Those who think competition law does not need to be updated to address the harms caused by Big Tech fundamentally misunderstand the nature of the high-tech giants
In 2021, the Biden administration in the United States appointed the Big Tech critic and antitrust scholar Lina Khan as chairperson of the Federal Trade Commission and continues to pursue the legal cases brought against Facebook and Google last year by the previous administration. Again, we’re not seeing anything like this happening in Canada.
The debate in Canada over how to handle the harms caused by Big Tech tends to be polarized between those who see a real and immediate problem with the growing power of Big Tech over our markets, and those who defend the status quo with claims that “we don’t need new laws.” Those who fall into the latter category fundamentally misunderstand the nature of Big Tech on several fronts.
First, there seems to be a tendency by status quo pundits to equate the massification of personal data collection with past practices of data collection, including loyalty card schemes and things like that. However, it is not for nothing that international institutions like the World Economic Forum call personal data a “new asset class,” as it is the resource that underpins 21st-century economies.
Personal data collection by Big Tech firms provides them with an insurmountable market position, since their economies of scale enable them to keep collecting data, but limit the capacity of any competitors to grow to anywhere near their size. Even if a startup thought it could compete, no venture capitalist would fund it because the likelihood of it maturing is slim-to-none. Economists and others have morbidly likened this to the establishment of a “kill zone” around these Big Tech firms.
Second, status quo pundits don’t appreciate the competitive advantage that these personal data enclaves provide to Big Tech. As Meredith Whittaker — founder of Google’s Open Research group — points out in a recent article, the concentration of data and computing power in Big Tech firms gives them excessive influence over the direction of important research areas, like artificial intelligence. Whittaker notes that artificial intelligence developments end up being driven by the objectives of Big Tech firms because researchers are dependent on those firms for access to the data and computing power necessary to undertake their research.
Third, status quo pundits argue that Big Tech firms are too diverse to treat the same way. This is true, but they are also similar in many ways — and their similarities matter. Simplistically, we could say that Facebook and Google sell ads, Amazon sells spots on its digital shelves and Apple and Microsoft sell products and services.
They are similar, though, in terms of the fact that they have become the architecture on which much of our digital economies depend: firms operate through Facebook; firms use Google to advertise; firms sell on Amazon and buy their web services; firms sell their products through Apple’s app store; and firms are still very much reliant on Microsoft’s software. The dependence of other firms on Big Tech means that the Big Tech firms have immense market power and they effectively set the rules in our digital economies.
Finally, status quo pundits keep their eyes trained on short-term price effects, but end up missing everything else. We need to rethink the structural role of Big Tech in our economies, a point highlighted by Lina Khan in her famous article, published in the Yale Law Journal, “ Amazon’s Antitrust Paradox .” Her main point was that the digital platforms and ecosystems controlled by Big Tech firms have come to underpin our markets, leading to a range of problematic outcomes.
A complementary issue, though, and one not addressed by Khan or others to my knowledge, is that Big Tech firms not only have oligopolistic positions in certain markets, but also control the ecosystems in which other firms, organizations, users and technologies operate. In this sense, they are characterized as much by the ease with which others can integrate into their ecosystems, as they are by their size. This enables them to further abuse their market positions by limiting access to their digital ecosystems and data enclaves — something that competition policy has historically not been designed to address.
Now is an opportune time for the Liberals to act and to “provide a clear set of rules that ensure fair competition in the online marketplace,” as promised in their election platform. They need to commit to a robust process to operationalize their commitment to address the issues with Big Tech that so many are raising around the world.
Article originally appeared on nationalpost.com.