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Elizabeth Warren's plan to break up Big Tech explained



In early October, Senator Elizabeth Wear's campaign released a political ad that opened with leaked audio from Facebook Inc. (FB) CEO Mark Zuckerberg and talked about how the company would "go to the mat and fight" if Warren is elected president in 2020 and is trying to break up the company. The clip, which is part of the two-hour audio from employee meetings in July achieved by The Verge, was used to demonstrate how she has Big Tech rattling.

Warren believes weak antitrust enforcement in the United States has helped large technology companies cement their dominance and hurt competition and innovation in the sector. According to her, the lack of consumer choices has allowed these tech giants to neglect privacy and user experience. This is how she plans to attack the FAANGs and even the playing field.

Plan

Among Warren's 48 plans is the plan "How we can break up Big Tech". According to her, companies are gaining smaller competitors and using their own online marketplaces to restrict competition unfairly. Her plan to fix this consists of two main parts and some goals for the future:

Online Marketplaces = Platform Utilities

Warren wants to enact legislation requiring online marketplaces run by companies with annual global revenues over $ 90 million to become designated as "platform tools." Companies with annual global revenues of over $ 25 billion will not have the platform tools and participants at the same time. In other words, companies will not be able to sell services in a public marketplace they own and control. The platform tools must treat all users fairly and equally. If they are sued and found guilty of violating the neutrality requirement, they would have to pay a fine equal to 5% of their annual income.

Reversing merger

Warren will also appoint federal regulators who will reverse "illegal" and "anti-competitive" mergers.

Objective

Her three goals are to give people more control over how their personal data is collected, shared and sold, help news outlets and artists keep more of the value the content generates and ensure that no foreign power uses social media for to influence elections in the United States.

What the Plan Means for FAANG's

Facebook: Under Warren's plan, Facebook's acquisition of Instagram of 2012 and 2014 acquisition of WhatsApp would be reversed, something Zuckerberg called an "existential" threat. "Facebook would face real pressure from Instagram and WhatsApp to improve the user experience and protect our privacy," says Wear's campaign page.

Seventy percent of American adults and 51% of American teens use Facebook, according to Pew Research. However, 70% of American teens use Instagram, the platform Facebook uses to compete with the likes of Snap Inc. and TikTok. The company will rely on Instagram to gain ad revenue in the coming years.

Amazon: Amazon.com Inc. (AMZN) will not be allowed to sell its own products with third-party sellers on Amazon.com if Warren law is passed. Its privately owned brands, such as AmazonBasics, had to be spun or shuttered. Mergers with Whole Foods (2017) and Zappos (2009) would also be discontinued.

Most of the hundreds of brands Amazon owns have not had such great success, but Oweise Khazi, senior editor at Gartner L2, told Retail Dive that Amazon "plays the long game" and will study the huge amount of data it has access to.

Apple: Apple Inc. (AAPL) is not among the companies mentioned on the Warren official campaign site, but AppStore will also qualify as a platform tool. This means that Apple will not be able to sell its own applications, such as Apple Music and Apple News, on the platform. "It has to be one or the other," Warren said when asked about it by The Verge. Either they run the platform or they play in the store. They are not going to do both at the same time. “This would come in the way Apple's Business ambitions have.

Netflix: Netflix Inc. (NFLX) faces little regulatory risk at this time. In March 2019, BMO Capital Markets made Netflix its top technology stock instead of Amazon for this reason, according to CNBC. The debate over the company is a burgeoning monopoly with its huge original content budget still ongoing.

Alphabet Inc. (GOOGL) : Google's Ad Exchange and Google Search are both platform tools under the proposed law and will need to be spun off. Alternatively, Google must stop including its own comparison service restaurant reviews etc. in the search results because it would compete with other companies like Yelp and separate the business from Ad Exchange. Acquisitions of Waze, Nest and DoubleClick will also be discontinued.

How did the movement begin?

Elizabeth Warren has not talked about technological monopoly for almost as long as she has talked about breaking up big banks. Her viral video from the second code conference in 2015 does not show that she mentions concentration in Silicon Valley. A year later, however, during a keynote address at the New York think tank Monopoly Forum, Warren criticized tech giants for "running out of competition" for the first time, and she made headlines. She said: "Google, Apple and Amazon have created disruptive technologies that change the world and deliver huge value every day. They deserve to be very profitable and successful. But the opportunity to compete must be open to new entrants and smaller competitors who want their a chance to change the world again. "She gave examples, such as Amazon directing consumers to books the published, Apple's treatment of rival music streaming companies such as Spotify and Google which gave preference to their products in the search engine. Her speech is still available for reading online.

But where did the inspiration come from? The New Yorker reported that in early 2016, Warren met New America's Open Markets program manager, Barry Lynn, and one of the legal scholars, Lina Khan. They talked about the dominance of certain conglomerates, and Khan and Lynn recommended breaking up some of these giant corporations. (Open Markets was later split from New America after former critic ized Google, one of the think tank's main funders.)

Unlike the EU, US antitrust activity has shrunk since the 1970s, and Warren is contributing to its resurgence in a huge way . At the time of his speech, Vox co-founder Matthew Yglesias called his proposal to increase antitrust control in the technology sector "political risk takers than Obama has done" and a "decisive breach of a generation-long consensus that antitrust policy should be closely linked to consumer welfare rather than to just intervene in corporate battles with each other. "

In October 2016, Presidential hopeful Hillary Clinton added" A new commitment to fostering competition, addressing excessive concentration and abuse of economic power and reviving antitrust laws and enforcement "to the list of campaign goals. In December, the New York Times ran an op-ed titled "Forget AT&T. The Real Monopolies Are Google and Facebook." That was the year Big Tech officially became one of the biggest bipartisan targets.


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