The impending fight for Big Tech is as big as Texas


The most amazing business story of the past 25 years is the global rise of technological megalodons. I’m thinking of superstar companies like Facebook, Amazon, and Google, in addition to Microsoft, Apple, and others.

The most astonishing business story of the next two to five years will be the government’s reaction to their rise – with attempts to contain, smash and ultimately break down many of these companies.

The Texas Legislature and Governor Greg Abbott kicked off the project a few weeks ago, passing a law prohibiting social media giants from discriminating against users based on their political views.

Abbott supported this regulation on social media companies with more than 50 million monthly users – think of Facebook, Twitter and Google, which owns YouTube – because they are part of what he called a “movement. dangerous ”to“ silence conservative (and) religious beliefs. ”Specifically, these tech companies are subject to the law because of their size.

Abbott and the legislature raised a wave of right-wing anger over perceived political biases through the “shadow ban” or the removal of the dominant voice platform from the Conservative movement. Twitter and Facebook shut down former President Donald Trump’s accounts after January 6 riots in Washington, DC

Elsewhere, Senator Josh Hawley of Missouri, a Republican, dedicates a section of his site at Big Tech, touting the Bust Up Big Tech Act he proposed in April. Hawley calls out Amazon, Google, Twitter, Facebook and TikTok as specific targets of his anger, his legislation and his future regulation.

When it comes to conservative voices supporting Texas law, it’s important to pay close attention to what may have been triggered on the right – and what is coming from the left.

Historically, the federal government has regulated large businesses when they hurt consumers. This is the central idea of ​​antitrust law. More on that later. But what Texas executives attacked Big Tech for wielding power in regards to business size. The size of the industry itself is the threat, and the national right, including the state government of Texas, is here to fight it.

This news from Texas is part of a larger federal context. People who pay attention to antitrust regulation may be aware that President Joe Biden has appointed new voices with entirely new ideas about what should happen with Big Tech. The movements predict great fights to come.

OK, it’s time for a quick lesson on antitrust actions in the United States.

Once upon a time, soon after dinosaurs ruled Earth at the turn of the 20th century, captains of industry were invading the world, setting monopoly prices and breaking unions at their will. President Teddy Roosevelt – speaking quietly – came with him to set a precedent for the dismantling of big business for the benefit of the public. The progressive era, led by Roosevelt and his successor, William Howard Taft, brought giant monopolies to heel and led to the creation of the Federal Trade Commission in 1914.

However, by the end of the 20th century, breaches of trust were rare and in theory limited to situations in which consumers were actually hurt. For most of the past 100 years, size itself was not an issue – just the harm it could do to consumers through monopoly actions. Think of the airlines, drug companies, or cable companies that coordinate on pricing. Legal scholar Robert Bork – also famous for a few other episodes in US legal history – is credited with limiting antitrust action to the test of whether consumers have been aggravated by monopoly corporations.

Now, Bork’s theories are no longer in vogue in Washington, and a new, broader view of antitrust law has arrived.

Lina Khan rose to prominence in 2017 as a law student, calling out Amazon as a candidate for antitrust action although it didn’t hurt clients. As a service, Amazon is delicious. It is generally believed to have driven prices down in the markets. As a megalodon, however, Khan proposed – and many antitrust lawyers have subsequently accepted – that the company could pose a threat to a strong economy and society, and should be subject to antitrust regulation based primarily on its size and power. It is the new measure of monopoly power and its impact on society.

Khan and his colleagues at an anti-monopoly think tank have also attacked Facebook and Google. She was recently appointed chairman of the Federal Trade Commission by the Biden administration, taking office in June.

Other thinkers who share Khan’s broad view of antitrust law have also joined the Biden administration. Legal scholar Tim Wu, credited with coining the phrase “net neutrality” and author of “The Curse of Bigness: Antitrust in the New Gilded Age”, has joined the administration as the president’s special assistant for law enforcement. technology and competition policy.

It’s probably only a matter of time before the administration takes aggressive action against Big Tech with this relatively new approach to breaking monopolies.

This is where Abbott’s leadership this month in the Big Tech attack indicates irony or perhaps even unlikely political coalitions.

Big Tech’s new antitrust approach isn’t all that different from the reasons Hawley and Abbott are attacking Big Tech megalodons. Do I think we’ll see a coordination of the right and the left on this? No. As always, the enemy of my enemy is my friend. But the coming battles with Big Tech on both sides can create unusual and ironic positions and temporary alliances.

Two more thoughts on antitrust regulation and the markets. The focus on greatness by the Federal Trade Commission means more risk for mergers and acquisitions. It’s clear. In addition, the last major antitrust action against Microsoft hit that company in April 2000 – the judge handling the case calling for its split into two companies – roughly coinciding with the start of a massive drop in the Nasdaq index. , rich in technology. Microsoft appealed and won that decision in September 2001, 20 years ago.

Big Tech is not going to fall without a fight. The markets, however, are unlikely to like it.

Michael Taylor is a columnist for the San Antonio Express-News and author of “The Financial Rules for New College Graduates”.

michael @ michaelthesmart

money.com | twitter.com/michael_taylor



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