Breaking Big Tech would be a mistake – TechCrunch
It seems safe to say that our honeymoon with Big Tech is officially over.
After years of questionable data handling procedures, arbitrary content management policies and blatant anti-competitive practices, it is only right that we take a moment to rethink our relationship with the industry.
Sadly, most of the ideas that have caught mainstream attention – such as calls to break Big Tech – have been knee-jerk responses that sound more like retaliatory fantasies than sound economic thinking.
Instead of chasing after sensationalist non-starters and zero-sum solutions, we should focus on ensuring that Big Tech grows better as it grows by setting a level playing field for digital marketplaces that own startups. and competitors.
Most of the ideas that have caught the attention of the general public have been knee-jerk responses that sound more like retaliatory fantasies than sound economic thinking.
We can find inspiration on how to do just that by examining how 20th century lawmakers curbed rail monopolies, which have also grown from industry darlings to the destructive forces of stagnation.
We have been here before
Over a century ago, the familiar story of a nation facing the unforeseen effects of technological disruption was set in a rapidly industrializing United States.
While the first full-scale steam locomotive debuted in 1804, it wasn’t until 1868 that more powerful and user-friendly American-style locomotives were introduced.
The most efficient and user-friendly locomotives spread like wildfire, and soon steel and iron pierced mountains and leapt over gushing rivers to connect Americans from ocean to ocean. other.
Soon the railway mileage triple and a huge 77% of all interurban traffic and 98% of passenger activity would run on rails, ushering in an era of profitable transcontinental travel that would reshape the economic fortunes of the entire country.
As is often the case with disruptive technologies, the first successes would entail a high human cost.
From the start, abuse and exploitation escalated in the rail industry, with up to 3% of the workforce suffering injuries or deaths in an average year.
The owners of railway trusts quickly became a key part of the much-maligned group of businessmen colloquially known as the robber barons, whose corporations devoured everything in its path and made life difficult for competitors and new entrants in particular.
The railroad owners achieved this by maintaining carefully constructed walled gardens, allowing them to drive competitors into the ground through extortion, exclusion and everything in between.
While these methods proved extremely successful for railroad owners, the rest of society languished under stifled competition and a complete lack of concern for the interests of consumers.
Everything old is new again
Learning from past experiences certainly does not seem to be the strong point of humanity.
In fact, most of our concerns about the tech industry reflect the objections 20th century Americans had against railroad trusts.
Like the theft barons, Alphabet, Amazon, Apple, Facebook, Twitter, and more, have come to dominate major commercial arteries in a way that leaves little room for competitors and startups.
By instituting double-digit platform fees, setting strict limits on payment processing protocols, and jealously accumulating proprietary data and APIs, Big Tech has erected artificial barriers to entry that make their replication almost impossible success.
In recent years, tech giants have also started cannibalizing third-party solutions by providing private label versions – a la AmazonBasics – to the point where Big Tech customers find themselves underestimated and overwhelmed by the holders of the platform themselves.
Given the above, it is no surprise that the pace at which tech startups are being created in the United States has been declining for years.
In fact, VC veterans such as Albert Wenger have drawn attention to the “killing zone”Around Big Tech, and if we are to reinvigorate the competitive fringe around our big tech conglomerates, something needs to be done quickly.
Why We Need To Stop Talking About Breaking Big Tech
The 20th Century Playbook for Taming Monopoly Railroad Trusts offers several useful lessons for dealing with Big Tech.
For the first stages, Congress created the Interstate Commerce Commission (ICC) in 1887 and charged it with administering reasonable and fair rates for access to proprietary rail networks.
Due to partisan politics, however, the ICC has proven to be relatively toothless. It wasn’t until Congress passed the Hepburn Act of 1906, which separated the function of transportation from ownership of the goods being shipped, that we began to see real progress.
By banning self-operation and double-deduction in proprietary platforms, Congress has succeeded in opening up equal access to both existing competitors and startups, making a thicket of practices operating once inaccessible the metallic backbone of American prosperity as we know it today. .
This could never have been achieved by simply breaking the railroad trusts into smaller pieces.
In fact, when it comes to platforms and networks, bigger is often better for everyone involved thanks to network effects and several other factors that conspire against small platforms.
More importantly, when the rules for access and interoperability are well defined, larger platforms can support increasingly large constellations of startups and third parties, helping us grow our economic pie instead of reduce it.
Making digital markets work for startups
In our post-pandemic economy, our focus should be on helping technology platforms grow better as they grow instead of shrinking them to the correct size.
Ensuring that startups and competitors can access these platforms on fair terms and at fair prices is a necessary first step.
There are many other concrete actions that policy makers can take today. For example, rewriting the rules on data portability, promoting broader standardization and interoperability between platforms, and reintroducing net neutrality would go a long way in addressing current industry issues.
With the recent intervention of President Joe Biden nod towards “Amazon’s antitrust antagonistLina Khan as the next Federal Trade Commission commissioner, these changes suddenly seem more likely than ever.
Ultimately, we would all benefit from a strong fringe of startups and competitors who thrive on the shoulders of the giants and the platforms they have created.