On Tuesday the House Judiciary subcommittee released its findings and recommendations on how to reform laws to fit the digital age. They conclude that the four Big Tech companies enjoy monopoly power and suggest that Congress take up changes to antitrust laws that could result in parts of their businesses being separated.
Video Transcript
– Welcome back to The Final Round. Well, the House Judiciary Subcommittee on Antitrust releasing its findings and recommendations. This follows a 16 month long investigation into competitive practices at four of the big tech firms, Apple, Facebook, Amazon, and Google. So for more on this, we want to bring in Bhaskar Chakravorti. He is the dean of Global Business at Tufts University.
And Bhaskar, great to have you on the show. This report that we’ve just received is 450 pages, and it was largely what we were expecting, just in terms of the Democrats taking the side that they’re questioning some of the monopoly power that these big tech giants have. They are pushing for some changes that could potentially result in some of these companies being broken up.
And then, of course, we have Republicans that are voicing at least some objections to some of these proposals. Just in terms of what you think is the biggest challenges of big tech right now and the best ways to address them, where do you stand on those issues?
BHASKAR CHAKRAVORTI: So there is obviously a lot to process, you know, with this new report that has just come out. But this report is– and the action that the house is recommending is happening in parallel with a number of other actions. There is action in the Senate. The Department of Justice has indicated that it plans to launch its own antitrust lawsuit against Google. You have the FTC. You have the states attorneys general. So there is a lot going on.
And in terms of the complaints against big tech, there are several. In addition to the fact that they are big, people are worried about misinformation, about what’s happening to our data, and there are so many different complaints against these companies.
So obviously, this is a challenging time for technology. And at the same time, this is one of the best periods for technology overall, because guess what? Thanks to all of us being under some form of shelter at home or lock down, the primary tether that we have to the rest of the world is through their products. So this is the worst of times. It’s also the best of times.
– Bhaskar, what are one of the key policies that congressman David Cicilline, who chairs the Antitrust Committee, has put forward is this Glass-Steagall, as he calls it, of tech, essentially preventing these tech companies from selling products on their own platforms. That would limit Amazon. That would limit Google. That would limit Apple.
How realistic is that option, and how much do these companies, do you think, stand to lose if they have to unwind the structure– the business structure they have right now?
BHASKAR CHAKRAVORTI: So the companies would obviously have a lot to lose if a version of Glass-Steagall were to be passed for the technology companies and the platforms were to be separated from the applications. They have a lot to lose, not only because they lose business, but they also lose the data and the ability to utilize the data that they gather on their platforms to then sell products to the same users.
The consumers potentially could also lose, because sometimes that data leads to tailored services. So unpacking these companies, breaking them apart, is going to be a long and complex process. And the history of antitrust– the history of trying to break up tech companies– is not very encouraging.
In 1956, the Bell System monopoly was left intact after a seven year legal saga to try to break them up. IBM, the action lasted for 13 years, and IBM was left unbroken. The 1998 action against Microsoft, again, left unbroken. It all ended with a settlement.
So you know, history suggests that it is not easy to break these companies up. And now these companies are even more complicated than IBM, Microsoft, or the Bell System was in the past.
RICK NEWMAN: Hey, Bhaskar. Rick Newman here. And you could possibly argue more powerful. So as you point out, antitrust litigation takes years and often doesn’t work. There could also be some kind of legislation, which seems to be what the House Democrats are hinting at by putting out this report.
But is there a legislative way to address this, and what is your best guess, 10 years from now, whether these companies will look more or less like they do today, or will they look different?
BHASKAR CHAKRAVORTI: So just working backwards from your question, Rick, I never try to predict what these companies are going to look like 10 years from now, because guess what?
RICK NEWMAN: That’s why I have to ask.
BHASKAR CHAKRAVORTI: I’m sorry?
RICK NEWMAN: That’s why it’s my job to ask.
BHASKAR CHAKRAVORTI: Right. You know, in 10 years, so much happens, right, in the technology business. But here is one prediction. I would make, that any antitrust action to try to break them up, that’s not going to happen. That’s not going to happen for so many reasons, because there’s too many complaints against too many companies.
We’re not going after one Microsoft. You’re going after Google or Alphabet. You’re going after Facebook. You’re going after Amazon, and potentially Apple. They’re all different companies. They’re all in tech, but they do very different things.
The complaints against them are different. The set of complaints against Facebook is very different from the set of complaints against Amazon. So the legislative action is complicated by the fact that legislative actions themselves are slow-moving processes.
Our legislators primarily don’t talk to each other across the aisle. They would have to come together as Republicans and Democrats to somehow craft some kind of a united front against these companies. This is going to take a while.
So one thing that I would expect to happen would be a series of settlements with these companies. And here is a recommendation. Go after the biggest technology problem that we face as a country. The biggest technology problem has been laid bare by the pandemic.
About 160 million Americans– roughly half the population of this country– does not have reliable access to broadband internet. Half this country does not have access to the internet, which could allow them to get on a video call, just like what we are doing. Which means they can’t get their children to attend schools that are being done remotely. They can’t do telehealth consultations. They can’t work from home.
This is a problem that could be potentially solved through a settlement with these big tech companies, because guess what? All four of them– the big ones that they’re after, Apple, Google, Facebook, and Amazon– they are all in the internet access business. They have invested in internet access in other parts of the world. They can direct that to this country and try and solve that problem.
That’ll be one piece of a settlement, and then there are several other pieces that would happen. 10 years from now, I expect there are going to be some rules and regulations in place and a deal that will be struck across the legislators and these different companies.
