Breaking up tech should be hard to do

Born and raised in America, these companies symbolize the country’s incredible global leadership in technology, leading to the creation of millions of jobs and trillions of dollars in stock value for shareholders.

The government’s antitrust attack on tech started on May 18, 1998, when the Justice Department launched its suit against Microsoft. Amazon was four years old, Google was incorporated four months after the lawsuit was initiated, and Facebook was six years away from creation. Apple was incorporated in 1976, but by 1997 it was nearly bankrupt, and by 1998, its stock price was barely more than $1 per share. After the Justice Department spent more than $40 million taxpayer dollars on the Microsoft antitrust case, the company again has the highest market cap, just like it did in 1998. Apple went from virtually nothing to become the first company with a market cap of more than $1 trillion and remains among the top five most valuable companies, demonstrating that Washington has no business trying to regulate the technology industry.

Echoing the Microsoft “case,” House Judiciary Subcommittee on Antitrust Chairman David Cicilline, D-R.I., announced on June 3, 2019, that the committee was launching an investigation into digital platforms to develop “kind of a deeper understanding of how the market is failing, why the internet is broken and why it’s not functioning well, and then looking at what we need to do in terms of legislative action.”

Nothing like declaring them guilty the week before the hearings began. And the definition of the “marketplace” supposedly occupied by the four companies is part of that prejudgment process.

While Congress tends to write one-size-fits-all legislation, it is virtually impossible to have a single “digital platform” policy, since each company under the subcommittee’s microscope has a unique method of operation and a different piece of the internet ecosystem. Digital platforms cover an enormous array of online activities, including search engines, social platforms, platform-as-a-service, infrastructure-as-a-service, and artificial intelligence. They allow interactions between suppliers and consumers, with different business models (advertising revenue versus fees) and different rules for managing content to make these interactions work most effectively.

It must surprise anyone who uses the internet that it is “broken” and dysfunctional, since there is more information available than ever, greater choice in where and how to find information, and incredibly easy and cheap access to goods and services. Walmart and Amazon are now racing to see which company can deliver goods faster, and that is just the beginning of welcome competition. Consumers have gone from waiting weeks to days to one day to a few hours to get millions of items delivered directly to their homes and businesses, all of which they found in one of thousands of online marketplaces.

It is not clear what anti-competitive or anti-consumer activity is occurring on these supposed “digital platforms” that Congress needs to address. Perhaps the subcommittee would like everyone to get their packages delivered by Pony Express and use flip phones with no access to the internet.

Ironically, the differences among “digital platforms” and the difficulty of legislating to cover that supposed marketplace is reflected in Facebook’s decision not to take down a doctored video of House Speaker Nancy Pelosi versus YouTube’s decision to do so. Her response was to join some of her colleagues in calling for action against the targeted companies in her tweet on June 3, stating, too much “economic power in the hands of a few is dangerous to democracy — especially when digital platforms control content.” A second June 3 tweet praised the Judiciary Committee’s “long overdue investigation to determine if dominant digital platforms have harmed Americans in the marketplace & the voting booth.”

Antitrust laws are designed to promote and protect competition, not punish large companies simply due to their size or success. The subcommittee’s investigation reflects a fundamental misunderstanding of these principles.

Jealousy, miscommunication, and irreconcilable differences may be reasons to consider breaking up a marriage. But they have no place in the effort to break up some of the nation’s most successful companies.

Tom Schatz (@TomSchatzCAGW) is president of Citizens Against Government Waste.