This automatically-generated transcript is taken from the IT Pro Podcast episode ‘Can the US take on big tech?’. To listen to the full episode, click here. We apologise for any errors.
Adam Shepherd
Hello, and welcome to the IT Pro Podcast. I'm Adam Shepherd.
Justin Cupler
I'm Justin Cupler.
Zach Marzouk
And I'm Zach Marzouk.
Adam
And today we're playing Monopoly. Now, if you've been paying attention to the intersection of technology and politics over the last year or so, you'll probably have noticed a growing trend of lawmakers railing against big tech companies. This has been particularly pronounced in the US where a number of bills have been launched, with the aim of breaking up the supposed monopolies held by giants like Facebook, Google and Amazon.
Zach
This week, we're taking a look at these proposed laws examining the corporate practices they take issue with and why these practices have arisen in the first place, as well as the potential impact that these bills could have on America's status as an innovation centre.
Adam
So, guys, before we dig into this topic in earnest, let's just start off with a little bit of a chat about what the kind of main issue is with these anti monopoly bills. Why are there so many of them just now?
Justin
I think we're coming off an administration with a lot of turmoil with big tech. I think that's number one. That side of the political parties is charged up right now to take them on. But there's also a collection of the other side that's been charged up for a long term to take on certain parts of it. Section 230 has been a big, big target of them. And it's kind of rolled off the back of that. And then you added all these mergers that have been popping up, that are happening at at a feverish pace lately. I think that's why we're starting to see them consider these antimonopoly bills and push harder on them.
Zach
Yeah, I think with the obvious growth of the internet in the last decade or so, it means that big tech companies' power has grown incredibly, not only in the US, but also across the the world. And I think legislators are now beginning to wake up and realise that they really need to maybe introduced some form of regulation to crack down on their power.
Adam
Yeah, and I think it's worth noting as well, that there are a huge amount of anti monopoly bills and anti monopoly arguments that have emerged over the last couple of years. But they're spread across a pretty diverse set of opinions, you know, they're not all targeting the same kind of problems and talking points. There's actually a huge range of complaints that have been levelled at big tech in this kind of same area. So let's take a look at some of the specific bills that have been launched. Zack, you've been doing a lot of research into this recently. What are the kind of the main ones that are currently looking to gain traction on the floor?
Zach
Okay, so in Biden's executive order that was signed earlier in the year, he wanted to promote competition in the country, and basically focus on areas in which big tech firms are undermining competition and reducing innovation. So this included policies like a greater scrutiny of mergers, encouraging the FTC to establish rules on surveillance and accumulation of data and rules barring unfair methods of competition on internet marketplaces. And then linked to that he also wants to make it easier and cheaper to repair items consumers own. So essentially a right to repair.
Adam
Well, it's something we've heard a lot about over the last couple of years, particularly around things like planned obsolescence.
Zach
Yeah, I think the only tech company who is investigating right to repair right now is Microsoft. And that's only because they were activists, activist investors, who last month pressured the company to start in the midst of an investigation into right to repair. In June, there were five other bills in the House of Representatives that were discussed. So the first bill is called the American Innovation and Choice Online Act which seeks to prohibit discriminatory conduct by dominant platforms, including a ban on self preferencing. There's a second one called the Platform Competition and Opportunity Act, which prohibits acquisitions of competitive threats by dominant platforms, as well as those that expand or entrench the market power of the platforms. The third bill is the Ending Platform Monopolies Act, which looks to eliminate the ability of dominant platforms to leverage their control across multiple business lines to self preference and disadvantage competitors. The fourth bill is called Augmenting Compatibility and Competition by Enabling Service Switching, which essentially brings in new data portability requirements to try and promote competition by lowering barriers to entry and switching costs for businesses and consumers. The fifth bill is called the Merger Filing Fee Modernization Act; it updates filing fees for mergers for the first time in two decades, I think that one's slightly more of like an administration, or like bureaucratic bill.
Adam
And that data portability bill in particular, is something that a lot of people have been paying attention to in a business context. One of the big fears in business IT is this concept of vendor lock in where you know, once you've moved to a service, it can often be very, very difficult to actually get your data out and bring it over to a new service, I'm sure all of us will be familiar on the consumer side with how difficult it is to take your mobile number, for example, from one network to another. And, you know, when you're dealing with a business estate that has maybe terabytes or petabytes, even, of data that you want to take from one, say, cloud storage provider to another, that kind of frustration is just orders of magnitude greater. So we've also seen bills, looking at digital storefronts and the app economy, right?
