The Historical Precedent for Breaking Up Big Tech

Amazon, Facebook, and Google, 3 of the largest and most recognizable companies worldwide, have come under strict scrutiny in recent years from both citizens and presidential candidates. Their products and services have undoubtedly taken a hold of our lives, but their proliferation has reached a point of public concern, where nearly every human moment is collected as a datapoint for companies to use as their own means to an end. The United States has a rich history of monopolies, as well as government intervention to break them up. What can the past tell us about the most moral and efficient way to proceed?

There are two schools of thought on the issue. 1. These companies have a history of malpractice and controversial data collection practices, and as their product lines grow bigger they become larger threats to human rights and the free market around the world or 2. People use these platforms because they value their services – as soon as the consumer no longer values them, they will fall by the wayside. This conflict very much parallels the original vision of Theodore Roosevelt in his efforts to reduce the power of mega-corporations like the Northern Securities Company. Roosevelt was not exclusively concerned with de-establishing all large companies, instead he was concerned with those that were bad actors maliciously harming the wider population (Atkinson). The mere fact that these companies are so historically large does not automatically warrant action on the part of the US government, but in each case there are obvious examples of malicious intent and predatory practices that should worry any concerned citizen.

Take Foundem.com for example. For the uninitiated on the topic, Foundem.com was/is a search engine for finding deals online that was more time-efficient and produced higher quality results than Google. In other words, it was a direct competitor to Google in many respects, and after finding substantial web traffic in the early going, Foundem was relegated to the bottom pages of nearly all relevant search queries. This was not a coincidence, as Google was making a conscious effort to curb the prominence of its competitors (Duhigg). The Foundem.com case is a direct abuse of power on the part of a behemoth in the space, who is leveraging their own computing power as a way to prop themselves over their competitors. My impulse, as well as those as many citizens worldwide, is to proceed swiftly with legal action on the part of the US, an international body, or anybody willing and able to do what we presume to be the right thing.

The same sentiment is prominent with regards to Facebook, though with a different lens. Facebook has not used its power as a direct way to stifle competition, instead they have acquired many of their competitors. This is not per se a direct abuse of one power over another. Instead, Facebook has drawn ire due to its incredible misuse of user data, most notably as a result of infiltration from Russian bots and the Trump campaign during the 2016 election, and its failure to regulate the appropriateness, and truthfulness, of the content that gets displayed on the platform. This is not a problem that has gone on unbeknownst to Facebook, and most recently, they leaned into it, introducing a policy that would allow deliberately false political ads to make their way onto user feeds (Alvarez). Again, this is not so much an abuse of the market, but an abuse of power that negatively impacts the consumers and poses a direct threat to the health and well being of American democracy.

Now, on the surface, the cases of Google and Facebook specifically mirror those of some of the most famous antitrust public action, like Standard Oil Co. of New Jersey v. United States or Northern Securities Co. v. United States. Power had unequivocally been consolidated to an absurd degree in the oil and railroad industries, and their business practices posed a real threat to the health not only for interstate commerce generally, but the quality of life for the “little guy” (Securities v. US, Oil v. US). Much the same could be said for the modern versions of these companies that inhabit most areas of our lives, and even though the argument against Facebook is less based in pure economics, it is nevertheless evident that the modern infrastructure of the free market necessitates action to reduce the platform’s power. Facebook and Google, as businesses, provide a service that is less tangible than the products of the oil and railroad companies of days gone by. The data points that they collect are equally as intangible, and the power that they wield resides behind the computer screen, and outside of the public view. But the prevalence of their services around the globe has compounded their ability to control both the market and the people, and it is imperative that action is taken.

But, this brings us back to the original question – do we really need the US government as the intervenor? In the original “trust-busting” cases, the issue was very straightforward – these companies in well-defined industries (oil, railroads, sugar, aluminum, etc.) had too much power, and we needed break them up. The older incumbents representing the United States had no trouble understanding exactly what they were dealing with. This contrasts greatly with what lays in front of them in Facebook and Google. They are operating with a technological and business prowess genuinely unfamiliar to much of the general public, at historical quickness, I might add. The United States has fallen into this trap once before, when they brought forth an anti-trust lawsuit against IBM in 1969, claiming that they had “monopoliz[ed] interstate trade and commerce in general-purpose digital computers.” Obviously, this is the same claim as what was posed against the oil and railroad giants, but to quote John Shenefield, an Attorney General under President Carter, “Frankly, we didn't find the easy case we thought we might” (US vs. IBM).

