Tech giants such as Google wield overwhelming market power. Does that mean they should be compelled to disband?
An FKD Feature exclusive

News Corp, run by Rupert Murdoch, believes that Google is essentially the gatekeeper to the internet. And for that reason, they maintain that Google should be forced to sell off a part of its business to a third party. This would, in a sense, level the playing field for other internet browsers, as well as for advertisers and consumers. Google responded that News Corp is operating upon the mistaken premise that they have market power in search, search advertising, and news media referrals. Google says that, to the contrary, they have “fierce competition.”

Google, one of the five largest companies in the U.S. by market capitalization, is estimated to have an 88 percent market share in search advertising. This would make it a “natural monopoly,” according to a New York Times Opinion piece, which compares it and the other tech giants, to the position of AT&T, which came under government regulation in the 1950s and whose break-up spawned companies such as Texas Instruments, Motorola and others.

It’s not only News Corp

News Corp’s complaint is only the latest in a long line of complaints against the outsized power of U.S. tech giants. Most notably, Democratic Presidential hopeful Sen. Elizabeth Warren also has condemned the company’s disproportionate control of the online commerce sphere and even has released an aggressive plan to get Amazon, Facebook and Google to disband.

Under Warren’s proposed plan, companies with more than $25 billion in annual revenue would be subject to a host of regulations, some of which would require these companies to spin off parts of their companies and relinquish their overwhelming control of the online sphere.  

“Today’s big tech companies have too much power — too much power over our economy, our society and our democracy,” Warren wrote. “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.”

What would change?

These tech behemoths would be further regulated by the government. According to a blog post from Warren, here are some of the presumed results of further regulation:

“Small businesses would have a fair shot to sell their products on Amazon without the fear of Amazon pushing them out of business,” Warren wrote. “Google couldn’t smother competitors by demoting their products on Google Search. Facebook would face real pressure from Instagram and WhatsApp to improve the user experience and protect our privacy. Tech entrepreneurs would have a fighting chance to compete against the tech giants.”

It’s not just privacy concerns that those in favor of a break-up believe would improve. Content creators, such as newspapers, have to compete with Google for advertising revenue and are failing miserably. Also, innovation in technology is stifled by the stranglehold Google and other big tech companies wield. As the economist Scott Stern has alleged, “it has become increasingly advantageous to be an incumbent, and less advantageous to be a new entrant.”

Some even allege that the real damage is to our democracy since Google controls such a big part of the news market. The problem with this was already seen in the “fake news” issue that plagued and continues to plague us. Some have warned that if Google and others are not regulated, we will have learned nothing from the 2008 financial crisis, which resulted in the regulation of big banks.  

Takeaway

Imposing government regulations on business is not something to take lightly, and, if we regulate Google, chances are we will have to impose regulations on the other big tech companies such as Facebook and Amazon.  

 

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Posted 03.14.2019 - 11:00 am EDT