It’s coming from left, right and center, but the message is clear: The US government and the political mood are turning on tech companies for being too big, crowding out competition, violating users’ privacy, squeezing government for tax incentives and scrimping on wages for their lowest-paid employees.
For an industry that has sold big promises to disrupt old industries, streamlining the economy, bringing people together and making lives easier, the disruption may be coming back full circle.
Government regulators have negotiated to split up oversight of Google, Facebook, Amazon and Apple, with the Department of Justice and Federal Trade Commission moving toward a new probe of Google, according to reporting by CNN’s Brian Fung.
Frustrated that those regulators are moving too slowly, Congress, with support from Democrats and Republicans, will use its investigative power for a top-to-bottom review of the tech industry, and focus on the biggest companies. Congress cannot break up companies under existing laws, but it could cook up new ones – and Sen. Elizabeth Warren of Massachusetts, who’s established herself as Democrats’ big ideas leader in 2020, already has a plan to break up the largest tech monopolies.
Warren’s gripe is that the largest tech companies favor their own products, something known as “platform privilege,” which crowds out every other player.
Larger frustrations with tech companies
But the problems are much bigger than that, and go way beyond antitrust investigations.
Even Facebook CEO Mark Zuckerberg, after Russia’s internet attack on the US election in 2016, said this year that the internet should be regulated to ensure the integrity of people’s privacy and of free elections.
The same internet that has made the world smaller and brought people across continents closer together for commerce and communication has brought together extremists bent on terrorism and has spread conspiracy theories and other disinformation that is driving society apart.
One person’s meme is another’s fake news, however. President Donald Trump has long groused, without concrete proof, that social networks bury conservative content – and even invited Twitter CEO Jack Dorsey to the White House to complain about it.
The House probe will also focus on the effect tech companies have had on local journalism and other aspects of American life.
Amazon, Apple, Facebook and Google are everywhere in US life now, providing the phones Americans use to shop and connect with one another, the speakers that listen for their commands and questions, the cameras that watch their homes. Smaller companies like Uber, Lyft, Twitter and others are playing their own roles in reshaping how we move through the world around us and how we understand what happens in it. Unless and until they are swallowed or ended by something larger.
“The open internet has delivered enormous benefits to Americans, including a surge of economic opportunity, massive investment and new pathways for education online,” House Judiciary Chairman Jerrold Nadler said Monday. “But there is growing evidence that a handful of gatekeepers have come to capture control over key arteries of online commerce, content and communications.”
More frustrations with tech companies
A backlash to big tech has been festering for some time.
People in cities have proved willing to fight tech companies and the inequality their fabulous salaries bring.
Earlier this year Rep. Alexandria Ocasio-Cortez and other Democrats in New York used a grassroots political campaign to kill Amazon’s plans to locate half of its new HQ2 in New York after a highly publicized beauty contest among cities vying for the right to host the company.
Part of the gripe was the tax benefits and goodies Amazon had extracted in exchange for jobs from New York Gov. Andrew Cuomo and New York Mayor Bill de Blasio – who is now running for president.
That came after Sen. Bernie Sanders of Vermont led the effort to get Amazon to pledge to pay its workers $15 per hour.
Amazon in particular plays a huge role in bringing automation to American life, which helps get products to your doorstep more quickly but is worrying many people that robots will replace human workers.
But now we also find that the IRS is auditing Uber for two tax years, which the company disclosed in filings Tuesday before its IPO. Uber doesn’t pay much tax, however, because it’s never turned a profit. Amazon, despite its size, gets away with some amazing tax magic.
The Supreme Court is letting iPhone users sue Apple for violating antitrust laws and creating a monopoly with its app store.
It’s not just consumer companies. The chipmaker Qualcomm was found in May by a federal judge to have violated antitrust law for overcharging phone makers.
Falling out of fashion
Time was, tech companies were the darlings of the American economy, and therefore of American politics. President Barack Obama dined with tech execs and happily took their campaign contributions. He used the Silicon Valley mentality to try to rethink government. Zuckerberg interviewed him at Facebook Headquarters in 2011 and the event was streamed live.
Republican presidential candidates in 2016 bought into Uber and the gig economy. Jeb Bush said it would change the workforce and let Americans “customize their lives.”
Now there’s a backlash on the lack of worker protections, lack of benefits and low wages that make gig workers and American workers soak up more risk.
And the public is starting to see the darker side of omnipresent tech companies that own their photographs, read their emails, know their habits and locations and serve up ads creepily related to their internet searches.
Now more lawmakers and candidates are turning their scrutiny on tech. A turning point was the Trump election victory in 2016. Democrats still shout about the rise of fake news on Facebook, Twitter and Google. Conservatives have leaped to defend fringe voices kicked off social platforms as the companies have responded to fake news complaints.
Democrats have seized on inequality as a campaign issue and tech billionaires like Zuckerberg and Amazon CEO Jeff Bezos embody the excess of a gilded age for tech success.
The Microsoft example
In the 1990s the government launched an epic antitrust case against Microsoft, which was forcing its web browser on PC users.
That case lasted for a dozen years and ended with a settlement. But the fallout created space for the rise of Google and Facebook, now under scrutiny of their own.
The European Union has previously fined Google $5 billion for requiring Google apps to be installed on phones running its Android operating system, solidifying its dominance.
Sally Hubbard of the Open Markets Institute has argued on CNN that tech companies have helped chip away at antitrust law by arguing in court cases that consumers are not harmed by their anti-competitive practices.
“But consumers pay for tech platforms’ services with data, not dollars,” she wrote back in January, explaining the view that tech companies are violating laws.
She argued that while there are other social media platforms, it’s not correct to argue Facebook doesn’t have a monopoly.
“The closest substitute to Facebook is Instagram, which isn’t much of a choice since Facebook owns it,” she wrote. It also owns Whatsapp, another competitor.
Popular but not trusted
And yet!
The biggest tech companies remain popular. Except for Facebook and Twitter.
In March, an NBC News/Wall Street Journal poll found 54% of Americans had somewhat or very positive views of Apple, 63% had similarly positive views of Google and 65% were high on Amazon. Facebook and Twitter, the social platforms, did not fare as well; just 36% of Americans had positive views of Facebook and 24% were positive about Twitter.
While popular, they are not trusted. In March a CNN poll found 41% trusted the tech companies a great deal or somewhat to do what is right for the economy or for their users.
Do you trust Alexa to not record your conversations?
And this is the conundrum for lawmakers as they turn a more critical eye at how and whether to further regulate tech companies that have gotten so big and become so ingrained in the economy and lives of everyone.
