In today’s political and commercial climate, 2020 presidential candidate Elizabeth Warren’s proposal to break up the nation’s largest tech companies sounds almost apocalyptic.
Companies like Amazon and Google have been the focus of controversy in recent years, but have also been core drivers of technological innovation and economic resurgence in the wake of the 2008 recession. For anyone making the case that the US has retained its status as a leader of innovation, the success of Silicon Valley is one key piece of evidence.
If Warren’s proposal is viewed simply as a punishment for bad actors, many will see it as too extreme.
Rob Atkinson, president of president of the industry group Information Technology and Innovation Foundation, echoed that argument in response to Warren’s announcement:
“The Warren campaign’s call to break up big tech companies reflects a ‘big is bad, small is beautiful’ ideology run amok. The proposal ignores the fact that many of the services big tech companies now provide free used to cost consumers money.”
Warren’s tone is admittedly aggressive, a reflection of growing public anger in the wake of a string of privacy and political controversies since 2016.
But in a broader context, and viewed as the starting point to an effort that would undoubtedly lead to negotiations, legal battles, and compromises, the proposal may have some merit. While her zealous campaign rhetoric reflects the tone of a crowded Democratic primary, a sober analysis suggests that the proposal could lead to positive change, and even benefit Silicon Valley in the long run.
For one, the end result of the proposal would almost certainly be a compromise. Courts have taken a conservative approach to antitrust law in recent decades. The final outcome would likely fall short of breaking up the companies – but recent history also suggests that such a compromise could actually stimulate innovation.
Although it may sound unusual in today’s context, Warren’s campaign rightly points to an antitrust case against Microsoft in the 1990s as a recent precedent for the move.
At the time, the Clinton Administration argued that Windows gave Microsoft a monopoly on PC operating systems. Bill Gates ultimately stepped down amid the negative publicity, and at one point, a federal judge ordered Microsoft to be split into two companies. That ruling was ultimately reversed. But the case did eventually force Microsoft to behave differently.
Following the case, a former employee said the company exercised “internal restraint” in the 2000s, according to CNBC. Far from being devastated by the 1990s antitrust push, Microsoft is still among the most valuable companies in the world. And before long, a new wave of tech giants emerged, offering innovations like social media, mobile technology, and cloud computing.
“The government’s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge,” the Warren campaign said Friday.
Indeed, other observers have pointed out that the pace of innovation seems to have slowed over the last decade. Whereas the dramatic innovations of ten years ago saw desktop computing miniaturized into handheld, mobile devices, today’s innovations are generally incremental improvements on those initial developments. And the bolder innovations, like Amazon’s Alexa, have faced public skepticism that has slowed their rollout, thanks to privacy scandals and the perception of these companies as opaque and all-powerful.
It’s not hard to imagine how opening up space for competition, not to mention tighter privacy regulations, could help user in a new wave of developments, and help them gain widespread acceptance.
And tech giants have actively used their power to stifle exactly the kind of startups that gave rise to their own innovations and success. Which is exactly the reason antitrust laws exist to begin with.
With few checks on their power, the missteps of today’s tech companies have led to a shift in how most Americans view the Silicon Valley giants, from seeing them as benevolent innovators, to arrogant manipulators with little regard for how their products affect society.
This is why Warren’s proposal may prove to be popular. Perhaps giving tech companies a reason to exercise a degree of “internal restraint” could actually help save them from themselves, while making room for the innovation that comes with robust competition.