Have we reached the tipping point?
In the last couple of weeks there have been a series of articles and commentary about trust busting big tech companies like Google, Facebook and Amazon. Will government agencies and/or legislators really doing something or is it just rhetoric? What impact would it have on consumers and businesses? The topic of big tech trust busting has been surprisingly bi-partisan, particularly in such a divided political era.
While you could certainly argue that the rationale for this bipartisanship is that the Democrats blame Facebook for Trump’s election and Republicans believe Google censors conservative views, the outcome is that both sides seem less than happy with what these companies are doing. Combined with what I call “the awakening” of the American people that these companies leveraged consumer data and privacy for profits, the perfect storm may be coming for big technology companies where both sides of the political spectrum and the public at large support investigating and potentially trust busting these companies.
Certainly, the upcoming 2020 presidential election will be the priority for both political parties, but in the aftermath, taking down one or more of these companies could be a political win, regardless of who holds the Presidency. With that, what should you be thinking about in the boardroom? What are the pros and cons to tech trust busting?
Why It Would be Good for Consumers
Privacy Awakening. People are now aware that the price we have paid for all of these “free” services is a loss of privacy. We are on the precipice of more and more devices and things connected to the internet at almost an alarming rate and faster speed. When a very few companies have woven themselves into the fabric of how everything is connected and time after time can’t seem to self-regulate, the government may have to step in.
Power to Crush Small Players. Companies like Amazon, Google and Facebook can destroy of small businesses with the simple change of an algorithm. Amazon reports that some one million businesses rely upon them to sell and distribute goods to consumers. What if they decide to sell their own products instead? Almost every local retailer relies upon Google Maps and Google Searches to reach potential customers. And, Facebook didn’t earn more than 2 billion dollars on subscriptions – it’s all from selling ads and data to businesses. That all sounds like it’s good for small business, but the reality is these three companies wield so much power that simply changing the economics of any of their systems could destroy millions of small businesses that collectively have a big impact on jobs and our economy. Some regulation may be required to ensure fair practices are applied and they don’t abuse that power.
Level the playing field. These companies have amassed fortunes because they didn’t have to follow the same rules as other companies essentially doing the same thing in traditional industries. For years Amazon has not had to pay local sales taxes. Facebook and Google have not had to follow FCC guidelines about the content posted on their sites because they claimed they were a tech company and not a media company. This means they have eliminated costs of complying with local, state and federal laws since their inception whereas their competitors (traditional broadcast, newspapers, cable networks and retailers) have all continually paid for these costs of compliance intended to protect consumers. The cost of no regulation gave them an edge over their predecessor industries and allowed them to profit by taking advantage of unknowing consumers.
Allow newer businesses to emerge. When three companies dominate so much of the digital platform and exchange of services, goods and ideas, it inherently means small business don’t ever get off the ground. Facebook quickly bought up Instagram to ensure it didn’t have a competitor. Amazon launches new business across industries based upon its massive power of data and logistics. If other companies can’t get off the ground because these three companies buy them or kill them off, we are limited in seeing some of the privacy problems solved.
Why It Would be Bad for Consumers
Slippery Slope. There’s always a concern when the government breaks up a company that it is overreaching and could slip into dangerous territory. These companies, after all, innovated and built the platforms on which we all have built our lives. Is it really fair to penalize them? Who will be next if we allow this to happen?
Stifles innovation. These companies invest heavily in innovative thinking about the future. Space travel, driverless cars, medical solutions, smart homes to name just a few. These companies invest in big sky thinking with their fortunes. Do we really want to stop all that research and development? If you remember when the government broke up AT&T, the outcome was that its think tank, Bell Labs was ostensibly dissolved. Bell Labs was responsible for much of the early cellular technology, laser, digital music and satellite work, all back in the 1940s – 70s. Imagine if all that innovative work had not happened. That’s the risk we have if we stifle the innovation of these big tech companies.
It’s just easier this way. Whether we like it or not, we, as individuals, rely upon these companies and many businesses (big and small) rely upon their platforms. If they are broken up, it could negatively impact a lot of businesses and their ability to reach customers. It could also leave a hole for many consumers that could be filled with smaller organizations that may have less ability to address privacy or not have the scale to absorb the losses that often accompany innovative activities.
There’s a lot more to come in the years ahead. Spend some time thinking about the impact to your organization both short and long-term if these companies are broken up or regulated.
If you’re interested in reading more, check out these articles:
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