Presidential candidate Elizabeth Warren is proposing to unwind acquisition by the likes of Google, Amazon and Facebook and declaring companies with more than $25 billion in revenue with marketplaces and platforms that connect third parties "platform utilities."
In a Medium post, Warren outlines her plans to drop a bomb on Silicon Valley in the name of competition. She makes a case for stiffer anti-trust regulation based on the Microsoft Department of Justice battle in the 1990s. Warren writes:
The federal government sued Microsoft for violating anti-monopoly laws and eventually reached a settlement. The government's antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge.
That argument is a bit debatable given that Google and Facebook both arrived years later.
But the meat of Warren's treatise gets more interesting. The highlights:
Mergers are limiting competition. Warren cites Amazon's acquisition of Diapers.com and Zappos as anticompetitive. She also targets Google's purchase of DoubleClick and Nest.
Proprietary marketplaces limit competition. She argues that Amazon crushes small businesses and copies their wares. We'll overlook the fact that Amazon also gives smaller vendors distribution they wouldn't have had otherwise with the exception of eBay.
Platform utilities need to be regulated and Warren outlined a revenue cap of sorts. She wrote:
Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as "platform utilities."
These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.
What's the problem? Where Warren's platform utility argument may run into problems is her broad definition. Based on her definition platform utilities would extend well beyond Google, Amazon and Facebook.
For instance, Salesforce has an app marketplace and a platform connecting third parties and will hit $25 billion in revenue. What about Microsoft? Is LinkedIn a problem for Microsoft that could be reversed? How about SAP with its Ariba platform? "Connecting third parties" could equate to any company that rustles up a platform via application programming interfaces.
Amazon Marketplace, Google's ad exchange, and Google Search would be platform utilities under this law. Therefore, Amazon Marketplace and Basics, and Google's ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.
She added that her plan would reverse Amazon's purchase of Whole Foods as well as Facebook's WhatsApp and Instagram purchases. Google would say so long to Waze and DoubleClick.
Also: Walmart forces tech partners to leave AWS, following Whole Foods acquisition TechRepublic
What's interesting here is that the reversals are based on hindsight. Amazon didn't have grocery operations when it bought Whole Foods. You'd need a crystal ball to find something anti-competitive. Has Google really done much with Nest? On the bright side, maybe Warren could have saved Google from itself and forbid it from buying Motorola, which was later unloaded to Lenovo.
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