Regulatory watchdogs, the Federal Trade Commission (FTC), and various antitrust lawsuits are beginning to find that Silicon Valley won’t give up its monopolies easily. At the heart of this stands the very consumers both parties claim to protect.
The FTC goes to war
Joe Biden’s appointment of Lina Khan as the chair of the FTC was significant for two reasons. Firstly, at 32, she is the youngest person to head the FTC in its history; and second, her confirmation by the senate in a 69-28 vote was a rare show of bipartisanship in a usually deeply divided House. Yet, considering both Democrats and Republicans alike have crossed the aisle regarding their concerns over Big Tech’s practices and market domination, support for Lina Khan’s appointment should come as no surprise.
Her appointment is also the latest for another outspoken critic of Silicon Valley within the White House. In March 2021, Tim Wu was appointed to the National Economic Council as a special assistant to the President for technology and competition policy. Concerns over potential antitrust violations have inspired a wave of new legislation packages that have gained bipartisan support and are beginning to make their way through the House. In the United Kingdom, the Competition and Markets Authority have also recently begun investigating whether Apple and Google effectively run a duopoly in regards to their mobile platform systems.
Concerns over the limited competition and potential for consumer harm have re-emerged at the highest levels of government. As the big companies (Facebook, Alphabet, Apple etc.) find themselves increasingly at odds with regulators, the government support that they could previously rely on appears to be fading.
Too big, too important, too late?
Yet for those hoping that this renewed attack will end Big Tech’s unfair practices, a recent legal decisions should provide a reality check.
In June, a Federal Court threw out the FTC’s antitrust lawsuit against Facebook, citing their case as ‘legally insufficient’. In his ruling, Judge James Boasberg said that the commission had failed to show that Facebook had sufficient monopoly power to facilitate the FTC’s demand to the sell several of its assets, including WhatsApp. In a damning indictment, Judge Boasberg claimed that the FTC expected the court “to simply nod to the conventional wisdom that Facebook is a monopolist”, rather than provide an effective case. Indeed following this ruling Facebook’s share price rose 4.2%, taking its value over $1trillion, and joining the illustrious company of Amazon ($1.7 trillion), Microsoft ($2 trillion) and Apple ($2.3 trillion).
The Tech antitrust movement even faces further opposition from former members of its own ranks. Former FTC chair William Kovacic asserts that antitrust lawsuits are not even applicable in the case of tech conglomerates, stating that these lawsuits “[rely] on a broader notion on what behaviour for individual firms is inappropriate”. Even attempts to limit Apple and Google’s marketplace creation and control through this new legislation face repeated backlash. Supporters and spokespeople from Silicon Valley have levelled accusations that not only would this stifle innovation, but SMEs and consumers would end up worse off. Just this month, Amazon even requested Lina Khan be removed from her position over allegations of a biased and unfair approach.
The growth of the Tech giants during the pandemic has provided further challenges to attempts at regulation. Morgan Stanley estimates that the major tech companies will see an estimated $40bn increase in ad sales as a result of the year, capitalising on the rapid influx to online marketing and advertising that was necessitated by the pandemic.
The regulators and government watchdogs are beginning to realise that these companies may well be too large, too intertwined, and too relied upon by the public to separate.
The power in your hands
Upon her appointment, Khan stated that the FTC would seek to ‘protect the public’ from the potential corporate abuse of the major Tech firms. Yet by presenting the public as a passive actor within this sphere, she and the other regulatory watchdogs are missing perhaps the most effective weapon for holding Big Tech to account: the consumer.
As we have seen, the consumer welfare approach prioritised by antitrust proponents faces significant questions when the overall benefits of the tech companies are weighed against the risks that these ‘monopolies’ provide. Very few of us could imagine life without these products, and for many small businesses (especially during the pandemic) these marketplaces provide their primary avenue for advertising and revenue. This allows for their proponents to depict the choice consumers are facing as one between regulated difficulty or free-market utility.
However, such a dichotomy underplays the ability that we have as consumers to regulate the very currency that these services were built upon: our personal data. Recent trends in data privacy awareness have rapidly improved the consumer’s understanding of personal data and its usage. The work undertaken by Max Schrems and his ‘None of Your Business’ (NOYB) foundation has started to gain further public notice. Their recent campaign against illegal cookie practices was given coverage on most major European news sites and has provided a jolt for consumers and businesses alike.
Even Apple’s latest advertising campaign centres around the options that their IOS 14.5 privacy settings provide. Considering the opposition from other Big Tech members that it engendered, Apple’s approach is an attempt to pre-empt this trend in consumer awareness. Silicon Valley is beginning to recognise that the consumer is reclaiming their stake in the marketplace.
Regulation and Education
The battle for ‘consumer welfare’ is thus central to the conflict between the Big Tech ‘monopolies’ and the regulators who are seeking to limit them. Yet, we as consumers need to be more proactive in understanding what is at stake, and what we are providing in return for the services we enjoy.
In their 2020 report on the digital advertising market, the CMA concluded that the dominant positions of Facebook and Google will likely result in three major outcomes; The consumer will face increasingly limited choice of services, anti-competitive online shopping will result in an increase of £500 spending per household, and there will be further unnecessary processing of the consumer’s personal data.
These risks are separate to the consumer welfare focused arguments levelled by the proponents of Big Tech and can be mitigated without compromising the functionality of their products for the consumer. Regulation along these lines is both achievable and impactful, but reliant upon the consumer understanding their individual online environment. We must demand better of the services we use.
The free services that Silicon Valley has built its monopolies on are reliant on a currency that can only be regulated by the people that provide it. By improving our knowledge on its application and demanding transparency in the practices of the Big Tech firms, regulation of these practices can occur without the widespread disruption that is feared.
As consumers the power lies, quite literally, in our hands. By approaching privacy and transparency as non-negotiable elements to our dealings with these companies, consumer welfare can be seen as an imperative rather than an excuse. Let the FTC and the other regulatory watchdogs continue to wage expensive and drawn-out legal cases; we must show that real change can be affected not just in the House, but in the home.