Elizabeth Warren wants to break up Apple, too

Senator Elizabeth Warren proposed yesterday to break Amazon, Google and Facebook in a publication published on Medium. His plan, which is presented when the Democratic presidential primary competition continues to heat up, would classify any company that manages a market and generates revenues of more than $ 25 billion a year as a "platform utility" and would prohibit those companies from using those platforms. to sell your own products.

According to Warren's plan, Amazon could not sell Amazon Basics products in the Amazon retail store, Google could not promote its own products in Google Search, and Facebook would have to separate from Instagram and Whatsapp. 19659003] But Warren's proposal did not mention Apple, which clearly matches the same set of criteria: the company earns more than $ 25 billion a year in revenue, and operates the iOS app store, in which it distributes its own applications. 19659004] I spoke with Senator Warren after she appeared on the SXSW stage in Austin, Texas today, and she told me explicitly that she believes that Apple should also be separate, specifically, that she should not run the App Store and distribute it. applications in it. "It has to be one or the other," he said. "Either they run the platform or they play in the store. "You can not do both at the same time."

Warren's plan to divide the world's largest technology companies is by far the boldest overall technology regulation proposed so far in the 2020 presidential cycle, and it will begin. a fierce debate over antitrust policy between Democrats and Republicans. After all, the impulse for a stronger antitrust enforcement has so far come from the conservatives.

Next, my interview with Warren, slightly edited for clarity.


So yesterday he announced a rather bold policy proposal to divide three of the largest companies in the world. You made a list of Amazon, Google and Facebook, and you said that you would separate them because they earn more than $ 25 billion a year in global revenues and manage markets in which they also participate.

Yes.

There was a company that fits the description you did not mention.

Apple. They are in.

You also want to break Apple.

Yes

You were very specific in the way of dividing Google and the rest. How would you split Apple?

Apple, you have to separate it from your App Store. It has to be one or the other. Or run the platform or play in the store. They can not do both at the same time. So it's the same notion.

Apart from that, the App Store is the method by which Apple keeps the iPhone safe. It is integrated in the platform. How would you propose that Apple and Google distribute applications if they do not run the store?

Well, are you in competition with others who are developing the products? That is the problem at all times, and that is what you have to keep looking for.

If you run a platform that others sell to, then you will not be able to sell your own items on the platform because it has two comparative advantages. First, it has absorbed information about each buyer and each vendor before making a decision about what to sell. And second, you have the ability, because you run the platform, to prefer your product over someone else's product. It gives a huge comparative advantage to the platform.

This would not be the first time in the history of the United States. UU That this type of arrangement should be broken. When the railroads were dominant, and you had to take steel or wheat to the railroad, there was a period in which the railroads discovered that they could make money not only by selling tickets on the railroad, but also by buying the steel. company and then reduce the price of steel transportation for their own company and increase the price of steel transportation for competitors. And that's how the giant grows.

The problem is that it is not competition. That's just using the domain of the market, not because they had a better product or because they were somehow friendlier to the client or in a better place. You are only using the domain of the market. So my principle is exactly the same: what was applied to the railway companies more than a hundred years ago, now we must analyze those technological platforms in the same way.

Why not mention Apple in your letter yesterday?

No Special reason.

The comparison with the railways is really interesting because it was a very popular comparison during the fight against the neutrality of the network. The ISP runs the pipes and you do not want them to interfere with what happens in them. Would it also break NBCUniversal and Comcast?

Yes. In fact, I'm already in the registry. Actually I have already weighed that. I have sent letters, I have asked for audiences. I think I've asked questions for the record in the hearings. I'm already there.

Obviously, the DOJ just lost with AT & T / Time Warner, you do not look very happy about that. How would you unroll that?

There are two different questions. How well do I think the Department of Justice and the FTC are doing? Nothing good, and not so much for a long time.

But the other half, how do you separate these things? Again, in the days when we enforced antitrust laws, we did it for a long time. The two pieces are peeled. The easy one, obviously, is something like Amazon. It is not very difficult to see You just say, it's okay, there's an Amazon that manages the platform, that manages the store and people get shares in that, and then all the small companies, you have stocks in them, and now they're separated from each other others

Then the platform has no reason to prefer what had been a seller of toasters or pet pillows on Amazon. Either, and we have a robust market with people competing once again. [The platform] would also have no interest in moving [search results] to page one instead of page six. The algorithm, at least in theory, returns to be a neutral algorithm.

