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Democratic calls to break up Big Tech raise fears in Silicon Valley

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Via Financial Times

The race for the Democratic presidential nomination has fuelled trepidation in Silicon Valley, as arguments for breaking up the world’s largest tech companies gain traction among the field of candidates.

Both Bernie Sanders, who won the New Hampshire primary, and his fellow progressive Elizabeth Warren, have called for a break-up of America’s largest technology companies. Moderates such as Amy Klobuchar and Joe Biden are also looking at aggressive measures to curtail the power of companies such as Facebook, Amazon and Google.

Arguments that were once confined to leftwing fringes are being examined more closely by government officials as well. Last week the Federal Trade Commission, which enforces competition laws, said it would review every takeover by a large technology company of a smaller start-up in the past decade to see whether they had displayed anti-competitive behaviour.

For decades, regulators had resisted taking action against companies on competition grounds unless consumers were being harmed through rising prices.

But for the past few years, a small group of leftwing academics has argued that large technology companies are causing damage in other ways, such as by killing off smaller competitors and eroding data privacy.

This group is close to one candidate in particular: Ms Warren.

“Competition is dying,” the senator said in a speech that first laid out her ideas on tech antitrust in 2016. “Consolidation and concentration are on the rise in sector after sector. Concentration threatens our markets, threatens our economy, and threatens our democracy.”

Through her advocacy, their ideas are now gaining a wide hearing in the 2020 presidential race. “What Warren is channelling is a variation of antitrust that the progressive left has managed to resurrect over the past five years,” said Rob Atkinson, president of the Information Technology and Innovation Foundation, which is funded in part by large tech companies.

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Ms Warren’s 2016 speech, which has now become famous in legal and technology circles, was written after a series of informal policy seminars with Barry Lynn, director of the Open Markets Institute, and a handful of other like-minded academics and lawyers who have become her brains trust on tech policy.

“This was the most important speech by a major public figure about the dangerous concentration in the United States since probably the 1930s,” said Mr Lynn. “There was no recognition of the problem, and then there was that speech that highlighted the problem in a way that people could not ignore it.”

Who is behind the progressive rethink on tech?

Barry Lynn, director, Open Markets Institute

Barry C Lynn

Role: Founding father
Founder of the Open Markets Institute, where he has earned a reputation as a thorn in the side of Big Tech

Lina Khan, counsel, House antitrust subcommittee

Lina Khan

Role: Academic wunderkind
Still in her early thirties, Ms Khan’s career has already taken her to a key role on the US House of Representatives antitrust subcommittee

Ganesh Sitaraman, law professor, Vanderbilt University

Ganesh Sitaram

Role: Convener
An informal policy adviser to Ms Warren and an important link between her and the academic community. He is well connected in Democratic circles — he was a groomsman for Pete Buttigieg, another leading presidential candidate.

Lina Khan, who published a seminal paper in 2017 while still in law school, is another member of the group. She has argued that Amazon is too powerful and should be investigated for monopoly violations. Critics have latched on to her youth, branding the movement she has come to represent as “hipster antitrust”.

Ms Khan has also advised the House of Representatives antitrust subcommittee, which is conducting a wide-ranging investigation of corporate power in the technology sector.

Ganesh Sitaraman, a professor at Vanderbilt University, has acted as formal and informal policy adviser to Ms Warren since 2012. Those close to Ms Warren say Mr Sitaraman was influential in getting her to see that the arguments she was making about the need to curb the power of big banks also applied to technology companies.

Democratically aligned antitrust enforcers are also on board. Rohit Chopra, one of the Democratic commissioners at the Federal Trade Commission, has argued against the corporate power built by the likes of Facebook. Democratic strategists say he is a likely candidate to take over the FTC should a progressive candidate win the presidency.

In his July 2019 judgment on the Cambridge Analytica scandal, in which the data of Facebook users were harvested and used for political campaigning without their consent, Mr Chopra echoed many of the arguments advanced by Mr Lynn and Ms Khan. “The case against Facebook is about more than just privacy,” he said. “It is also about the power to control and manipulate.”

Ms Warren’s campaign is looking for a fresh burst of momentum following disappointing results in Iowa and New Hampshire. But even if she fails in her ambition to become president, her approach to tech antitrust has already taken hold.

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Ms Klobuchar, the moderate who outperformed expectations in New Hampshire, has argued for greater scrutiny of tech megamergers, while Mr Biden says he wants social media companies to be liable for the content posted by third parties on their platforms.

Only Michael Bloomberg, the former mayor of New York, stands apart as a staunch defender of Silicon Valley. “Breaking things up just to be nasty is not an answer,” he said last month.

Despite Mr Bloomberg’s opposition, many in the Democratic party think the consensus on Big Tech has now changed for good.

“There were a small number of us that were talking about this type of thing, and our views were seen as somewhat far-fetched,” said one Warren adviser. “I really think she transformed the debate in a way that nobody has.”

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