Break Up Big Tech?
The titans of tech have managed to paint a large political target on their collective back. Republicans hated them because most of them provided financial and technical support to Democrats. Now, Democrats hate them because they are convinced that Facebook was the cause of Hillary’s defeat. On top of that, they’re billionaires and we hate billionaires.
The proposed cure is anti-trust enforcement. The problem is that the anti-trust laws were designed to be sure that monopoly operators were not able to use their position to harm consumers by pricing as they pleased. That doesn’t work very well when trying to enforce against folks who put out their product for free.
The cure will also result in a host of ugly and unintended consequences. You will have a bunch of legislators who know nothing about technology empowering bureaucrats who will attempt to turn google, Facebook, etc. into public utilities. Innovation will be replaced by regulatory capture.
It would be much more straightforward and effective to approach the problem from a barriers to entry prospective. That is the thing that has radically altered the business landscape.
The traditional monopoly wannabe built a business that was hard to duplicate. A prospective competitor had to have land, factories, lots of capital and managerial expertise. Those things were hard to duplicate.
Today’s technology behemoth may have some real estate and some managers, but their basic assets are intellectual properties. The ideas that matter can be stolen (see China), reverse engineered (see China) or simply copied. The biggest threat is a better idea. Do you remember Texas Instruments, Nokia, Motorola, or Blackberry? They are either gone or a shadow of their former selves. A better idea came along.
The way today’s technology companies try to avoid that fate is by preempting the better idea. When they see a startup that threatens their position, they offer big bucks to the founders to come inside the tent or go away. Some of the prices seem irrational because the startup may have no profit or any prospect thereof. Profit has nothing to do with the price; it is the dimensions of the threat that drive the offering price.
Instead of breaking up big tech, we should simply force it to compete. If anti-competitive acquisitions were thwarted, the existing tech companies would be forced to work at innovation on their own and competitors (with better ideas) would be allowed to grow and prosper. That solution eliminates the problem of illiterate legislators and stifling bureaucrats. That solution gets the job done with a minimum of market interference. If that solution doesn’t work, the path of more intrusion is always available.
