The “Big Tech” Breakup

The “Big Tech” Breakup

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2018 was a tough year for the American technology industry and 2019 is showing no signs of relief. Data breaches, court hearings and growing foreign competition are putting new pressures on tech giants like Google, Facebook, Apple and Amazon while concerns over the size and influence of these companies continue to grow. Consumers are also beginning to understand just how involved these technologies are in their day to day lives and how these companies monitor, collect and sell their personal data. This is why some consumer rights organizations and government officials are calling for a “Big Tech” breakup.

In the early days of the technology revolution some of the world’s largest tech companies were still being run out of garages by college dropouts, while cellphones weighed two and a half pounds and could only be used for 20 minutes before the battery died. But the human drive for innovation is insatiable. Today, these same tech companies are some of the largest private entities in the world and that cellphone is a museum piece. This rapid innovation has made us more connected and efficient than we ever thought possible, but some important details were overlooked on our way to the top. While internet users everywhere rushed to create their first email or online profile, they did not consider the potential cost of using these “free” online services. They uploaded their personal information and agreed to let these companies track their online habits without regulation or recourse, and when advertisers discovered the value of this information, the advertising-supported revenue model was born.

Companies like Google, Facebook and Amazon used this model to grow into corporate juggernauts with unchallenged dominance of their respective industries and annual revenues that are larger than the Gross Domestic Product of most countries. These companies have been allowed to grow almost entirely unchecked by the United States Government as they collected, packaged and sold unprecedented amounts of information about their users while purchasing emerging competitors before they could get off their feet.

These companies now have so much authority and control in their individual segments that the Federal Trade Commission and Department of Justice are rumored to launch antitrust investigations against them. Google has been found to filter and promote their own services over those of smaller companies in their search results, while Amazon will create their own generic products based on what is trending on their website and sell them for a much lower cost than smaller companies would be able to. Facebook was recently the center of attention following a data scandal when they allowed Cambridge Analytica to misappropriate the data of tens of millions of Facebook users without their knowledge which resulted in a congressional hearing on the matter. In the wake of the 2016 Presidential election there were also concerns that foreign actors may have attempted to meddle in the democratic process of the United States by creating and managing fake Facebook accounts. Finally, Apple has come under scrutiny for how it runs its app store, how it promotes apple music and for creating their own applications that mimic those of other app developers.

These rumored investigations come alongside a piece of California legislation, which takes effect on January 1st, 2020, that would make it much more difficult for tech companies to collect information about their users. This legislation has tech lobbyists scrambling to pass a less stringent federal bill in hopes of superseding and negating the bill passed in California. The passing of legislation that regulates tech companies is very likely, even in this relatively divided congress, as both sides of the isle are weary of the power and influence of these massive firms. There is even international pressure being placed on these companies as European Competition Commissioner Margrethe Vestager handed out fines to the American tech giants. Vestager has handed out fines to Google, Amazon and Apple based on EU tax laws and in Googles case a breach of the EU’s competition laws for which Google was fined 8.2 billion euros. The EU can issue fines to US tech companies such as Google because they operate in and provide services to customers across Europe.

Things may look grim for “Big Tech”, but a Government mandated breakup is highly unlikely. These tech giants are far too valuable to the economic standing of the United States and are some of the leading technology innovators in the marketplace. Technological innovation is what drives our modern world forward and gives countries a competitive edge on the world stage. As the trade war with China intensifies, and the Chinese technology industry becomes more and more advanced, the United States needs to keep itself one step ahead of the competition. A more probable outcome would involve stricter oversight and regulation of these industries and the reversal of some recent acquisitions to promote more marketplace competition.

The future for “Big Tech” is an uncertain one, but it is up to the individual consumer to speak out and act in their own best interest. No matter how much regulation is placed on these companies, at the end of the day, they will do what is best for their bottom line. Do your due diligence and shop wisely.

Remember to save often and backup daily.
Karl Volkman,
CTO, SRV Network