Jack Welch, the legendary CEO of General Electric, still considered by many to be the ultimate business guru, offered his simple formula for success: “Number one, cash is king… number two, communicate… number three, buy or bury the competition.” Pressure has been building for years to break up Facebook and the other monopoly-minded tech giants like Google, Amazon and Twitter. The hammer, or at least the gavel, is threatening to fall concerning Google and Facebook. According to Reuters, the social media platform is now being sued by “the U.S. Federal Trade Commission and nearly every U.S. state,” who claim that “it used a ‘buy or bury’ strategy to snap up rivals and keep smaller competitors at bay.”
Earlier this year, the US Department of Justice went after Alphabet Inc.’s platform Google for using its monopoly power against rivals. The authors of the Reuters article — Diane Bartz, Nandita Bose and Katie Paul — signal a “growing bipartisan consensus to hold Big Tech accountable for its business practices.” This may mean, especially with a change of administration in Washington, that this time something will happen. In any case, it is enough to begin striking fear into some of the stalwarts of Silicon Valley.
Who Owns Intellectual Property?
In an interview with Yahoo Finance, Aaron Levie, the CEO of Box, expressed his principled opposition to this apparently concerted assault on the tech giants. He believes they are too essential to today’s economy to break up. He called the effort to chop them down to size “a misguided solution that would fail to address consumer concerns and threaten the competitiveness of the U.S. tech sector.” Yahoo describes Box as a “midsized file storage company with a $2.6 billion market cap.” That means Levie won’t feel personally threatened by the move to break up super-sized companies.
But he appears to sense that it’s an attack on his tribe and he’s ready to rise to their defense. Levie appears to concede there’s a problem when he evokes the possibility of a “solution.” But he balks at describing his perception of the problem. He is even less clear about the nature of the solution. When pushed, he evokes the metaphor of seatbelts and guardrails. And he appears to envision them as technological rather than, say, legal. “We need modern digital approaches,” he asserts. The closest Levie gets to a recommendation is this: “We need modern forms of regulation to insure that these platforms are being used appropriately and being run for the good of consumers.”
Today’s Daily Devil’s Dictionary definition:
Good of consumers:
An abstract idea that once evoked the welfare of the community but has, since the rise of the consumer society, been reduced to two simple considerations: the lowest possible price and the widest array of merchandise.
When rich businesspeople reflect on the ethical notion of “the good” — a concept dear to philosophers ever since Socrates — it often appears that the extent of their material wealth is directly proportional to the poverty of their reasoning. Levie evokes his “concerns” with undefined notions such as “the right kind of information” and to “deal with the spread of information.”
This sounds serious, but there’s a singular lack of substance in the case he argues. He develops two logical propositions. The first relies on the idea that monstrous growth is inevitable, saying that “It was almost an inevitability that the leading technology platforms of our time were only going to get bigger and bigger.” Calling it “almost an inevitability” could be called hedging his bets, and he is right to do so. Nothing is inevitable, especially in a society where democratic institutions theoretically have the power to put limits on anything that poses a risk to the people’s welfare. Nevertheless, Levie wants us to accept as a fatality the unlimited growth of platforms.
He seems to be reaffirming the dogma of modern libertarian capitalism that markets always produce what is naturally an optimal solution. It sounds like another condescending way of saying, “Live with it! That’s just the way it is.” It’s as if he wants to prevent people from even thinking about the optimal or non-optimal size of enterprises that create and thrive on massive dependence. He prefers to focus on what he calls “consumer concerns,” proposing to address them one by one on a piecemeal basis. After all, if people were to think about the big picture, they might consider the classic but radically un-American solution of nationalizing those enterprises. Levie continues by admitting there is a real problem while dismissing it as inevitable: “Our lives are only becoming more dependent on digital technologies, whether it is our social networks, whether those are the mobile devices we use, or the marketplaces that we purchase from like e-commerce platforms or cloud infrastructure.”
Instead of seeing that very dependence as comparable to addiction and the opioid crisis, he treats it as something fundamentally positive because people accept this kind of dependence. And yet addicts never complain about having too much of the drugs they depend on.
Levie believes it is a good thing to ask questions about regulating enterprises “in the digital age.” He wants to keep the companies “in check,” to “protect consumers” and “make sure there’s fair and open competition within these ecosystems.” But when an invasive species dominates an environment, eliminating the forms of life that preceded it, can we still talk about ecosystems?
Levie calls for “modern forms of regulation to ensure that these platforms are being used appropriately.” The interviewer asks Levie if he has “any specific ideas how that can be accomplished?” Instead of answering the questions, Levie simply points out that Facebook and Twitter are not the same thing as Amazon, Microsoft and Google. His conclusion is that “on social media we need one set of regulations to the spread of information” and for the others “modern digital approaches … as opposed to taking laws that were written for the 1800s or 1900s.”
Paradoxically, the arguments Levie uses today were the same President Theodore Roosevelt used when, in the first decade of the 1900s, he began appealing to the Sherman Antitrust Act of 1890 to launch a campaign of regulation of monopolies that established his public image as a trust-buster. That reputation alone earned him a place on Mount Rushmore.
Roosevelt never claimed to be on a populist mission of trust-busting. On the contrary, like Levie, he felt that “the government should enforce a ‘rule of reason’ on business.” He was not opposed to monopolies per se. Roosevelt distinguished between “good” and “bad” trusts: “If a trust controlled an entire industry but provided good service at reasonable rates, it was a ‘good’ trust to be left alone.” In contrast, Levie seems to think today’s tech trusts are all fundamentally good because people depend on them.
The real difference between the two is that Roosevelt used the same arguments as Levie to make a compelling case for dismantling some actual monopolies rather than as a reason to refrain from doing so. This difference between the two men stems from their respective appreciation of where the authority lies for judging whether a monopoly should be broken up: “Roosevelt held a consistent position: there was a power larger than the power of even the biggest, wealthiest business organization. That superior power was the power of the people, and of the public interest.” Where Roosevelt appealed to the authority of the people, Levie appeals to “a modern digital approach.” Does he mean “the power of the people” of Silicon Valley?
Roosevelt effectively dissolved the Northern Securities Company, the crown jewel of the immensely powerful banker J.P. Morgan. Will Joe Biden or any future president even try to do the same thing to Jeff Bezos or Mark Zuckerberg? Levie’s reasoning that a few digitally-programmed regulatory tweaks are enough will probably prevail. American presidents no longer place any faith in the authority of the people. Republican presidents count on the authority of the Electoral College, the Democrats on the authority of Wall Street. And, like everyone else, in their daily lives, they too depend on the tech giants.
*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.