A list of things that are wrong with Elizabeth Warren’s plan to break up Facebook, Google, and Amazon

A counter to Elizabeth Warren’s plan to break up several big technology companies

It seems that ripping big technology has become a standard practice worldwide post 2015. Between the talked about European and Australian specialized taxes on big technology, and rhetoric from everyone from Bernie Sanders to Donald Trump on Amazon and Google, it has become normal to attack technology companies, especially ones that use personal information and advertising to generate revenue.

Certain companies have been completely left out of targeting, like Microsoft and Apple (although now that’s changed). The reason why these 3 companies were isolated instead of other giant technology companies is vague. According to Warren, it has to do with the fact that Google, Facebook and Amazon buy companies which limit competition, and they also have a majority control digital media traffic. There is also constant reference to Google, and Facebook

“ scooping up” information about people, musicians, and users. She frames the advertisement and user data model as manipulative and exploitative.

Here are all the reasons why Elizabeth Warren has as much business acumen as Native American blood:

The acquisitions haven’t impacted Americans as much as other aspects of the economy.

Some of the companies that Warren lists that she’s cited as being manipulatively acquired were Waze, Whats App, Wholefoods, Instagram, Diapers.com, Zappos and Doubleclick.

She cites an economist article that states venture capitalists are hesitant to back companies in the form of social media, search engine, mobile and E-commerce, because Google, Facebook, Microsoft and other big technology companies threaten having a better product than them.

There’s a few problems with this.

Being bought by a company like Google, Amazon etc is actually a huge accomplishment that many investors like. That’s the great thing about investing, you have a say in the companies ownership. What often happens is that a company might be bought by a large tech company, but the investors get paid. This would include venture capitalists. There’s actually an incentive to have your company bought out, because you get paid a lot of money and you don’t have to run a business anymore. Matter of fact, capitalists can invest in something else or just invest in the stock market after they’ve sold their business.

But then there’s the other concern that capitalists are skeptical of forming social media, search engine, mobile and E-commerce companies because of big technology. From an investors standpoint, if the product is better than large tech’s version, it will either warrant a purchasing opportunity or they’ll make money. Despite the mischaracterization of big technology, compared to other big companies like Comcast, TimeWarner, and other internet service providers who routinely have been known to hurt their customers, Amazon’s “customer first” mentality actually delights consumers.

The economist article cites companies getting hammered by large tech that are still around. Snap is still a company, and so is Blue Apron. Yet these are used as the example of big tech killing smaller companies. Slack is still competing with technology companies despite being relatively new. There are small scale companies that still make the larger ones nervous, and pose a threat. The evidence for the tech companies directly impacting startup culture is tenuous at best. There might be some cases, but the overwhelming majority of technology companies promote things like open source software, and things to facilitate software development and innovation, not impede it.

The Microsoft anti trust case was about bundling Internet Explorer with Windows

Elizabeth Warren cites a case where an anti trust case was brought up against Microsoft, and uses it as precedent to break up the current technology companies.

The case brought against Microsoft was that it was unfair to have their operating systems bundled and lumped together with Internet Explorer (IE). Today, we might call that a tech ecosystem. Today, Apple’s Operating System (OS) comes with Safari as default, and Google’s comes with Chrome. They are actively competing with each other to provide the best ecosystem for users. While Microsoft was one of the only major technology companies with an operating system (although Apple did exist at the time also, so even then it wasn’t a true monopoly), now there are multiple big tech companies all each fighting for the customer.

Providing an all encompassing technological experience that’s seamless is actually great for users, and using a case that fights against that is dubious. There is no evidence that the Microsoft anti trust case laid the foundation for innovation. The result of it was actually placing 3 regulators in Microsoft to overlook all their code and software. It didn’t accomplish anything really tangible.

Targeting single large tech companies by name will help other large companies unfairly

By breaking up Amazon, you help Walmart, JC Penny, Macy’s, Target, and other large scale retailers. People still primarily shop for things in-person, not online. By going after online sales specifically, Warren is actually going after a smaller market.

One of the other contentions by Warren is that Amazon, and other companies, shouldn’t be able to host a digital market platform, and also make products for that platform. But this ignores a larger market like was just discussed. Shouldn’t the same logic be applied to other marketplaces and store brands? Walmart still would be able to sell their Walmart brand products at their physical stores, right? Shoprite and some of the larger grocers do the same, which is make their own brand of goods and sell it in their marketplace. So why is Warren targeting online shopping spaces, despite the fact that most people shop in person anyway? With Warren’s logic, grocers have been snuffing out smaller competitors unfairly for years. If her logic was taken to its logical conclusion, then every mid size to large grocer in the country would have to stop selling their store brand products. This would actually shift costs back onto consumers, since consumers would then have to buy the more expensive brand.

Source: Why is this allowed, but Amazon style chargers not?

Could you make an argument that the cheaper store brand is wiping away the smaller companies that sell at the grocery stores? Why is Warren specifically discriminating against digital spaces when physical ones practicing exactly the same model have been around longer than Google has been a company?

