Or so says a new report for Britain’s government
IT HAS BECOME impossible to avoid the debate over how to tame the world’s ever more powerful technology companies. On March 8th Elizabeth Warren, a left-leaning senator from Massachusetts and candidate for the Democratic presidential nomination, caused a sensation by calling for the big Silicon Valley platform firms, such as Facebook and Google, to be broken up.
This concentration is, the report argues, an innate feature of digital markets. Network effects mean single firms can grow especially large. Their collection of data about their users is a formidable barrier to entry that inhibits new competitors and makes it hard for consumers to switch.
To this end, says the report, Britain should create a new digital regulator. It would designate some large firms as having “strategic market status”. These would be subject to a code of conduct on competitive behaviour that would, for example, prevent an online marketplace such as Amazon from favouring its own products over those of a rival in a search result shown to a consumer. The watchdog would also require firms to redesign their software to allow “data mobility”.
As a balanced piece of analysis that puts markets and consumers first, rather than big tech firms or the government, the experts’ report is first rate. However, two important questions stand out.
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