Massachusetts Sen. Elizabeth Warren released an aggressive plan on Friday to target the power of Silicon Valley by breaking up some of America’s biggest tech companies.
But while the Democratic presidential candidate’s proposal is sure to excite tech critics and progressive activists, antitrust experts caution that the country’s existing laws and precedent would mean a hypothetical President Warren would face a tough road ahead.
The ambitious plan includes two main parts. In the first, Warren would pass legislation that prohibits companies from offering a marketplace and also participating in that marketplace — forcing giants like Amazon and Google to spin off large parts of their businesses. Second, Warren says she would appoint regulators who would unwind “illegal and anti-competitive tech mergers,” again referencing high-profile companies such as Facebook and Instagram.
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation,” Warren said in a Medium post announcing her plan.
Warren has presented herself as a presidential candidate who will appeal to voters with detailed policy proposals on big issues and a fiery populist tone. This proposal continues that trend and sets a bar that may challenge other Democrats, especially in a field already split between those like Warren who have criticized Big Tech and others who have taken money from the industry.
The ideas Warren is presenting are in line with the increasing public backlash against Silicon Valley, but her approach may be difficult to implement, antitrust experts said on Friday.
“I think she has some good ideas. I think she is a little bit aggressive,” said Eleanor Fox, a professor of trade regulation at New York University School of Law.
Part of the issue is that the some of the concerns Warren seeks to address, particularly around data use and privacy violations, do not fall under traditional antitrust law, according to experts.
“Undoubtedly we should have serious concerns about privacy. How are we going to think about privacy now and in the future? But this is not an antitrust issue,” says antitrust expert and University of Arizona law professor Barak Orbach.
The main law that applies to antitrust cases is the Sherman Antitrust Act. Over the past several decades, the courts have interpreted antitrust law conservatively, Fox says, so finding violations typically requires a situation where a company’s actions are lowering output or raising prices.
These two concerns don’t necessarily cover the issues raised by big tech companies operating on the internet in 2019.
“Antitrust or competition policy has to catch up with the fact that we have these forms of restraint that are not about lowering output and raising price, but they are about amassing huge amounts of data and using it very profitably and amassing it often deceptively,” Fox said.
Ideally, Fox says the Federal Trade Commission would be the best place to resolve this. The FTC recently launched a task force focused on tech competition and would be in position to analyze cases, weigh both the interests of consumers and those of companies and decide whether to expand its interpretation to cover new types of problems.
But the commission is currently composed of three conservative members and two more liberal ones, so it would be unlikely to offer a decision Warren likes. In addition, proposing a brand new law sounds a lot more exciting for a presidential candidate than talking about procedural details, Fox notes.
“It would be a big uphill fight to get this legislation through,” she said. “It will draw forth a lot of animosity — even by people who are sympathetic to the idea that big tech firms are abusing power.”
When it comes to the second part of Warren’s plan, some experts felt more optimistic.
“The retroactive breakups, in particular, are a great idea and very doable — not pie in the sky,” Columbia University law professor and frequent big tech critic Tim Wu said in an email. “A world where Instagram and WhatsApp were actively trying to compete with Facebook — especially by offering better privacy practices — would be a big step forward.”
Warren specifically called out acquisitions by Amazon, Facebook and Google in the past few years in her announcement about breaking up tech companies. She also gave the example of the antitrust case against Microsoft in the 1990s as a means of promoting competition. But Daniel Crane, an antitrust expert at the University of Michigan Law School, said this doesn’t track with Warren’s stated goals.
“Microsoft was the last time there was a serious discussion about breaking up a company and the D.C. Circuit en banc ruled that no you’re not going to do that,” he said. “So I think there’s a real disconnect between what she sees as an effective antitrust intervention and the rhetoric of breaking up, which is exactly what we didn’t do with Microsoft.”
Another potential obstacle for Warren could be Facebook’s announcement in January that it plans to integrate its messaging services, including WhatsApp, Instagram and Facebook Messenger. If it does this, it could become much more complex and costly to force the company to disentangle these components.
“I think that the integration proposal creates the urgency,” Wu said. “When the mergers happened, Facebook promised that the firms would remain separate. The proposed integration makes the problem worse.”
Others noted that if politicians like Warren want to break up these companies, it’s also important to act before consumers get used to more integrated services.
“If you’re going to try to unwind any of those now is the time to strike,” said Crane. “If you’ve gotten used to using certain IM services from Facebook in an integrated way, and now suddenly along comes the FTC and says we’re going to break that up, that’s not great from a consumer perspective.”
Over all, experts said that even with the pushback against Facebook and Amazon in the last few years, Americans have traditionally preferred to leave companies alone. This is very different from the European Union, where powerful companies have a “special responsibility” to not restrict competition.
“I think even saying the words special responsibilities is likely to cause a lot of pushback in the United States,” NYU’s Fox said. “I think some people think they care [about this issue] but they might be distressed if they find that Facebook or Google is broken up and they don’t get the services they used to get.”
