Fingers Crossed: Big Tech Could be About to Get Smaller and Better
Hi friends —
The news is unrelenting these days. Mothers snatched from their newborns and sent to jail. Fathers sent to gulags and denied their constitutionally mandated day in court. U.S. military walking the streets of LA to intimidate peaceful protesters. Supreme Court rulings that chip away at fundamental American tenets like the separation of church and state.
But I would like to present to you a tiny bit of good news. After thirty years of doing pretty much whatever they wanted, Big Tech companies are finally facing the music.
As I wrote in my latest piece for New York Times Opinion, Big Tech is Finally Losing, (gift link) the big tech companies are all in court facing the prospect of deep structural changes in their business that could fundamentally reshape our access to information, commerce and entertainment.
What’s Happening?
Years of litigation against Big Tech is finally reaching a critical point. In the past two months, courts have:
Forced Apple to end its usurious tax on purchases made through apps.
Debated what punishments to enact on Google for its illegal dominance of the search market.
Heard arguments about why Meta should be forced to spin off Instagram and WhatsApp.
Ruled that Google had abused its online ad monopoly.
Allowed a case alleging Amazon had abused its monopoly to proceed.
This is an unprecedented series of moves that could usher in a whole new information landscape with more competition, smaller companies, and better services.
What Could Go Wrong?
The tech broligarchs have been so friendly to Trump – donating millions to his inauguration, sitting in premier seats as he was sworn in, visiting him in Mar-a-Lago and saying nice things about him to the press. All these pending cases - most of them brought by federal government prosecutors – couldn’t have been far from their minds.
But so far their bets haven’t paid off, as the New York Post wrote earlier this month in an article titled “Big Tech’s Bet on Trump hasn’t Yielded any Special favors.” So far, Trump hasn’t publicly intervened in any of the ongoing cases. And he appointed Gail Slater to run the Justice Department’s antitrust division, who has been enthusiastic about reining in Big Tech under the guise of what she has called “Hillbilly Antitrust.”
Of course, Trump has made it clear that he is interested in profiting from his position – whether through accepting an airplane from the Qataris or reaping $150 million from a dinner with crypto industry heads. So there is always the possibility that the tech bros just haven’t given enough.
I worry about what happens if one of the broligarchs offers to buy Trump an airplane, or give him acres of land in Hawaii for a new resort? Would Trump continue to support the Justice Department and Federal Trade Commission antitrust cases against Big Tech? I hope we don’t ever need to find out the answers to these questions.
What Could Go Right?
In the meantime, however, the cases are winding their way through court, and already changing our tech landscapes. Here’s a few things that have happened or could happen:
The court ruling that killed the so-called “Apple tax” allows apps to finally accept in-app payments without having to pay Apple up to 30% of the sale in fees. Already, the Kindle app finally allows people to buy books in app, the game Fortnite has returned to the app store and the privacy app Proton has said it will lower prices by up to 30%.
And this is just the beginning. We can expect a huge change in apps now that they are freed from these fees. “The long national nightmare of the Apple tax is ended,” tweeted Epic Games CEO Tim Sweeney, whose five-year legal battle against Apple resulted in the legal ruling.
By August, a judge will decide whether to force Google to sell off its Chrome browser, force Google to share its search data with competitors, prohibit Google from paying companies like Apple for exclusive access, or force Google to do all of the above. As I wrote last year, I think that the most crucial step the court can make to enable competition is to open up Google’s search data to competitors.
But spinning off Chrome would be revolutionary as well. Currently, Chrome is the dominant Web browser and is the most privacy invasive of the leading browsers. After years of promising it would drop third-party tracking cookies to match what its competitors did years ago, Google finally admitted in April that it was never going to deliver on its promise. It’s high time for some competition in the Web browser space, too.
The antitrust case against Amazon alleges that close to 50% of the price of many goods on Amazon is made up of fees sellers must pay to Amazon to rank higher in search results. The case also alleges that Amazon search results highlight the products that pay the most in fees rather than the cheapest product or the best match for your query.
Who among us hasn’t had the experience described by this Amazon seller on a discussion forum: “I am looking for organic rye flour. Not only are ads for organic wheat, spelt, and barley flours grating my eyeballs. But the product I am looking for is on page 4 or 5 of the search results.” Imagine if Amazon was forced to provide us better search results and cut back on fees – we could have cheaper and better selection.
This is just a taste of how our tech landscape might transform in coming years. After years of stagnation, we are standing on the precipice of a restructuring of our tech landscape for the better. There are many obstacles on the journey, of course, but we have a lot to gain if we can pull it off.
As always, thanks for reading.
Best
Julia