Targeting specific large corporations just makes it easier for similar corporations to take advantage of the other companies recent restructuring. Apple and Google still compete on the smartphone, map, and applications business. But because Warren would target Google and not Apple, or some other technology company, Google would have to deal with the costs of interpreting the new laws and restructuring themselves. And even if she now is saying Apple should be broken up, what about Microsoft? There are going to be companies that want to build the best user ecosystems so that they can have them engaged on their products. This is normal. If users are engaged with their products, the users, most of the time, find the product useful. Scolding big technology companies for wanting to keep users on their own products is misguided. Making money off that is not immoral, it’s a mutual transaction between consumers and a business.

Targeted advertisements and using user data may actually help poor consumers

Elizabeth Warren makes it clear that Apple and Microsoft get a pass partially because they don’t hoard user data and sell it (although now it looks like she wants to break up Apple now also). They partially get a pass because they don’t run targeted advertisements on individuals that is informed based on users prior internet behavior.

Here is why this is not only short sighted, but a complete disregard for poor individuals.

Google search and some of its apps utilize user data and advertises, but it’s also 100% completely free. The amount of information anyone with an internet connection and a browser compatible device can access is nothing short of amazing. If you don’t have enough money to afford a computer, you can get a cheap smart phone, or go to the library. And instead of manually searching for books via an ISBN number, with no guarantee it’ll be in stock, you can search for the information on a website. You can even use Google Scholar to look up reputable sources. How is Google supposed to keep search free, and make money if the company can’t collect data and sell ads? Since using user data is being demonized, would a subscription service be better? Could poorer individuals afford access to all of Google’s search resources if they can’t afford the subscription or payment, much like they can’t afford Microsoft Office or other non ad/data based businesses? Other companies, who have a market cap that is comparable to or larger than Google’s (Apple and Microsoft) don’t primarily make money off advertisements. But the majority of both of their products are very expensive for poorer people. Apple priced their iPhone's higher than ever before, their laptops are expensive, as well as their desktops, headphones, and other accessories. Microsoft primarily caters to other businesses and provides services to them, but Microsoft Office is more expensive to buy compared to the free Google Docs.

Large technology companies are still innovating

Under Alphabet, Waymo has come into the forefront of the driverless car market. Because Alphabet has a very strong AI and data driven culture, this kind of endeavor makes sense in terms of a subsidiary that is driving (ha!) innovation. Technology companies also have their own incubators. So individuals can start a company inside a larger company. A lot of the time, the larger company will take a stake in the smaller startup company, but the founders still reap many of the rewards.

Large companies have the capital to devote to expensive research and development programs. Advancement in hardware and software requires massive amounts of resources in order to make a successful breakthrough in creating new, higher quality, and faster products. Better phone cameras, better software for those phone cameras, all take investment. And it’s easier for one company with a lot of cash to develop something revolutionary than it is for a series of smaller companies who are short on cash and resources.

The China factor

Giant corporations in rival countries like China will have more money to spend on their research than American ones if they are separated into smaller companies. Companies like Baidu don’t care much about their own country’s economic imperfections, and will have no qualms about crushing American business in the international market. While the USA will be focusing on how to limit big technology, China will do everything to seize on that economic moment of weakness, and strike with their own giant multi conglomerate mega company, capable of out spending any one individual american tech company. If Elizabeth Warren is truly worried about the American economy and the everyday worker, we need to keep rolling with big technology since they produce very good paying jobs, especially at places like Facebook, and Google. Walmart and other big companies pay minimum wage. Warren went after Amazon to raise their minimum wage, and they listened and raised it to 15 dollars an hour.

“Aren’t we all glad that now we have the option of using Google instead of being stuck with Bing?”

Although Google is used more often and is often seen as better than Bing, Bing is still a relevant search engine. Not only that, there is still competition in the search engine front from DuckDuckGo, a search engine that answers Elizabeth Warren’s exact wishes. DuckDuckGo doesn’t collect user information, and brands/prides themselves in this fact. This company has been around for years, Google hasn’t killed it. You can search for DuckDuckGo within Google, showing how off base Warren’s claims are that Google stifles competition. So far, despite DuckDuckGo reaching out, because the search engine isn’t as good as Google’s, it isn’t as widely used. It isn’t as good partially due to them not collecting user information and using that to fuel search engine results. Despite the intent to cast collecting user data as exploitative and dangerous, it actually, in the long run, is used to deliver a better product. Google uses data to make more money, but also to make their products better for people.

A desperate attempt

Elizabeth Warren hasn’t been a front runner in the 2020 Democratic party race, and the move to regulate big technology has a lot of people scratching their heads. I believe this recent move is to bring attention to her campaign… But it has backfired and brought attention in a negative way.

In the end the ploy could be reformed into a club for political opponents to wield against Democrats. It also has the potential of alienating a large swath of their voting base, considering a majority of technology workers vote for Democrats, going after Silicon Valley might not be the best move.

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by +433,678 people.

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