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Big Government Isn’t the Way to Fix Big Tech

Big Tech has long faced calls for more regulation, and as their companies have grown, so has the pressure. Now those demands are coming from within Silicon Valley itself. Apple CEO Tim Cook recently told [1] Axios that, though he supports the free market, it’s only a matter of time before Big Tech is restricted. “We have to admit when the free market is not working. And it hasn’t worked here,” Cook said. “I think it’s inevitable that there will be some level of regulation.” Indeed, a newly released Axios poll found [2] that 55 percent of Americans “fear the federal government won’t do enough to regulate big tech companies.” That figure is up 15 points over last year.

The problem is that, if implemented, such regulations would only entrench existing firms and hurt consumers.

As Axios notes [2], Big Tech regulation has become “a rare topic uniting Republicans, Democrats and Independents.” In August, Representative Steve King, Republican of Iowa, floated [3] the idea of turning tech giants into public utilities. On the Left, writer Richard Eskow went even further by calling [4] for companies like Amazon and Google to be nationalized. The young right-wing firebrand Charlie Kirk recently [5] advocated that Google be classified as a monopoly and anti-trust law be brought to bear against it.

It’s understandable why so many across the political spectrum have an uneasiness about Big Tech. After all, it has an immense amount of power, especially in regard to stored information.

But increased regulation will only empower Big Tech and leave it less accountable than before. The “revolving door [6],” through which officials move between government and the private sector, allows businesses to heavily influence regulation. Sometimes they’ll even advocate that regulation be increased as a means of ensuring that the new regulations work to their advantage. When groups like Business for a Fair Minimum Wage [7], whose members already pay [8] employees “well over the minimum wage,” advocate for an increase in the minimum wage, it’s not out of benevolence toward workers. They want to force their competitors to pay more in the hope of driving them out of business. In economics, this is known as regulatory capture [9], an idea developed by Nobel laureate George Stigler.  

Another tactic is making the regulatory hurdle so high that it ensures new competition and smothers startups in the cradle. A startup in someone’s basement can’t afford an army of lawyers to navigate through reams of regulations like Google and Facebook can.

Historically, Big Tech has been hands-off when it comes to lobbying, but that’s starting to change and the numbers show it. In 2017, Google, Amazon, Facebook, and Apple spent [10] over $50 million on lobbying, a 32 percent increase for Facebook and a 51 percent increase for Apple. In fairness, that’s much less than other industries spend on lobbying—but as talk of regulation increases, expect to see Big Tech kick up its lobbying even further and for its competition to get squelched.

In a free market, companies only have the power that consumers give them when they make their consumption choices. Google, Facebook, and Amazon are huge and powerful because so many choose to utilize their services. Economist Ludwig von Mises called this “consumer sovereignty [11],” writing, “The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that.” No matter how large a business is, if it doesn’t give consumers what they want, it will eventually falter. Just look at Nokia. In 2007, the company controlled [12] almost 50 percent of the world’s smartphone market. By 2013, that number had fallen to less than 5 percent. Such a drastic change in fortunes occurred because consumers chose to make it happen—and because other companies innovated more to attract them.

But if Big Tech becomes entrenched and protected from competition through regulation, the consumer’s power over them is diminished. It’s a recipe for decreased innovation and customer service. Big Tech is kept on its toes by the fear of becoming the next Nokia, which is why they spend [13] tens of billions of dollars every year on research and development. There will be far less incentive to do so if they know that they’re safe from potential upstarts supplanting them.

Big Tech has big problems, but increased regulation will only lead to more lobbying, less competition, and less innovation. Consumers have given Big Tech its power, and as long as there are competition and alternatives, they also have the power to take it away. Let’s hang on to that control rather than demanding that the government exercise it for us.

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Zachary Yost is a Young Voices contributor [14] and a research assistant at the Center for the Study of Statesmanship [15]. He is currently a political theory graduate student at the Catholic University of America. Follow him @ZacharyYost [16].

12 Comments (Open | Close)

12 Comments To "Big Government Isn’t the Way to Fix Big Tech"

#1 Comment By Colin Chattan On December 5, 2018 @ 12:46 pm

So what’s your objection to application of anti-trust law?

#2 Comment By TheSnark On December 5, 2018 @ 1:08 pm

The big tech firms are natural monopolies, like the electric company. The electric companies are generally local monopolies, but regulated. It works fairly well.

The tech companies will soon become like regulated utilities, with controls over their pricing, most important, what they do with the data they collect.The big challenge is how to regulate their content without getting into censorship, that’s a tough one.

#3 Comment By polistra On December 5, 2018 @ 1:20 pm

In an ideal world this might be true, but in practice deregulation leads to monopoly. The deregulation is always motivated and purchased by the biggest companies with the biggest lobbyists, who know exactly what they’re doing.

Strong anti-trust regulators and strong security fraud regulators make it easier for smaller companies to survive.

#4 Comment By Kent On December 5, 2018 @ 2:02 pm

“Economist Ludwig von Mises called this “consumer sovereignty,” writing, “The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that.””

