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Elizabeth Warren Proposes Plan to Break Up Big Tech

WASHINGTON — Sen. Elizabeth Warren (D-Mass.) proposed a sweeping plan to break up tech giants like Facebook, Google, and Amazon, and to impose rules preventing platforms from engaging in discriminatory practices.

“America has a long tradition of breaking up companies when they have become too big and dominant — even if they are generally providing good service at a reasonable price,” Warren wrote in a Medium post on Friday.

Her proposals include legislation to designate tech giants as “platform utilities,” meaning that companies could not both own the platform and be a participant on it. As an example, she wrote, Google’s ad exchange and businesses on the exchange would be split apart, and Google search would have to be spun off. Companies with an annual global revenue of $25 billion or more that offer an online marketplace or a third-party exchange, like Amazon Marketplace and Google’s ad exchange, would be designated as utilities.

The companies would also be prohibited from discrimination in dealing with users, applying some of the name net neutrality standards that have been aimed at internet providers like Comcast and AT&T. The platform utilities would not be allowed to transfer or share data with third parties, a provision designed to address growing concerns about the privacy of personal information provided by consumers.

Smaller companies, or those with global revenue between $90 million and $25 billion, would also be prohibited from discriminatory conduct, the would not be required to make the same divestitures as the larger platforms.

Warren also said she would appoint regulators to undo existing mergers, and she specifically cited Amazon’s ownership of Whole Foods and Zappos, Facebook from WhatsApp and Instagram, and Google from Waze, Nest, and DoubleClick.

She wrote that the proposals will give small businesses a “fair shot to sell their products on Amazon without the fear of Amazon pushing them out of business. Google couldn’t smother competitors from demoting their products on Google Search. Facebook would face real pressure from Instagram and WhatsApp to improve the user experience and protect our privacy.”

Federal regulators, state attorneys general or private parties would get the right to sue a platform utility for violating the regulations, with the ability to collect “ill-gotten gains,” losses and damages. A company also would be fined 5% of annual revenue if found in violation.

Her proposals go farther than other Democratic presidential candidates in prescribing solutions to the marketplace dominance and political power of major platforms.

While other candidates aren’t proposing as sweeping of measures to rein in the power of big business, there has been a shift in how they are talking about big tech. In recent presidential cycles presidential contenders treated Silicon Valley tech giants as shining examples of the economy. Now they are targets, as politicians express concerns over privacy, data collection and antitrust.

Sen. Amy Klobuchar (D-Minn.), one of Warren’s rivals for the nomination who is the ranking member of the Senate Judiciary antitrust subcommittee, said this week that it is her goal to “make antitrust cool again.” She has unveiled a set of proposals that includes shifting the burden to companies to prove that their mega mergers do not harm competition.

Warren put her proposal in the context of the trust-busting that followed the Gilded Age, when Standard Oil, JPMorgan and AT&T controlled vast sectors of the economy. She noted that reformers in both parties sought to break up the conglomerates.

Some of her ideas actually have some buy in on the right. When he was still in the White House, Steve Bannon floated the idea of regulating Google and Facebook as utilities. President Trump has at times railed against big tech and suggested that they have antitrust problems, although he also believes that the platforms have been unfair to conservatives and conservative content.

At a Senate hearing this week called “Does America Have a Monopoly Problem?,” she was joined by Sen. Josh Hawley (R-Mo.) in expressing “great concern” over the increasing concentration across the economy, not just in tech.

He said his concern was the “drowning out of small and individual voices” and also “the ability of these behemoth corporations to extract favors from government and to leverage their economic power into political power. That results in cronyism and insider dealing, and in the manipulation of our free market into something that is decidedly not free and that is rigged.”

Sen. Mike Lee (R-Utah), the chairman of the antitrust subcommittee, urged “some humility in how we approach this work, about our understanding, about how our markets function, particularly before we condemn activity that appears to benefit consumers.”

NetChoice, an eCommerce trade group, said Warren’s proposals were misguided. Carl Szabo, its VP and general counsel, said in a statement that it would “increase prices for consumers, make search and maps less useful, and raise costs to small businesses that advertise online.” He argued that “never before have consumers and workers had more access to goods, services, and opportunities online.”

Democrats have long enjoyed lopsided support from the tech industry. According to the Center for Responsive Politics, almost 80% of contributions from employees of internet companies went to federal Democratic candidates and committees in 2018.

Warren, however, is not taking PAC money, and she recently announced that she would not attend high-dollar fundraisers with major donors.

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