October 2, 2022

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Develop Technology For The Connected World

What Should We Do With the Big Technology Companies?

11 min read

The online world is playing an ever-larger role in people’s lives, especially in the wake of the pandemic. And an astonishing amount of this technology is run by a handful of companies.

Now big tech corporations are facing more governmental scrutiny than ever, with new laws and regulatory efforts taking shape in the U.S. and around the world. Regulators argue that new rules are needed. They seek to prohibit dominant platforms from favoring their own products or services, to discourage social-media companies from promoting harmful content, and to modernize antitrust laws, among other actions.

Some argue that the whole effort is misguided. The big tech companies have said that they support updated regulation but that some current regulation proposals could raise prices for consumers and hurt American companies’ competitiveness and ability to innovate.

The Wall Street Journal recently brought together three experts to discuss some of the issues animating the global debate over how to rethink tech regulation.

Rob Atkinson

is president of the Information Technology and Innovation Foundation, a nonprofit public-policy think tank whose mission is promoting tech innovation, with several tech companies on its board.

Barry Lynn

is an author and executive director of the Open Markets Institute, a nonprofit research group with a focus on addressing monopoly behavior and the social, political and economic effects of concentration of power.

Lawrence Lessig,

the Roy L. Furman Professor of Law and Leadership at Harvard Law School, is currently focused on addressing what he views as the harmful effects of ad-driven business models on public discourse.

Here are edited excerpts of the conversation.

The top issues

WSJ:What are the biggest problems regulators should pay attention to when it comes to the big technology companies?

Lawrence Lessig

MR. LESSIG: The business model of big tech is contrary to the business model of democracy. The business model of big tech is grounded in advertising, which means grounded in driving engagements. It turns out to be most profitable when it drives us down rabbit holes of content to keep us locked into their platform. It’s a strategy that disables the well-functioning democracy, and that reality is profound for the potential of democracy.

MR. LYNN: What the regulators should be looking at is the license that these corporations have to discriminate, to treat people differently, to treat different suppliers of information and goods differently, to manipulate commerce, to manipulate communications.

Think back to

AT&T.

I want to call my grandma, I dial the phone and I talk to grandma. Nowadays, one of our main communications platforms is Facebook. If I want to connect with grandma, when I get on Facebook, Facebook will say, “Hey, you know what, before I connect you to grandma, I want you to listen to this rant by the dude down the street. So just hold on, we’ll get you to grandma, but listen to this rant.”

They do this when people want to meet together to engage in trade, when they want to meet together to share political information. This is something radically new in our democracy, in which you have the intermediaries actively manipulating the interactions between people.

Rob Atkinson

MR. ATKINSON: I don’t know what Facebook you use, but when I use Facebook Messenger, they don’t force me to listen to some ad. I get it free, so I’m pretty happy with that.

One of the problems with this debate is we’re talking about a multitude of different industries. We have to differentiate between social-media companies and a company like

Amazon

or a company like Google or a company like

Intel

or a company like

Microsoft.

There’s not really one big tech, there are a whole set of different subindustries.

If we’re going to have regulation, which we do need in the digital economy, it should be about issues like privacy. It shouldn’t be focused on big tech. Why would small tech get away with violating my privacy, or nontech? Why would we have a regulation around cybersecurity or malware only focused on big tech? Why would we have a rule around AI that only affects big tech?

If there’s a case against any of these companies where they are violating current antitrust law and engaging in anticompetitive behavior, the Justice Department or Federal Trade Commission should bring a suit. That’s about all we need to do.

Barry Lynn

MR. LYNN: If people have come to accept a certain platform as essential to their lives, then the conduct needs to be regulated to ensure that the platform treats everybody the same, provides them the same services at the same terms. We don’t want the intermediary to be picking and choosing winners and losers. We don’t want the intermediary to be manipulating how people act. We want the intermediary to be providing services to everybody in the same way.

MR. ATKINSON: You want breakup as a structural remedy for large technology firms. Am I correct?

MR. LYNN: It depends on the firm. Would we want to break up Amazon? Maybe we would separate out the platform from the ability to manufacture, say, Amazon-branded batteries, because that’s a traditional approach to ensure nondiscrimination. Someone who controls a platform is not allowed to compete with people who depend on that platform.

[Amazon says that selling its own branded products alongside other sellers’ products is a boon for customers and sellers, adding that solutions that separate the two would make it harder for customers to find what they’re looking for and harder for sellers to connect with customers, as well as removing the in-store competition that helps keep prices low. It also says that separating its logistics from its store would inhibit its ability to offer fast, free shipping.]

MR. ATKINSON: There’s no evidence that Google has ever discriminated against anybody in organic search. Does Google put their maps on the top? Absolutely they do. And they make it very clear that this is not organic search. I am super happy that Google puts their maps on the top, because it makes it easier for me as a consumer. What’s lost in this discussion is consumer welfare. That’s really what we ought to be focusing on here. If Google discriminates on organic search against

Yelp,

that to me is an actionable antitrust case. No evidence that they’ve done that.

On this whole notion of self-preferencing, I went to CVS the other day, and I got their CVS baby aspirin, because it was cheaper. I’m super happy that Amazon has Amazon batteries.

Everybody has their own store brands. And they do it for a simple reason, that they can charge less.

MR. LESSIG: When Rob talks about these tech companies as if it’s just your local grocery store preferencing their local items, it portrays a fundamental misunderstanding.

The AI behind this technology is facilitating a kind of price-discrimination regime on both sides of the transaction that we have never seen in the economy. And that’s because of the enormous capacity for data about the user that the platform has. The platform is between both the seller and the buyer and is able to leverage that knowledge in a way that produces a kind of market that we’ve not seen before.

