Throughout the history of the U.S., monopolies have been synonymous with robust industry, but, more times than not, this power is directly proportional to a loss of freedom on the part of the consumer and laborer. For the majority of American history, this loss of freedom is a loss of the ability to buy and sell a product or service easily, but very recently, a new and more frightening loss of freedom has emerged: the loss of the ability to control one’s data. For hundreds of years, controlling one’s data was not a problem, as companies did not have the technology to do it. However, as technology evolved, companies such as Facebook, Amazon, and Alphabet have realized that it is both exceedingly easy and extremely valuable to collect vast amounts of data on all their users, leveraging this newfound power to control people’s online life indirectly. Additionally, not only are these new-era tech giants effectively modern monopolies, but they are virtually untouchable by current legislation, creating an atmosphere for dangerously unrestricted behavior.
Introduction: the Economic Principles of the Founding Fathers
In the earliest years of the United States, the founding fathers laid the groundwork for today’s economy, ensuring that the right to buy and sell was not encroached upon in any way (West). Even before the Gilded Age and industrial revolution, the Founding Fathers understood that monopolies would undoubtedly restrict the rights mentioned previously, as they recognized that a company with “exclusive advantages of commerce” could prevent anyone else from competing (West). Despite this, the problem of overly powerful monopolies began as these initial views on prohibiting monopolies were discarded, and robust industry helped the United States economy tremendously (“Trends of the Gilded Age”). By and large, monopolies were responsible for this growth, as, without the fear of competition, they could take on large projects and expand indefinitely (“Standard Oil Company and Trust”).
The Gilded Age and the Start of Antitrust Law
Due to the previously mentioned oversight of monopolies, companies like Standard Oil were able to grow unchecked for decades, using their power to prevent competition and hurt both consumers and laborers. One of the common practices was lowering the price of a commodity so that it was not profitable for competitors, allowing a monopoly to consolidate the smaller company and broaden their control (“Standard Oil Co. v. New Jersey”). To increase profits even further, this strategy often went hand-in-hand with lowering wages of workers, who labored long hours in poor conditions for little pay (“Working Conditions in the Gilded Age”). This situation meant that for the majority of working class men, the power monopolies had over their lives was very direct: the power to control how they worked. Monopolies could lower wages, hire strike-breakers to prevent unionization, and fire whomever they wanted arbitrarily. Likewise, monopolies had an impact on business owners in the Gilded Age, as they could decide the price of a monopolized commodity whenever they wanted to. This power of pricing could be used to drive up prices, causing buyers who needed the product to be forced to pay (often several times) more due to a lack of alternatives. Luckily, the Clayton Antitrust Act of 1914 was able to cease the operation of most monopolies, creating a roughly 80 year period of consumer freedom within most markets (Segal). However, the threat of monopolies is certainly not a thing of the past, as in recent years the problem of overly powerful companies has re-emerged with the tech industry.
Big Tech and the Start of Data Mining
On a warm summer day in 1998, Google co-founder Larry Page placed a 100,000 dollar check into a desk drawer. The check, an early investment in Page’s search algorithm, was undepositable, as it was written out to the non-existent company Google Inc. In the following weeks, Page and other co-founder Sergey Brin filled out the paperwork to make Google Inc. a legal company, depositing the check and hiring the first employee (McFadden). Google grew quickly, using a pay-per-click marketing strategy called AdWords to profit from web traffic (McFadden). By 2003 Google had created Google AdSense, a service designed to connect businesses with advertisers. By 2004 AdSense was making 1 million dollars per day (Gould). However, Google had yet to start showing targeted ads, meaning that it was not yet mining user data for profit. This all changed in 2004, when Google introduced its new product Gmail along with an advanced keyword algorithm named PHIL that searched through personal emails for keywords and used them to determine what ads to show users (Gould). It was at this point that Google began to test the boundaries of its unofficial motto, “don’t be evil,” as they crossed the line between a service designed to “organize the world’s information and make it universally accessible and useful” (Google) and a service designed to organize personal information and make it useful for advertisers.
Other tech giants like Facebook and Amazon have similar stories to Google. Facebook, a social media platform founded in 2004, was initially a platform to share someone’s college experience online, quickly expanding outside of college campuses and adding Facebook Ads, a targeted advertising system similar to Google’s AdWords, in 2007 (Facebook). Amazon, founded in 1994, was originally a marketplace for books, but after transitioning to broader e-commerce, realized that it would be drastically more profitable if it used customer data, likely starting to mine data after AWS (Amazon Web Services) was created in 2006 (Matthews).
Of the three, Amazon was the first to rebuild their business around data, as its previous market strategy did not use data whatsoever. Amazon’s new business model relied heavily on its use of data collection, using the data it collected from customers to predict what products people wanted, how and when they wanted them, and how to stay ahead of competitors (Matthews). By using data in this way, Amazon was able to create an unbeatable feedback loop: collect customer data to determine what people want, more people come to their platform because Amazon offers exactly what they need conveniently, more people using the platform means more data, which means better predictions (Zatari). Despite competitors such as Target and Walmart pioneering these practices, Amazon created new and improved strategies to utilize them, allowing them to grow their e-commerce marketshare to over 50% by 2019 (Clement). This cycle prevents competitors from keeping up, as the more people use Amazon, the less data competitors have, and the worse their predictions are.