So, with the railroads and the ISPs, there is an element of natural monopoly: it is difficult to build a railroad, it is difficult to place fiber. Is there a natural monopoly equivalent to that of giant platforms that leads to a regulatory movement?

You know, the natural monopoly argument is really … not everyone accepts it. And there are some back and forth about whether that is the phenomenon we are dealing with here or not. My point of view is: I do not care. [laughs] Sorry. What I do care about is that I can see the advantages that the platform obtains, and that's why I say "Stop". You can not use that information, the data you can collect. "Because, literally, you play this game a million times, right? there will not be competition.

There should not be just six companies. [19659033] It's true, there should not be just six companies.

With $ 25 billion [in annual revenue to trigger a breakup] you're not anticipating that the local supermarket will stop having to make its own brands

Exactly, and nobody is looking for that. You are getting into the nuance, which is actually a two-tier regulation.The one that has captured all the headlines is that for all those over $ 25 billion, you must break the platform for many of the associated companies or Affiliates.

But between 90 million and 25 billion [in annual global revenue] the answer is to say if you run a platform, you have an obligation of neutrality , so no p You can participate in discriminatory prices. Obviously, it's like the neutrality rule of the network: you can not speed up some people and slow down other people, which is another way of setting prices. Then there is an obligation of neutrality.

The advantage of dividing them at the top [tier] instead of simply saying: "God, girl, why did not you accept the obligation of neutrality at all times?" easier. When you just get a bright line rule, you do not need the regulators. At that point, the market will be disciplined. If the Amazon platform does not have any economic interest in any of the companies previously known as Amazon, it is already done. It takes care of itself.

Do not you think Jeff Bezos is going to manage himself at $ 24.99 billion a year in revenue?

If he did, he would have an obligation of neutrality and would have regulators who tracked everything about him. He could decide that he prefers to be at $ 25 billion and split it all up.

Everyone should bear in mind that when they split Standard Oil into all the components such as Standard of Ohio and Standard of New Jersey and Standard of California, etc., they ended up obtaining greater benefits for all those who have been shareholders and executives because the separated ones [companies] allow people to enter and negotiate more. And there was more competition. They were not getting monopoly profits, that's the negative, but some of them became much more competitive. And that is a good thing. If those Amazon spin-off companies are really very good, be careful, baby.

That's what this is all about. What I oppose is when they get their profits because they are extracting secret specialty information that no one else receives, or when they obtain a privileged location in terms of when they appear in a search.

Re articulating a bright line ruler. Many conversations I've had with antitrust people like Tim Wus and Lina Khans of the world, say that we should change the standard . We have to move from the antitrust standard of consumer welfare to a European-style competition standard. Are you advocating for us to change the antitrust standard?

I think it's much harder to enforce that against a giant who has great political power.

So, are you in favor of leaving only the standard of consumer welfare?

Look, would I love to have [that changed] too? Of course. I do not have any problem with that.

My problem is in the other direction: there are times when bright and hard line rules are the easiest to enforce and, therefore, you are sure you will get the result you want.

Let me give you an example of that: I've been arguing for a long time about the reinstatement of [the] Glass-Steagall [Act]. And my argument is basically: do not tell me that the Federal Reserve and the Office of the Comptroller of the Currency can trace through Citibank and JPMorgan Chase and find out if they are taking an excessive risk and if they have been integrated. and companies with cross subsidies. Simply break the boring banking part (checking accounts, savings accounts, what you and I would call commercial banking) of the investment bank, where you take a high flier in this action or in that new business.

Apart from those two, you really need less regulators and less intrusion into the business.

He also has more confidence that it really happened. We live in an America where we not only have to worry about the economic power of the Amazons and the Facebook, Google and Apples of the world, but we must also worry about their political power. There is a reason why the Department of Justice and the Federal Trade Commission are not more aggressive. There was a time, a long time ago, when were more aggressive, a golden age of antitrust enforcement.

These large companies exert a huge influence on the economy and in Washington, DC. We separate them, that supports the influence a bit, and we make sure they do not participate in these unfair practices that affect every small company that is trying to start, every new company that is trying to get in there. .

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