Today’s tech landscape is dominated by a small group of large corporations like Meta, Amazon, and Google catching up with fledgling startups before they can develop into potential competitors. the labor laws are inconsistent with their immediate needs and generally act as dystopian corpro villains Johnny Mnemonic warned us about. Traditionally, state regulation has served as a gentle brake against the more problematic trends of American industries, yet the pace at which current computing and communications technologies are evolving. have overwhelmed the government’s ability to govern them.
In their new book, Access Rules: Freeing Data from Big Tech for a Better Future, Viktor Mayer-Schönberger, Professor of Internet Governance and Regulation at Oxford, and Thomas Ramge, author of Who is afraid of AI?. One such method, explored in the excerpt below, involves directly addressing Big Tech’s monopoly power, as the Biden administration has done in recent years, despite these efforts. not particularly effective.
Taken from Access Rules: Freeing Data from Big Tech for a Better Future by Viktor Mayer-Schönberger and Thomas Ramge, published by University of California Press. © 2022 by Thomas Ramge and Viktor Mayer-Schönberger.
Early in his term, President Biden appointed Tim Wu, who has argued in favor of breaking up Facebook and written popular books about the dangers of centralizing the Big Tech market, to the Economic Council. National as special assistant to the president on technology and competition policy. . Putting one of the most outspoken supporters of the trusted Big Tech in the role of top advisor is a strong signal that the Biden administration is taking a much more confrontational course.
Wu is not alone. His appointment was followed by Lina Khan’s choice to chair the Federal Trade Commission (FTC). Khan’s youth – when nominated in his early 30s – showcased his intellectual prowess and political credentials. A professor at Columbia Law School like Wu, Khan has authored influential papers on the need to fight Big Tech’s unchecked power. And she explained why current antitrust laws are ill-equipped to deal with platform providers in Silicon Valley. But Khan is more than just a Big Tech critic; she also offers a radical solution: make Big Tech companies like utilities, like the venerable AT&T or electricity suppliers, before telecoms deregulation. With Khan at the FTC and Wu as an adviser with the chairman’s interest, Big Tech could be in serious trouble.
It’s not just antitrust experts serving in government like Tim Wu and Lina Khan who fear that America’s tech-dominated monopoly structure could turn into their Achilles heel. Think tanks and advocacy groups on both the left and the right joined the critics. Entrepreneurs and venture capitalists such as Elon Musk and Peter Thiel view the highly-reheard dance of Big Tech and venture capital as growing skepticism, concerned that complex choreography is hindering the world The next generation of founders and disruptive technology. This pool of voices is calling for and assisting regulators and legislatures to prevent the most glaring cases of large companies removing potential competitors from the market by acquiring them — cases similar to Facebook’s acquisition of Instagram or Google’s acquisition of Waze. And they called on venture capitalists to fill the role that Joseph Schumpeter originally conceived of this type of capital, a role that the venture capitalists on Sand Hill Road in Menlo Park had filled for the past decade. first of this century: financial support for bringing to market new, completely better ideas and then allowing them to be replicated.
Antitrust waves are on the rise in the United States. However, it remains questionable that well-intentioned operations managers backed by broad public support will succeed. The challenge is a combination of structure and politics. As Lina Khan herself has argued, current antitrust laws are less helpful. Big Tech may not have breached enough to warrant breaking them. And other drastic measures, such as declaring them utilities, require legislative action. Given the delicate balance of power in Congress and hyperpartisan politics, it is likely that such bold legislative proposals will not receive enough votes to be enacted. Political factions may agree on the problem, but they differ widely on the solution. The left wants an effective remedy, while the right emphasizes the importance of market forces and worries about antitrust action driving economic activity. That leaves a rather narrow corridor of acceptable incremental legislative steps, such as a “post-acquisition lock.” This may make political sense, but it is not enough to achieve real and lasting success.
The truth is that the current game based on exit strategy works just too well for all participants, at least in the short term. Monopolies continue to raise their rents. Entrepreneurs get rich fast. Venture capitalists minimize risk by optimizing their investments for exit through sales. And the government? It also earns from every “Goliath buys David” transaction. Preventing such transactions causes a lot of trouble for everyone involved. Any politician who mounts a serious attack on Big Tech USA is responsible for jeopardizing the enormous successes of American tech companies in the global marketplace — a fee that one would expect. some politicians can hold out.
Despite the Biden administration’s renewed determination to get serious against Big Tech’s overreach, significant change still looks elusive in the United States. In contrast, European antitrust authorities have been much more active. The multi-billion dollar fine campaigned by Commissioner Vestager’s team at US Big Tech certainly sounds impressive. However, as we mentioned, most of them have lost their appeal for some money that superstar companies with huge cash reserves and skyrocketing profits can easily buy. . The European Parliament may not be too partisan and willing to strengthen antitrust rules, but their effectiveness is limited by the fact that most Big Tech is not European. At best, the Europeans can prevent America’s Big Tech from acquiring innovative European startups; The necessary laws for this are increasingly being enacted. But that won’t break Big Tech’s information power.
The challenge facing European regulators is shared by regulators globally, from the Asian Tigers to the Global South: how can national regulators fight back? effectively recap the information that can be gathered by Silicon Valley superstars? Sure, one could ban America’s Big Tech from operating. But that would deprive the local economy of valuable services. For most countries, such binary decoupling is not an option. And for countries that can and have gone astray, such as China, their homegrown Big Tech companies face similar problems. The huge fine being hit Alibaba in 2021 will certainly surprise outside observers, but they are also targeting the symptoms, not the root cause, of Big Tech’s strength.
Sooner or later, regulators and legislators will be faced with the real problem plaguing Big Tech: whether we consider draconian measures like a breakup or incremental ones like fines and transfer locks, which target symptoms of Big Tech’s information power, but do little to undo the structural advantages that digital superstars possess. It’s nothing more than cutting off a Hydra’s head, only to see a new one grow.
To deal with structural advantage, we must remember Schumpeter. Schumpeter’s nightmare was that innovation would become concentrated in a few large companies. This will lead to a downward spiral of innovation, as the big players have less incentive to disrupt and more reason to enjoy market power. Contrary to Schumpeter’s fears, this centralization did not happen after World War II, mainly because entrepreneurs had access to abundant capital and were able to thrive on breakthrough ideas. break. They stand a real chance against the great incumbents of their time, a role more than some of them take on themselves. But money is no longer the scarce resource that limits innovation. What is scarce today is access to data. More precisely, such scarcity is being created artificially.
In the data economy, we are seeing a centralization dynamic driven by narrowing access to a resource critical to innovation and driven by AI. Hence, dynamic allows access to data as raw material. Economic policy to combat market concentration and the weakening of competition must focus on this structural lever.
If we are to stop Schumpeter’s nightmare, maintain the economy’s competitiveness, and strengthen its capacity to innovate, we must dramatically expand access to data – for entrepreneurs. and startups, and for all the players who can’t turn their ideas into innovation don’t have access to data. Today, they can only hope for the kill zone and be acquired by one of the digital giants. If data flows more freely through broader access, the incentive to use the data and derive creative insights from it will increase. We will enhance the economy’s ability to innovate in a way not seen since the first wave of Internet companies. We will also learn more about the world, make better decisions, and distribute data dividends more widely.
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