Business Technology

Thursday 25 April 2019

Big tech is not the big problem

White House 2020 hopeful Elizabeth Warren has big tech in her sights. Photo: Bloomberg
White House 2020 hopeful Elizabeth Warren has big tech in her sights. Photo: Bloomberg

Tommy Collison

Americans love elections. That's the conclusion I draw from six years of living in the US, having moved here from Ireland. It seems less about the business of governing and more about the stump speeches, the handshaking, and drawing of lines in the sand. Here's what I'm for, and here's why my opponent is wrong.

As I write this, we're some 20 months away from the 2020 election, and over a dozen candidates have thrown their hat into the ring. If you can't keep them all straight in your head, you're not alone.

The 2020 election, like the 2018 midterms, will be a referendum on Donald Trump's presidency. But if Elizabeth Warren, the Democratic senator from Massachusetts, is anything to go by, the 2020 election will also be a referendum on Silicon Valley.

The phrase "a shot across the bow" was invented for moments like earlier this month, when Warren published a 1,500-word critique titled "Here's how we can break up Big Tech." In it, she outlined how tech monopolies hurt innovation, why regulators should reverse recent mergers, and why platforms should be designated "utilities," like electricity and water.

On the one hand, deeply-researched and coherent policy outlines are conspicuously absent from American politics recently. On the other hand, it's hard to see how this will win her campaign friends or influence voters.

Whether or not tech companies are too big, too small, or just right, it's hardly a problem that materially impacts the everyday lives of Americans.

I get the appeal of taking a strong stance, particularly one which isn't exactly crowded by other candidates - but this still strikes me as bizarre. Rather than making an argument against "big tech" from first principles, she's trying to convert the unpopularity of these tech companies into support for her presidential run.

Leaving Apple off her list of undesirables is an indication of this: the iPhone manufacturer has largely avoided the negative press that Amazon and Facebook have been subjected to for the last 18 months.

But all of Warren's criticisms also apply to Apple, so it's unclear why they originally emerged unscathed. (In a follow-up interview, Warren did include them in her crosshairs.)

The thrust of Warren's argument, that American consumers are worse off because Amazon, Facebook, and Google have grown so big, feels off to me. Warren never quite articulates what the company's size has to do with how consumers are impacted. Take her policy plank that these platforms should not be allowed sell on their own platform. If Amazon is banned from selling items on its own site (something Warren proposes), the result is that consumers have less access to affordable goods. Google offers many of its core services for free, and it's not obvious this would remain true with increased regulation.

A question Warren doesn't ask: would it be worth "breaking up big tech" if you had to pay for Gmail, or Google Maps, or to search the web?

There's a lot that Warren doesn't include in her manifesto, and a lot that she glosses over or expects her audience to take on faith alone.

Conspicuously absent is any explanation of how these companies got so big in the first place. It's easy to cry monopolies and unfair practices, but this ignores the simple fact that people like these companies, and more and more people use their products every year.

People, as Warren notes, prefer using Google to Bing - precisely because it's an unquestionably superior product. As business analyst Ben Thompson noted, Warren is effectively seeking to punish consumers for choosing the best option available. Ultimately, Warren's policy is a solution in search of a problem. Breaking up large companies just for being large makes no sense, and penalising innovation strikes me as the ultimate own-goal.

Silicon Valley might have solidified its place in popular culture, but innovation is actually down in the last decade.

Entrepreneurship in America largely hasn't recovered from the Great Recession: in 2015, a total of 414,000 business were formed - 25pc less than were formed in 2006. If Warren is a supporter of small business, she should put forward initiatives that promote competition, rather than add bureaucracy for its own sake.

It's certainly in vogue to criticise the tech industry in the US. The Cambridge Analytica scandal was so bad because it confirmed so much of what people suspected Facebook was up to. But taking a generic stance against big tech isn't the solution.

The best way to prevent big businesses is to make it easier to unseat incumbents. As we saw with GDPR, regulation entrenches big businesses more often than it curbs their perceived excesses.

Putting more regulatory weight on small businesses will only make it harder for the sorts of young, scrappy companies that Warren ostensibly promotes.

Since the 1400s, startups have created jobs and been a key source of economic mobility: the term "high-tech startup" is redundant because so many startups develop new technology solutions that make society (and other companies!) more productive. They are the tide that raises all ships.

None of this is to say that governments and regulators shouldn't take a long, hard look at Silicon Valley companies. But if Russian meddling with social networks impacted the result of the 2016 election, that would have far greater consequences for American consumers than whether Google's acquisition of Waze violates the spirit of anti-trust laws.

If Warren's opening move is anything to go by, Silicon Valley is going to the punching bag of 2020 campaigns on the left and right.

Democrats in 2018 defined themselves in opposition to Donald Trump, with lukewarm results. Silicon Valley is an easy target to refocus on.

Prepare yourself for multiple rounds of one-upmanship that ultimately won't benefit consumers. I suspect it's going to be a long few months.

  • Tommy Collison works on the growth team at Lambda School, a code school that's free until students get a job

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