Why we need to rein in the tech monopolies
Ten years ago, the world’s five largest companies by market capitalization were Exxon Mobil, General Electric, Citigroup, Shell Oil, and Microsoft. Today only Microsoft remains in the top five, where it has been joined by Apple, Amazon, Facebook, and Alphabet (the parent company of Google).
Yep, all tech companies, each dominating its corner of the industry.
Amazon has a 74 percent share in the e-book market. Facebook and its subsidiaries Instagram, WhatsApp, and Messenger own 77 percent of mobile social traffic. And Google has a whopping 88 percent market share in search advertising.
Welcome back to the early 20th Century, when the great jurist and later Supreme Court Justice Louis Brandeis argued for the necessity of ending monopolies, because he knew that in a democratic society the existence of large centers of private power was dangerous to the continuing vitality of a free people. We witnessed this ourselves in the behavior of the largest banks during the 2008 financial crisis. We’re witnessing it now in the roles that Facebook and Google played — and still play and still defend! — in “fake news.” (We witness it, too, in the enormous iceberg surfacing in Silicon Valley regarding (mis)treatment of women. All part of the same male-supremacist culture.)
But back to Brandeis, who generally opposed regulation, though only because he worried it could lead to the corruption of the relevant regulator. Instead, he advocated breaking up “bigness,” though he made an exception for so-called natural monopolies like railroads, and like telephone, water, and power companies, where it makes sense to have one or a few companies controlling an industry because of the central requirements for cooperation and linkage. It may well be that tech companies today — Google in particular — have become natural monopolies by supplying an entire market’s demand for service at a price lower than what would be offered by two competing firms. Jonathan Taplin, director emeritus of the University of Southern California’s Annenberg Innovation Lab, asks, if that’s the case, isn’t it time to regulate them like public utilities?
When AT&T was regulated it was required to spend a fixed percentage of profits on research and development, so in 1925 AT&T set up Bell Labs to develop the next generation of communications technology, and also do research in physics and other sciences. Over the next 50 years Bell Labs produced the transistor, the microchip, the solar cell, the microwave, the laser, and cellular telephony — plus eight Nobel prizes. That benefited the public.
Today, however, Facebook, Google, and Amazon smother innovation. Their platforms are now the point of access to all media for the majority of Americans. Their profits have soared, while revenues in media businesses like newspaper publishing or the music business have, since 2001, fallen by 70 percent. Newspaper publishers lost over half their employees between 2001 and 2016. Billions of dollars have been reallocated from creators of content to owners of monopoly platforms. All content creators who are dependent on advertising must negotiate with the gatekeepers, Google or Facebook, the only ways in to communicate with the world. Furthermore, rising supernormal returns on capital companies with limited competition is leading to a rise in economic inequality in general.
We could start with some obvious regulations — although first we have to get rid of the Trump regime to do anything constructive. But we should have plans in place and begin educating consumers. For example:
1) Monopolies are created by acquisition: Facebook buys Instagram and WhatsApp; Google buys Double-Click; Amazon buys Audible, etc. For starters (and at minimum), these companies should not be allowed to acquire other firms, like Spotify or SnapChat.
2) Regulate a company like Google as a public utility, require it to license out patents for a nominal fee, for its search algorithms, advertising exchanges, and other key innovations.
3) Remove the “Safe Harbor” clause in the 1998 Digital Millennium Copyright Act. Nice-sounding name, “safe harbor”; disastrous intent. “Safe Harbor” allows companies like Facebook and Google’s YouTube to free ride on content produced by others. Removing the Safe Harbor provision would force social networks to pay for the content posted on their sites. But also: You know the real reason there are 40,000 Islamic State videos on YouTube, many with ads that yield revenue for those who posted them, all of them aimed at radicalizing impressionable young men? It’s not that ISIS/ISIL/Daesh is so brilliant. It’s that YouTube doesn’t have to take responsibility for content on its network. You know the real reason Hillary isn’t sitting in the Oval Office but Donald Trump is squatting there like a toad? Russian hackers and bots ran (still run!) wild on Facebook and Twitter, who take their rubles with no culpability or liability for what their platforms are launching.
Facebook, Google, and Twitter shrug, pretending innocence and claiming that Aw Gee it’s just too onerous to police their networks. That is preposterous. They already police their networks for child pornography quite well. And as for paying for content on their platforms instead of practicing, well, piracy, just one example: One million downloads of a song on iTunes would yield the performer and her record label about $900,000. One million in streams of that same song on YouTube would earn them only about $900. That’s fair?!?
Speaking of YouTube, it has more and more become a home for the politics and figureheads of the right. The hard right. Like the guy calling himself Black Pigeon Speaks, who has 215,000 followers and whose uploads have been viewed more than 25 million times. He believes in a global conspiracy of bankers led by the Jews, and thinks that women being allowed to do whatever they want, including choosing their own mates, is a deathblow to Western civilization. Like the mega-platforms Twitter and Facebook, YouTube hosts diverse communities, sure. But. Like the much smaller Tumblr (dominated by combative left-wing politics) or 4-chan (the extreme hard-right meme factory), YouTube posts only one dominant native political community. Very quietly, YouTube has followed the path of talk radio, in its willingness to be taken over by the right. Talk radio’s growth followed decades of deregulation and subsequent opportunity — the rise of FM, the abandonment by music stations of AM, and especially the devastating 1987 revocation of the Fairness Doctrine, a rule through which the FCC tried to regulate a balance in content produced by licensed broadcasters. The result? Rush Limbaugh and his bros. YouTube reminds us just how powerful a medium can become while still appearing marginal to those who know little about it.
As Paul Joseph Watson of InfoWars tweeted gleefully, ”Twitter is a tiny echo chamber. I’m not sure the Left understand the monumental ass-whupping being dished out to them on YouTube.” YouTube stars have massive followings — and they’re scary people. For instance, Stephen Molineux, like Watson, has apocalyptic fixations. He’s especially fond of the phrase “Take the red pill,” a reference to the film The Matrix. The term was adopted by men’s rights activists to describe their “awakening” to what they claim is an anti-male bias in society, and it has now become a versatile catchphrase deployed against feminism, emigration, social justice, and of course the media.
Regulation of the public airways in the interests of the community, in the interests of real fair and accurate reporting, and in the interest of balanced opinion that informs rather than dividing, debasing, and inciting to violence. Those values are in fact precisely what the Framers had in mind with the First Amendment.
I understand that the concept of government regulation can make some people nervous. Yet we don’t get nervous about high standards of accurate reporting at major newspapers — for example, the three sources rule — and for decades we didn’t get nervous at the idea of “community standards” required by the FCC in the public interest.
There’s no longer any question as to whether these mega-platforms are willing, even eager springboards for noxious political propaganda that is seriously now imperiling the existence of the Republic and actual free speech. Furthermore, it is blatant, utter nonsense for tech giants with bulging pockets to claim that they are innocent, passive bystanders in the propagation of that propaganda. Such an argument is identical to that made by the gun industry and its lobbyist, the National Rifle Association.
We need to make absolutely clear to Big Tech that if they won’t regulate themselves as complicit delivery systems to stop flooding poison into our lives, then damned right: We want United States laws and standards that will regulate them — and we will elect those principled candidates who vow to make that happen.
This article first appeared as Robin Morgan's blog.
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