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Elizabeth Warren's new plan: Break up Amazon, Google and Facebook


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https://www.cnn.com/2019/03/08/politics/elizabeth-warren-amazon-google-facebook/index.html

 

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Sen. Elizabeth Warren released an aggressive plan on Friday to break up tech giants like Amazon, Google and Facebook, targeting the power of Silicon Valley with her populist message as sprawling Internet giants face mounting political backlash ahead of the 2020 presidential election.

 

The far-reaching proposal would impose new rules on certain kinds of tech companies with $25 billion or more in annual revenue, forcing Amazon and Google to spin off parts of their companies and relinquish their overwhelming control over online commerce. The plan also aims to unwind some of the highest profile mergers in the industry, like the combinations of Amazon and Whole Foods, and Google and DoubleClick, as well as Facebook's acquisition of Instagram and WhatsApp.


The proposal from the Democratic presidential candidate is sure to rankle Silicon Valley executives and investors as well as opponents of government regulations, while drawing applause from progressive activists, consumer advocates and a range of lawmakers who have railed against what they see as unsustainable monopolies in the industry.

 

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"Today's big tech companies have too much power -- too much power over our economy, our society, and our democracy. They've bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation," Warren wrote in a Medium post about the proposal. "That's why my Administration will make big, structural changes to the tech sector to promote more competition—including breaking up Amazon, Facebook, and Google."

 

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Lol. While I agree with her, there goes her very slim chance of winning. And if I owned a multi-billion dollar company, I’d work to bury her too. If I owned google, and a candidate made comments like this, you’d only get a blank white screen when you searched her name.

 

 

this is everything I’ve said about twitter in your 2020 thread. They are too powerful to let control the political narrative. 

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5 minutes ago, SFLUFAN said:

Yes, absolutely.

 

It could be converted into a super post office!

So, you are an outright socialist?Fascist?

 

i could get behind that IF it wasn’t guaranteed to become corrupt, because people are corrupt. No absolute leader will ever be impartial or incorruptible.

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6 minutes ago, TheGreatGamble said:

So, you are an outright socialist?Fascist?

Depends on how I'm feeling at any particular moment, I could be Marxist, Fascist, Socialist, Anarchist, or Trotskyist.

 

But one thing's for sure - I'm definitely not a so-called "liberal", so-called "conservative" or so-called "centrist", all of which I consider to be vapid, degenerate, and bloodless.

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I think this is actually a pretty good idea. Facebook would not be as dominant as they are if they weren't allowed to buy WhatsApp and Instagram, and the market has absolutely suffered as a result. I think Amazon is great, but allowing them to compete in their own marketplace kills off so many potential companies. Brands like Anker have been able to emerge almost entirely through Amazon, but for every success there are likely dozens of companies that were killed off in the early stages as Amazon ate their market share with a cheaper knock off. Google has a stranglehold on web advertising that we're only now seeing any competition in thanks to Facebook, but it's less clear to me how they should be broken up. She brings up Waze, which I don't think was a particularly big deal, and Nest, which Google has completely bungled and is as far from an antitrust issue as I can imagine. Google shouldn't have been able to buy DoubleClick, but at this point separating them out may be next to impossible.


There are also a couple examples that I think fall under her language that she didn't bring up. 

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Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as “platform utilities.”

These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.

 

 

To me, that sounds like it would apply to Apple, Microsoft, AT&T, Comcast, and Verizon. For the ISPs, I'd be fine if you prevent them from owning media companies. The incentives there are terrible for competition in multiple markets, and I can't think of a single consumer harm from splitting them up. With technology platforms, I think things get a lot messier. Apple and Microsoft (along with Google), own platforms (Mac/iOS, Windows/Azure, Android/Chrome) but also compete at various levels on those platforms. Is offering Office on the Windows Store both owning the platform and participating in it? What about OS level features like antivirus or cloud storage? What about Google Maps on Android or Safari on MacOS? What about offering Windows VMs in Azure, or even MS running any of their own products from Azure? Where do you draw that line? 

 

If you had forced MS to divorce their products from Azure, you'd have changed the entire direction of the company, a direction that I think has been good for competition on a number of markets.

 

Because she specified that this only affects public marketplaces, I'm guessing that this wouldn't affect Walmart stores, but Walmart.com might be? One of the perverse incentives that the EU antitrust case against Google brought up is that because they allowed competition in certain respects (in being open, in allowing multiple stores, etc.) they were punished for their practices in a way that Apple, who doesn't allow for that kind of competition, wasn't. So Google is incentivized to make things less open and to not allow competition where there might otherwise be. So the line between a public marketplace and a private one becomes incredibly important, because how much competition you're allowing might determine if you get regulated. If Amazon forces sellers to jump through a few hoops to become partners or suppliers in the same sense that Coke sells products to CVS, at what point would that marketplace become a "private" one?

 

Wielding antitrust law to increase competition is something I really support, and much of what Warren lays out makes sense, but this kind of thing is very difficult.

