Welcome to You Op to Know, The Daily Orange Opinion section’s weekly podcast.  

This week, Assistant Editorial Editor Michael Sessa and Business columnist Santiago Hernandez discuss the flaws of Sen. Elizabeth Warren’s (D) plan to break up big tech.

If you have any questions or comments, feel free to submit a letter to the editor at opinion@dailyorange.com.

TRANSCRIPT

SESSA: Welcome to this week’s edition of You Op To Know, The Daily Orange’s Opinion section podcast. I’m Assistant Editorial Editor Michael Sessa and this week we’re joined by our Business columnist Santiago Hernandez.

HERNANDEZ: Hey. Thanks for having me. I really appreciate it.

SESSA: Tonight we’re going to talk about Sen. Elizabeth Warren’s (D) plan to break up big tech companies. Tell us what the components of that plan look like and why she’s pushing so hard to get them passed?

HERNANDEZ: Sure, so Sen. Elizabeth Warren, she’s scared of tech companies because she thinks that they’ve grown to big and too powerful and that they’ve grown to have a lot of influence on the consumer and a lot of influence on politics. And so her plan is essentially to break up tech companies, and she wants to do so by specifically targeting companies that are above $25 billion in annual revenue and that are also platform utilities. So an example of this is Apple. So Apple owns the Apple Store but they also participate in the Apple Store. They have their own apps. And so she believes that this an anti-competitive behavior and that this is harming competition because it’s giving Apple, for example, an unfair advantage. And so her plan is to designate these companies as platform utilities and essentially break them up. And so the Apple store would have to be broken up from the rest of the Apple ecosystem. Another example of this is that the Google search engine would have to be broken up from the rest of the Apple company, or rather the Alphabet company, and each of the different divisions of Google would have to become different companies.

SESSA: So you think that the plan is flawed. Why do you think that?

HERNANDEZ: So, it’s certainly a step in the right direction. But the problem with her plan is that it’s a structural change, and this is unlikely to have any positive effect. This is because each company has a totally different business model. There’s many different ways in which these companies can perform anti-competitive behavior. And if you make a structural change, you’re putting a one-size-fits-all model to these companies. And, like I said, there’s many ways for these companies to get around that. Ultimately, the answer to this is to focus on the behavior of these companies, rather, not their structure, but their behavior. Senator Elizabeth Warren is wrong in that there’s a problem with these tech companies becoming so big. It’s pretty normal for tech companies to become big because it’s an information industry. It’s a consumer based industry. It’s normal. It’s also normal for companies to acquire other companies. That’s just the life and death of different technologies. So rather than focussing on that and focussing on the structure, she has to focus on the specific behavior of each company. An example of this would be that she should follow what the EU has been doing with Google. So Google has been found to perform anti-competitive behavior in the EU space. They have been found to promote their own products and give their own products an unfair advantage. They have been fined billions of dollars, and so far it’s been pretty much proven that they have been doing this. Now the question is why is the US not doing the same thing. I mean, they’re doing the same exact actions in Europe as they are doing so here. So this is an example of focussing on behavior, behavioral change, and focussing on stopping these companies from doing very specific actions. I think that’s a much better route than applying a one-size-fits-all model and making a structural change that would ultimately, would not help.  

SESSA: So what is a specific change that you might institute since you think that the plan is a step in the right direction?

HERNANDEZ: Yeah. So the laws and regulations in the US are very far behind. A monopoly from 100 years ago is totally different than a monopoly from today, but the laws are pretty much the same. There has to be a revamp on a lot of these laws and a lot of these regulations. The politicians and the government, without getting political, have to catch up with what’s going on in the tech space. Ultimately, the goal would be to create new legislation that applies to these technology-based monopolies. And specifically referencing her plan, in order to improve it, like I said, you’d have to focus on behavioral change, so you’d have to be very specific about what tech companies can do and what they can’t do, as specific as focussing on one company such as Google and then going on to the next.

SESSA: Cool. Thanks for joining us. And as always, if you have any comments or questions, or if you’d like to send us a letter, you can email us at opinion@dailyorange.com. We’ll talk to you next week!

Published on April 8, 2019 at 7:50 pm