Breaking Up Monopolies Unleashes Innovation, Competition
By Jeff Benson
First of three parts.
Cory Doctorow is one of the world’s most prolific tech and science fiction writers.
In between releasing his second graphic novel, “Poesy the Monster Slayer,” in July and a sequel to “Little Brother” (due out in October), Doctorow managed to fit in a 27,000-word treatise on breaking up tech monopolies.
Published on OneZero late last month (and available for free to read), “How to Destroy Surveillance Capitalism” argues that the government needs to step up its antitrust efforts or else Facebook, Google and their ilk will invade people’s privacy with impunity.
In the first of a three-part interview, Doctorow told Digital Privacy News that breaking up monopolies helped tech grow, that Facebook won’t stop hoarding data on its own — and provided questions that really should be asked about Big Tech.
“How is it that we don’t have a national privacy law with a federal right of action that might compel Facebook to stop retaining data?”
In “Destroy,” you talk mainly about Big Tech. Can those centralized online services preserve user privacy, or is it only with anti-monopoly regulation?
I think that the frame of the question is just slightly off.
You could run Facebook without keeping logs.
But the more important question is, how is it that we don’t have a national privacy law with a federal right of action that might compel Facebook to stop retaining data?
And the answer is that the monopoly rents that Facebook extracts, combined with the vast concentration of Facebook industry, means that — on the one hand — there’s a lot of money for lobbying, and — on the other hand — that entities that have to agree on a common lobbying position are so small in number that they can overcome a collective-action problem associated with figuring out what that policy is going to be.
What happens if regulators continue being hands off? What is the worst-case scenario?
The worst-case scenario is AT&T.
We saw it with AT&T, which was that their abuses were completely unchecked.
One of the things that it did with its market power was crush rural and small telephone co-ops and refuse to interconnect with them.
It also limited access to long distance. It also limited access to innovative new products and services.
“With AT&T, … their abuses were completely unchecked.”
One of AT&T’s great campaigns was blocking the rollout of modems. AT&T stood in the way of the internet for years and years.
And every time it came time to do something about AT&T, when the (Federal Trade Commission) or the (Justice Department) was finally ready to break them up because of this ongoing bad conduct — this pattern of being told what they mustn’t do and then just flouting their promises to cease their bad conduct — the Pentagon intervenes.
They said, “Look, we can’t afford to have you shut down AT&T because they’re how we’re fighting the war in Korea.”
When you actually tie a company to a part of the state, then the state intervenes to stop that company from being broken down into components. If they’re so small enough, they can no longer perform that statewide role.
“When you actually tie a company to a part of the state, then the state intervenes to stop that company from being broken down.”
You already hear this. You hear people saying, “We have to defend American monopolists because otherwise Huawei will take over — and we need these national champions.”
But when you look at the actual history, it doesn’t bear up that analysis.
AT&T was broken up at the height of the trade war with Japan, when everyone was, like: “Japan is eating America’s lunch. Toyota cars are outselling (General Motors) cars” — and so on.
And when they broke up AT&T (in 1982), they said, “Oh, you are paving the way for Japanese telecom companies to destroy the American telecom industry and the high-tech industry.”
Instead, what happened was breaking up AT&T unleashed the tech industry.
It gave us the internet — and it gave America the trade advantage it needed.
So, if we fail to rein in these tech companies, they will become an arm of the state — and it will be that much harder to break them up.
The consequence of that will not be that America has this public-private partnership that defends it from countries that have their own tech giants, that are using them to project soft power on the world.
“If we fail to rein in these tech companies, they will become an arm of the state.”
It’s that America will lose the ability to resist that soft power, that America will have its domestic tech sector become weaker and weaker — because it will not be disciplined by market forces, by competition, by the need to respond to the needs of users.
And, instead, it will primarily respond to the needs of the customers it has in government and the protectors it has in government.
Just look no further than Boeing.
Boeing is a civilian-aviation company, but it’s primarily a military-aviation company.
Its products just got worse and worse, and less and less competitive — to the point to where Boeing is on life support, billions of dollars in government money’s worth, because they can’t build an airplane.
And, when it’s done, no one wants to fly it. And when they do, it falls out of the sky.
Wednesday: Why Facebook went from pro-privacy to low-privacy.
Jeff Benson is a Nevada writer.
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