Thursday, 25 Apr 2024

US Senator Elizabeth Warren outlines proposal to bust up the tech giants

NEW YORK (NYTIMES) – US Senator Elizabeth Warren, who is bidding to be the policy pacesetter in the Democratic presidential primary, championed another expansive idea Friday evening (March 8) in front of a crowd of thousands in Queens: a regulatory plan aimed at breaking up some of America’s largest tech companies, including Amazon, Google, Apple and Facebook.

At a rally in Long Island City, the neighbourhood that was to be home to a major new Amazon campus, Ms Warren laid out her proposal calling for regulators who would undo some tech mergers, as well as legislation that would prohibit platforms from both offering a marketplace for commerce and participating in that marketplace.

“We have these giants corporations – do I have to tell that to people in Long Island City? – that think they can roll over everyone,” Ms Warren told the crowd, drawing applause. She compared Amazon to the dystopian novel “The Hunger Games,” in which those with power force their wishes on the less fortunate.

“I’m sick of freeloading billionaires,” she said.

Ms Warren’s policy announcement sent reverberations from New York to Silicon Valley, as she further cemented herself as one of the Democratic candidates most willing to call for large-scale changes to the country’s structure in the name of equality.

Among the crowded field of Democrats seeking the presidential nomination, Ms Warren has done the most to add detail to those early proposals, including a plan for universal child care, a tax on the country’s wealthiest families, and, as of Friday, breaking up big technological giants.

Ms Warren’s regulatory plan would also force the rollback of some acquisitions by tech giants, the campaign said, including Facebook’s deals for WhatsApp and Instagram, Amazon’s addition of Whole Foods, and Google’s purchase of Waze.

Companies would be barred from transferring or sharing users’ data with third parties. Dual entities, such as Amazon Marketplace and AmazonBasics, would be split apart.

Pressure for elected officials to place additional oversight on mega-tech companies has been building for months, particularly after revelations that companies such as Facebook may have violated customer privacy agreements.

Ms Warren is also sending a political warning shot across the Democratic primary field, where decisions on how much to embrace or reject Silicon Valley and its wealthy donors could become an important dividing line among candidates.

In the wide-open nomination race, Democrats such as Ms Warren, Senator Bernie Sanders of Vermont and Senator Amy Klobuchar of Minnesota have expressed a willingness to limit the influence of companies such as Facebook, Google, Apple and Amazon – thoughMr Sanders andMs Klobuchar have yet to present clear policy details.

Senator Kamala Harris, who represents many of those companies based in her home state of California, has repeatedly pressed executives on consumer privacy but has stayed away from direct calls to limit their influence.

Senator Cory Booker of New Jersey has been more willing to embrace the controversial corporations, who have frequently used their vast resources to lobby politicians of both parties.

“Our technology industry is the envy of the world, and we need policies that will foster innovation and consumer choice – but we also need stronger enforcement of antitrust law,” said Ro Khanna, the California House Democrat who represents Silicon Valley headquarters of companies such as Apple and eBay.

He said blanket statements against big tech companies weren’t helpful, but that each company needs to be “evaluated on a case-by-case basis and afforded due process.”

Ms Warren’s plan creates two tiers of companies that would fall under the new regulations: those that have an annual global revenue of US$25 billion (S$34 billion) or more, and those with annual revenue of US$90 million to US$25 billion.

The upper tier would be required to “structurally separate” their products from their marketplace. Smaller companies would be subject to regulations but would not be forced to separate themselves from the online marketplace.

Ms Warren, who has previously said moving to Boston would have been a “good opportunity” for Amazon, said in a Medium post Friday morning that companies have grown so powerful that they can bully cities and states into showering them with massive taxpayer handouts in exchange for doing business, and can act – in the words of Mark Zuckerberg – “more like a government than a traditional company.”

During a brief interview later in New York, Ms Warren refused to say whether Governor Andrew Cuomo was right to have offered hefty tax incentives to Amazon in return for the proposed campus in Queens. Boston’s mayor, Martin Walsh, from Ms Warren’s home state, also offered similar incentives.

  • “That’s not the point,” she said. “Before you even get into the question of do you need to change the statutes, there are structural changes you can make in the economy to prevent Amazon from dancing its way across America saying, ‘What will you offer me if I came?’ ” This is a refrain she has hit for years, including in a 2016 speech titled “Reigniting Competition in the American Economy.”

Last year, she introduced the Accountable Capitalism Act, which seeks to curb shareholder power by forcing corporations to increase worker representation on their governing boards, while also reducing incentives for big companies to pay out shareholders rather than reinvest in businesses.

Matt Stoller, a fellow at the Open Markets Institute in Washington and a former senior adviser to the Senate Budget Committee, said Ms Warren’s plan was “practical” and “necessary.” He compared big tech companies to the tobacco monopolies of America’s past, which were eventually subjected to antitrust lawsuits.

“There’s been a traditional sense around the politics of DC that these companies are progressive,” Mr Stoller said. “Their employees give to Democrats, they’re friendly to social liberalism, there’s an idealism to how they talk about the world. That’s been the traditional sense.

“But these companies have the moral frame of Big Tobacco,” he added. “They don’t care.”

Carl Szabo, who is vice-president at an e-commerce trade association called NetChoice, said he felt Ms Warren’s plan was unnecessary. He warned that it could lead to weaponisation of antitrust laws, as legislators target companies deemed to be their enemies.

“Politicising and weaponising antitrust law is ripe for abuse,” said Mr Szabo, who is a professor of privacy law at George Mason University’s law school.

“We’ve already seen how politics can inject itself into antitrust reviews, and I don’t think our legislators should be encouraging this precedent.”

Though tech giants have experienced several controversies in recent years, it is unclear how popular Ms Warren’s antitrust proposal would be with voters.

Rob Atkinson, president of Information Technology and Innovation Foundation, an industry-sponsored group, defended the power of big companies in the technology sector for what he described as benefits to consumers.

“The Warren campaign’s call to break up big tech companies reflects a ‘big is bad, small is beautiful’ ideology run amok,” Mr Atkinson said. “The proposal ignores the fact that many of the services big tech companies now provide free used to cost consumers money.”

Matt McIlwain, a partner at Seattle venture capital firm Madrona Venture Group, which was an early Amazon investor, said in an email, “Senator Warren and others with a similar mindset are misguided on the need to break up larger tech companies.

“Companies in the innovation economy have a strong track record of creating quality products and services that are often free or at dramatically lower costs than previous services,” Mr McIlwain said.

For those closely watching the Democratic presidential nomination contest, the announcement was another example of Ms Warren’s political strategy, which is to appeal to voters based on policy ideas and retail politics, not soaring oration or feel-good messages of unity.

Among the crowd in Queens, which included more young people than many Ms Warren rallies across the country, several said they appreciated her policy focus.

“The fact that she focuses on concrete policy, this early in the race, is really aspirational,” said Milo Vassallo, who is involved in several Brooklyn leftist groups. Mr Vassallo said he particularly liked Ms Warren’s new proposal on technology.

“Her goal is not to undermine big tech, but just make it more competitive,” he said.

Kevin Murray, 28, a law student who lives in Queens who has not decided on a candidate to support, praised Ms Warren’s proposals as “tangible.” Mr Murray also wanted to come to the rally because Ms Warren is the author of one of his law school textbooks.

“I would’ve brought it for her to sign,” he said, “but it was a rental.”

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