Facebook and Google have a similar (and equally worrisome) feedback loop to Amazon due to their heavy use of data mining. Both Facebook and Google use the data they gather to profit and expand their reach, causing there to be more users, which means more data. This process shows that the crux of the Big Tech problem boils down to a straightforward idea: more data equals more users, more users equal less competition. This results in companies having the power to do whatever they want without consequences, a situation that quickly spirals out of control.
To show just how effective these strategies were, here are several graphics showing just how dominant Amazon, Google and Facebook are in their respective fields: (Quick Note: Instagram is owned by Facebook but is still counted separately)
Cambridge Analytica, Facebook and the Dangers of Data Collection
In 2018 the New York Times published an article discussing documents obtained from Cambridge Analytica, a UK based organization deemed responsible for influencing both the Brexit vote and the 2016 election through targeted Facebook ads. The obtained documents detailed the data acquisition of data about tens of millions of Facebook users by Cambridge Analytica, as well as Cambridge Analytica’s connections to both the Trump campaign and the Kremlin (Confessore). In the following months, as more information detailing election tampering in several countries surfaced, the blame shifted to Facebook, whose lack of oversight of account holders’ personal data resulted in a massive privacy breach. In two much-anticipated hearings, Mark Zuckerburg, the founder and CEO of Facebook, testified before the House and Senate on how he had made mistakes regarding the privacy rights of his users, refuting claims that Facebook should never have been allowed to self-regulate and should not be able to continue to do so in the future (Roose, Kang). The entire scandal resulted in a 5 billion dollar fine from the FTC, with many considering this to be a mere “slap on the wrist” for a company making 55 billion dollars a year in ad revenue (Kang). However, despite all the talk of regulating data collection, the more significant underlying issue escaped the attention of the general public: Big Tech’s monopolistic tendencies.
At the same time as the 2018 Cambridge Analytica scandal, Google was dealing with its own equally severe legal issues. Google had just been served a 5 billion dollar fine from the EU for abusing its power with the Android operating system (Google gave third-party manufacturers of handsets the Android operating system for free, but forced them to pre-install 11 Google apps, a practice that was determined to violate European antitrust law) to solidify market domination for search engines (Satariano, Nicas). This fine was neither the first nor the last time Google would run into trouble with the EU for antitrust violations, as in 2017 they had been fined 2.7 billion dollars for prioritizing their shopping service Google Shopping in search results. A year later, in 2019, the EU again fined Google, this time handing them a hefty 1.7 billion dollar penalty for prohibiting advertising partners from working with other competitors. That same year, the EU opened an ongoing investigation of Google’s use and collection of data (Hamilton). However, despite this dubious track record, Google did not receive any scrutiny from US lawmakers, likely because all of Google’s wrongdoings have been in the realm of anti-competitive behavior and not (yet) privacy violations. Due to a lack of action in the US, Big Tech is able to continue collecting and using data to the detriment of consumers.
David vs. Goliath: The Fight Against Big Tech
The key to leveling the playing field in the world of technology lies in the problem itself: data. Data allows Big Tech to crush its competitors and make a considerable profit doing it. Therefore, the easiest way to increase Google, Amazon, and Facebook’s competition is to take away their data…but how? Tech and privacy activists alike have been thinking of effective tactics that would solve this issue, but very few have actually been implemented, due to a lack of both government cooperation and consumer support. However, one of these activists, Alastair Mactaggart, masterminded a law that would force tech companies to reveal all the information they collected about a person if that person asked and would allow an individual to demand the company stop selling their data (Confessore). Mactaggart, who had owned and run a real-estate business in Silicon Valley for many years, had no tech background. However, like many other activists, he had realized that the US had no comprehensive law regulating data collection and use, and was convinced that this needed to change–fast (Confessore). It was at this point that Mactaggart began lengthy negotiations with the legal Goliath that was Big Tech. However, this legal barrier did not deter Mactaggart, and after months of negotiation, the law passed the Senate, taking effect in 2020 (Confessore). However, passing laws that regulate Big Tech is very rare due to their legal and political influence, so it is critical to take steps now to prevent tech companies from becoming even more powerful. Additionally, I believe that the best solution is not to break-up large tech companies, as this is a brute force solution that only considers the present, with no plan of action for the future. We should not simply “kill Big Tech” but instead use more reasonable and surefire ideas to regulate it. The most effective of these ideas is a combination of a so-called “Digital Authority” and a law that makes dominant companies “unlock their data.” The former of these two proposals is relatively self-explanatory: a new government organization with a purpose similar to the FCC, but focused on encouraging competition in the tech industry. The latter part of this idea–unlocking the data– is more complicated. What unlocking the data boils down to is forcing companies like Google, Facebook, and Amazon to make the data they collect accessible to competitors in one of two ways. The companies could either give competitors access to all the data they collect or allow consumers to move all their data to a competitor’s platform, with both options effectively breaking the feedback loop mentioned earlier (Lohr).
Do What You Can! How You can Contribute Today to the Big Tech Problem
Despite the end goal being legislature, this is not to say that individuals cannot contribute, as without support from voters people in positions on power are not motivated to make change. It is therefore our duty to inform others about the gravity of the problem, as many are uninformed about the dark side of a better online shopping, browsing or watching experience. Informing our community that Big Tech does not need to die for our privacy to live is a crucial step in regulating Big Tech correctly. If we work together we can cause meaningful social change to protect our privacy, democracy, and integrity.
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