December 1, 2017
The Battle for Tech Regulation Has Begun
By Cameron Douglas
The would-be trustbusters are an odd grouping, proof of the old axiom that “politics makes strange bedfellows.” There are very few issues where one could find progressive Senator Elizabeth Warren (D-MA) and former Trump strategist Steve Bannon in lockstep agreement, but both have called for increasing regulations on the giants of Silicon Valley. The congressional Democratic leadership has made this issue a key part of their 2018 agenda, as has the New Center Project, bringing together a coalition with levels of cross-party and cross-ideological buy-in that demonstrate just how seriously the world of politics is taking tech regulation. The issue is gaining traction at the state level as well: recently, Missouri’s Attorney General (and US Senate candidate) Josh Hawley launched a probe into allegations that Google wrongly collected user data and manipulated search results.
The common thread running through Big Tech’s opponents’ complaint is their monopolistic practices—squeezing out smaller competitors, controlling massive shares of their respective markets, and in so doing stifling new innovation. Startups are still growing in Silicon Valley, and some still succeed, but their chances of doing so, which were never likely to begin with, have further shrunk in recent years. When successful startups do attempt to challenge the giants’ dominance, they are crushed. In the mid-2000’s, Amazon used predatory business practices to overcome competitors like online shoe retailer Zappos. Amazon lowered their prices to take a loss on each shoe sale, to the point where Zappos could no longer compete and agreed to be bought by Amazon in 2009. More recently, Facebook has brazenly plagiarized key features of Snapchat, a disappearing-photo messaging app that has, up to this point, resisted Facebook’s attempts to buy them out. Snapchat has managed to survive, but its growth is slowing; Facebook successfully fended off a potential threat to its hegemony.
One type of regulation commonly floated to address these problems would treat all or parts of the big tech companies like public utilities, the way water, sewer, and landline phone systems are governed. This would almost certainly not be a full nationalization of these companies, but would rather involve much stricter oversight of certain critical, nearly universally-used services, like Google’s search function. In the most prominent historical example of this type of action, the breakup of the AT&T telephone monopoly in the 1950’s, the government required AT&T to allow third parties to license the patents it had previously held for minimal fees. This led to the development—by new companies like Motorola, Texas Instruments, and others—of modern electronics as we know them today.
Critics of Big Tech argue that a similar dynamic is at play today. As of 2012, Apple and Google spent more on buying patents and suing over patents than on their own research and technology—which to some outside observers would suggest that creating new technologies has become less significant to them than buying out other companies and their fresh ideas. Of the products that Google buys, they often shut down any product that is not reaching 100 million or more users. Some skeptics argue that releasing these patents from Big Tech’s control could enable more innovation to come to the market.
Utility-style regulation is not the only option available. Alternative steps might include preventing the giants from additional acquisitions of competitors, or potentially rolling back some already-existing ones—preventing Facebook from buying Snapchat, for example, or even forcing Facebook to sell or spin off Instagram and WhatsApp. Or the government could change the so-called “safe harbor” clause in the 1998 Digital Millennium Copyright Act. This clause makes it possible for Internet sites like Facebook or YouTube to host content from all sorts of users without being directly held responsible for that content. Congress has already begun to do this in certain specific cases—targeting Backpage, a website accused of being a platform for child sex trafficking—but the potential to apply those strict rules to the Internet more broadly could have wide-reaching ramifications for the future of the Internet. Among the revelations from October’s hearings was that the major tech companies, who had previously opposed the Backpage bill, have acquiesced and will support the bill going forward.
The battle over tech regulation is just beginning. As Senator Dianne Feinstein (D-CA) warned the tech companies, “You have a huge problem on your hands. You have created these platforms and now they are being misused. And you have to be the ones to do something about it, or we will.”
Cameron Douglas is an intern with the Foresight, Strategy, and Risks Initiative.