Juha Saarinen: Breaking up tech giants won't be easy

Facebook CEO Mark Zuckerberg. Photo / AP

COMMENT:

Well after the fact it has dawned on politicians that having a few tech companies completely dominate multiple markets is not a good thing.

Democratic senator and presidential candidate Elizabeth Warren says that if she's elected to the top job in the United States, her administration will put an end to today's monopolies and break up what she terms are "platform utilities".

"Today's big tech companies have too much power — too much power over our economy, our society, and our democracy. They've bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation," Warren wrote on Medium.

Amazon, Facebook, Google and Apple are "platform utilities" in Warren's sights because not only do they own marketplaces, they take part in them and in doing so, undermine competition and crush small companies.

Any company with annual global revenue of over US$25 billion ($36.5b) and which owns an app store or similar marketplace would be designated a "platform utility" by Warren's government, and be broken up.

Anti-competitive mergers like Facebook buying Instagram and WhatsApp, or Google snapping up navigation company Waze would also be undone if Warren comes to power in 2020.

The above is music to the ears of telcos, IT companies, retailers and media organisations worldwide that have been flattened under the growing weight of the big tech firms.

Big tech and investors aren't worried though. US sharemarkets are unfazed by Warren's threats of regulation, and tech stocks rose.

Facebook very provocatively pulled the senator's ads calling for a big tech breakup, with a lame excuse that the social network's logo was misused in the ads; later Facebook said it would restore the ads but the act of removing them shows the social network isn't afraid of proving Warren's point about having too much power.

The cat's out of the bag, and the business model that uses internet scale to rapidly grow and squeeze out competition isn't going away.

Warren notes that anti-monopoly laws reined in Microsoft in the mid-90s, after the tech giant tried to embrace the internet and extend its operating system dominance to the web.

Without irony Warren says that the regulatory action helped clear a path for internet companies such as Google and Facebook to emerge, which suggests we're going around in circles and that the fundamentals that allow monopoly building and measures against it only after the damage is done are wrong.

What Warren leaves unsaid is that these days, there's bigger than big: China.

Media darling Huawei for instance runs a computing cloud on top of selling smartphones, computers, telco and network equipment and making chips and software. If you like, that's trying to integrate Apple, Amazon Web Services, Nokia Siemens/Ericsson, Intel/Qualcomm and Google within one massive company.

There are other massive Chinese tech companies like Jingdong, Alibaba, Tencent and Baidu that would easily fit the "platform utility" description being vertically integrated.

Unless they too are cut down to size, breaking up US tech companies would only provide temporary breathing space before their Chinese counterparts rush in and take over.

Unless Warren figures out how to stop that from happening, today's tech monopolies will seem like piddly little players compared to what will appear in the not so distant future.