Zach
Yeah, that was introduced in August. It's called the Open App Markets Act. It declares that Google and Apple have gatekeeper control of the two dominant mobile operating systems as their app stores allow them to exclusively dictate the terms of the app market. So it's looking to break that up.
Adam
Yeah, it's a particularly thorny question, because I'm not sure if anyone has ever tried to use any of the alternative app stores out there. Because there are, there are other app stores that you can use, they usually involve sideloading applications onto your phone through slightly, not dodgy, but by means that are not recommended, let's say. And Amazon operates its own app store, for example. Microsoft operates obviously a separate UWP app store for Windows. But the apps that find their way onto there generally are not good. The selections are usually very, very limited. The quality control is nowhere near as good, as you know, even the Google Play Store, which I think says a lot for anyone that's dived into the bowels of the Play store before. And it does sort of beg the question, Are these two platforms dominant because they're kind of keeping a stranglehold on competition? Or are they dominant because they're just the best options?
Justin
Yeah, I think one of the problems they're gonna have with this is the the consumer demand for more app stores. I mean, I like you said, I've never heard of any other episodes, except for Amazon App Store, and Microsoft. Nor will I go to any others because I just don't trust them. So is there a company out there willing to dive into this and take advantage of this anti monopoly bill? Or are they just spinning their wheels trying to nail Google and nail Apple or whatever?
Zach
So yeah, the last two bills that were proposed, were in October. And they would essentially bar big tech platforms from favouring their own products and services. That's the first one. And then the second bill, was what Justin was talking about, which would basically remove some of the protections given to tech companies by something called Section 230, which is a portion of the Communications Decency Act that exempts them from liability for what is posted on their platforms. All the bills that are being proposed are a result of cross party efforts. So it's both Democrats and Republicans working together to introduce them.
Adam
So what do we think about these bills, then? They're fairly wide ranging, I think it's fair to say. And as Zack mentioned, they kind of broadly, they have broad kind of bipartisan appeal. But do we think that these are kind of legitimate issues that are being brought up?
Justin
I think the the most legitimate one I see on here, the one that has the most grounds to stand on is the limiting of mergers and acquisitions. Because now you have startups that are literally starting up just for the plain goal of being acquired by one of the big giants. And these giants are gobbling them up, changing the name, putting it under their umbrella and running with it. And that that is limiting a lot of innovation. It's limiting people who legitimately want to get a start running, want to run this as an actual startup that's going to be successful. It's limiting those people's ability to do this in lieu of the people who want to go out there and just sell their startup for a billion dollars.
Adam
So looking at mergers and acquisitions landscape, one of the problems or supposed problems that that one of these bills is trying to address is the practice of essentially catch and kill. So big tech companies buying startups that they see as a potential threat, and essentially just subsuming them into, into their kind of existing corporate structure, you know, largely when they're doing something that whichever company it is, is already doing. But is this a problem? I mean, this has been going on really for, you know, as long as, as business acquisitions have been a thing, what is it about big tech's use of this tactic in particular that lawmakers are finding so objectionable, do we think?
Justin
I would say the thing they're seeing the most is the, for example, the ultimate dominance of Google. Now they see this all, I mean, they are the end all be all of tech right now, everything you touch every day, has something to do with Google. And that is through acquisitions, mergers, buying companies, buying, and all of this. And that's where this all came from. And everyone kind of followed suit with them, then them and I believe Microsoft is also one of those ones, that's gobbling up things left and right. And now all the other tech companies below them are doing this exact same thing. So we're seeing this trend; for Google, it was Okay, it's convenient, it was easy for all of us, because we had all these services packaged into one nice tidy package. Now it's getting to a point where everything is going that direction, and it's becoming a problem.