Old Ludwig wasn’t an economist, he was a banker. Which is why his comment is so simple-minded. Consumers only have a choice of the products that producers choose to produce at a given moment in time at a price the producer chooses. If the consumer is not given a choice that pleases him among competing products, then his only choice is to do without. Something that we call market failure.

America was far better off economically when we had competitive capitalist markets instead of monopolistic, socialism for the rich, free markets.

One regulation is the only thing needed for big tech. And it is in favor of capitalist property rights. And that is a simple law that says that browsing history and purchasing history are the property right of the person doing the browsing and purchasing.

If Google, FB, Uber, whomever wants access to that information, they can have it after negotiating a fair price with the owner.

Competitors will quickly spring up who will pay for access and consumers will actually have a choice.

#5 Comment By Daniel Allen On December 5, 2018 @ 3:25 pm

Ooooof. This article presents a terrible argument, straight out of “The NeoCon’s Guide to Abject Failure”.

Section 230 of the Communications Decency Act gives social media companies amnesty for liability regarding information shared on their platform. HOWEVER, this is only if they remain politically neutral (which they haven’t been). By banning dissenting voices and censoring what they call “hate speech”, they have been acting as a de facto publishing platform rather than a communications platform. Lawmakers simply need to clarify that these companies must either allow free speech or they can be held liable for information shared on their platforms as publishers are.

It’s a simple, easy fix with non-burdensome regulation. But as a purveyor of Neoconservative, big-business-must-win-at-all-costs dogma, I’m sure Mr. Yost would rather keep shilling for the massive corporations that hate us and want to keep silencing us.

#6 Comment By Ken T On December 5, 2018 @ 5:19 pm

as long as there are competition and alternatives, they also have the power to take it away.

And right there is the problem. Because once any business starts getting big enough to be tagged with the epithet “Big [Whatever]” it has already grown beyond the point where there are “comptition and alternatives”. Whether you are talking about Big Tech, or Big Oil, or Big Ag, or Big Pharma, all corporations involved have informally joined together to form a consortium that is able to behave as if it were a single monopoly. There is no competition, there are no alternatives. The consumer has no power to do anything except choose between Tweedledee and Tweedledum. He can do NOTHING to change any corporate behavior.

#7 Comment By Patrick D On December 6, 2018 @ 12:19 am

“The consumer has no power to do anything except choose between Tweedledee and Tweedledum. He can do NOTHING to change any corporate behavior.”

Swap out “consumer” for “voter” and “corporate” for “government” and this describes the U.S. two party system perfectly.

#8 Comment By madge On December 6, 2018 @ 10:57 am

“Section 230 of the Communications Decency Act gives social media companies amnesty for liability regarding information shared on their platform. HOWEVER, this is only if they remain politically neutral (which they haven’t been). ”

Here’s a link to the full text of Section 230. Please cite where it demands “political neutrality” from anyone (for added bonus point, please explain how such a demand is consistent with the First Amendment).
[17]

#9 Comment By Chim On December 6, 2018 @ 12:14 pm

@madge that’s cute that you know how to Google; if only you knew to look up case law too.

In Fair Housing v. Roommates.com, (1997), the 9th Circuit court held that the housing locator site, Roommates.com, was not immune under Section 230 because even weaker guidelines and editorial control than Twitter’s and FB’s meant it was not a passive publisher of the content. (The site had developed questionnaires to elicit potentially discriminatory information including on political and religious grounds from users settings which twitter, Fb and others allow in the ad creation process). The court found that Roommates.com was neither a passive pass-through of information provided by others nor merely a facilitator of expression. The site categorized, channeled, and limited the distribution of users’ profiles. By doing this, Roommates provided an additional layer of information that created and developed particular activity. The court therefore held that the site was an information content provider and not immune under the publisher provisions of the CDA. This same precedence is one of many that could be used to attack twitter for it’s censorship and effective content curation. Neocon corporate slaves like yourself will no doubt hate this.

#10 Comment By Ken T On December 6, 2018 @ 3:18 pm

Patrick D:
Swap out “consumer” for “voter” and “corporate” for “government” and this describes the U.S. two party system perfectly.

No, it doesn’t. Because when it comes to the political system, the voters DO have the ability to get directly involved. The Sanders/Warren/AOC wing of the Democratic Party is a grassroots movement that is forcing changes on the party establishment, just like the TeaParty was a grassroots movement that did force changes on the Republican Party. Yes, the establishment in both parties screams and rages and fights back with everything it can. But the changes do ultimately take place, however slowly. That does not happen in the corporate world, because corporations are strictly top-down power structures. There can be no such thing as a “grassroots” movement, because the upper levels hold absolute power to fire anyone who dissents.

#11 Comment By S On December 6, 2018 @ 11:20 pm

This article is based more on ideology than any real world facts. In addition to the points made by previous posters, we must note that Facebook, Google et al do not consider the common folk as their customers. Except for a limited number of services, most of their services are consumed and paid for by corporates and governments. Their services include spying on the common folk. Their dominance is bad for democracy and good governance.

#12 Comment By learning curve On December 10, 2018 @ 3:48 am

Mr. Yost doesn’t acknowledge the extent to which these companies ARE Big Government. The symbiosis is certainly very tight.