No, Tech Monopolies Don’t Serve National Security

2 days 7 hours ago

In what appears to be a “throw spaghetti on the wall approach” to stopping antitrust reform targeting Big Tech, a few Members of Congress and a range of former military and intelligence officials wrote a letter asserting that these companies need to be protected for national security. It’s a spurious argument that seeks to leverage fear of China to prevent changes desperately needed for consumer choice and innovation.

The argument they make is that gigantic tech companies are the only ones who can innovate and compete with China. But this completely misses the point on innovation. When companies have monopolies, they have no reason to innovate since they have captured the market. There is no need to compete to have the best product when you are the only product. Innovation depends on the best ideas from everyone being put forth to the public.   

Now, we don’t know if these folks actually believe in the argument or if they think the rest of us will believe in the argument because they say it, but this letter is really only about delaying legislative antitrust action through raising not just fictional concerns, but completely bogus takes on how innovation happens on the internet.

This Has Been Tried Before, and It Didn’t Work Then

The irony about the national security argument is that it takes a page straight out of the AT&T monopoly playbook and history. Forty years ago, AT&T was the largest corporation in the world and was facing antitrust action both in Congress and the courts. In a Hail Mary effort to get the Department of Justice to abandon its lawsuit, AT&T lobbyists went to the Department of Defense and convinced them that a monopoly communications network was essential for national security.

Source: New York Times Archive found here https://www.nytimes.com/1981/04/09/business/weinberger-defends-at-t.html

The plan was to convince then-President Ronald Reagan that he should directly order the Department of Justice to end the case, despite nearly six years of court hearings detailing how AT&T leveraged its monopoly power. In fact, a year prior to the Department of Defense weighing in opposition to further antitrust action, a federal jury had already awarded MCI $1.8 billion in antitrust damages against AT&T.

The situation with Big Tech is similar to the AT&T monopoly of the past facing antitrust actions on various fronts and like AT&T is attempting to change the narrative and come up with any excuse to avoid the right outcome, which is opening up the tech industry to competition.

Innovation Does Not Come From Big Tech; It Gets Bought by Them

The signers of the letter adopt the view that massive consolidation of the industry is necessary for innovation. But the exact opposite is true. Due to the size of these companies and their targeted acquisitions, innovation is either unnecessary or simply bought up. Startups with new ideas aren’t being launched to make something that competes with Google, Facebook, Apple, and Amazon’s services or products because the lion share of investor money has gone towards creating products that Big Tech will pay lots of money to acquire.

Congressional investigations identified this “kill zone” as the area of tech products and services that orbit the dominant platforms' products, such as search in the case of Google or social media in the case of Facebook. In fact, one would be hard-pressed to find a new organic product from Big Tech that didn’t find its origins in buying another company.

After a lengthy investigation by the House Judiciary Committee and Senate hearings into the merger practices of these companies with a wide array of experts and industry players, the congressional record is full of evidence to demonstrate that the size of Big Tech is, in fact, suppressing competition that sparks innovation. Think about how the tech industry used to be a place where previous giants were replaced regularly with the next best thing that initially started as a garage startup. EFF calls this the life cycle of competition, and it has been fading from the tech industry due to where things are now. This is why EFF strongly supports bills such as the ACCESS Act and the Open App Markets Act because they would open up dominant platforms to new entrants and help empower smaller players to innovate without interference again.

It comes as no surprise that 79% of Americans view Big Tech mergers as anti-competitive because the public isn’t fooled. These companies aren’t huge because it gives them some sort of cutting edge; they are huge because it conveys dominance, control, and monopoly profits. The public understands this, but, clearly, some Members of Congress are not getting it.

Ernesto Falcon