Today’s technology landscape is dominated by a small number of huge corporations such as Meta, Amazon and Google, which snap start-ups before they can become potential competitors, ignoring labor laws that do not meet their immediate needs, and generally operating as dystopian corrupt villains Johnny Mnemonic warn us about. Traditionally, government regulation has acted as a light brake on the more problematic trends of American industries, but the speed with which modern computing and communication technologies are advancing exceeds the government’s capacity to manage them.

In their new book, Access rules: Release data from big technologies for a better future, Victor Mayer-Schönberger, Professor of Internet Governance and Regulation at Oxford, and Thomas Ramge, author of Who is afraid of AI?, argue passionately against the data collection practices of today’s largest technology companies and call for more open, fair means of accessing the information these companies have accumulated. One such method, discussed in the excerpt below, involves a direct examination of Big Tech’s monopoly power, as the Biden administration has done in recent years, although the effort has not been very effective.

UC Press

Excerpt from Access rules: Release data from big technologies for a better future by Victor Mayer-Schönberger and Thomas Ramge, published by the University of California Press. © 2022 by Thomas Ramge and Victor Mayer-Schönberger.

Early in his term, President Biden appointed Tim Wu, who advocated the break-up of Facebook and wrote popular books on the dangers of concentrating on the high-tech market, to the National Economic Council as the president’s special aide on technology and competition policy. . Putting one of Big Tech’s most outspoken advocates of trust in a leading advisory role is a powerful signal that the Biden administration is taking a much more confrontational course.

Wu is not alone. His appointment was followed by the election of Lina Khan as chairman of the Federal Trade Commission (FTC). Khan’s youth – she was in her early 30s when she was nominated – contradicts her intellectual strength and political powers. A professor at the Columbia Law School as Wu, Khan is the author of influential articles on the need to combat the uncontrollable power of Big Tech. And she explained why existing antitrust legislation is not prepared to deal with Silicon Valley platform suppliers. But Khan is not just a big technology critic; it also proposed a radical solution: regulating large technology companies as utilities, similar to electricity suppliers or the reputable AT&T before the deregulation of telecommunications. With Khan of the Federal Trade Commission and Wu as an adviser who has the president’s ear, Big Tech could have serious problems.

It’s not just antitrust experts working in government like Tim Wu and Lina Hahn who fear that the monopoly structure of American technological dominance could become the Achilles’ heel. Brain trusts and advocacy groups from both the left and the right joined the critics. Destructive entrepreneurs and venture capitalists like Elon Musk and Peter Teal are watching the well-rehearsed dance of Big Technology and venture capital with growing skepticism, concerned that sophisticated choreography is hampering the next generation of destructive creators and technologies. Taken together, these voices call on and support regulators and lawmakers to prevent the most obvious cases of large companies eliminating potential competitors from the market by acquiring them – cases comparable to Facebook’s takeover of Instagram or Google’s acquisition of Waze. And they call on venture capitalists to take on the role that Joseph Schumpeter originally envisioned this class of investment capital, the role that Sand Hill Road venture capitalists in Menlo Park played until the first decade of this century: financial support to attract new marketers. , radically better ideas and then allow them to be expanded.

The antitrust tide is rising in the United States. Still, it is questionable whether well-meaning activist regulators, backed by broad public support, will succeed. The challenge is a combination of structural and political. As Lina Khan herself claims, existing antitrust laws are less than useful. Great technologies may not have broken them enough to justify their disintegration. Other powerful measures, such as declaring them utilities, require legislative action. Given the delicate balance of power in Congress and hyper-partisan politics, it is likely that such bold legislative proposals will not garner enough votes to be passed. Political factions may agree on the issue, but they are far from apart on the solution. The left wants an effective remedy, while the right insists on the importance of market forces and is concerned about the antitrust actions that govern the micro-management of economic activity. This leaves a rather narrow corridor of acceptable gradual legislative steps, such as ‘post-acquisition lock-in’. This may be politically acceptable, but not enough to achieve real and sustainable success.

The truth is that the current exit strategy game works too well for everyone involved, at least in the short term. Monopolists continue to increase rents. Entrepreneurs get rich quick. Venture capitalists reduce risk by optimizing their investment to exit through sales. And the government? It also makes money from every Goliath Buys David transaction. Preventing such transactions annoys all participants. Any politician who launches a serious attack on Big Tech USA is accused of threatening the great success of American technology companies in global markets – an accusation that few politicians could reject.

Despite the renewed determination of the Biden administration to take seriously the excesses of high technology, significant change still seems elusive in the United States. In contrast, European antitrust authorities were much more active. The billions of dollars in fines imposed on US Big Tech by Commissioner Westager’s team certainly sound impressive. But, as we mentioned, most of them have been reduced to an amount that superstar companies with huge cash reserves and rapidly growing profits can easily afford. The European Parliament may not suffer from over-partisanship and want to strengthen antitrust rules, but their effectiveness is limited by the fact that almost all major technologies are not European. At best, Europeans can prevent US big technology from buying up innovative European start-ups; the necessary laws for this are increasingly being passed. But that will do little to disrupt Big Tech’s information power.

The challenge facing European regulators is shared by regulators around the world, from Asian tigers to the global south: how can national regulators effectively counter the information gathered by Silicon Valley superstars? Of course, one can ban US Big Tech from working. But that would deprive the local economy of valuable services. For most nations, such a binary division is not an option. And for nations that can and have liberated themselves to some extent, such as China, their local big technology companies face similar problems. The huge fines imposed on Alibaba in 2021 are certainly surprising to outside observers, but they also target the symptoms, not the root cause of Big Tech’s strength.

Sooner or later, regulators and legislators will have to face the real problem of mastering big technology: whether we look at draconian measures as disintegrations or growing ones such as fines and blocking acquisitions, they address the symptoms of Big Tech’s information power, but do little to undo the structural advantages that digital superstars have. It’s a little more than cutting off Hydra’s head, just to see a new one grow.

To deal with the structural advantage, we must remember Schumpeter. Schumpeter’s nightmare was that the capacity for innovation would become concentrated in several large companies. This would lead to a downward spiral of innovation, as big players have less incentive to be destructive and many more reasons to enjoy market power. Contrary to Schumpeter’s fear, this process of concentration did not occur after World War II, mainly because entrepreneurs had access to abundant capital and could thrive on destructive ideas. They had a real chance against the great starters of their time, a role that more than a few of them took on on their own. But money is no longer the scarce resource that limits innovation. What is scarce today is access to data. More precisely, such a shortage is created artificially.

In the data economy, we are seeing a trend of concentration driven by narrowing access to the key resource for innovation and accelerating AI. Therefore, the dynamics include access to data as a raw material. Economic policy to counteract market concentration and weaken competition must focus on this structural lever.

If we want to prevent Schumpeter’s nightmare, maintain the competitiveness of our economy and strengthen its capacity for innovation, we must drastically expand access to data – for entrepreneurs and start-ups and for all players who cannot turn their ideas into innovation without access to data. Today, they can only hope to enter the murder zone and be redeemed by one of the digital giants. If data flows more freely through wider access, the incentive to use data and gain innovative insights from it increases. We would strengthen the capacity of our economy to innovate in a way never seen before by the first wave of Internet companies. We will also learn more about the world, make better decisions and distribute data dividends more widely.

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