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SAN FRANCISCO — A decade ago, when the greed and carelessness of the financial industry came close to destroying the American economy, the overwhelming response by politicians and the public was: Meh. Almost instantly, all was forgiven and forgotten.
Now the tech industry — which, among other impressive innovations, provides the world’s knowledge on demand, lets people freely broadcast their diverse opinions and has made shopping as easy as pushing a button — has made some mistakes of its own. It has abused privacy, squeezed the competition and casually spread hate. And that’s just the beginning of the list.
Google, Facebook, Amazon and Apple might not get away as cleanly as Goldman Sachs and Citigroup. Elizabeth Warren, the Massachusetts senator who is seeking the Democratic presidential nomination, released proposals this month that would force tech breakups and impose severe restrictions on what remained. Another Democratic presidential candidate, Senator Amy Klobuchar of Minnesota, covered more briefly some of the same ground, saying, “We have a major monopoly problem.”
At a moment when nearly everything in America seems wildly contentious, antitrust action against tech is getting a sober look. Antitrust is the nuclear bomb of regulatory policy, but the reaction to Ms. Warren’s and Ms. Klobuchar’s ideas was surprisingly receptive.
“We’ve got to break these guys apart,” Ms. Warren said in an interview on “Face the Nation.” The show could name only one critic of her proposal: Howard Schultz, the Starbucks mogul, who is flirting with an independent run for president to the deep disregard of voters.
“A billionaire, right?” Ms. Warren noted.
For decades, a politician who mentioned “antitrust” was essentially arguing for more government oversight, which has been dangerous territory at least since the Ronald Reagan administration. “Antitrust” was relegated to the shelf with “socialism” and “wealth inequality” and “higher taxes for higher incomes.”
It didn’t help that what could be called “maximum antitrust” — when the Justice Department decides a company is abusing its monopoly power and should be broken up — has a mixed history. The government dropped such a case against IBM in 1982 after more than a decade. It settled its case against Microsoft in 2001. Only AT&T, which agreed in 1982 to dissolve itself into a long-distance company and the seven Baby Bells, could be considered an unqualified success from the government’s point of view.
The political landscape is shifting, however, at a speed that dumbfounds even antitrust experts. President Barack Obama thought of the tech companies in the way they think of themselves: as progressive, smart entrepreneurs who want what’s best for America. His administration declined to pursue Google on antitrust charges and hired from the tech industry for top posts. Top staff members later went to work for the tech industry in top posts, too. It was a cozy relationship.
“Something has definitely changed,” said Geoffrey A. Manne, the founder of the International Center for Law and Economics, a think tank in Portland, Ore. “Most voters are very fond of Amazon, Apple, Google and even Facebook. But I think there’s also a growing sense of skepticism about all these companies. The shine has come off.”
Mr. Manne, who has been a critic of the antitrust arguments against Google and has received funding from the search giant as well as from some of its competitors, including Comcast and AT&T, eviscerated Ms. Warren’s proposal with his colleague Alec Stapp in a recent blog post. They wrote that the senator’s plan to turn the top companies into heavily regulated “platform utilities” would make them as resistant to improvement as sewer systems or Amtrak.
And yet, Mr. Manne conceded in an interview, increased regulation is an idea whose time may have come.
“There is a long history in America — just not a recent one — of using the power of the state to counteract the economic power of private enterprise,” he said. “We may be at that moment again.”
The financial firms were predatory last decade, exploiting weak spots in the mortgage markets in a way that undermined their viability. Google and Facebook, by contrast, offer their services for free, while Amazon built its reputation on selling as cheaply as possible. That makes it hard to regulate them by the antitrust consensus, which for a couple of decades has held that there is no injury unless consumers directly suffer by paying higher prices.
Nothing is ever really free, of course, and there has been a dawning realization among some consumers that they are paying for these services with information about themselves. How most users feel about this seems up in the air, as evidenced by a new SurveyMonkey poll done for the news site Axios.
The headline finding was that “a growing majority now views our online privacy as a crisis.” But deeper in the survey was the revelation that more than half the respondents said they were unwilling to pay to keep from being tracked by a service they were using. Twenty-one percent said they would pay less than $1 a month, and no more, for the right.
Users, it seems, want it both ways: privacy and free services. This is the contradiction at the heart of the internet.
Daniel Crane, an antitrust expert at the University of Michigan, said Ms. Warren’s proposal might be a hard sell to voters. “The median consumer probably feels that she gets lots of free goodies from Big Tech and will worry about what it would mean to go after them,” he said.
But Mr. Crane noted that being broken up was the least of the companies’ worries. “A likelier consequence is that the next acquisition they want to make will be rejected,” he said. “Even just the rhetoric can complicate their lives and put pressure going forward.”
That is already happening. One of the anti-competitive complaints about Amazon is that it prohibited its merchants from selling more cheaply elsewhere. That prevented a new platform from underselling Amazon and gaining a competitive edge.
Amazon ended this practice in Europe six years ago, but it continued in the United States. Senator Richard Blumenthal, a Democrat from Connecticut, asked for regulators to investigate in December. Last week, Amazon confirmed that it had dropped the requirement.
Antitrust talk emboldens competitors as well. Google controls much of the market for online ads in Australia, just as it does elsewhere. That presents a big problem for News Corporation, which owns eight of the 10 largest papers in the country.
The Rupert Murdoch-controlled media conglomerate asked Australian regulators last week to take the “very serious step” of breaking up Google in the country because of the “unparalleled power that it currently exerts over news publishers and advertisers alike.”
In this new environment, winning can soon look a lot like losing.
Amazon opposed a proposal in Seattle last spring for a corporate tax to help the homeless, and succeeded in getting it cut in half. Then the retailer decided it just couldn’t live with the measure at all. A repeal effort began. The City Council killed the tax just as it was going into effect.
At the time, that looked like another triumph for Amazon. But in the months since, even some of those who thought the tax was a bad idea have found their views evolving.
“My feelings about Amazon have changed, and not in a good way,” said Julie Shapiro, a Seattle University professor of family law. “I think they want the ability to be a bully and, once they have it, they’re quite willing to use it.”
That is the crux of the issue: Can a company be dominant without coming off as a bully? It is no accident that the company that was the subject of the biggest antitrust action in the last quarter-century — Microsoft — had a terrible reputation in the tech community. Voters love innovation, convenience and entrepreneurs. They don’t love bullies.
Amazon failed to avoid bullying behavior in its now-abandoned bid to build a headquarters in New York, and Facebook likewise failed last week when it took down Ms. Warren’s posts about Facebook having too much power. The company, which said the posts had violated the use of its logo, quickly restored them, but the public relations damage had been done.
“Curious why I think FB has too much power?” Ms. Warren tweeted. “Let’s start with their ability to shut down a debate over whether FB has too much power.”
