March 13, 2019 / 11:13 AM / 9 days ago

Breakingviews - Britain shows United States how to fight Big Tech

Facebook and other Big Tech companies face a new European tax regime. REUTERS/Dado Ruvic

LONDON (Reuters Breakingviews) - “Break up Big Tech” could become a slogan in the U.S. 2020 presidential elections if Democratic hopeful Elizabeth Warren has her way. But a report for the British government on Wednesday proposed a smarter way to tackle the dominance of behemoths such as Facebook, Google and Amazon.

Warren wants to prohibit tech giants from selling products through their own websites and apps, or owning companies that do. That could force Amazon, for example, to split its marketplace, which is used by third parties, from the unit that sells the company’s own products. The Democratic Senator has also proposed unwinding deals that stifle competition, such as Facebook’s acquisitions of rival social networks Instagram and WhatsApp.

The new UK review – led by Jason Furman, who used to advise former U.S. President Barack Obama – agrees there’s a problem. It found that a few players, including Facebook, Apple and Google, control more than 90 percent of online searches, mobile operating systems and social media markets in Britain. These companies are so large, and have such a tight control over users’ information, that it’s almost impossible to launch competitor search engines or app stores.

The panel’s solution is, however, subtler than simply breaking up the giants. Furman proposes giving users the right to transfer their data to competing services. That would allow, for example, a Facebook user to switch to a rival without losing their photos, or an Amazon customer to carry their purchase history over to another shopping site. He also recommends opening up the basic technical standards used by such services so that they can “talk” to each other. Competitors of Google Maps, for instance, could then use the search giant’s vast horde of location data to recommend routes.

The proposal would be tricky to implement. Ideally the standards would apply worldwide, but getting international agreement would be hard. Decisions may also have to be taken on who would set standards or take the blame if data held on multiple networks went missing. Still, the plan gets to the nub of digital giants’ strength – the self-reinforcing gravitational pull of its already numerous users and data. Open standards could boost competition by effectively allowing new companies to tap into these so-called network effects. Breaking up the giants, on the other hand, would leave a constellation of smaller companies that remain dominant in their respective spheres. Britain is showing America how to really fight Big Tech.

Breakingviews

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