The biggest companies in the world are eroding and wobbling the foundation of the economy: competition. It has long been gospel in Silicon Valley that a winner should try to take all. Today’s software, hardware, and marketplace winners such as Apple, Google, Microsoft, Facebook, and Amazon are dominating markets in ways competition regulators and legislators had never imagined.
As these megaliths surf to victory on the waves of low or zero prices and choke out competition, they ensure that there will be a permanent profit stream from captive customers that find themselves without other options. Countries proactively prevent their rivals from dumping on their markets when they do not wish to see their domestic industries decimated, and they need to think the same way about companies that wield monopoly-levels of power. However, long consumer prices must not be the only outcome regulators and legislators must defend against. Competitive markets are valuable in themselves – higher levels of freedom on the competitive battlefield result in best products and services provided at compelling prices, and high levels of choice with strong pay for workers. When there are only one or two games in town, it is going to be a crummy experience for everyone but the game masters.
What can we do? The breathless arguments that “this time it’s different” from the leaders of tech firms should not distract those responsible for finding a solution. Code bases can be separated, network effects accrue across categorically subdivided networks, and logistics machines do not need to be centrally controlled. Big tech PR are sounding more and more like the apologists for planned economies: these systems are not too integrated and complicated to be left to multiple stakeholders to control. Different organizations could control Amazon’s fulfillment centers, Alexa devices, web services, communications, consumer electronics retailing, grocery, entertainment, and bookselling businesses, and there might be more value created. As it stands today, every decision must take into at least some account what the overall impact might be on Amazon’s brand, code base, and key profit drivers. The stifling net effect on innovation, growth, and operating freedom may not be fully realized for some time, but the energy that might be unleashed by a breakup of Amazon or any of the other tech conglomerates should take into account the potentially positive effects for shareholders and employees. Top managers (i.e. Jeff Bezos) are the big losers of a break-up. They would no longer possess total control of the strategy and operations of a tremendous empire – while their shares would still be worth untold riches, their command scope would be diminished.
Consider also what might happen if Facebook were shattered into reasonably smaller constituent pieces. Mark Zuckerberg’s mouthpieces would screech that the usefulness of a social network is in proportion to its size. The same drivel flew out of the mouths of the telecommunications monopolies. Interoperability solves so many of these problems. One can call a T-Mobile customer from an AT&T-connected cell phone, just as one may one day be able to connect with someone across competing social networks. The walled gardens these networks have built and defend are optional, anti-competitive bugs, rather than customer-oriented features. Legislated and regulated open standards may be needed to unlock the social network monopolies.
The next giant, Google, will argue that one search box to rule them all is in the best interest of the world’s Internet users. Is it in those same Internet users’ interests that many promising startups with transformational technologies are acquired and often dissolved or redirected before their value can be fully realized? Or that so many types of data are harvested and hoarded to feed the world’s most potent advertising machine? Google search is not free. Customers pay with their ad-addled eyeballs and manipulated spending habits. Beyond all the other businesses Google is in, even search could be broken up. Search is currently linked deeply with advertising, but these ties could be severed. Imagine if consumers payed a penny or a fraction of a penny for each successful search. Value might be exchanged more honestly. And specialized search engines could attract those wishing to pay the lowest search fees or sift through difficult material. Filtering and finding are bigger problems in our world of information overload than a single advertising drunk monopoly can effectively solve.
Apple and Microsoft are easier to dissolve than the others for the traditionally-minded – just split up the components logically. iPhone, Wearables/Home/Accessories, Mac, and iPad each have the makings of a standalone business, given the right Federal Trade Commission encouragement. Azure, Surface, Office, XBOX, LinkedIn and a potpourri company for everything leftover. Most of the above businesses would be market leaders with greater autonomy. Shareholders would win from higher growth & returns from the successful components. Employees would win greater freedom to operate and create. Satya Nadella, Tim Cook, and their respective chiefs & board members would be the losers – but the price in power for the gain in freedom, innovation, and competition far outweigh the loss of prestige and limited income drop for these individuals.
One argument for keeping tech companies wide-ranging and monopolistic is that they must be so to compete with other wide-ranging, monopolistic competitors. Unless we would all like to live and work under the strange, Triassic, extractive clash of the megafauna, competition among smaller organizations is preferable. It is not necessary to limit all companies to Dunbar’s Number capped tribes to prevent the anti-competitive, winner-take-all, market-restricting rise of super-organizations. One does not even need to examine specific wrongdoing (restrictive hiring agreements, software ecosystem collusion) to argue that the market-distorting impacts of these companies is worth correcting (though these behaviors should be the icing on the break-up cake). It’s time for regulators, legislators, political parties, and citizens around the world to press for the dissolution of the closest thing the free world has to planned economies with the same outcome – planning for the benefit of the planners with rule-by-cost-benefit-analysis instead of rule-by-customer-choice.
Roman Ryan 