- Blog Post
- Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.
Maya Villasenor is an intern in the Digital and Cyberspace Policy program at the Council on Foreign Relations.
The last few months have been rather unpleasant for big tech. A House Judiciary Committee report released in October condemned Google, Facebook, Apple, and Amazon for alleged anti-competitive behavior. Weeks later, the Department of Justice (DOJ) filed suit against Google for allegedly maintaining search and search advertising monopolies through a series of exclusionary contracts. Additional lawsuits, bolstered by growing bipartisan dissatisfaction with big tech, are expected to follow in relatively rapid succession.
Circumstances are similar overseas. In early November, the European Commission announced antitrust charges against Amazon, claiming that the e-commerce giant abuses its non-public marketplace data to imitate (and later undercut) third-party merchants. Days after the Ant Group’s planned November IPO was halted by regulators in China, China’s State Administration for Market Regulation debuted potential anti-monopoly rules aimed at Tencent, Alibaba, and their peers.
Although lawmakers and regulators have lauded the long-awaited reckoning for big tech, past efforts at antitrust enforcement were sluggish and did little to directly curb technology companies. The thirteen-year and three-year legal dramas against IBM (1969) and Microsoft (1998), respectively, left both companies not only intact, but also on trajectories to increase their market power. The IBM case was ultimately dropped for its lack of merit, and the Microsoft case ended in a settlement that was widely considered a mere slap on the wrist.
Antitrust actions abroad have been similarly inconsequential. In 2004, the European Union (EU) fined Microsoft in connection with monopolistic practices, but failed to enforce the rulings and ensuing settlement (leading to more fines in 2006, 2008, and 2013). A decade-in-the-making EU case against Google in 2018 resulted in “fixes” that proved deeply flawed and levied fines that, in light of Google’s vast coffers, amounted to very little.
Thus far, European regulators have shied away from more extreme action, such as mandating a breakup of any big tech company. Instead, in pursuit of “digital sovereignty,” regulators in the EU have resorted to other tools to foster competition such as “digital services taxes,” protectionist regulations, and subsidies for domestic tech players in high-growth industries such as cloud computing.
However, antitrust hasn’t proven entirely futile: the aggressive U.S. antitrust lawsuits of the twentieth century arguably created invaluable opportunities for competitors, although not in the expected ways. IBM, distracted by a trial that required 974 witnesses, 104,400 transcript pages, up to 200 concurrent lawyers, and millions of dollars annually, was less able to focus on innovating, allowing competitors such as Microsoft to gain a strong foothold in the PC market. In hindsight, the U.S. suit against Microsoft has a similar, albeit less extreme, legacy. By hindering a potential browser monopoly, United States v. Microsoft Corp. left today’s tech incumbents including Google, Facebook, and Amazon better positioned to succeed.
Nonetheless, there are critical differences between today’s tech behemoths and Microsoft in 1998. Putting aside the many potential weaknesses of the DOJ’s newly filed case against Google, the lawsuit itself is exceedingly narrow, and big tech’s pursuits and influence are much more varied than Microsoft’s were twenty years ago. Google, for example, has made major investments in nearly every imaginable facet of the tech industry. Although a DOJ victory against Google would be an important precedent, an antitrust lawsuit won’t hobble the search giant that has grown to compete in (and, according to some startups, monopolize) multiple markets.
Despite growing support for suggestions to force big tech to fracture, Facebook has claimed that its platform is “too complex to break up,” indicating to some that perhaps such far-reaching and powerful companies shouldn’t have existed in the first place. There were countless opportunities to challenge big tech’s acquisitions, including Instagram in 2012 (Facebook), WhatsApp in 2014 (also Facebook), Waze in 2013 (Google), and Whole Foods in 2017 (Amazon). There have also been hundreds of important acquisitions that escaped scrutiny, often because the dollar value of the target company fell below the threshold that triggers FTC involvement. Facebook, for example, has acquired over a hundred potential competitors and shut down at least thirty-nine with little oversight in the last thirteen years.
As a result, an oligarchy of tech companies has accumulated an extraordinary concentration of market control. Senator Ted Cruz, speaking to Twitter CEO Jack Dorsey during an October congressional hearing, grumbled, “Who the hell elected you?” Although the hearing was widely (and rightfully) criticized as excessively partisan, Cruz hinted at a valid concern: today’s tech leaders, accountable only to their shareholders, have consolidated a power that rivals that of governments. The fiscal year 2019 annual revenues of Alphabet ($161.9 billion), Facebook ($70.7 billion), Apple ($260.2 billion), and Amazon ($280.5 billion) all exceed the GDP of small countries, and over half of the global population relies on the aforementioned companies for news and information, connection to family, and the purchase of goods and services—a dependence only deepened by the pandemic.
Silicon Valley’s “move fast and break things” ethos that began as the declaration of a utopian and newly-democratic digital world order led to extraordinary innovations, but has now evolved into a careless indifference to blatantly anticompetitive behavior. Simply ignoring that dynamic is no longer acceptable. What’s needed is more balance. As global antitrust regulators work to identify and rectify big tech’s anti-competitive actions, they need to do so in a manner that preserves the climate for innovation, startup investment, and development of products that improve lives all over the world.