ourEconomy: Opinion

Breaking up the tech giants won’t be enough to rein in their power

We must recode the way that platforms operate – and in whose interests.

Nils Peters
2 December 2020, 11.01am
Nicolas Economou/NurPhoto/PA Images

Hardly any tech giant is spared an antitrust investigation these days. In the United States, Google is facing the biggest antitrust case in a generation. Across the Atlantic, the European Commission has brought formal antitrust charges against Amazon. In the UK, the Parliament has launched an enquiry into music streaming by platforms such as Spotify, Apple Music, Amazon Music and Google Play.

This was overdue. A decade of light to no regulation enabled a historical consolidation of platform wealth and power. The COVID-19 pandemic has made it painfully obvious how much we depend on digital platforms and how our lives are entangled with them. Crucial platform products and services like health technology (Google and Apple), food and groceries delivery (Deliveroo), transport (Uber) and the supply of essential goods (Amazon) underline to what extent they have become indispensable intermediaries of everyday life. Tech regulation is coming, and we need changes that thoroughly democratise their governance and challenge concentrated corporate ownership.

‘Breaking up’ platforms is a popular proposal for antitrust action. But this might not be enough to tackle the true source of platforms’ monopolistic power. Breaking up Facebook (Facebook, Instagram, WhatsApp) or Alphabet (Google, Youtube, Nest) won’t profoundly change their dominant position in their respective markets. Facebook and Google are dominant because they have built network effects. The value users derive from using the platform increases with the number of other users. Owning and operating the digital structure through which these users interact allows platforms to extract valuable data and charge for access to the platform (e.g. in form of subscription or commission fees). This essentially makes platforms the big rentiers of our time, receiving revenue flows from the digital space they enclose.

As long as platforms were perceived to add value and drive innovation they evaded widespread criticism. But this narrative has broken down and concerns about platforms abusing their intermediary power are mounting. The antitrust case against Alphabet focuses on Google harming competition by paying other companies to set its search engine as the default option. Amazon is being sued over using retail data they extracted from their marketplace to boost their own products and compete with sellers. Meanwhile a market study conducted by the Competition and Markets Authority (CMA) showed concern about Facebook and Google’s role in stifling innovation and using their market power to raise the price of digital advertising.

Get our free Daily Email

Get one whole story, direct to your inbox every weekday.

The prevalent tech-solutionist discourse makes platform dominance sound inevitable, integral to our contemporary configuration technology and society. But there are alternatives. The challenge is to liberate the democratic potential of the platform from the logics of concentrated corporate ownership and profit maximisation. Crucially, while platforms have encouraged a sense of technological inevitability, the way that our digital economy is run is neither fixed nor certain. Platforms are legal as much as digital institutions; we can recode both and change how they operate and in whose interests. We can disperse and democratise economic coordination rights currently monopolised by the platforms, ensuring private power is not beyond democratic regulation. Central to this must be a new architecture of ownership and control.

The challenge is to liberate the democratic potential of the platform from the logics of concentrated corporate ownership and profit maximisation

The first, obvious alternative is reducing corporate concentration and power through antitrust regulation. In the past years, the UK provided a lenient regulatory environment in the hope to foster tech ecosystems akin to Silicon Valley. The CMA only recently started to explicitly name platform monopolies as a problem. The recognition that self-regulation among platforms has failed is an important first step. Platform regulation is a thorny issue that has to deal with new business models and rapidly changing markets. The CMA advocates for an ex ante pro-competition regime, which aims to reduce the concentration of corporate power through micro interventions in their business models. But doubts remain whether this can bring about the decisive change we need.

However, there are options beyond antitrust policy to reign in the power of Big Tech. More ambitious proposals should tackle the political economy underpinning platforms. A starting point is to rethink our conception of what essential services and products are in the digital world. Platforms are increasingly providing services that cannot be efficiently or easily replicated under monopoly or near-monopoly conditions. Some of these services are considered a vital good that people have a right to, including the provision of food, transport or shelter. As platforms are presiding over networked infrastructure that exhibits powerful economies of scale, the UK Government could regulate major platforms as utilities through a new Office of Digital Platforms.

In addition to that, decisions about what types of data should be collected, how and for what purposes data can be used should not be the prerogative of multinational corporations. We should democratise decisions about who gets to collect and hold data in an effort to reinstate meaningful privacy and counter surveillance. A new multi-stakeholder agency or organisation should determine when and how data can be collected, if it is at all. The goal should be to ensure all stakeholders – workers, residents, community organisations, businesses, and more – can collectively shape the rules and regulations concerning data collection as well as the development and application of data technologies in their communities and workplaces, technologies which intimately pattern how we live and work.

We should democratise decisions about who gets to collect and hold data

The UK should direct public funding into the development of data and platforms (and the ecosystem around them) that are decentralized and democratically owned via a variety of new public institutions. The current financing environment for platforms in the form of the venture capital industry has fuelled monopolisation and an attitude of moving fast and breaking things. Only public funding can close the financing gap for more democratic platform alternatives. A Public Platform Accelerator, for example, could be tasked with developing platforms that replicate already existing ones. The key difference would be fee structures designed to maximise the utility of the platform for its users and workers not returns to its investors, as well as a multi-stakeholder governance model.

Corporate monopoly power has often been to the detriment of workers, and the platform economy is no exception. However, there is nothing innate in the concept of the platform that means that work organised through it should be precarious, badly paid, or lacking in control. A comprehensive set of labour rights should be introduced to ensure work organised through platform intermediaries is secure and decent. This could be done through standalone legislation and regulation targeting platform companies in their current incarnation or embedded into the governance and management structures of new platform entities (like the Platform Accelerator previously described). In doing so, a comprehensive agenda for reimagining work for all can ensure we emerge from the current COVID-19 crisis with a fairer, more secure, and equitable world of work.

There is an interesting parallel between Google’s antitrust case and the landmark antitrust case of the 1990s against Microsoft. Both companies were sued over antitrust issues roughly two decades after they were founded (22 and 23 years respectively). This is not entirely coincidental. As the tide is turning against Big Tech, we should opt for ambitious interventions to put platforms on a more equitable and democratic path. It might save us from having the same debate in twenty years’ time.

This article is based on Common Wealth’s new report ‘A Common Platform’. It can be read here.

Ukrainian journalists share their stories of war

Hear Igor Burdyga and Kateryna Semchuk explain what it's like working in a homeland under threat. Plus British author Oliver Bullough and chair Daniel Trilling.

We've got a newsletter for everyone

Whatever you're interested in, there's a free openDemocracy newsletter for you.

Economics journalism that puts people and planet first. Get the ourEconomy newsletter Join the conversation: subscribe below
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram WhatsApp yourData