Big tech is more competitive than Elizabeth Warren thinks

Last week, Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., made a splash by calling for antitrust action against tech companies. The senator took a victory lap on Tuesday when Facebook restored an ad supporting her plan that was temporarily taken down for using the company’s logo without permission.

Warren is dead wrong. The Internet today is not remotely close to being “dominated by a single censor.” To the contrary, there is healthy competition among major tech platforms — even those that do not seem like direct competitors upon first glance. Breaking up big tech would not lead to a healthier marketplace but would destroy value.

Warren specified her proposal in a March 8 Medium post, calling for “companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties” to be “prohibited from owning both the platform utility and any participants on that platform.” She goes on to call for separating Amazon Marketplace from Amazon Basics and Google Search from Google Ads, as two examples.

Warren and her #BreakupBigTech ilk fail to realize how novel and competitive technology companies are. We are no longer living in the age of Standard Oil where big businesses have monopolized a finite resource that the government can simply redistribute to another company. The Internet’s possibilities are infinite, and thus far household names like Google, Amazon, and Facebook have been the best in creating value from the digital frontier in a largely free and open marketplace. Breaking them up is not as simple as it sounds.

First, it’s not obvious that multiple companies would be able to compete post-breakup on any of the platforms previously mentioned. Take Google Ads, for example, one of Warren’s top targets. As the American Action Forum’s Will Rinehart recalls, the history of online advertising suggests that the connection between the ad and platform are critical for profitability:

Secondly, if the government insisted on breaking up Google Search from Google Ads, it’s not clear that the user experience would be any better. After all, as Rinehart points out, a search engine like Google or social media sites like Facebook would have to be “functionally integrated” with the advertising company managing the ads, sharing demographic data to deliver personalized ads.

Finally, breaking up big tech could severely undermine innovation, as companies like Google, Facebook, and Amazon subsidize supporting services on their platform and spend billions in research and development. To the former point, Google is perhaps the best example of internal subsidization, supporting YouTube, Google Fiber, self-driving cars, and artificial intelligence. Facebook famously purchased the virtual reality company Oculus in 2014, and Amazon leads the way in research and development with nearly $23 billion in 2017.

Mark Zuckerberg was mocked for telling Sen. Lindsey Graham, R-S.C., in his testimony to the Senate Judiciary Committee that Facebook has “a lot of competitors.” But Zuckerberg was correct in the sense that tech companies are fiercely competing to develop the technologies of tomorrow: flying cars, AI, drones, and so much more.

Federal anti-trust actions along the lines of Warren’s proposal would be immensely destructive, potentially undermining future technologies without conceivable gain in competition or user experience. The Internet stands as the strongest example of the power of free enterprise as a wellspring of prosperity. Tearing apart deeply complex and integrated firms through anti-trust would be using a 19th-century government axe on 21st-century technology just beginning to bloom.

Casey Given (@CaseyJGiven) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is the executive director of Young Voices.