PS Commentators Respond: Can the US Rein in Big Tech?
Mar 9, 2023
US lawmakers have spent years declaring their commitment to bringing technology giants like Google and Meta to heel, and US President Joe Biden’s appointment of tough-minded reformers to leading antitrust-enforcement positions in 2021 raised hopes that progress was imminent. But progress never arrived.
In this Big Question, we ask Anu Bradford, Tim O’Reilly, Ilan Strauss, and Mariana Mazzucato, and Tommaso Valletti whether and how the US government can translate regulatory ambition into effective action.
Featured in this Big Question
Anu Bradford
ANU BRADFORD
Tim O'Reilly
TIM O'REILLY
Ilan Strauss
ILAN STRAUSS
Mariana Mazzucato
MARIANA MAZZUCATO
Tommaso Valletti
TOMMASO VALLETTI
ANU BRADFORD
In its determination to protect free speech, the free internet, and incentives to innovate, the US has traditionally embraced a libertarian approach to regulating technology. But as Americans have become increasingly aware of the harmful effects of leading tech companies’ vast economic power and social influence, calls for greater regulation of the sector have grown louder.
Congress is now assessing the possibilities of re-writing US antitrust laws, enacting a federal privacy law, and revisiting the 1996 Communications Decency Act, which shields internet platforms from liability for the content they host. But, to date, the US government’s regulatory rhetoric has not been translated into any concrete reforms.
There are a few reasons for this. The first is that the tech industry has generated tremendous wealth by producing products and services that consumers value, whether for convenience, entertainment, or something else. Many Americans are entranced by – or, some would argue, addicted to – Big Tech’s offerings.
Second, the tech industry engages in persistent lobbying efforts and advances a wide range of narratives that reinforce lawmakers’ reluctance to regulate. For example, last year, tech companies argued that more robust antitrust legislation would “give a free pass” to foreign companies, hurting US competitiveness and setting the US back in its tech race against China.
Third, even though the Democrats and Republicans agree that regulation is needed, they cannot agree on the content. For example, Republicans complain that platforms are censoring conservative voices, while Democrats worry about rampant hate speech and disinformation. Such disagreements also may cause efforts to implement a federal privacy law to falter.
Though discontent about tech companies is strong in the US, political dysfunction has thus far proven to be even stronger. As long as this remains true, meaningful legislation cannot be enacted.
TIM O’REILLY, ILAN STRAUSS, AND MARIANA MAZZUCATO
The dominant “Big Tech” companies (Alphabet, Amazon, Apple, Meta, and Microsoft) exert substantial market power on users and other firms. But what kind of power?
In information markets, attention is the currency. Platform algorithms for search, social-media feeds, and recommendations direct that attention, influencing what content users consume, which products they purchase, how much time they spend online, and how that time is monetized through advertising. Attention allocations drive value allocations.
A dominant platform’s “market power” is the ability, over a sustained period, to direct user attention and produce information allocations that are, to an appreciable degree, independent of relevance, consumer preferences, or users’ explicit inputs. By using its proprietary algorithms to allocate scarce user attention for its own benefit, rather than for the benefit of its users, a dominant platform secures excess returns or “algorithmic attention rents.”
Big Tech platforms’ market power ultimately manifests as an ability to degrade output quality (rather than necessarily to raise prices). A striking example of this is the algorithmic promotion on social media of content that is irrelevant or even harmful to users, but increases their engagement and keeps them online for longer, thereby enabling the platform to serve them more advertisements. Another example is the promotion on web-search and e-commerce platforms of “sponsored” results over “organic” results produced by the company’s user-centric algorithms.
Although all Big Tech firms are expanding their advertising businesses, Amazon stands out because of the way that advertising has almost completely supplanted the algorithmic recommendations and results based on quality and price – results chosen for user benefit – that were a cornerstone of Amazon’s original business. A recent study showed that 16 of the first 20 results in an Amazon product search are now ads!
In the US and elsewhere, broad regulations establishing minimum standards on the share and prominence of organic results relative to ads may be among the most effective ways to limit the abuse of market power by dominant platforms.
TOMMASO VALLETTI
First, what is the problem with Big Tech? A few companies have grotesque and enduring market power. Google has controlled over 90% of the search-engine market for 15 years. According to the US Federal Trade Commission, Facebook has dominated the market for US personal social-networking services since at least 2011. The list goes on.
These companies owe their dominance not only to some excellent products, but also to serial acquisitions that went unchallenged by regulators. Some big misses are well-known: Facebook was allowed to buy Instagram in 2012, and Google was allowed to acquire Waze in 2013. Others – such as Google’s 2007 purchase of DoubleClick – are less familiar, but hold the key to these companies’ monopolization of the ad-tech business.
Market power brings market abuses. If Google is so good, why does it oblige mobile-phone manufacturers who need Android to preinstall Google Search or Google Chrome? Why does it pay Apple more than $10 billion per year to be the default search engine on iOS devices as well? And market power brings political power: these giants can dictate the rules of any game. Good luck trying to compete with them.
