Over the last several weeks, Senator Elizabeth Warren (D-MA) has been rolling out a slew of proposals aimed at fleshing out how she would lead the country, should she be elected president. Over the weekend, Warren took aim at “Big Tech,” claiming that companies like Google, Amazon, Facebook, and Apple are operating as “monopolies” that “have too much power over our economy, our society, and our democracy.”
Warren proceeded to lay out a plan to break up these companies in order to create a “more competitive” economy. The proposal has garnered a lot of attention, from critics and supporters alike. AR Intel dug through the coverage of Warren’s plan to provide you with the info you need to know about her latest attempt to reign in American business.
An Overview of Warren’s Proposal
Warren’s plan has two major tenets. First, it seeks to unwind mergers and acquisitions made by tech companies. Warren argued that too many companies have used mergers to limit competition. As such, her proposal would call for the appointment of regulators “committed to reversing illegal and anti-competitive tech mergers.” This would apply to Amazon’s purchase of Whole Foods, Google’s purchase of Waze, and Facebook’s deals for WhatsApp or Instagram. Warren advocated for breaking up these mergers because she believes it “will put pressure on big tech companies to be more responsive to user concerns, including about privacy.”
Warren’s plan would also prohibit companies from both offering and participating in the same online marketplace. The senator accused tech companies like Amazon of “using proprietary marketplaces to limit competition.” Under Warren’s proposal, legislation would be introduced to break up dual entities like Amazon Marketplace and AmazonBasics (the company’s generic brand). According to The Washington Post, the plan “could theoretically stop [Amazon] from making, selling and promoting clothes, toys or other goods alongside those same offerings from competitors on its website…” The legislation would place different types of regulations on companies depending on their size and annual revenue.
Warren’s Hypocrisy on the Issue
Despite her insistence that tech companies are destroying competition in America, Warren hasn’t had an issue accepting money from them. From 2011 through 2018, Warren accepted at least $90,000 from employees at Amazon, Google, and Facebook. In September of last year, she received $2,700 from Facebook COO, Sheryl Sandberg.
It doesn’t appear that Warren intends to stop taking money from these companies either. This week, her campaign declined to say if would reject money from big tech, and Warren herself also refused to confirm that she would do so.
What the Critics Are Saying: An Exercise in Overreach That Could Stifle Innovation
Economists, investors, and technology experts have largely panned Warren’s proposal, primarily on the grounds that it is an exercise in regulatory overreach. Carl Szabo, Vice President of NetChoice and professor of privacy law at George Mason University’s Law School, argued that Warren was “wrong in her assertion that tech markets lack competition,” adding, “[n]ever before have consumers and workers had more access to goods, services and opportunities online.”
Others have argued Warren’s plan would unnecessarily stifle innovation. Kara Nortman, a partner with the Los Angeles-based firm Upfront Ventures said the policy might have “potentially negative consequences for innovation.” Nortman pointed out, “These companies are funding massive innovation initiatives in our country. They’re creating jobs and taking risks in areas of technology development where we could potentially fall behind other countries and wind up reducing our quality of life. We’re not seeing that innovation or initiative come from the government — or that support for encouraging immigration and by extension embracing the talented foreign entrepreneurs that could develop new technologies and businesses.”
Tech Companies Are Driving Economic Growth
Warren’s attacks against tech companies ignore the impact that they have on the U.S. economy. In 2017, tech companies claimed the top five spots in the U.S. for research and development spending, investing a combined $76 billion. Amazon alone invested $22.6 billion on R&D. As Recode notes, “R&D spending is important not only as it contributes to a company’s own innovation and dominance, but also for its contribution to national productivity, accounting for about 3 percent of the GDP.” It’s also worth pointing out that in 2018, combined capital spending by Google, Amazon, Microsoft, and Facebook totaled $77.7 billion.
Americans Like Tech Companies
In many ways, Warren’s proposal seems like a solution in search of a problem. A March 2019 survey conducted by Axios and Harris Poll gauged the reputation of the 100 most visible brands in America. Amazon finished second overall and both Apple and Google earned “very good” reputations. Meanwhile, the U.S. Government, which Warren is pitching as the overseer of tech, ranked dead last in the eyes of Americans.
Although Warren may believe she is fighting for the “little guy,” in reality she is proposing additional regulations on companies widely liked by Americans that would result in higher prices and slower innovation.