The Industry

How Silicon Valley Will Try to Kneecap Elizabeth Warren’s Antitrust Plan Before It Has Legs

WASHINGTON, DC - FEBRUARY 26: Senator Elizabeth Warren (D-MA) questions Federal Reserve Chairman Jerome Powell as he delivers the Federal Reserves Semiannual Monetary Policy Report to the Senate Banking Committee on February 26, 2019 in Washington, DC. (Photo by Joshua Roberts/Getty Images)
Senator Elizabeth Warren isn’t afraid of Big Tech.
Joshua Roberts/Getty Images

Sen. Elizabeth Warren took a big swing on Friday, unveiling a plan to break up the largest tech companies in America. Her roadmap, one of the first major proposals of her presidential run, involves ambitious antitrust moves like undoing Facebook’s purchases of Instagram and WhatsApp and separating Google Search from the company’s ad business. She also wants legislation that would prevent platforms from competing on the same marketplaces they own: Amazon, for example, would no longer be able to sell its Basics brand on Amazon.com, an arrangement that gives a big advantage to the company’s in-house products.

How much is Silicon Valley freaking out right now?

However they feel, they won’t want this idea to become a real problem. Which is why we can expect significant pushback no matter how Warren’s candidacy fares, particularly if other Democratic presidential contenders unveil antitrust-themed policy proposals. (Even more moderate candidates like Sen. Amy Klobuchar have been tough on the internet platforms over the last couple of years.) The large tech companies have a huge lobbying presence in Washington and will likely offer their own, more industry-friendly proposals for reform. They’ll message loudly, perhaps through the platforms they control (and which Warren and others need for advertising and outreach). They’ll support candidates who are friendlier to the industry. And they’ll dig trenches: There’s a good case that their business moves already reflect their concern over regulation. Earlier this week, Facebook CEO Mark Zuckerberg shared a new plan to merge his three main social media networks by building an encrypted messaging service that works across WhatsApp, Facebook, and Instagram—a move that was seen by many as fortifying against a potential attempt by lawmakers to break his companies apart.

Silicon Valley knows how to spend to get its way, which may be one reason why the tech industry has been able to grow unhindered for so long. Facebook, Google, and Amazon have all hired former top aides from the Obama administration, and Facebook Chief Operating Officer Sheryl Sandberg, a Clinton administration veteran, was reportedly considered for two jobs in Hilary Clinton’s cabinet. As scrutiny of internet platforms has increased in the aftermath of the 2016 election, their lobbying shops have staffed up in order to protect their interests against politicians like Warren who think they’ve become too big.

Amazon reportedly has amassed nearly 100 lobbyists and hired on more than a dozen lobbying firms to throw its punches. Facebook, Google, and Amazon spent a total of $48 million on lobbying last year. Since last summer, the industry’s lobbyists have been pushing a version of a privacy legislation that they feel comfortable with, likely in an effort to get ahead of more aggressive, European-style privacy laws. They also want laxer federal rules that would pre-empt  state privacy laws, like California’s recent voter measure that regulates online data collection. The tech industry tried to fight that one and failed—but Warren’s proposal would be significantly more disruptive and a harder (if not Herculean) political task.

What it will do, however, is test the Democratic field’s appetite for translating the public frustration with Facebook and others into real policies. That certainly doesn’t mean the mutual affinity of Big Tech and the Democratic Party will end. Expect tech companies and their deep-pocketed employees to throw their money at the candidates they think will go easiest on them. Tech executives gave tens of millions of dollars to Hillary Clinton’s presidential effort. Facebook co-founder Dustin Moskovitz and his wife Cari Tuna donated more than $20 million to various pro-Clinton PACs. While it’s too early to tell who Silicon Valley will put its financial heft behind this year, the two running darlings appear thus far to be Sens. Kamala Harris and Cory Booker.

Warren’s proposal will also test just how much voters care about the bigness of Silicon Valley, particularly if they’re susceptible to arguments that the Massachusetts senator wants to take away their Amazon Prime account. It’s not clear that the industry’s claims that they are taking privacy and security more seriously after scandals like Cambridge Analytica have been very convincing—but it’s also not clear a large number of users who like their services were bothered in the first place. If Amazon, Google, and Facebook become political punching bags for Democratic candidates this election cycle, it wouldn’t be beneath those companies to mount ad campaigns in their own self-defense, like how Facebook ran a full-page ad in the New York Times, Washington Post, and Wall Street Journal as the Cambridge Analytica scandal reached a boil. Even last year, though, usership didn’t appear to drop overall and the company remained profitable despite the scandal (and a huge hit to its stock), probably because Facebook is so dominant that users had nowhere else to go. Not to mention the fact that antitrust, while an important issue for anyone concerned with structural inequities in the economy, isn’t likely to be the thing that voters hang their hat on.

Warren’s plan is compelling—perhaps the strongest articulation of how lawmakers could start to rein in the power of tech platforms. She has hard financial lines in her proposal, like the suggestion that companies that make more than $25 billion in revenue and control an online marketplace on which they also compete be broken up. We don’t know if this plan could have legs. But we can be sure the big tech companies will try to kneecap it before it has a chance to grow some.