To borrow from Ben Franklin, nothing is certain except death, taxes, and that Big Tech is alarmingly…big. As Americans increasingly rely on the major tech companies to help us perform our jobs and navigate our personal lives, our trust and opinion of the digital giants continue to trend downward. Recent surveys show a mere 34 percent of the public rates Big Tech favorably.
The reasons aren’t hard to fathom, given the enormous control a few handful of corporations have over our lives. We are beholden to algorithms we don’t understand, mystified as to who has access to our personal and financial information, and lack any faith in their promises to protect our online privacy. And this says nothing of their power to control the news, influence public opinion in their preferred direction, or put their tentacles on the scale in our elections.
Often overlooked in this discussion is the myriad of troublesome ways Big Tech wields power over small businesses that bear the burden of market concentration. For years, entrepreneurs and small business owners seeking access to market places dominated by Big Tech have been forced to strike a devil’s bargain. By maintaining a tight grip on the channels of online commerce and advertising, Big Tech companies use their clout to gain an overwhelming advantage over competitors while exploiting vendors and further leveraging power in a way that simply would not have been permissible in the pre-digital, brick-and-mortar economy. Fortunately, Washington is now taking action against their monopolistic fiefdoms.
New legislation proposed in the U.S. Senate titled the American Innovation and Choice Online Act (S.2992) will prohibit tech platforms such as Amazon and Google from rigging online commerce in their favor, and holding their smaller competitors hostage. This is not legislation aimed at punishing companies for being successful, but to hold them accountable for anti-competitive and anti-consumer practices which would be considered major violations of antitrust in any other context.
Examples of these practices abound across the Big Tech ecosystem. Google enjoys a monopoly on search, advertising, and mobile, making it next to impossible for other companies, especially small businesses, to compete on equal footing. Because of their search market dominance, small businesses and entrepreneurs must rely on Google to engage consumers and grow their businesses. But when Google uses their extraordinary market power to advantage their own products and the products they favor in search results, small businesses have no recourse, short of spending exorbitant sums in hopes they’ll ascend to the top of search. These digital manipulations hurt consumers and restrain economic efficiency. It is hard to argue that it is not inherently anti-competitive for Google to control both the ad selling and ad buying platforms, and then sell its inventory through those platforms. Google stifles free and fair competition in the digital ad marketplace and then compounds this mercantilist arrangement by depriving consumers of seeing a wide spectrum of products and information in their search results.
Amazon presents another harrowing picture of market theft and dominance. Interviews with more than 20 former employees of Amazon confirm the company has used data about independent sellers on the company’s platform to develop competing products, in violation of their own stated policies. Because of its size and reach, businesses that make or sell consumer goods have little choice but to work with Amazon as a vendor. Amazon then can extract billions in seller fees every year, which of course it uses to add more bricks to its impenetrable online fortress.
Amazon also uses information they collect from the site’s individual third-party sellers—data those sellers view as proprietary, to develop private label merchandise which are then given preference on their search engine. Amazon may think that imitation is the highest form of flattery, but the small companies getting fleeced by these deceptive practices surely feel differently.
The senate legislation would put a stop to this market bullying by prohibiting “disadvantaging rivals, or discriminating among businesses that use their platforms in a manner that would materially harm competition on the platform.” It further outlines protections against misleading consumers by giving their own products preference, especially in cases where a competitor’s product is factually a closer match for a consumer search.
This is all entirely reasonable and closely contoured to the long-held principles of U.S. antitrust. Nobody would ever permit Wal-Mart from covering up the signs of rival stores, or paying advertisers to blacklist competitors, so these same tactics should be similarly proscribed online. Senator Charles Grassley (R-IA) makes the key point that we can’t apply old and outdated marketplace rules to new technologies, stating, “As Big Tech has grown and evolved over the years, our laws have not changed to keep up and ensure these companies are competing fairly.”
The billionaire Big Tech companies all now have cap valuations of over $1 trillion, enabling them to laugh off fines and enforcement efforts. Too big to fail has now become too big to even give a damn when you sit atop ever-growing mountains of cash. Hopefully this welcome legislation will get their attention and hold them accountable for their continued arrogance, abuse, and market deception.