Reining in Big Tech’s monopolistic power

Too often we are apt to think of the free market as a free lunch, imagining it will just take care of itself unless we are careless enough to ruin it. In reality, like all freedoms, it requires constant vigilance to maintain and protect. The rise of Big Tech is a case in point, as a handful of megafirms that dominate the market, suppress competition, limit consumer choice, and threaten free public debate have replaced a once tumultuously competitive online marketplace. The recent bipartisan American Innovation and Choice Online Act is an important, albeit imperfect, effort to fight back.

Targeting primarily the Big Five tech giants—Apple, Amazon, Google, Facebook, and Microsoft—the proposed legislation addresses the injustices that arise when these firms function as platforms, via which products are traded, and as product producers in their own right. They can use their dominant power as platforms to privilege their own products and disadvantage others—whether by tweaking software to make it harder for competitor products to integrate with the platform, by tilting search results to privilege their own products, or by using their platforms to gather data on rivals to outcompete them.

An analogy from the railroads—the first network-based monopolies that prompted antitrust legislation in the late 19th century—may be helpful. Consider a railroad company that controlled all the routes across a state and produced and sold locomotives and train cars. The company might tweak the shape of its rails so that only its own trains could run efficiently on them, or control the schedules to give its trains priority passage through congested areas. The company might even subject competitors’ locomotives to inspections before they could pass through, so it could copy its competitors’ design advantages. Such behavior might be rational from a profit-maximization standpoint, but it would be unjust and anti-competitive.

As one of the bill’s sponsors, Rep. Ken Buck, R-Colo., put it, “Amazon deceives third-party sellers by pretending that they’re interested in investing or hosting those third-party sellers, they receive the data for this product … and then they start producing that product on their own, under their own label, for cheaper. That’s unfair. What part of unfair don’t you understand?”

Some critics are likely to object that this bill will substitute the decisions of government regulators for those of private businesses, ultimately limiting consumer choice by limiting companies’ discretion over which products to display. This objection fails to reckon with the fact that, especially in a consolidated market, consumers are not in the driver’s seat anyway; they are always in some measure the guinea pigs of what behavioral economists call a “choice architecture” established by retailers, marketers, and/or government regulators. Someone is always “nudging” you toward certain behaviors and purchases, and Big Tech does so on a scale and with a subtlety that casts doubt on the very notion of “free choice” when it comes to our online behavior. The American Innovation and Choice Online Act may be an imperfect tool for correcting these unfreedoms, but the problem it addresses is real.

Another concern is that this act, like many such regulations, may increase prices for consumers. After all, there is no doubt that monopolistic practices can cut costs. A platform operator like Apple, it stands to reason, may be able to design apps for that platform more efficiently than anyone else. And maybe the Amazon Basics brand really is the cheapest option available. If so, why wouldn’t we want it at the top of the search results? Of course, if Apple or Amazon drives rivals out of business, its prices may not stay low; robust competition is the best way to ensure long-term low prices and high quality.

Still, the more important point to make here is that price isn’t everything. One can imagine a world in which a handful of megabusinesses control everything from production to transportation to marketing, supplying goods at rock bottom prices by cutting out middlemen. The reductio ad absurdum of such a world is pictured in Pixar’s dystopian WALL-E, in which a single company, Buy n Large, has effectively taken over the planet with its promise of cheap consumer goods.

We reject such monopolistic business for the same reason that we reject big government: It may supply our material wants but at the cost of depriving us of any meaningful freedom, agency, or self-government. By specifically targeting the Big Tech giants that are suppressing innovation, addicting their users, and imposing their progressive values on American society, the American Innovation and Choice Online Act strikes an important blow for self-government and market freedom in an age that is fast losing its grip on both of these great American ideals.