Breaking up the power of the big tech platforms will be one of the big challenges of the post-COVID-19 world. It’s a power that’s bad for democracy, bad for culture, bad for business and — perhaps surprisingly — bad for innovation.
It’s also a power that will be challenged early Thursday morning (AEST time) in Washington, when the CEOs of the big four (Google, Amazon, Facebook, Apple) appear before Congress. In Australia, the Australian Competition and Consumer Commission (ACCC) is prosecuting Google over its failure to get proper consent for use of personal data it uses to push ads at you.
Later this week, there’s the expected release of the ACCC’s draft mandatory code on bargaining between news media and the Google/Facebook advertising duopoly.
Thursday’s congressional hearings could — and should — be seen as another important paving stone in the path of an administration taking serious steps to properly restrain tech’s market power, including breaking up the big four.
Australia’s mandatory code is much less ambitious. It’s expected to result in traditional media outlets getting a handout from the advertising dollars increasingly corralled online by Google and Facebook. Australia is a small player in global regulation. The code will inevitably leave the monopoly structures unchanged and, given scale, not much poorer.
In the absence of US will, it’s been the European Union that has taken baby steps to regulate tech. 2018’s General Data Protection Regulation has (sorta, kinda) become the global standard for data; it’s urged on the death march of the once ubiquitous third-party cookies.
In a sign of the EU’s continued importance, last week instant messaging platform Slack announced it was looking to the European Commission for relief in its complaint about anti-competitive behaviour from Microsoft, which bundles competing software with its computers.
But neither Europe nor Australia can touch the monopoly structure. Even the million-dollar fines threatened by the ACCC could end up as just a cost of doing business. That’s why it needs US action — and big tech knows it.
Between them, big tech companies spent about US$52 million lobbying Washington last year — a lot of money (although probably not for them). This week’s hearings will feature the four leading CEOs: Google’s Sundar Pichai, Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos and Apple’s Tim Cook.
You can expect more theatre than action. There will surely be debates about whether Google search is inherently left wing, or whether Facebook excessively amplifies alt-right voices. But, in context, it should give some guidance on what practical tools US Congress is considering.
For example, the big platforms could be treated as “utilities” and barred from also owning services that rely on that utility.
The result? Google (or technically its parent company Alphabet) would have to spin out its ad tech business.
Amazon would have to stop selling its own branded goods on its platform and, depending on the law, may have to offload Whole Foods, which it bought in 2017. Apple and Google would have to stop selling their own apps in their app stores (and maybe stop clipping the outrageous transaction fees of up to 30%).
Another option is to unwind takeovers which have essentially reduced competition. That would mean Facebook would have to split off Instagram and Whatsapp. Alphabet would have to split off its ad tech business.
Zuckerberg has called this an existential threat to Facebook and has threatened legal challenges. He’s right: it would significantly diminish the company. Instagram, bought in 2012, is the company’s future. It dominates the youth market, currently delivering about a third of the company’s advertising revenues and growing.
The tech giants might make some pre-emptive announcements this week ahead of both the US hearings and the Australian code. Google, for example, has already announced payments with individual publishers (including Private Media, owners of Crikey).
Amazon could split off its profit engine, Amazon Web Services (about one-eighth of its revenues and over half its profits). Or Google could pre-emptively divest its advertising exchange or even YouTube.
There are plenty of options — and plenty of scope for resistance.
We may not know where we’ll end up by the end of this week. But we’ll have a better sense of the direction we’re heading.