Adam
And you mentioned Microsoft there, I think it's important to highlight that this, or certain elements of this, at least, aren't exactly new, particularly in terms of the self preferential stuff. Of course, Microsoft famously, back in the, back in the 90s, was the subject of a massive antitrust case for effectively killing Netscape by putting Internet Explorer as the default web browser option on Windows, which gave it a huge market share, got a load of people used to using Internet Explorer, and basically, for a long time completely stifled the browser market. So this isn't new, per se. But one of the really interesting things about the the self preferential argument is, I think you could make an argument that it is reasonable for companies to promote their own services and their own products. And it's not something that's unique to tech; when you go to the grocery store, for example, you will quite often see prominently featured, that store's own-brand products, you know, they will be promoted heavily, they will often be discounted or sold under special offers. And that isn't really that much different compared to some of the tactics that tech giants are using to promote their own services - in some cases.
Zach
I think the comparison there would be that there would only be one supermarket in the country. And I think that's the comparison we can make with something like Google.
Justin
But to play devil's advocate on that on that is the fact that there, again comes into simplicity for us as the end user, when they give preferential treatment to these these different softwares and hardwares and things like that. It's because they Yes, it's their their service and their hardware, but it's also easier for them to develop it in house and make it work the right way. When they have to go out and suddely spread out to other places, and then link up with other systems and deal with them. You can run into some issues, there are some you know, there's some software's out there to integrate things like Zapier and things like that, but they don't exactly do, they don't function the way it's supposed to function if it's actually put together and given that preferential treatment.
Adam
Yeah, and I think the existence of platforms like Zapier, and If This Then That, and all of these kind of framework based services really illustrates that point, you know, the fact that we need third party services, to to form the kind of the links between all these services that we're using, illustrates how difficult it is to get these systems to talk to each other. And considering that we, in a lot of cases, need these systems to talk to each other in order to do the things that we need to do, not just on a consumer level, but especially for businesses, it does sort of raise the question, Is it reasonable to kind of make that trade off and say, okay, you know, maybe this makes it a little bit harder for newer competitors to break into the market, but It's also providing an arguably essential service.
Zach
I think there have been some voices in the industry as well who have raised concerns around this bill, the self preferencing one. Essentially, they're asking, Will it ban Google from showing YouTube videos in its results?
Adam
Yeah, and I think with tech in particular, we've reached a point now, where so many systems, particularly the systems that we've already talked about, you know, Facebook, Google, Microsoft, and Apple to certain extents, they're all networked so tightly together, that splitting them up would be incredibly difficult, if not actively impossible. I mean, like, the Facebook outage that we had a couple of months ago, is a prime example of that. The reason that that took as long to fix as it did, is because Facebook has deliberately architected itself in such a way that all of its systems are completely interdependent. And effectively, you can't split it up because WhatsApp's backend infrastructure and back end tooling runs on top of Facebook's platform; it runs on top of Facebook's kind of domain, and unpicking all of that and separating out those services may not even be possible without effectively burning it to the ground and starting again, from scratch. I would imagine Google and Microsoft are both similar in terms of how their systems talk to each other, because that's the most straightforward way to design systems in a lot of cases, you know, you link what you already have together. Facebook, presumably, has also done it with half an eye on making sure that it doesn't get split up at some point, because Facebook in particular has been fielding these particular monopoly questions for a number of years now. But it also just makes good engineering sense. So on that note, then, is it possible to address the kind of concerns that we've already spoken about with regulation? You know, how many of these problems can be legislated for?
Zach
Yeah, I think this is a really good question, you can definitely bring in regulation to curb the power of big tech, but I don't know if it will go far enough, especially since the bills are still being discussed. So we don't know what the end, the final bill would look like. I think if you look at China, and see what they've done in terms of regulation, which is probably like the other end of the scale, the spectrum, compared to the US, they're definitely taking a stance against big tech, you know, they're curtailing the power of tech giants, you know, firing CEOs and so on. But I don't know if the US is going to go all the way and bring in the right legislation that will address the power of big tech.
Adam
So let's dig into that quickly. What kind of measures is China taking at the moment against these kinds of monopolies? Because they're being pretty drastic, right?
Zach
Yeah. So right now China is curtailing the power of their technology platforms. So you may have seen Jack Ma, the Alibaba CEO, he appeared to disappear, if you like, for a while and has now only just resurfaced in Europe. So we're not sure what's going on there. But another CEO stepped down recently, I think, the CEO of TikTok and then before that, the CFO of Bytedance stepped down to focus on TikTok, so I think there's definitely some kind of shift going on there. China brought in a new data law recently. So in China, right now, if you're a tech platform, you're 100% responsible for any content that's published there. Which means that for many companies, social media companies from the West, that is a huge problem, because they don't really mind what's posted on their platforms. Whereas in China, you have to ensure you're following the cyberspace agency's policies, otherwise, you could end up with some kind of penalty or fine, which includes a financial penalty or also a penalty for people who work with data in your business, or even those people at the top. Whereas in the US, you don't really see that happening. I don't think the regulation is going to address that in any way.
