Welcome to the club. The Verge got leaked audio from two of Mark Zuckerberg’s internal meetings with Facebook employees reviewing the challenges faced by the Internet giant, one of which is the upcoming presidential election. With candidates calling for the breakup of the tech giants, Zuckerberg predicted that the worst outcome might be a victory by Elizabeth Warren. If that happens, Zuckerberg told his employees, expect to go to the mattresses:
“You have someone like Elizabeth Warren who thinks that the right answer is to break up the companies … if she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge. And does that still suck for us? Yeah. I mean, I don’t want to have a major lawsuit against our own government. … But look, at the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.” …
“It’s just that breaking up these companies, whether it’s Facebook or Google or Amazon, is not actually going to solve the issues. And, you know, it doesn’t make election interference less likely. It makes it more likely because now the companies can’t coordinate and work together.”
Alert the Federal Elections Commission, because this might just be an in-kind donation to Warren’s campaign, if perhaps inadvertent. Warren herself certainly recognized opportunity when it dropped into her lap. She wasted no time promoting the quote as evidence that she is best positioned to lead the progressive fight against the only-slightly-less-progressive tech giants:
What would really “suck” is if we don’t fix a corrupt system that lets giant companies like Facebook engage in illegal anticompetitive practices, stomp on consumer privacy rights, and repeatedly fumble their responsibility to protect our democracy. https://t.co/rI0v55KKAi
— Elizabeth Warren (@ewarren) October 1, 2019
Warren followed that up with a link to her breakup plan:
— Elizabeth Warren (@ewarren) October 1, 2019
That may sound laudable for conservatives plagued by online platforms’ habits of silencing or curtailing their voices on these systems, but make sure to read Warren’s plan first. Rather than just breaking up these platforms and allowing real competitive pressures to incentivize more responsiveness and openness, Warren would replace their current biased leadership with government-managed regulatory regimes.
Warren’s plan has only two main components, the second of which is fairly anodyne. Warren proposes, as most do when proposing breakups of tech giants, to unwind previous mergers and acquisitions — in Facebook’s case, WhatsApp and Instagram would be the obvious choices. It’s her first component that would “suck” not just for Facebook but for everyone:
First, by passing legislation that requires large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform.
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.
For smaller companies (those with annual global revenue of between $90 million and $25 billion), their platform utilities would be required to meet the same standard of fair, reasonable, and nondiscriminatory dealing with users, but would not be required to structurally separate from any participant on the platform.
To enforce these new requirements, federal regulators, State Attorneys General, or injured private parties would have the right to sue a platform utility to enjoin any conduct that violates these requirements, to disgorge any ill-gotten gains, and to be paid for losses and damages. A company found to violate these requirements would also have to pay a fine of 5 percent of annual revenue.
“Platform utilities”? We regulate utilities on the basis of physical monopolies for access — electricity, gas, water, and local telephone and cable service in some areas. That’s because it’s physically impossible for other providers to dig cables and/or pipes into each residence to allow for physical choice. We undid the Ma Bell monopoly nearly forty years ago, although it took technology twenty years or more to eclipse that “last mile” threshold.
That physical monopoly doesn’t exist with the tech giants. Consumers have choices of other platforms, or the choice not to use any at all. Electricity, gas, and water are necessities for maintaining a basic quality of life, whereas Facebook and Google most decidedly are not. If the federal government sees them as monopolies, then break them apart and leave the components to sink or swim on their own against start-ups that emerge as the markets open up. Turning them into “utilities” will only perpetuate their status as monopolies, as the necessary regulation needed to deal with that will all but kill any start-ups that might challenge them.
This knee-jerk plan to put government in charge of tech giants as “utilities” is one reason a Warren victory would “suck” not just for Zuckerberg, but for everyone. In the meantime, though, who can blame Warren for spiking the ball after this pick-six?