Warren proposes splitting tech companies like Amazon, Facebook

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NEW YORK/WASHINGTON (March 9): Democratic presidential candidate Elizabeth Warren is proposing to break up the largest technology companies, including Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc., calling them anti-competitive behemoths that are crowding out competition.

The Massachusetts senator is calling for legislation that would designate the companies as “platform utilities” and the appointment of regulators who would unwind technology mergers that undermine competition and harm innovation and small businesses.

“Twenty-five years ago, Facebook, Google, and Amazon didn’t exist,” Warren wrote in a post on Medium Friday. “Now they are among the most valuable and well-known companies in the world. It’s a great story — but also one that highlights why the government must break up monopolies and promote competitive markets.”

Facebook declined to comment. Representatives of Google and Amazon didn’t immediately respond to a request for comment. Amazon was down 0.7% at 10:45 a.m. in New York, while Facebook and Google were little changed. The stocks were already lower after disappointing payrolls data.

Warren proposes that some mergers by the biggest tech companies be unwound, including Amazon’s purchase of Whole Foods and Zappos; Facebook’s acquisition of WhatsApp and Instagram, and Google’s deals for Waze, Nest and DoubleClick.

Under her proposal, large tech companies would be designated as “platform utilities” and broken apart from any participants on the platform. That means that Amazon Marketplace and AmazonBasics would be split apart, as would Google’s ad exchange and its businesses on the exchange. Google Search would have to be spun off as well.

“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy,” Warren wrote. “They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”

Heightened Scrutiny

Years of privacy lapses and revelations that the Russian government used social media in its attempts to sway the 2016 presidential election have led for calls for intensified scrutiny and greater regulation of the companies in Washington. In addition to the movement for more antitrust enforcement, Congress is moving ahead with privacy legislation that will impact vast swaths of the data economy.

It’s a dramatic change from the years when big internet companies such as Google and Facebook wowed lawmakers, impressing Republicans as American business success stories and pleasing Democrats with their socially progressive ethos.

Even some Republican lawmakers, which generally oppose government regulation of the economy, have flirted with antitrust for tech. They cite concerns over both privacy and unsupported allegations of systematic silencing of conservative voices on social media, although those are separate policy issues from antitrust.

‘Creepy’ Revelations

“Is it really any wonder that there is increased pressure for antitrust enforcement activity, for privacy activity when these companies behave in the way that they do, when they spy on their consumers,” Republican Senator Josh Hawley of Missouri said at a March 5 hearing. “Every day brings some creepy new revelation about these companies’ behaviours.”

Warren said “weak antitrust enforcement” has resulted in a reduction of competition and innovation in the tech sector. She also said there is lax venture capitalist investment in new startups to compete with big tech companies, “because it’s so easy for the big companies to either snap up growing competitors or drive them out of business.”

Warren’s economic populism, which includes attacks on corporations and wealthy Americans who she says are rigging the system for self-interest, is at the heart of her campaign in a crowded field of contenders for the Democratic presidential nomination in 2020.

She has sought to set herself apart from the dozen or more Democrats vying to challenge President Donald Trump in next year’s presidential election with a flurry of policy proposals at an early stage of the campaign. She’s also competing directly with Vermont Senator Bernie Sanders for the votes of the party’s progressive wing, a key constituency in the months-long series of caucuses and primaries leading to the nomination.

Warren’s proposal to break up technology companies also moves into territory staked out by another one of her colleagues and competitors in the 2020 nomination race. Senator Amy Klobuchar of Minnesota is the top Democrat on the Judiciary Committee’s antitrust subcommittee. She has released proposals to increase the government’s ability to scrutinize settlements and take into account wages and the prices paid to suppliers in merger reviews. Earlier in March, she told The Washington Post that the U.S. has a "major monopoly problem" in the technology and pharmaceutical industries.