The rules we need

WSJ: What regulation—if any—is necessary to better govern the behaviors that we’re talking about?

MR. LYNN: The Biden administration is doing something right now very effectively, which is moving beyond what the Justice Department and Federal Trade Commission can do, to what every single agency and government can do, what every single department and government can do. Three years before the Sherman Antitrust Act, the Interstate Commerce Act basically said to the railroads, thou shall not discriminate in terms and in service and pricing and thou shall post all your prices, so we can make sure that we understand if we’re getting cheated. You start off with nondiscrimination as your baseline to establish a rule of law, because if you allow for a powerful actor to discriminate, then your property is not protected, your liberty is not protected. You have no rule of law.

Digital Dominance

Shares of several digital markets in the U.S.

Retail ecommerce sales, 2021

Smartphone operating systems, 2021

Cloud provider revenue, 4Q 2021

Smartphone operating systems, 2021

Retail ecommerce sales, 2021

Cloud provider revenue, 4Q 2021

Smartphone operating systems, 2021

Retail ecommerce sales, 2021

Cloud provider revenue, 4Q 2021

Retail ecommerce sales, 2021

Smartphone operating systems, 2021

Cloud provider revenue, 4Q 2021

MR. LESSIG: We also have to recognize something which we’ve never had to address, which is the difference between different domains of activity on the internet. There’s a certain domain within which I think advertising is doing great. The idea that platforms don’t advertise mountain-climbing equipment to me is a great thing. I’m happy for that.

Where the business model drives people into increasingly polarized environments, that use of advertising or data is destructive. We don’t yet have, in the stuff that’s being discussed in Washington, a way to think about the places we could be helping, and distinguishing that from the places we might not need to do much at all.

We should not be adding new layers of censorship. We know from the Facebook Files that slowing the reposting rates down is much more effective in removing false or misleading information than filtering is. Understanding how to slow the technology down to human speed could do a lot to avoid them becoming these engines of misinformation and anger and hate.

MR. ATKINSON: What too many of the antitrust populists are forgetting is that the goal of antitrust for so long has been the consumer-welfare standard. As a consumer, I am super happy with that because nobody’s forcing me to go to Amazon or buy from

Walmart.

SHARE YOUR THOUGHTS

What are your thoughts on regulating big technology companies? Join the conversation below.

I haven’t heard anybody comment that TikTok now has more viewers than Facebook. How did that happen? I thought Facebook was a monopoly. TikTok’s not a social-media market. It’s the market for eyeballs. And that market is incredibly competitive.

I would say, by the way, I don’t pay anything for any of these things. When I can go overseas and videoconference with my daughter for free, why is there a problem there?

I think with the current antitrust system we have, it has all of the tools to do exactly what it needs to do.

The solutions

WSJ:I’d like to drill down on your best ideas for tech governance.

MR. LYNN: Our goal should be to empower citizens to do for themselves and to do for each other to as great a degree as possible. What we have on the internet is a couple or three corporations have monopolized vast amounts of the internet and of the services that used to be widely distributed.

When we look at Google, we should understand that inside of Google, Google’s not really an innovator. Google is a monopolizer of other people’s innovations.

We should think of a vastly more open, superior system, a system that is made that is like the way America used to be, in which everybody was free to come to the market with their best ideas, and move to achieve that vision by delimiting the power of the platforms that now dominate.

You identify the goal, and then when you find that in American law, in American policy, you have pathways to get there. There is no one pathway.

[Alphabet Inc.’s Google points to public statements it has made about innovation, including that the vast majority of its acquisitions have helped smaller technology companies grow and reach consumers faster, that its own R&D, including more than 6,000 research papers published in areas such as machine learning and robotics, is significant, and that American innovation and investment in internet businesses are robust.]

New laws and regulatory efforts are taking shape in the U.S. and around the world.



Photo:

Brian Stauffer

MR. ATKINSON: The goal should be continued U.S. innovation and global competitiveness, and we’re at risk of losing that to China. Barry mentioned, “These companies don’t innovate.” According to the EU R&D 5000 study that just came out, out of the top 10 companies in the world doing R&D, five of them are American: Facebook, Amazon, Google, Microsoft and

Apple.

Those five companies spend more on R&D than all of the U.K. economy does on R&D. They’re equivalent to a third of what China’s doing in R&D, so those companies are critical to the U.S. continuing to innovate.

I don’t think we should do very much of anything. The tech economy is working pretty darn good.

But we need a national privacy law. We need much more enforcement, both domestically and internationally, on cyber.

On the whole question of how much content should the platforms take down, how much should they intervene in policing content, those are tough questions. Those aren’t really questions that those companies should be answering. Those are societal questions.

The worst thing we could do is pass these antitrust laws in Congress. I think it would slow down innovation and it would make consumers’ lives worse.

MR. LYNN: On the issue of freedom of expression, we do agree that this is too much to put on these corporations. It is a responsibility of citizens to work on this together.

MR. LESSIG: I would focus on poisonous business models. The one I’m focused on now is the business model that profits from dividing us. Not because they want to destroy America, not because they want to support one side or the other, but just because the algorithm turns out to be most profitable. That is driven by the need for engagement, which is driven by the underlying advertising model.

If you think about the contrast between the

Twitter

or the Facebook way of engaging on politics, or the podcast or long-form way of engaging on politics, the latter is healthier, and we ought to be setting up incentives to drive towards healthier discussions.

[Facebook, which is owned by

Meta Platforms Inc.,

has previously said, “The best way to tackle the challenges facing today’s internet is by passing new regulations addressing the areas of greatest concern to people, like content moderation, election integrity and privacy—as we have been urging Congress to do for years.”]

Mr. Rosenbush is chief of the WSJ Pro Enterprise Technology Bureau. He can be reached at [email protected]

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