The US’ case against IBM dragged on across almost a whopping 13 years, where the US itself was not necessarily misguided, but just plain ignorant. The lawyers had fundamental misunderstandings, or no understanding whatsoever, of the “structure of key industries” (ibid) that IBM operated within (notably, the computer hardware industry), and it is my fear that a similar fate could befall the US government is similar, straightforward anti-trust action is taken against these companies. To put it lightly, many legislators are from a different generation, and may not be familiar enough with these platforms to assemble a cohesive and poignant legal strategy capable of securing the American public.

However, IBM is not the powerful entity that it once was. In fact, because the public scrutiny from the antitrust case was so intense, they broke off their business into the hardware and software divisions (Pethokoukis). As they tried to maintain their established name and grow in new ways, the public strayed away from IBM to other products, which heavily diminished their market power. Similarly, the antitrust action against Microsoft resulted in decreased sales growth, which allowed for smarter and more conscious actors in the space to make a name for themselves (Johnston). Consumer wallets are more influential than people give them credit for, a concept that the general public should be more aware of going forward. I think that the United States, from both a legislative and judicial standpoint, should be actively looking for ways to address many of these new issues within American life, but there must be increased caution with advocating for straightforward antitrust legal steps as in the past. The rebalancing of power is not going to be a swift process, certainly not something that can be done within the space of a four-year presidential tenure, even though these sentiments have been popular on the campaign trail. Continued public scrutiny is enough to greatly diminish the market presence of these names, which makes such speech worthwhile for all concerned citizens.

Sources

Alvarez, Edgar. “Mark Zuckerberg Still Won’t Ban ‘Political’ Ads on Facebook.” Engadget, 30 Oct 2019. https://www.engadget.com/2019/10/30/facebook-political-ads-misinformation-mark-zuckerberg-q3-2019-earnings/

Atkinson, Robert and Lind, Michael. “The Myth of the Roosevelt ‘Trustbusters’”. The New Republic, 4 May 2018. https://newrepublic.com/article/148239/myth-roosevelt-trustbusters

Behr, Peter. “IBM, Justice Rests Cases in Historic Antitrust Trial.” The Washington Post, 2 Jun 1981. https://www.washingtonpost.com/archive/business/1981/06/02/ibm-justice-rests-cases-in-historic-antitrust-trial/5cc16db0-8e7f-4763-a17d-fdfb6fef0464/

Duhigg, Charles. “The Case Against Google.” The New York Times, 20 Feb 2018. https://www.nytimes.com/2018/02/20/magazine/the-case-against-google.html

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Johnston, Matthew. “Why Microsoft’s Old Antitrust Case is a Bad Omen for Google and Facebook.” Investopedia, 13 Jun 2019. https://www.investopedia.com/why-microsoft-s-old-antitrust-case-is-a-bad-omen-for-google-and-facebook-4690465

Northern Securities Co. v. United States, 193 U.S. 197 (1904)

Pethokoukis, James. “Taking a Second Look at the Idea that Antitrust Action Created the US Software Industry.” American Enterprise Institute, 12 Jan 2018. https://www.aei.org/economics/taking-a-second-look-at-the-idea-that-antitrust-action-created-the-u-s-software-industry/

Robertson, Adi. “How the Antritrust Battles of the ‘90s Set the Stage for Today’s Tech Giants.” The Verge, 6 Sep 2018. https://www.theverge.com/2018/9/6/17827042/antitrust-1990s-microsoft-google-aol-monopoly-lawsuits-history

“Roosevelt and the Trusts.” The Ohio State University Department of History. https://ehistory.osu.edu/exhibitions/1912/trusts/roosevel

Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)

“The Antitrust Case U.S. v. IBM, is Tried and Eventually Withdrawn.” Jeremy Norman’s History of Information. http://www.historyofinformation.com/detail.php?id=923

“US vs. IBM.” The New York Times, 15 Feb 1981. https://www.nytimes.com/1981/02/15/business/us-vsibm.html