Across the federal government, the knives are officially out for big technology companies. Avoiding a bloodbath should be a priority.
As Bloomberg News reported Monday, the House Judiciary Committee is gearing up to investigate unfair business practices by platform companies, while the Justice Department and the Federal Trade Commission have divvied up Silicon Valley’s big four — Amazon.com Inc. and Facebook Inc., Apple Inc. and Google — as they probe potential antitrust violations.
The tech business has certainly had its share of mishaps and misdeeds over the years, and the concentration of power in certain digital markets is indeed a cause for concern. But the breadth of these looming probes is nonetheless worrying. As the government bears down, three things are worth keeping in mind.
One is that each of these businesses should be evaluated on its own terms, not as part of a generalized crackdown. It’s true that all four companies are big, profitable and connected to the internet. Beyond that, though, their similarities aren’t obvious. Google and Facebook are ad-sales companies. Amazon is a retailer. Apple makes nice phones. These are very different industries, with different competitive dynamics. They may each require distinctive reforms, or no reforms at all. A gigantic new rulebook on the telecoms model isn’t the thing.
Second, the goal should be identifying specific instances of wrongdoing and devising prudent remedies. Take data. All four companies have loads of it, and in some cases may use it to gain unfair advantages. Facebook has created tools to monitor what other products its users are interested in, for example, and has acted on that information to buy out budding rivals or mimic their ideas. Likewise, Amazon’s bird’s-eye view into what people are buying on its marketplace may confer an undue advantage on its competing private-label goods. In both cases, regulators should intervene to stop objectionable behavior — not to put anyone out of business.
Finally, it’s important to remember that, for all their faults, these companies shouldn’t be vilified. After all, they’re pillars of the American economy. They collectively employ almost 900,000 people. They’ve made it easier than ever to start a business. They’ve invented entirely new categories of products and services — and often charge users nothing for them. No one could argue that consumers have been harmed by Google’s free apps or Amazon’s aggressive cost-cutting. Quite the opposite: They now have a bounty at their fingertips that previous generations could never have dreamed of.
It’s true that tech companies have generally done themselves no favors in the court of public opinion. They’ve often been heedless about the harms their products can cause, opaque about their data practices, and dismissive of their overseers. When it comes to paying taxes, Congress has no doubt noticed that they employ savvy accountants.
On balance, though, the good vastly outweighs the bad. Most other countries would kill for an industry as productive, profitable and endlessly inventive as the American tech business. Markets can always be improved, of course. But as Congress tries to write a new rulebook, and regulators begin to roll up their sleeves, one question above all needs to be asked: What problems are they trying to solve?