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To rein in monopolies, maybe we need to rethink what a monopoly is.

Via NYTimes, By Kara Swisher


In a tech galaxy that now seems far, far away, everyone was terrified of Bill Gates. He was the Apex Predator of Tech.

You wanted to make software? Microsoft would crush you. You wanted to start an online service? Microsoft would decimate you. You wanted to make a browser to navigate the World Wide Web? Chomp!

It was that last one that finally stopped Mr. Gates and Microsoft. The government accused the company of being a monopoly and of engaging in anticompetitive practices against Netscape and its Navigator browser. In 2001 the government won a landmark case against the company that required it to submit to more oversight and make it easier for other companies to offer competing software.

The Sherman Antitrust Act had prevailed over the leading power in tech, and what happened after was a resurgence of innovation that ushered in a spate of new companies and ideas. You can draw a pretty straight line from that decision to the growth of Google and Amazon and Apple, the explosion of Facebook and the introduction of start-ups like Uber, Airbnb, Pinterest and Slack.

In recent years tech has backtracked, except this time we have several Apex Predators instead of just one. Google and Facebook are the most obvious. More and more people in the media and in politics, as well as consumers, have become fearful of these companies for the damage they can do and the unregulated power they wield.

Something has to be done, but what? Even as distrust of big tech companies increases and governments move to control them, their businesses have never been more successful.

One option is privacy legislation. Europe passed such a law in 2016. While there is no national privacy law in the United States, California will soon have a state-level law, and other states are considering similar reforms. The idea of restricting tech companies’ use of personal data becomes more popular with every hack and every instance of abuse. Still, the likelihood of the United States passing a national privacy law with teeth is small.

Then there are the fines, such as a multibillion-dollar one that the Federal Trade CommissionClose X is considering to punish Facebook for privacy violations. While the fine would be the largest the agency has ever levied, it would also be far too small to make a difference. When Facebook announced it might have to hand over $5 billion as its get-out-of-jail-free card, Wall Street cheered and Facebook stock rose.

Meanwhile, there’s a lot of talk about the ways that countries can work together to improve the online ecosystem. Prime Minister Jacinda Ardern of New Zealand met with President Emmanuel Macron of France last week, for example, about creating an intergovernmental effort to end online extremism. While laudable in theory, very little of this hand-wringing is likely to result in any rules with heft. In addition, the prospect of governments making rules around the restriction of speech is rife with ethical dilemmas.

Finally there’s the biggest gun: Using antitrust law to break up big tech companies. Calls for antitrust action have become increasingly loud, most notably in a recent essay in this paper by the Facebook co-founder Chris Hughes. His statement that the company should be broken up attracted a lot of attention, especially after he called the power held by Mark Zuckerberg, his former college roommate, “un-American.” That had to hurt, even if the blow is likely to be glancing, since antitrust cases are slow-moving and hard to pull off.

And yet the idea of using antitrust to rein in these companies got a significant boost recently with the Supreme Court’s decision to allow a lawsuit from consumers aimed at how Apple runs its App Store to proceed in a lower court.

Breaking with the more conservative wing of the court in a 5-4 decision, Justice Brett Kavanaugh wrote in the majority opinion that Apple’s arguments that it wasn’t subject to a lawsuit over its app prices “disregard statutory text and precedent, create an unprincipled and economically senseless distinction among monopolistic retailers and furnish monopolistic retailers with a how-to guide for evasion of the antitrust laws.”

Apple has and will continue to argue that it is not a monopoly in either hardware and software — which is true. But the case, though narrow, is still a flashing neon sign of change. It centers on rethinking the idea of what a monopoly is with an eye to the power of the network effect. Even if a company doesn’t completely dominate its sector, if its platform can exercise what amounts to an iron-fisted control over consumers, perhaps it should be considered a monopoly after all.

Google and Facebook are good examples, because they hold sway in all kinds of ways that make it hard for other companies to compete and for consumers to escape. Google’s share of the search market allows it to dominate mapping, recommendations, email, video, documents and more, while Facebook rules the social media world through its main app along with Instagram and WhatsApp.

None of this is good for consumers, except perhaps by the measure of convenience, because the choices they have are limited and never likely to challenge the status quo. In other words, these companies are Apex Predators, too. You don’t have to be as powerful as Bill Gates once was to be just as harmful.

The question now is: How do we get consumers on top of the food chain for once?

Kara Swisher, editor at large for the technology news website Recode and producer of the “Recode Decode” podcast and Code Conference, is a contributing Opinion writer.