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The last place Big Tech wants to be in the defense

So, it finally happened . A leading American politician has said loudly what many have whispered: it's time to break up Big Tech. Democratic presidential candidate Elizabeth Warren just kicked the opening burst and urged the federal government to take action: "Today's big-tech companies have too much power – too much power over the economy, our society, and our democracy. They have bulldozed competition, used our private information for profit And tilted to everyone else, and in the process, they've harmed small businesses and innovated. "To rectify it, she suggests that Facebook, Google, and Amazon be broken up, and any company with more than $ 25 billion in revenue is termed a "platform tool

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Zachary Karabell is a WIRED contributor and president of River Twice Research.

Whether you think this is a good idea or a terrible, it is very unlikely that this problem goes away, and if Elizabeth Warren makes it to the top of the democratic presidential competition, this problem is greater than her s ability to draw attention to the primary engine. New York congressman Jerry Nadler has already begun preparing his jurisdiction committee led by David Cicilline on Rhode Island to investigate the competition competition in the corporate industry, based on Nadler's previous observation that companies like Facebook "cannot trust" to regulate themselves. And of course, the populist backlash to the Amazon New York headquarters indicates the plan of public unrest. Big Tech is patiently zero for the simple truth that large metropolitan areas of money and power combined with highly opaque business practices and little public oversight or accountability do not tend to do well in democratic societies.

It is certainly true that the current antitrust law framework does not work well for the new technology. The law was designed to break up labyrinthine companies that exacerbate competition and harm consumers because of market share and size. Amazon is big, but it doesn't dominate any of its many verticals; It's an e-commerce giant, but e-commerce is still only a part of total trade (less than 20 percent). Google and Facebook dominate market advertising on online advertising, but do not dominate the overall advertising market share. Apple has a huge ecosystem of phones, tablets, computers and applications, but it's not a close dominant market share in any of them. Antitrust as it is structured for the time being is not designed to deal with the particular challenges of the sudden rise of Big Tech over the past two decades.

But it should not give much comfort to those who believe that these efforts to regulate and break up will be short. Initially, the government is fully capable of adapting to new forms of business by finding categories that are then regulated. Before the passage to the Sherman Antitrust Act in 1[ads1]890 and then the Clayton Antitrust Act of 1914 (the constitution of our current antitrust regime), there were no "vertically integrated monopolies" or competitive companies. These concepts were invented and defined because of a widespread or untruthful belief that companies of a certain size and organization structure served the interests of their owners and shareholders only and harmed it for workers and the public good. Google et al cannot fit the shape of industrial conglomerates in the late 1800s and 20s, but lawmakers with the wind in their backs can certainly and will create new categories to justify new rules. Warren's salvo is simply on the opening statement.

It is also doubtful that Big Tech is at all prepared for this upcoming attack. Of course, technical companies find that because so much of what they offer is either free or helps consumers get goods and services at lower cost and with less friction, they are not and will not be subject to anti-trust action. They tend to claim that their business models are in service to consumers, as evidenced by several offers on several things at lower cost. For the past two decades, public attitudes have supported it, more or less. Judging from the wave of negative pressures, damaging stories and ever-high rumbles in Congress, people can finally realize the cost of these free services.

Therefore, 2019 may be too tech what 2008 was for the big banks: the bend point when public attitudes became aggressively negative and the demand for regulation grew. The regulation of banks that followed the financial crisis has in many respects been the worst of all possible outcomes: the big banks have grown larger while choking off the competition and becoming less profitable and less innovative. Something similar to tech countries, where the rate of change is faster and the need for innovation much greater, can permanently dampen the ability of the United States to remain globally competitive. We are not yet at a Dodd-Frank moment for Big Tech, with massive new oversight monitoring, but Warrens manifesto should serve as a warning.

Yes, the big technology companies are very good at getting lobbying in Washington or major heads of state like Sacramento. It is not the same as maintaining their social license to operate, the unwritten but decisive purchase of users and stakeholders without which no business can thrive on a large scale for too long. For example, in the Amazon negotiations on HQ2, it worked well with Albany, but not so good at all to work on the messenger relations with working with actual people in actual societies to convince them that their needs would not be ignored . Facebook has done its best to educate US lawmakers on privacy settings and business models, a campaign that has not worked so well with European regulators and has done little to compensate for increasing public disenchantment with Facebook. None of the companies saw their income too much, but as banks and cigarette companies before them, Big Tech would be denied if it believed it could not happen to them.

Many of these companies have flourished because they have made so much more achievable for so many, and generally speaking, that they made our world better. Their social license to operate has become deeper over time, but as the reputation and trust, what takes years to build can be erased quickly. When attitudes become negative and accelerate in that direction, they tend to grow in intensity before being released. Warren may be the highest of waking up to date. And her may well be one of the last before the discussion about the right size and influence of Big Tech, of the pros and cons of size and scale, is not run by those who see the enormous importance and potential of these companies, but by those who see them as a threat. In no way will we be better off in a regulatory framework designed by those who see these companies as a hazard, which means that these companies must respond to intense engagement with their customers and truly understand their very real concerns. If they do not, they will be forced to spend tremendous time and money to respond to the rules rather than build for the future. And neither of us gets better for it.

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