Yesterday, the CEOs of Google, Amazon, Facebook, and Apple testified remotely before the House Anti-Trust subcommittee. It was clear from the outset that Big Tech was under attack. Members of the committee from both parties were salivating for a fight, and with good reason.
Members of the Democrat Party were seeking to paint the tech giants as greedy capitalist willing to use their power to harm small businesses and essentially force consumers to use their products.
The Republican members were rightfully concerned with the clear bias demonstrated by Google and Facebook against conservatives. This goes for Twitter as well, though CEO Jack Dorsey didn’t testify before the committee.
There is a lot to unpack from yesterday’s hearings regarding the broader implications of what was discussed. First, I am going to take on the Democrat’s claim that the tech companies are a de-facto monopoly, and I assume they would like to see them split apart.
I am going to make a statement that might be unpopular on both sides of the aisle: I am ok with monopolies as long as they aren’t protected by the government. Monopolies subject to a free market still have to produce high quality products at prices consumers are willing to pay when weighing their budgets and preferences. If they fail to do so, then eventually they will be met with competition who can do the job better.
One of the arguments made by those against monopolies is that higher prices can be set by the monopoly holder. That is true, however, they fail to acknowledge that higher prices will entice potential competitors to enter the marketplace. Eventually, through innovation and business practices, that price will come down and benefit consumers.
The classic example cited with regards to a monopolistic company is the “robber baron” John D. Rockefeller and his Standard Oil. History textbooks have unfairly maligned Rockefeller and his company. He produced petroleum at cheaper prices and by occurring large economies of scale. He was a good businessman who did a better job than his competitors, and his corporation grew exponentially as a result.
Author D. T. Armentano wrote that “the record clearly indicates that prices fell, costs fell, outputs expanded, product quality improved, and hundreds of firms at one time or another produced and sold refined petroleum products in competition with Standard Oil.”
Fast forward to yesterday’s hearing. A similar charge was being lobbed at the tech giants by lawmakers. The Wall Street Journal had this to say about claims of a big tech monopoly:
“Start with the reality that all four face ferocious competition, often from each other. Amazon is supposedly an unbeatable leviathan in retail. But the company has only about a 1% share of the overall global retail business and less than 4% in the US. Walmart is bigger and its online business is growing fast. In cloud computing services, Amazon faces competition from Microsoft, Google, Alibaba, and more. Apple’s iTunes must contend with Spotify and Amazon Prime…
Facebook is losing users to Snapchat and TikTok, especially among the young. Facebook tried to introduce a TikTok-like feature in 2018, known as Lasso, but it didn’t rope enough users.”
As you can see, the claim that these companies don’t face competition is not true and often time they are facing off against each other in certain segments of their businesses. Putting aside the fact that they aren’t a government-controlled monopoly, the argument that they should be broken up because they are abusing the free market is false.
I am obviously more sympathetic to the Republican concerns with censorship and data collection. However, I don’t believe the government has the right to break up these tech companies for those reasons alone. There are other ways to address the problem, like enforcing rules on the books, most notably the infamous Section 230 code that bars online businesses from being sued when they claim to be a platform when in fact they are regulating speech on their sites which makes them a publisher.
Google, Twitter, and Facebook are not even following their own guidelines and are without a doubt censoring conservative speech. If private users, particularly conservatives, were allowed to sue these companies, that would devastate their business and in order to stay afloat, they would have to reform their practices to become fairer in the content allowed on their sites.
Although, at the same time, there is a danger that by doing this, then these companies could charge a type of insurance fee to consumers to pay for their legal defenses. Repealing section 230 is certainly a double-edged sword.
With regards to digital private data collection, that could be solved in the legislative process. I am open to the idea of more stringent privacy laws, especially because we are in unchartered waters with regard to the technology to seemingly track our every move.
There are other solutions besides using the levers of the government to address the censorship, privacy, and monopoly issues. As an adherent to free markets, the last resort should be government intervention—always!