The debate about how to regulate the tech sector is eerily reminiscent of the debate over financial regulation in the early 2000s. Fortunately, one US politician has mustered the courage to call for a total rethink of America's exceptionally permissive merger and acquisition policy over the past four decades.
CAMBRIDGE – Displaying a degree of courage and clarity that is difficult to overstate, US senator and presidential candidate Elizabeth Warren has taken on Big Tech, including Facebook, Google, Amazon, and Apple. Warren’s proposals amount to a total rethink of the United States’ exceptionally permissive merger and acquisition policy over the past four decades. Indeed, Big Tech is only the poster child for a significant increase in monopoly and oligopoly power across a broad swath of the American economy. Although the best approach is still far from clear, I could not agree more that something needs to done, especially when it comes to Big Tech’s ability to buy out potential competitors and use their platform dominance to move into other lines of business.
Warren is courageous because Big Tech is big money for most leading Democratic candidates, particularly progressives, for whom California is a veritable campaign-financing ATM. And although one can certainly object, Warren is not alone in thinking that the tech giants have gained excessive market dominance; in fact, it is one of the few issues in Washington on which there is some semblance of agreement. Other candidates, most notably Senator Amy Klobuchar of Minnesota, have also taken principled stands.
Although the causal relationships are difficult to untangle, there are solid grounds for believing that the rise in monopoly power has played a role in exacerbating income inequality, weakening workers’ bargaining power, and slowing the rate of innovation. And, perhaps outside of China, it is a global problem, because US tech monopolies have often achieved market dominance before local regulators and politicians know what has happened. The European Union, in particular, has been trying to steer its own course on technology regulation. Recently, the United Kingdom commissioned an expert group, chaired by former President Barack Obama’s chief economist (and now my colleague) Jason Furman, that produced a very useful report on approaches to the tech sector.
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