Big Tech Getting Too…Big?

It is not often that Senators Elizabeth Warren and Ted Cruz agree. However, when it comes to regulating Big Technology, both have strongly advocated for political action to curb the influence of incumbent giants. In recent months, legislators from both sides of the aisle have called for action to stifle the alarming control that Facebook, Amazon, Google and Apple hold over what consumers buy, see and think. The Department of Justice, the Federal Trade Commission and Congress have all launched sweeping anti-trust investigations of these big technology companies amidst concerns of anti-competitive practices. Even President Trump has weighed in against Big Tech, charging that “something is going on in terms of monopoly” and that it is “a bad situation.”

Concerns over these technology giants’ anti-competitive conduct have driven several politicians to propose anti-trust legislation to “break up Big Tech,” with Senator Warren leading the charge. Warren and others, however, face a significant barrier to their goal of fracturing Big Tech: anti-trust legislation. The Sherman and Clayton Antitrust Acts, passed in 1890 and 1914 respectively, fail to provide a compelling case against technology giants despite their broadly worded nature. The precedent for applying these statutes has been to prove that consolidation within a market has harmed consumers, often pointing to price as a primary indicator. Unfortunately for Warren, Big Tech’s business tactics, whether unethical or not, have resulted in heightened convenience for consumers. Though third-party providers and technology startups feel repressed in what they feel is an anti-competitive environment, consumers benefit tremendously from Amazon’s low prices and free access to Google’s search services and Facebook’s social networking platform. It would be a daunting task to prove that fracturing technology giants would result in better outcomes for consumers.

As a result, Big Tech opponents have sought to frame their anti-trust argument in a different light. Pivoting from price, they have pinned technology giants’ exploitation of private data as the case for how their monopolistic practices harm consumers. Warren and others assert a link between increased competition and superior data protection, arguing that breaking up Big Tech will limit the misuse of consumer data by giving people “more control over how their personal information is collected, shared and sold.” This paranoia over how Big Tech companies use data resonates with consumers, as a recent YouGov survey reports that nearly two- thirds of Americans would support breaking up Big Tech companies to ensure more competition in the future. In light of how beneficial Big Tech’s services are, this sentiment illustrates the severity of consumers’ discomfort with how much personal information these companies accumulate and how that data is handled. What is unclear, however, is whether anti-trust action would actually give individuals more privacy or ensure superior data security practices.

The pro-privacy argument for breaking up Big Tech hinges on the notion that forcing these companies to compete on privacy features will make them more transparent and accountable with consumer data. Though this reasoning may seem intuitive, there are serious potential drawbacks to having smaller firms handle our data. For example, large technology firms have a significant advantage over small companies when it comes to data security. Many security updates involve fixed costs that bigger entities can better afford to invest in since they can amortize the cost over a larger user base and benefit from economies of scale.

Larger firms can also hire larger and more experienced security teams to detect and respond to new threats, and many of these larger firms like Facebook have steadily increased the size of their security staffs in light of more prevalent breach threats. Big Tech companies lie at the forefront of privacy research and development efforts which many other institutions find unfeasible, so breaking up these firms could actually harm privacy innovation rather than improve it. Some advocates argue that smaller firms better protect consumers from data breaches simply because they hold less personal information. However, there is no reason to believe that consumer data is more protected if four firms hold information on twenty-five million Americans versus if one firm holds data on one-hundred million. Plenty

of companies with far less data than Facebook such as Under Armour and Caribou Coffee have experienced significant data breaches in recent years. With inferior security capabilities, smaller organizations would arguably be even more attractive targets for malicious actors.

Specific regulations that enforce superior transparency and security present a much clearer path towards resolving data privacy concerns. Some argue in favor of creating a quasi-property right to consumers’ data on social media to regulate its collection. This approach resembles Europe’s GDPR initiative which forbids the tracking of activity or use of personal information without permission. It also outlaws making consent to collect data a condition of access to services. Others, like Questrom Professor of Management Marshall Van Alstyne, believe government should take a less interventionist approach and strive to promote data use in a non-exploitative manner rather than restricting its collection outright. More concretely, this would involve more rigorous standards for transparency on how information is gathered and utilized.

Whatever the correct approach to regulation may be, the critical takeaway is that increasing competition alone will not necessarily spurn superior privacy protection among technology companies. Although advocates of breaking up Big Tech may find it convenient to lump data privacy into their mandate for the sake of litigation, there is no compelling reason to believe anti-trust measures alone would ensure more favorable privacy practices. In fact, it is likely that fracturing technology giants would have a detrimental impact on consumer data security. While there are valid reasons to support Warren’s call to dissolve the Big Tech monopolies, improving the way technology companies handle our personal information does not belong under that umbrella.