Despite their tremendous value to the economy, Big Tech firms are a menace the US government has been struggling to keep in check, until now. Or is it too late?
After years of fostering a mutually beneficial relationship, it appears the love affair between the US government and Big Tech is over. The primary reason is that these companies have gotten too big.
If Big Tech companies were countries, Apple would be the seventh wealthiest. Microsoft, Alphabet, Amazon and Nvidia would crack the Top 20, with Meta narrowly missing out.
While every nation on earth is concerned about what these companies can do to the competition (where they still exist), most are powerless against them. Now, it is up to the US government to slay the monsters it created.
FTC’s war on Big Tech
When Lina Khan took over as the chair of the Federal Trade Commission (FTC) in 2021, she became the face of President Biden’s campaign against Big Tech. Since then, the former Columbia University law professor has sued, probed and thrown everything at these companies.
In December, the FTC sued to block Microsoft’s $69 billion acquisition of video game company Activision Blizzard because it would give Xbox an unfair advantage. Even though Microsoft had assured the European Commission (EC) that it wouldn’t make game titles exclusive, the FTC argued otherwise.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the FTC’s Bureau of Competition. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
Microsoft won the case and would have proceeded with the merger, if not for opposition from the UK’s Competition and Markets Authority (CMA).
In the past two years, the FTC and the U.S. Justice Department have challenged 22 mergers in court. Most recently, the Justice Department sued Alphabet over Google’s dominance of online advertising, requiring the company to sell its ad manager.
This is not the first time Alphabet has been sued in the US or outside for that matter. Last year, the tech giant lost a suit challenging the EC’s ruling that it quashed competitors of its Android operating system. The search engine giant was fined $4.12 billion.
Besides taking companies to court, the FTC has tried to introduce policies to balance the scales of competition.
One of the FTC’s boldest moves is aimed at noncompete agreements, which the Commission labelled as exploitative and affecting 30 million workers.”The freedom to change jobs is core to economic liberty and to a competitive, thriving economy,” said Khan in a statement. “Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand.” The FTC estimates that removing noncompete agreements could increase wages by over $300 billion a year.
In a separate fight, the FTC co-published a new antitrust roadmap with the Justice Department. The guidelines detail the types of mergers and acquisitions they object to, listing Amazon’s acquisition of Ring as an example.
Despite all of the effort Khan has put in, Big Tech has only gotten bigger. In order for the US antitrust regulators to be successful, they are going to need a lot more support.
Senators propose new regulator to oversee Big Tech
In an unprecedented move, Democratic Senator Elizabeth Warren and Republican Senator Lindsey Graham have teamed up to propose a bill that would create a new regulator to oversee tech. The new commission would halt anticompetitive acquisitions or require asset sales when necessary. The bill will also tighten antitrust laws and prevent companies from favouring their products. For example, Amazon has been accused of showing its products more often in searches.
The new Digital Consumer Protection Commission would also limit foreign ownership and protect young social media users. “This bipartisan bill would create a new tech regulator and makes clear that reining in Big Tech platforms is a top priority on both sides of the aisle,” said Warren in a statement. Graham added that the bill would better protect American consumers.
Both senators said the digital commission is needed because Congress could not be trusted to pass effective laws to curtail these entities. They argued that lawmakers are vulnerable to lobbying and are slow to respond. Those opposing the bill say there would be too much overlap because the FTC and U.S. Justice Department already loosely fulfil that role.
Given the failure of those regulators to stop Microsoft, Meta or Alphabet, there is an argument that those entities can easily be bypassed. If successful, the Digital Consumer Porection Commission could wield the same powers as the CMA in the UK and the EC in Europe.
While the US tries to figure out a strategy, other nations are enforcing laws to check Big Tech.
The global crackdown on Big Tech
The EC has had a very busy summer with policies aimed at US tech companies. First, it updated the process for investigating privacy breaches across borders. The regulation will also impose harsher fines on lawbreakers. It then followed this up by updating the Data Act signed into effect last year to curtail Big Tech’s activities. The updates will ensure better privacy protection for European citizens and limit foreign access to their data.
This law is similar to the one recently passed in India. The data protection legislation in the Asian country will also prosecute companies guilty of data breaches and limit foreign access to data.
China has just concluded a three-year crusade against its largest companies, which reduced the combined value of its big tech firms by $1.1 trillion.
While similar measures would be difficult to implement in the US, it is an option.
The only question is, does the US want to risk something similar happening to their tech firms, or have these firms grown so powerful that nothing can stop them? The answer, unnervingly, just might be the latter.
