Elizabeth Warren has officially declared a war — she has come up with a plan to break up big tech companies like Google, Amazon and Facebook.

Warren’s plan is fundamentally flawed and unlikely to be effective. But, it’s a step in the right direction.

Warren argues that these technology giants have become too powerful and are using anti-competitive practices. That includes running marketplaces that make it harder for competitors to sell their products as well as using mergers and acquisitions to buy out smaller competitors.

Warren’s plan is to designate companies as platform utilities if they offer an online marketplace or platform and have more than $25 billion in annual global revenue. These platform utilities wouldn’t be allowed to run a marketplace and simultaneously participate in it.

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So essentially, Amazon would no longer be allowed to sell their own products on the Amazon Marketplace. Instead, they would have to be split into two different companies.

According to Lee McKnight, an associate professor at Syracuse University’s School of Information Studies, Warren’s plan should instead focus on changing the specific behavior of tech giants by updating and enforcing antitrust laws — something that the United States has lagged on for the past years. One way of doing this would be to look toward the European Union’s treatment of Google in which they fined the tech giant a total of $9.3 billion for violating antitrust laws and hurting competition.

“Google has already promised reform in Europe, so we should expect to hold them to the same standard here in the U.S. Therefore, there is a roadmap from Europe on how to reign in the behavior of tech giants which regulators around the world will follow,” McKnight said.

In focusing on the size and the market power of these tech companies, Warren’s plan aims to transform their overall structure via a one-size-fits all model. This is unlikely to be effective with today’s tech giants — each has an entirely different business model and can use different variations of anti-competitive strategies for their advantage. A structural change may also hurt consumers by disrupting the range of free services that are currently available to them.

Warren’s plan is still a step in the right direction. Big tech provides invaluable services to consumers, but they have largely been able to go unchecked. The U.S. fostered the growth of these tech giants, and it should therefore bear the responsibility of making sure they follow antitrust laws.

Santiago Hernandez is a sophomore finance major. His column runs biweekly. He can be reached at sherna06@syr.edu.

Published on April 2, 2019 at 11:31 pm