How Big Government led to Big Tech

How Big Government led to Big Tech

The common refrain among conservatives and liberals is suggesting the federal government is the only solution to reigning in Big Tech. Rachel Bovard wrote at American Consequences it was imperative to use the power of antirust on Big Tech because Google and Facebook are ideological monopolies. Lina Khan, who may be on the shortlist to become FTC commissioner, told BBC’s Hardtalk that Big Tech provided valuable infrastructure but needs to be held to a higher standard to the public. Her main complaint is the companies are controlled by a “small group of private executives.” A new Vox and Data for Progress poll shows Americans are amendable to Big Tech regulation.

The anger is understandable. Khan sees Big Tech as a force preventing innovation and better products from smaller companies. Bovard highlights Facebook’s apparent hypocrisy of limiting anti-lockdown protests while allowing #BlackLivesMatter events (context is needed because Facebook claims the limits were placed on demonstrations in certain states.). Their idea is that using the power of antitrust or some new regulation will suddenly destroy Big Tech’s dam and let information, and opinions, flow freely across the Internet.

This is a fatal mistake because Big Government helped create Big Tech.

Let’s remember, San Francisco created an incentive program exempting companies from the city’s 1.5% payroll tax if they set up shop in the Mid-Market section. The main benefactor? Twitter, which was considering a move to Silicon Valley. The social media company saw its employee base and income soar following the subsidy – derisively called the “Twitter Tax Break,” cementing its power as one of the major online players.

Facebook’s subsidies are more egregious. Most of their incentives come from massive data centers with decades-long exemptions from property taxes in Iowa, Texas, New Mexico, and Oregon. One Iowa city councilman admitted the massive property tax abatement would hurt local businesses, but said it’d be worth it due to jobs (increasing property values were likely not mentioned.). Oregon’s subsidies required Facebook to pay taxes on the land it owns, not the buildings. Other tax incentives save the company $70M for 200 or so employees. New Mexico’s incentives towards Facebook are worth $30B(!) while the Tarrant County, Texas government handed out a 60% cut in real and business property value taxes and an around 40% cut for Hospital District taxes. Fort Worth’s deal with Facebook allowed the company to retain around $13M in taxes.

Nice work if you can get it.

It’s these “incentives” that allow Big Tech to become Big Tech. It gives the companies an advantage against smaller companies allowing their market share to increase. Why try to come up with a new, better product when all the big corporations can do is ask local governments for money for a data center? The tax breaks allow Big Tech to buy out Small Tech keeping its power intact.

Let’s say the government does break up Big Tech. What then? The fractured companies still have an advantage over smaller companies due to the existing tax breaks. It won’t necessarily bring about new products or innovations, just slight tweaks. Did things really get better after Ma Bell was broken up in the 1980s? They eventually became AT&T and Verizon. A similar fate might await Google, Facebook, and Twitter if breakup advocates get their pound of flesh.

The best solution is the hardest. Stop giving handouts to corporations. Do you want to lower taxes to lure businesses into town? Lower them for all companies (and reduce spending). No handouts mean the companies have to fend for themselves and create new products to stay in business. It allows other businesses to develop better interfaces and compete for users.

Getting rid of handouts cures the disease, which is Big Government, instead of treating a symptom, which is Big Tech.

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