Adam
And no. and China, of course, is is famous for being, shall we say, fairly heavy handed with its approach to corporate regulation in particular. And its kind of adherence to, to policy guidelines.
Zach
Microsoft shut down LinkedIn in China the other week, which is related to its online laws. So LinkedIn was one of the last Western social media platforms available in China. And it decided to shut it down in and it's going to introduce a new kind of like job board portal, but without the social media aspect.
Adam
Which is, I think, quite interesting in terms of how companies are kind of approaching compliance in China. But moving things back to the US. Do we think that these proposed regulations are actually capable of solving the challenges that they set out to? Or are these issues simply too big to be tackled with, you know, new laws?
Justin
I think when you come to the preferential treatment, the preference they give their own apps, and their own hardware and so forth, I think that is at this point, it's almost beyond repair. I mean, if you think about it, that would involve taking the the massive being that is Google and trying to break it up into small pieces. How many of Congress's bills are stored on Google Drive right now? Who knows. So breaking that up, is gonna that's gonna be a bear in itself, that's gonna affect everybody. We work in Google Drive, everybody works in Google Drive, they're all linked to different things. And that's all linked to your email, which is all linked to your Slack. And you're gonna blow this up, that's that's probably not going to happen. Will it be some regulation, moving forward, forward looking stuff, I think there will be forward looking regulation. But I do not think it's going to be retroactive, I believe what's going to happen is if they introduce these, it's going to be you're grandfathered in. But don't do it again. As for things like the mergers and acquisitions, I think that again, is going to be the one that they're gonna be able to make the biggest moves on. Because that, again, is a problem. It's a major problem. It's killing innovation in this country, that the big dogs are coming in, as you say, catch and kill, grab these companies that are their potential rivals, and kill them, absorb their technology and move forward. And we see in the automotive space, also these these companies, larger companies, gobbling up battery companies for EVs, absorbing them and spitting them out, and they no longer exist, they just take the batteries and run with them. So I think that's what we're gonna see across the board, tech, automotive, everyone's gonna have that issue. And then the rest of these, it's really hard to say, because they do have, you do have cross platform or cross cross the aisle support. But is there enough cross the aisle support between all of them to get the votes needed to push them through? That remains to be seen that that's really hard to say, because big tech has a lot of reach in politics, they really do. So will they be able to get enough people on board to say, rewrite section 230, that's been on the table for five years. And still, nothing has happened, no one has come forward with any kind of regulation that could possibly replace it or even tweak it a little bit in the past five years, they haven't been able to, they've been pushing so hard on it. So those ones I doubt will; with the two I mentioned, I think moving forward with with the preferential treatments and the overall scope of the mergers and acquisitions, I think those two are the most most most likely to be pushed forward.
Adam
So do we think that there is a possible future where we see Congress stepping in and breaking up some of the bigger tech players, you know, Google, Facebook, Microsoft? Do we think we'll, we could feasibly see some of those divisions hived off into their own companies in the same way that we saw in the UK with the BT Openreach split a couple of years ago?
Justin
We had something similar to that with, I believe it was Bell South. When it came to telephone long distance providers, they had to break up I believe it was into three or four different companies. But there's a big difference. People always point to that one; there's a huge difference. Back then you're talking about physical stuff, you're talking about physical offices, physical lines, physical subscribers, and now you're talking about data and servers and things like, things that are virtual that you now have to divide up. That's that's a whole other undertaking that I'm not sure if Congress has the ability to dive into and really figure out how to do this because they're gonna have to write the regulations to how they will divide this stuff. When you're splitting a line, that's easy, you say, okay,Bell South, you get this line, this telephone company or this new telephone company, gets that line, Verizon, you get that line. But when it comes to this digital stuff, how are you going to break this apart? It's almost impossible.
