By John Pecman, (former CCB Commissioner of Competition)
“The nail that sticks out gets hammered down.” That Japanese proverb — typically used to teach conformity — seems similar to the approach advocated by U.S. Senator and Democratic presidential hopeful Elizabeth Warren in her recent call to “break up our biggest tech companies,” including Google, Amazon, and Facebook.
The Internet has been the foundation for those and some other tremendously successful companies. Consumer demand for innovative products and services has allowed these technology giants to realize rapid growth and also market preeminence.
Recent times have featured populist backlash against the scale and power of these data monopolies, concern over harmful online content or behavior, cybercrime, and political misinformation.
But breaking up large tech companies, as advocated by Sen. Warren and others, is a flawed solution. It overstates the consequences of being “big,” politicizes the role of competition regulators, and ultimately will hinder innovation and harm consumers.
Internationally, too, there is a growing call for government action to curb the strength of the tech giants. Most advanced economies are studying the adequacy of competition law over concerns about increasing market concentration in digital network sectors.
In the United States, the Federal Trade Commission has begun public hearings to examine the need for new antitrust approaches. The FTC recently launched a task force to monitor technology markets, designed to investigate potential anti-competitive conduct in the digital sector.
The United Kingdom is also examining the role of competition in the digital economy. One recent report by an expert panel, entitled “Unlocking Digital Competition,” recommended, among other things, a code of conduct for tech firms that would include mandated interoperability. Another report, by the House of Lords Committee on Communications, recommends a public-interest test for data mergers.