks in place. The chances of a relatively small firm thriving within this market are close to non-existent.


The standard must be adapted for today’s emerging technologies and the needs that follow such a market. From Google’s privacy policies to Zuckerberg’s “Cambridge Analytica” scandal, failing to recognize the need for a new standard and approach regarding competition policies is turning a blind eye to the world as it is shaped today. To protect the very root of competition, one needs to assess what exactly can poison it – and the answer is rarely transparent.


Julia:

Although concerns about the handling of privacy and harmful content are essential, we must bear in mind that these are not antitrust issues. Regarding the complaint by the Federal Trade Commission on Facebook’s acquisition of WhatsApp (2014) and Instagram in (2012), antitrust regulators reviewed each deal at the time of the acquisition. They found no risk of harm to competition in any potential market. The fact that the FTC now wants a do-over essentially states that no sale is ever final. Additionally, it results in harmful consequences for innovation and growth of new products and services, ultimately undermining the authority of the US government’s merger review process.


Furthermore, Facebook’s social media market has remained competitive with apps such as TikTok, Parler, WeChat, Telegram, Twitter or Snapchat, which offer alternative policies on consumer data use. The statement that users have their backs against the wall regarding privacy options is simply not true. Due to intense competition, Big Tech firms are adapting their privacy policies to address consumer and governmental complaints, for instance, by aligning policies with the General Data Protection Regulation. In this regard, we find the example of Apple, which has positioned itself as the champion on privacy. In December 2020, Apple announced a new privacy policy that would strictly limit the possibility of tracking users across different apps and websites.

Breaking up the Big Tech

Stefania:

Since Massachusetts Senator Elisabeth Warren proposed dismantling the Tech Giants for the sake of competition, many have frowned upon such a seemingly outrageous idea. However, it is worth noting the advantages of this break up not only for the consumers but also for other businesses and the market.


Before delving into the arguments, one thing must be clear: the antitrust laws are not against big firms thriving. They define a healthy market as one in which smaller firms can have the possibility of becoming big. When such a thing is not in the realm of immediate possibilities, there might be an issue.


This hidden deterrence from entering the market created a decline in companies’ dynamism concerning networking or other such services that the Tech Giants propose. Therefore, the dismantling of these corporations would allow smaller businesses to have increased chances of gaining relevance. This way, they could share their insights and ideas in a more accepting and fertile environment. This can lead to innovation, as more voices would be heard and more ideas assessed.


Julia:

Breaking up Big Tech completely overlooks the fact that, in doing so, it will hinder the constant dynamism of new products and services, as well as the innovation and investment that emanates from these massive corporations. Break-ups could destroy value. Synergies would evaporate, leading to higher prices. If companies are limited in what they can do, platforms may cut investment, thus slowing innovation in the market. Furthermore, breaking-up is incredibly complex, particularly in network industries. This break-up process runs the risk of harming consumer welfare as Big Tech companies are practically impossible to disentangle.


Any attempt to dismantle these corporations or subject them to more antitrust activity can end up costing consumers billions of dollars. Just look at the work Google has done to foster the mobile phone market with Android, or the advances in artificial intelligence that took place with Siri, Alexa and OK Google. The impact of breaking Big Tech regarding innovation and R&D can be devastating.


All in all, instead of blindly breaking up Facebook with a butcher’s knife, it seems a more sensible and effective strategy to push them to review their privacy policy, which they have done several times. And if you do not like Facebook, you can always turn to Snapchat.

Stefania:

The situation we find ourselves in urges us to make a judgment call: is the consumer and our privacy the priority, or do we sit by idly because the necessary steps are too difficult? Consumers should have a more extensive menu of privacy policies from which they can choose the more suitable one for their own needs and understanding. Our data should not be a currency that is hazardously shared around and over which we can assert almost no influence. We can regain this autonomy by the dismantling of Big Tech.


Is the consumer and our privacy the priority, or do we sit by idly because the necessary steps are too difficult?


Conclusion


The ramifications of the Big Tech debate can leave some wondering when and how a conclusion will be reached. Considering the somewhat obsolete nature of the regulations in place, we are witnessing a time in which some priorities must change. The new information, as well as our need to rapidly adapt to the continually evolving status quo, must be brought to the table. The reality is that in order to avoid loopholes, there should be coordinated enforcement across antitrust and data protection authorities and regulatory bodies.


The process of positively putting an end to the debate will be sinuous and test someone’s ability to reach a conclusion- within an incredibly intertwined context. What will follow – and who will reap off the benefits of the outcome – is yet to be seen.

Comments


bottom of page