Data is the new oil. Just as John D Rockefeller’s Standard Oil swept up the spoils of the – initially competitive – oil rush, the future of the internet will be shaped by a handful of tech titans, including Google, Apple, Facebook, Amazon and their Chinese equivalents Tencent, Alibaba and Baidu. Today, around 90% of internet searches are via Google, and 94% of young people who use social media have a Facebook profile. Just 1% of smartphones use an operating system that isn’t iOS or Android – made by Apple and Google.

But the challenge we now face has one key difference to that posed by the oil barons. Rather than price-fixing, many of the tech titans provide a largely “free” service to the public. Facebook and Google don’t make most of their money through selling services to users, but through advertising. Amazon and Apple, meanwhile, do make money the traditional way, but corner their markets through other means, by squeezing suppliers in the former case or locking in users through software and hardware exclusivity in the latter. So why do these new monopolies pose a problem?

Firstly, because they hold back innovation. By acquiring potential challengers before they become a threat, spending millions lobbying governments to ensure their economic interests are protected, and tying in users through the sheer scale of features and social interaction they offer, the tech giants’ dominant position often leaves entrepreneurs feeling they have no choice but to sell up, or close up. This is bad for innovation and bad for consumer choice – two things the tech giants once stood for.

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In addition, the tech titans have lost the ability to monitor what content gets put on their own platforms. A small minority of users are posting terrorist propaganda, depictions of child sex abuse, and hate speech. State and non-state actors use these platforms to spread false information and influence elections, including the Brexit referendum and the recent US presidential election. Facebook, YouTube and Twitter are either unable or unwilling to curb the misuse of the data they collect, and are increasingly seen as part of the problem.

Finally, the new internet giants operate in a largely borderless world where their main source of profit is intangible intellectual property rather than measurable “things”. This is difficult to track and quantify, and has turned national tax authorities into largely powerless bystanders.

Of course, any new technology is open to abuse, and the internet has also been an outstanding force for good in its short history. It has empowered activists and investigative journalists in fighting for democracy and exposing corruption, and amplified important campaigns like the #MeToo movement and recent anti-gun marches in the United States.

But we stand at a crossroads. One way leads to monopoly and abuse. The other way continues the road to empowerment and liberation.

How should we respond? As liberals we must show that to be radical in this field is not to be statist. We do not accept a Hobson’s choice between the entrenched private monopolies which are becoming the status quo, or direct state control over the internet, as is being developed in China. First, we must revive the trust-busting spirit of previous generations. Competition authorities should be primarily concerned with takeovers which stifle innovation or involve the acquisition of large quantities of valuable data. More radically, companies should be broken up when their size becomes economically detrimental.

One could imagine Amazon being split into three separate businesses: one offering cloud computing, one acting as a general retailer and one offering a third-party marketplace. Facebook could be made to sell off Instagram and WhatsApp, Google could divest itself of YouTube – in the process creating new competitors for themselves.

Second, internet companies should be held accountable for extreme content posted on their platforms through the establishment of a new independent standards body governing the handling of such content. This would put an end to the current “wild west” approach of self-regulation and haphazard government responses to tech-company failures. This is preferable to the draconian system recently put in place by Germany, which has already led to excessive censorship by private companies and a backlog of court appeals and disputes.

Third, concerns over the manipulation of data can be met in part through greater transparency, requiring search algorithms to be made available to the authorities and by requiring commercially used databases to be available for a variety of uses. Such principles become even more important as the data giants develop the use of AI, where there is even more potential for monopoly abuse and manipulation.

Finally, we must entrench and expand the rights of people to own their personal data. The EU’s new General Data Protection Regulation is a big step forward in this direction, but it clearly needs to be tested in practice. And it is just the beginning, not the end of the story. We should seriously consider the possibility of compensating people – or society more broadly – financially for the data they currently hand over for nothing.

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All four of these suggestions require Britain to be a truly global nation, leading these debates rather than following on the coat-tails of others. The UK cannot do this alone. It will require a regulatory authority with far more clout. How tragic then, that the most effective competition authority in the capitalist world – one that has already fined Google €2.4bn for market abuse – is the European commission. As the world grows closer together, Britain commits an act of serious self-harm by doggedly setting itself apart from the power of shared sovereignty with our neighbours.

When it comes to regulating the new oil – data – Brexit is the equivalent of giving up shared influence over where, when and whether it rains, in return for absolute power over a compact umbrella.

• Vince Cable is leader of the Liberal Democrats and former secretary of state for business