So, can the US rein in Big Tech? The government is now trying to, after more than a decade of abdicating its responsibility to enforce antitrust laws against the sector. But enforcers must work within the existing laws, and the established interpretation of those laws. The standard of proof has become excessive, and while regulators are under-resourced, Big Tech firms have the means to hire armies of lawyers and consultants. These companies sit on gargantuan rents and will do whatever it takes to preserve them.
The real game changer would be new laws. Unfortunately, all of the tech-related antitrust bills that Congress debated last year stalled in the Senate. It might not be surprising, but it is certainly regrettable. To avoid monopolization we need to reintroduce into antitrust law some (rebuttable) structural presumption. Big Tech’s market dominance is good for neither the economy nor democracy.
Featured in this Big Question
Anu Bradford
ANU BRADFORD
Writing for PS since 2013
7 Commentaries
Anu Bradford, Professor of Law and International Organization at Columbia Law School, is a senior scholar at Columbia Business School’s Jerome A. Chazen Institute for Global Business. She is the author of The Brussels Effect: How the European Union Rules the World.
Tim O'Reilly
TIM O'REILLY
Writing for PS since 2021
3 Commentaries
Tim O'Reilly is the founder and CEO of online technology learning platform O'Reilly Media and Visiting Professor of Practice at the University College London Institute for Innovation and Public Purpose. He is the author of many books, including WTF: What's the Future and Why It's Up to Us (Harper Business, 2017).
Ilan Strauss
ILAN STRAUSS
Writing for PS since 2022
2 Commentaries
Ilan Strauss is Head of Digital Economy and a senior research associate at the University College London Institute for Innovation and Public Purpose.
Mariana Mazzucato
MARIANA MAZZUCATO
Writing for PS since 2015
52 Commentaries
Follow
Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, is Founding Director of the UCL Institute for Innovation and Public Purpose, Chair of the World Health Organization’s Council on the Economics of Health For All, and a co-chair of the Global Commission on the Economics of Water. She is the author of The Value of Everything: Making and Taking in the Global Economy (Penguin Books, 2019), The Entrepreneurial State: Debunking Public vs. Private Sector Myths (Penguin Books, 2018), Mission Economy: A Moonshot Guide to Changing Capitalism (Penguin Books, 2022), and, most recently, The Big Con: How the Consulting Industry Weakens our Businesses, Infantilizes our Governments and Warps our Economies (Penguin Press, 2023).
Tommaso Valletti
TOMMASO VALLETTI
Writing for PS since 2023
1 Commentary
Tommaso Valletti is Professor of Economics at Imperial College London, where he heads the Department of Economics and Public Policy, and a former chief competition economist at the European Commission.
0
US lawmakers have spent years declaring their commitment to bringing technology giants like Google and Meta to heel, and US President Joe Biden’s appointment of tough-minded reformers to leading antitrust-enforcement positions in 2021 raised hopes that progress was imminent. But progress never arrived.
In this Big Question, we ask Anu Bradford, Tim O’Reilly, Ilan Strauss, and Mariana Mazzucato, and Tommaso Valletti whether and how the US government can translate regulatory ambition into effective action.
Featured in this Big Question
Anu Bradford
ANU BRADFORD
Tim O'Reilly
TIM O'REILLY
Ilan Strauss
ILAN STRAUSS
Mariana Mazzucato
MARIANA MAZZUCATO
Tommaso Valletti
TOMMASO VALLETTI
ANU BRADFORD
In its determination to protect free speech, the free internet, and incentives to innovate, the US has traditionally embraced a libertarian approach to regulating technology. But as Americans have become increasingly aware of the harmful effects of leading tech companies’ vast economic power and social influence, calls for greater regulation of the sector have grown louder.
Congress is now assessing the possibilities of re-writing US antitrust laws, enacting a federal privacy law, and revisiting the 1996 Communications Decency Act, which shields internet platforms from liability for the content they host. But, to date, the US government’s regulatory rhetoric has not been translated into any concrete reforms.
There are a few reasons for this. The first is that the tech industry has generated tremendous wealth by producing products and services that consumers value, whether for convenience, entertainment, or something else. Many Americans are entranced by – or, some would argue, addicted to – Big Tech’s offerings.
Second, the tech industry engages in persistent lobbying efforts and advances a wide range of narratives that reinforce lawmakers’ reluctance to regulate. For example, last year, tech companies argued that more robust antitrust legislation would “give a free pass” to foreign companies, hurting US competitiveness and setting the US back in its tech race against China.
Third, even though the Democrats and Republicans agree that regulation is needed, they cannot agree on the content. For example, Republicans complain that platforms are censoring conservative voices, while Democrats worry about rampant hate speech and disinformation. Such disagreements also may cause efforts to implement a federal privacy law to falter.
Though discontent about tech companies is strong in the US, political dysfunction has thus far proven to be even stronger. As long as this remains true, meaningful legislation cannot be enacted.
TIM O’REILLY, ILAN STRAUSS, AND MARIANA MAZZUCATO
The dominant “Big Tech” companies (Alphabet, Amazon, Apple, Meta, and Microsoft) exert substantial market power on users and other firms. But what kind of power?
