The Big Four tech companies are finally getting the attention they deserve from the U.S. government.
While European regulators have been aggressive, those in the U.S. have been slow off the mark as Google, Amazon, Facebook and Apple accumulated vast market power. That began to change in the past few months as controversies swirled over disinformation, political bias, privacy breaches and misuse of personal information. Last week brought two potentially significant developments.
The Federal Trade Commission on Wednesday fined Facebook $5 billion for violating a 2011 privacy settlement and imposed a series of oversight measures for the social network’s collection and handling of user data as part of a new agreement with the company. Facebook ran afoul of the 2011 settlement by allowing Cambridge Analytica, a British firm consulting for the Trump presidential campaign, to mine the personal information of users, without their knowledge or permission. The firm used that data to build profiles of American voters.
While a $5 billion fine sounds enormous, it is but a fraction of the company’s $56 billion in annual revenue. And Facebook’s ability to collect, share and use personal information was not restricted in any way.
As a result, some privacy advocates view the settlement as little more than a slap on the wrist. But it could signal a more aggressive regulatory stance by the FTC.
Earlier in the week, the Justice Department announced that it would begin an antitrust review into whether the internet giants had acted to stifle competition and are harming consumers. As The New York Times reported, this is a potentially significant shift in how antitrust law is interpreted and applied. For decades, the test has basically been whether consumers pay higher prices as a result of anticompetitive behavior in the marketplace. That allowed tech companies to largely escape scrutiny because Google and Facebook do not charge users, and one of Amazon’s big selling points is charging low prices.
But it has become clear that these tech behemoths have the power to harm consumers in ways other than pricing. Misusing personal information and failing to keep it secure are two. So is allowing a social network to be used to spread disinformation. Other examples: In Amazon’s case, its low prices and vast reach have devastated local retailers, reducing consumer choice in shopping. Facebook and other social media platforms have helped to cripple mainstream local news organizations while profiting from their content, to the great detriment of consumers of news — and American democracy.
There is a long way to go to rein in the tech giants, much less break them up, as Sen. Elizabeth Warren, D-Mass., proposes in her presidential campaign. These companies, after all, have the wherewithal to field an army of lawyers and lobbyists to protect their turf.
But as Warren points out, nearly half of all e-commerce is transacted through Amazon and nearly 70 percent of all internet traffic flows through sites owned by Google or Facebook. Those companies are the contemporary equivalents of the Gilded Age powerhouses such as Standard Oil.
Antitrust laws were the Progressive Era’s response to the need to ensure competition, and that imperative has not changed.