Zach
One thing we should mention is that the bills are still being discussed. I think they were meant to be put to the floor in October. But it's a little bit peculiar that the legislators are still discussing the bill, which gives me the feeling that they're not quite sure what to do. If you cast your mind back to when Zuckerberg appeared in front of a committee, and you had senators asking fairly strange questions to him. It could be linked to that. I hope it isn't. But it's something to bear in mind.
Adam
Yeah, it's it's the problem that every every effort to regulate the tech industry faces. These regulations are being formulated and dicussed by people who, bless their hearts, just do not fundamentally understand the technologies or the industries that they are dealing with, you know, because they are very complicated, it's a very complicated field, there is a lot of very complex kind of interactions, not even just on on the technical side, but just in terms of the relationships that these companies have to each other, to their customers, to the public, to the wider kind of internet infrastructure. But legislators, generally speaking, don't have the best grasp of that kind of stuff. So it's hard for, it's hard for anyone to try and sort out a problem that they don't understand, which I think is where a lot of frustrations, particularly for people in the industry, come into this. So let's say for a moment that these bills all do go through in more or less the same form that they're currently being discussed. If the bills go through in their current state, what does this do to the business climate in the US? Does this put a damper on innovation? Will it drive companies in the tech sector elsewhere? Or will it kind of have the intended effect in terms of accelerating innovation, providing a more competitive marketplace, you know, all of the silver lining type stuff?
Justin
I think one thing you said, Adam, that that's a good point to bring up, that's probably going to be the biggest benefactor from this are going to be the third party apps, the third party integration apps, and the third party integration, softwares that bring these together, like the Zapiers and so forth. I think that's where we're going to see the biggest innovation if they have to break all these up, because now someone has to come in and put these pieces back together. And these companies are already tuned to doing that, they will just have to get a little bit better at it, and market it. And I think that would be a huge boom in that industry.
Zach
I think it's very hard to think of an internet that isn't based on a platform ecosystem, I definitely think there's a case for thinking about an internet in the future where citizens aren't locked into corporations that hold their data in silos and only exist to I guess, produce profit for shareholders. Maybe we should be thinking about a new kind of social media that wrestles power away from the huge firms. And away from thinking of the platform economy as the only way forward, maybe thinking about more of open source software. Now, I don't think this regulation is going to take us that way. But it may hamper business interests a little bit. But I don't think having regulation is going to stop the US from being pro business at all. Like they've cracked down on monopolies in the past, whether it's Teddy Roosevelt, and so on. But it definitely needs some kind of legislation to prevent them from growing any bigger.
Adam
Mmm. And I think that data portability legislation, in particular is one that could have significant kind of tangible benefits for a lot of consumers and a lot of businesses. A lot of the other ones are kind of fairly abstract economic and market concepts, but legislation to make it easier to move from one service to another, whatever that service is, I think that's something that has a very kind of tangible benefit. So that's something that I could see actually going through in some form. But what about the rest of these bills? Do we think that these anti monopoly efforts in the broad sense are likely to succeed?
Zach
So I think some of the bills right now I have major issues with them, where they don't only hurt big tech firms, but they hurt smaller companies. So I would hope that first those issues are addressed. So the section 230 Bill, which basically protects companies from legal liability for content posted on their platforms, there is a Guardian article with comment from Evan Greer, who's the director of digital rights group Fight for the Future. So basically, the laws is only going to apply to large tech firms with five million or more monthly users. But it could have negative consequences for firms large enough to qualify for that, but still that have fewer resources on Facebook. So Greer basically said that Facebook would be able to survive that kind of bill, but smaller competitors wouldn't. Which is apparently why Facebook is calling for changes to Section 230. As I know it will solidly solidify their dominance and monopoly power. He called the bill well intentioned, but a total mess.
Adam
That's fairly damning.
Zach
Yeah. So I think hopefully, there'll be some changes made before they are out to be voted on, although we're not quite sure when that's going to happen.
Adam
Yeah, they could end up being quietly dropped from the agenda. which has happened before. Well, I'm afraid that's all we've got time for on this week's episode. But thanks once again to Justin and Zack for joining me.
Justin
Thanks for having me.
Adam
You can find links to all of the topics we spoken about today in the show notes and even more on our website, or you can follow us on social media for more. Don't forget to subscribe to the IT Pro Podcast wherever you find podcasts to never miss an episode. And if you're enjoying the show, leave us a rating and a review. We'll be back next week with more analysis from the world of IT but until then, goodbye.
Zach
Bye!