In information markets, attention is the currency. Platform algorithms for search, social-media feeds, and recommendations direct that attention, influencing what content users consume, which products they purchase, how much time they spend online, and how that time is monetized through advertising. Attention allocations drive value allocations.
A dominant platform’s “market power” is the ability, over a sustained period, to direct user attention and produce information allocations that are, to an appreciable degree, independent of relevance, consumer preferences, or users’ explicit inputs. By using its proprietary algorithms to allocate scarce user attention for its own benefit, rather than for the benefit of its users, a dominant platform secures excess returns or “algorithmic attention rents.”
Big Tech platforms’ market power ultimately manifests as an ability to degrade output quality (rather than necessarily to raise prices). A striking example of this is the algorithmic promotion on social media of content that is irrelevant or even harmful to users, but increases their engagement and keeps them online for longer, thereby enabling the platform to serve them more advertisements. Another example is the promotion on web-search and e-commerce platforms of “sponsored” results over “organic” results produced by the company’s user-centric algorithms.
Although all Big Tech firms are expanding their advertising businesses, Amazon stands out because of the way that advertising has almost completely supplanted the algorithmic recommendations and results based on quality and price – results chosen for user benefit – that were a cornerstone of Amazon’s original business. A recent study showed that 16 of the first 20 results in an Amazon product search are now ads!
In the US and elsewhere, broad regulations establishing minimum standards on the share and prominence of organic results relative to ads may be among the most effective ways to limit the abuse of market power by dominant platforms.
TOMMASO VALLETTI
First, what is the problem with Big Tech? A few companies have grotesque and enduring market power. Google has controlled over 90% of the search-engine market for 15 years. According to the US Federal Trade Commission, Facebook has dominated the market for US personal social-networking services since at least 2011. The list goes on.
These companies owe their dominance not only to some excellent products, but also to serial acquisitions that went unchallenged by regulators. Some big misses are well-known: Facebook was allowed to buy Instagram in 2012, and Google was allowed to acquire Waze in 2013. Others – such as Google’s 2007 purchase of DoubleClick – are less familiar, but hold the key to these companies’ monopolization of the ad-tech business.
Market power brings market abuses. If Google is so good, why does it oblige mobile-phone manufacturers who need Android to preinstall Google Search or Google Chrome? Why does it pay Apple more than $10 billion per year to be the default search engine on iOS devices as well? And market power brings political power: these giants can dictate the rules of any game. Good luck trying to compete with them.
So, can the US rein in Big Tech? The government is now trying to, after more than a decade of abdicating its responsibility to enforce antitrust laws against the sector. But enforcers must work within the existing laws, and the established interpretation of those laws. The standard of proof has become excessive, and while regulators are under-resourced, Big Tech firms have the means to hire armies of lawyers and consultants. These companies sit on gargantuan rents and will do whatever it takes to preserve them.
The real game changer would be new laws. Unfortunately, all of the tech-related antitrust bills that Congress debated last year stalled in the Senate. It might not be surprising, but it is certainly regrettable. To avoid monopolization we need to reintroduce into antitrust law some (rebuttable) structural presumption. Big Tech’s market dominance is good for neither the economy nor democracy.
Featured in this Big Question
Anu Bradford
ANU BRADFORD
Writing for PS since 2013
7 Commentaries
Anu Bradford, Professor of Law and International Organization at Columbia Law School, is a senior scholar at Columbia Business School’s Jerome A. Chazen Institute for Global Business. She is the author of The Brussels Effect: How the European Union Rules the World.
Tim O'Reilly
TIM O'REILLY
Writing for PS since 2021
3 Commentaries
Tim O'Reilly is the founder and CEO of online technology learning platform O'Reilly Media and Visiting Professor of Practice at the University College London Institute for Innovation and Public Purpose. He is the author of many books, including WTF: What's the Future and Why It's Up to Us (Harper Business, 2017).
Ilan Strauss
ILAN STRAUSS
Writing for PS since 2022
2 Commentaries
Ilan Strauss is Head of Digital Economy and a senior research associate at the University College London Institute for Innovation and Public Purpose.
Mariana Mazzucato
MARIANA MAZZUCATO
Writing for PS since 2015
52 Commentaries
Follow
Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, is Founding Director of the UCL Institute for Innovation and Public Purpose, Chair of the World Health Organization’s Council on the Economics of Health For All, and a co-chair of the Global Commission on the Economics of Water. She is the author of The Value of Everything: Making and Taking in the Global Economy (Penguin Books, 2019), The Entrepreneurial State: Debunking Public vs. Private Sector Myths (Penguin Books, 2018), Mission Economy: A Moonshot Guide to Changing Capitalism (Penguin Books, 2022), and, most recently, The Big Con: How the Consulting Industry Weakens our Businesses, Infantilizes our Governments and Warps our Economies (Penguin Press, 2023).
Tommaso Valletti
TOMMASO VALLETTI
Writing for PS since 2023
1 Commentary
Tommaso Valletti is Professor of Economics at Imperial College London, where he heads the Department of Economics and Public Policy, and a former chief competition economist at the European Commission.
0
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