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https://www.cbsnews.com/news/full-interview-sen-elizabeth-warren-on-face-the-nation-march-10-2019/

 

ED O'KEEFE: You can imagine, and you know, that this idea has gotten a lot of criticism.

 

SEN. WARREN:: From?

 

ED O'KEEFE: Well we've spoken-- we spoke, for example, to Howard Schultz.

 

SEN. WARREN:: Yeah.

 

ED O'KEEFE: The guy who's thinking about running as an independent.

 

SEN. WARREN: A billionaire, right?

 

ED O'KEEFE: Yes. And he- he suggested that your proposal is quote, "inconsistent with our free enterprise system," and said that it's "emblematic of Democrats proposing," his words, "fantasy ideas that will never be implemented," and that instead perhaps you could just find ways to discuss with these companies ways to make it more competitive.

SEN. WARREN:: You mean we could ask these multi-billion dollar companies nicely if they would not eat up the competition and just behave better in the marketplace. Really? We've had laws around against antitrust activity and predatory pricing for over a hundred years because we understand that the way markets work are when there's real competition in that market. Look at Facebook for example. You know I don't know about you but there are a lot of people who said, "I don't like how Facebook handles privacy, right? They're sucking up all my information and my kid's information." So along comes WhatsApp.

 

And WhatsApp says, "Tell you what we're going to offer what we think is a better product and we're going to give you a lot better privacy." Now, Facebook had two choices at that point. Facebook could have said, "Dang maybe what we better do is make our company better, compete more aggressively, see what people want on privacy. Or we could use the fact that we are a multi-bazillion dollar corporation and just stomp out the competition." They bought the competition and now they're sucking the data out of the competition.

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In an interview with The Verge, Warren did specify that she'd break up Apple, specifically that they shouldn't run the store and compete in it. I'm still not sure how you'd deal with that. It seems pretty imperative to Apple that they be in charge of the store, so they have control of their platform. It also is the best way to distribute apps. I love that on my Android devices I get very regular updates to "core" apps through the store, without having to update the whole OS. Would Apple just pull all their apps out of the store again and make them part of the OS? That seems like a backwards move that might satisfy Warren's requirements. Alternatively, is it enough to allow other stores, like Google does, or does that not matter if no other store has sufficient market share? It would be kind of insane to have a web browser ballot a-la Windows in the EU for core functions of phones.

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3 minutes ago, TwinIon said:

In an interview with The Verge, Warren did specify that she'd break up Apple, specifically that they shouldn't run the store and compete in it. I'm still not sure how you'd deal with that. It seems pretty imperative to Apple that they be in charge of the store, so they have control of their platform. It also is the best way to distribute apps. I love that on my Android devices I get very regular updates to "core" apps through the store, without having to update the whole OS. Would Apple just pull all their apps out of the store again and make them part of the OS? That seems like a backwards move that might satisfy Warren's requirements. Alternatively, is it enough to allow other stores, like Google does, or does that not matter if no other store has sufficient market share? It would be kind of insane to have a web browser ballot a-la Windows in the EU for core functions of phones.

 

My off-the-cuff reaction is that the iOS app store presents a situation where a competent regulator seems more appropriate than just breaking it up. Apple has used their control of the app store in ways that are easily characterized as abusive, but they also have legitimate security reasons for the setup that they have, it's not purely about rent-seeking, so a regulator that will actually smack them if they abuse the situation seems like the appropriate solution.

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16 hours ago, Jason said:

My off-the-cuff reaction is that the iOS app store presents a situation where a competent regulator seems more appropriate than just breaking it up. Apple has used their control of the app store in ways that are easily characterized as abusive, but they also have legitimate security reasons for the setup that they have, it's not purely about rent-seeking, so a regulator that will actually smack them if they abuse the situation seems like the appropriate solution.

Her answer to that is that you don't need a strong regulator if you break the company up, because the market will largely sort that out. So make a strong rule at the top end (no competing in markets you control), so you don't need regulators figuring out if X app breaks broad rule Y (or if a given ad breaks our company policies). I think in general that makes sense, and it particularly makes sense for a company like Amazon.

 

I'm less convinced it makes sense for Apple. I think Apple's success is largely dependent on their ability to foster and maintain a software ecosystem, and I can't think of a successful platform where the platform creator didn't take a large role. Google, Apple, and Microsoft, all build those platforms on the backs of their own software. If you put these rules in place, the incentives for the platform creators shift dramatically.

 

I hadn't thought about it before, but I'd imagine some of the gaming platforms also fall under these rules. Certainly Valve does, though they probably don't make enough money to qualify. Xbox, Playstation, and Nintendo all offer to the public online marketplaces where they own the platform and prominently compete on those markets. I'd be shocked if they didn't offer their own products preferential treatment. In a year when we're likely to see an Xbox without a disc drive, can you even imagine if Microsoft couldn't create their own games to sell on their own platform? How about Nintendo?

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At least people are now talking about the issue, and genuinely discussing breaking up (or not breaking up) big corporations. Before recently it was blasphemy to do so. Same with questioning AIPAC and same with the top marginal tax rate. 

 

Just putting it out there makes a previously verboten topic discussed and its working. It's great.

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