Is Washington getting tougher on Silicon Valley? Two words: not yet.
My take on this topic goes against the grain of last week’s news that the Federal Trade Commission has set up a tech antitrust task force to consider both the current and past behaviour of companies like Facebook, Google, Amazon and even Apple. The announcement generated a fair bit of press, in part, because the new committee, which includes 17 FTC lawyers with skills in areas like online advertising, social networking, mobile payments and so on, has a mandate that’d include breaking up past mergers like Facebook’s purchase of Instagram or WhatsApp, and potentially unwinding some Google deals too. The committee is modelled on a 2002 FTC hospital merger task force, which brought a series of successful court challenges to proposed hospital mergers.
Certainly, regulators in Washington are eager to show that they’re up to the task of regulating Big Tech. That’s because their legitimacy is under threat at the moment, and not just at the FTC. Witness how the SEC has been unable to rein in Elon Musk, who continues to churn out financially misleading tweets. The problems there are three-fold. First, Musk represents the typical libertarian view of many tech titans, which is that they simply don’t have to play by government rules (remember Google’s empty seat at the recent Senate hearings on election manipulation?).
The second issue is the market moving impact of social media itself. A few years back, Carl Icahn (who I cite in my column on financialisation this week) kept tweeting requests that Apple do more share buybacks every few weeks. With each tweet, the stock price jumped, in part because Tim Cook seemed to be complying with Icahn’s wishes. After he’d made his money, Icahn promptly dumped the shares. Why such behaviour isn’t considered illegal, I can’t imagine. Ed, any ideas?
But the third and most important issue is the overall ability and willingness of regulators to curb the richest and most powerful people in the country. The SEC hasn’t deterred the most egregious behaviour of the tech titans. The FCC hasn’t either. Many have hoped that the FTC would rise to the challenge, but my take is that this task force may be more of a window dressing to cover the fact that the Republican chairman of the FTC and its other governors don’t really have a clear plan of how to fight Big Tech — sources tell me many of them aren’t even keeping abreast of the latest headlines — not to mention the will.
For my money, the most aggressive fight against Big Tech will come from the House antitrust subcommittee, which is busy recruiting the most able critics (Lina Khan, the author of the Yale paper on the Amazon Antitrust Paradox, just joined the staff — I’ve also just done a “Lunch With” her which will appear in the Weekend FT in the next few weeks). While it’ll be tough for them to affect real change with a split Congress, if we end up with a Democratic Senate and/or president at some point — watch out.
- Is quantitative easing the father of millennial socialism? David McWilliams make a persuasive case in the FT that the answer is yes, because it raised asset prices and made the cost of housing unaffordable for young people (a topic I plan to tackle in an upcoming column). This is one of the sharpest analysis pieces I’ve read in a while.
- The WSJ’s Gerald Seib did an interesting analysis of the identity crises being faced by both Republicans and Democrats, and how they exacerbate the traditional view of conservatives as “daddy” and liberals as “mommy” and yet also pose strategic challenges for both parties in terms of the ground they need to cover in 2020.
- In the New Yorker, crackerjack journalist Steve Coll tackles two of the most dysfunctional things in America — our healthcare system and our prison system — in one piece.
- I also really enjoyed my colleague John Thornhill’s piece on how disruptive innovators are now found more in politics than business.
Edward Luce responds
I’ve no idea why Icahn’s public gaming of the market isn’t illegal. But, I sort of do — since it’s conducted in public view and would qualify as outsider trading, rather than insider trading. Yet it’s a misuse of market power for personal gain at public expense. The fact that Icahn’s intimidation appeared to work also calls into question Cook’s judgment. That said, I’m neither a lawyer nor a trader so I’d better shut up. My larger question is about the main point of your Swamp Note — that the FTC is finally focusing on the monopoly power of Big Tech companies. You link to John Thornhill’s excellent piece about the fact that Silicon Valley is no longer as disruptive as it once was, or likes to think it still is. There’s a lot of truth to that. Contrary to the popular view, Silicon Valley is also far less competitive that it used to be, which is harmful to innovation. It ought to be possible for Washington to curb monopoly abuse in the name of innovative capitalism. It has done it before. If it can’t do so now, then what’s the point of public regulation?
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