Abu Dhabi, UAEMonday 24 June 2019

US presidential hopeful Warren vows to break up tech giants

Facebook, Google and Amazon in firing line of Democrat aiming to be presidential candidate

Senator Elizabeth Warren says dismantling big tech firms would "keep the marketplace competitive". Bloomberg
Senator Elizabeth Warren says dismantling big tech firms would "keep the marketplace competitive". Bloomberg

Senator Elizabeth Warren vowed on Friday to break up Amazon, Google and Facebook if elected US president to promote competition in the technology sector.

Seeking to stand out in a crowded field vying to be the Democratic candidate for president in 2020, Ms Warren said at a campaign event in Queens, New York, that it was time to challenge the increasing dominance of America’s biggest technology companies.

“We have these giant tech companies that think they rule the Earth,” she told a crowd of about 300 people in Long Island City. “I don’t want a government that’s here to work for the giant tech companies. I want a government that’s here to work for the people.”

Amazon abruptly scrapped plans in February to build a major outpost in the neighbourhood that could have created 25,000 jobs, blaming opposition from local leaders.

In an event held not far from the proposed Amazon site, Ms Warren said that big tech companies come into towns, cities and states and “bully everyone into doing what they want” and “roll right over” small businesses and start-ups that are a threat.

“Giants are not allowed to buy out the competition," she said. "The competition needs the opportunity to thrive and grow.”

Some of those in attendance said they didn’t know enough about Ms Warren’s proposal to back it fully but they trusted her policy expertise.

“What I like is that she’s proposing big ideas. I think that’s important,” said lawyer Kate Aufses, 32, who said she was undecided about which Democratic candidate she would support.

Earlier in the day, Ms Warren said in a post on Medium that she would nominate regulators to unwind acquisitions such as Facebook's deals for WhatsApp and Instagram, Amazon's deals for Whole Foods and Zappos, and Google's purchases of Waze, Nest and DoubleClick.

Shares of Facebook closed up 0.3 per cent on Friday, while Alphabet’s Google fell 0.08 per cent and Amazon.com lost 0.3 per cent.

Ms Warren also proposed legislation that would require tech companies like Google and Amazon that offer an online marketplace or exchange to refrain from competing on their own platform. This would, for example, forbid Amazon from selling on its Amazon Marketplace platform.

Amazon and Google did not immediately respond to requests for comment. Facebook declined comment.

It is rare for the government to seek to undo a consummated deal. The best known case in recent memory is the government’s effort to break up Microsoft. The Justice Department won a preliminary victory in 2000 but it was reversed on appeal. The case settled with Microsoft intact.

US Congress held a series of hearings last year looking at the dominance of major tech companies and their role in displacing or swallowing up existing businesses, among other things.

Amazon’s business model has displaced brick-and-mortar stores and the company has been criticised for poorly paying its warehouse workers.

Facebook has angered policymakers for losing track of users’ data and for not doing more to stop foreign meddling in the 2016 US presidential election.

Google has clashed with smaller companies, such as Yelp, over search placements and has raised concerns it would comply with China’s internet censorship and surveillance policies if it re-enters the Asian nation’s search engine market.

NetChoice, an e-commerce trade group whose members include Facebook and Google, said Ms Warren’s plan would lead to higher prices.

“Senator Warren is wrong in her assertion that tech markets lack competition. Never before have consumers and workers had more access to goods, services and opportunities online,” said Carl Szabo, vice president and general counsel for NetChoice.

In Washington, the president of the US Chamber of Commerce, Tom Donohue, said breaking up the big tech companies would “take us back to the Stone Age”.

“This is not a vision for the future, but an archaic idea that should be dumped in your computer trash can,” he said.

Public Knowledge, a tech policy group, called Ms Warren’s plan a step towards protecting the next generation of businesses, but stopped short of full-throated support for breaking up the tech giants.

Tim Wu, a professor of law, science and technology at Columbia Law School who coined the term “net neutrality” and has warned against an economy dominated by a few giant companies, said in a tweet that it was “heartening” to see the idea of breaking up the tech giants gaining some traction.

Tech companies are some of the biggest political donors. Google spent $21 million to lobby in 2018, while Amazon spent $14.2m and Facebook spent $12.6m, according to their filings to US Congress.

Angering a deep-pocketed industry could hurt Democrats, but that is not likely to be a big concern for Ms Warren, who made her political mark and plenty of enemies by going after big banks after the 2007-09 financial crisis. In the Senate, Ms Warren continues to be an outspoken critic of Wall Street and is a leader of her party’s progressive wing.

Other Democratic candidates have also weighed in on the issue.

Senator Amy Klobuchar used her campaign launch speech to vow action on digital issues such as privacy, saying “big tech companies” misuse personal data.

Senator Bernie Sanders in 2018 even named a bill after Amazon founder Jeff Bezos, the Stop Bezos Act, which would tax big companies if their employees receive public benefits.

Updated: March 11, 2019 02:40 AM