Elizabeth Warren tech proposal

Statement on Sen. Warren’s proposal to Break Up Big Tech

Date: 8 Mar 2019 | posted in: Press Release, Retail | 0 Facebooktwitterredditmail

In response to Senator Elizabeth Warren’s proposal today to break up Amazon, Facebook, and Google, the Institute for Local Self-Reliance released the following statement:

The Institute for Local Self-Reliance (ILSR) applauds Senator Warren’s plan to restore the balance of power in our democracy and revive competition and innovation by breaking up big tech companies.

Senator Warren’s proposal has two main components. One calls for reversing mergers that have allowed giant tech corporations to expand and solidify their monopoly power. The second, more consequential component would designate large digital platforms as platform utilities. It would require large tech companies to choose between maintaining ownership of a platform utility and being a participant or competitor on that same platform.

“Senator Warren’s proposal rightly recognizes that digital platforms have become the core infrastructure of our economy,” said Stacy Mitchell, co-director of ILSR and author of several reports and articles about Amazon’s market power. “If we’re going to restore competition and protect the free exchange of goods and ideas, then we cannot allow Amazon and other big tech companies to continue to use their control of this infrastructure to privilege their own goods and services at the expense of their competitors.”

ILSR’s research, including its in-depth 2016 report, “Amazon’s Stranglehold,” has documented how Amazon’s structural power as the dominant online shopping platform creates a conflict-of-interest that harms competition. More than half of online shopping searches now start on Amazon. This means that companies making and selling consumer goods must use Amazon’s platform to reach most of the market. Amazon also competes with many of the companies that rely on its platform, and it routinely uses its power as a platform operator to enhance its own market power. For example, Amazon harnesses the data and insights it gleans from monitoring the companies on its platform to expand into their markets with a built-in advantage. Amazon also routinely favors its own products in its search and recommendation results.

“We’ve encountered this problem before. A century ago, powerful industrialists used their control over railroad lines to favor their own products and block their competitors from accessing the market. Congress responded by passing legislation that banned a company from owning both a railroad and the goods that travel by rail. You could do one or the other, but not both,” noted Mitchell.

“We need to apply this same logic to Amazon,” Mitchell continued. “As digital platforms mediate more of the exchange of goods and information, it’s essential that these platforms operate free from conflicts-of-interest and temptations to self-deal, and that they have a duty of non-discrimination and fair dealing.”

For more of ILSR’s analysis of Amazon:

Photo: Elizabeth Warren in Lawerence, Ma., February 9, 2019

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.