What happens if a President Warren breaks up ‘Big Tech’?

The 2020 Election season is officially upon us, and “Big Tech” is among the hot button issues. Between Mark Zuckerberg’s multiple trips to Capitol Hill to offer a defense of Facebook’s issues related to user privacy or Sundar Pichai’s testimony about censoring Google’s search results, it’s clear that this topic will remain in the spotlight for some time.

Sen. Elizabeth Warren (D-Mass.) has made breaking up and regulating Big Tech one of the central pillars of her campaign, and while she makes some compelling arguments to support her case, it’s important that we carefully examine the issue from all sides.

Will breaking up companies such as Google, Amazon, and Facebook provide a more level playing field for the next generation of scrappy start-ups to compete? What impact might anti-trust regulations have on innovation and the global economy? And, most critically of all, will breaking up these tech behemoths have the desired effect on protecting individual privacy?

While we can speculate endlessly as to whether or not a President Warren or another Democratic candidate would be successful in breaking up Big Tech, it’s a useful thought experiment to look at what might happen should this campaign promise be brought to fruition.

Beware the ‘law of unintended consequences’

Whenever policy is used as a blunt instrument to legislate change, the one thing you can be sure will come into play is the “law of unintended consequences,” which posits that the actions of people — and especially governments — always have effects that are unexpected. We see examples of this everywhere: from compulsory fishing quotas that resulted in lower fish supplies to the enactment of the BAPCPA leading to more bankruptcy declarations — predicting how humans will respond to imposed policies is an inexact science at best.

From the perspective of furthering innovation and building a more level playing field, there are some obvious precedents in support: the government’s break-up of AT&T in 1984 is perhaps the most notable example of an anti-trust case that succeeded in fueling competition and innovation. But unlike that landmark case which was defined in large part on geographical restrictions, today’s Big Tech titans do not limit competition on the basis of physical borders — and we, the customers, wouldn’t see a benefit in the form of lower prices, which has long served as the rationalization for this type of heavy handed regulatory action.

As someone who has spent their career at the intersection of technology and public policy, I would argue that instead of prescribing broad regulations with vague objectives, we would be better served to articulate the problem we are trying to solve and apply best practices that leverage technology to meet these new challenges.

Prescriptive regulations are often a short term fix

Whether it’s Enron becoming ‘too big to fail’ or the financial crisis of 2007-08, the knee jerk reaction for legislators is to enact regulations designed to appease their constituents. In response to the excesses of Enron, Congress passed the highly prescriptive Sarbanes Oxley Act to protect shareholders and the public from financial malfeasance. 

Section 404 of the Act, which laid out a framework for internal controls, was notably different than other sections of the Act; rather than prescribing rules of governance, it defined a set of requirements — a language well understood by technologists. Twenty years later, Section 404 has served as a general controls framework that has improved our ability to secure data, without relying on prescriptive mandates.

Incentives matter, but wield them with care

The discipline of behavioral economics is fundamentally about the study of incentives. Tax breaks are commonly used as a lever to promote investment. The EU’s General Data Protection Regulation (GDPR) on the other hand takes more of a stick approach, imposing stiff fines to ensure compliance with privacy violations.

While it’s too early to say whether GDPR will achieve its long-term privacy objectives, companies that want to do business in the EU understand that they have to meet these qualifying requirements. In a sense, their ability to meet the privacy requirements of GDPR serves as the incentive, encouraging businesses to make investments in technology and processes they may not have made otherwise.

Privacy is a global issue

Policy decisions ultimately come down to trade-offs. If you aim to provide the strictest protections for user privacy, you might inadvertently be helping hackers remain anonymous.

Alternatively, if Big Tech gets broken up in an effort to wrest back control of user privacy, what will happen when facets of our social personas are splintered across even more companies? And how does this prevent consumers (including myself) from having access to a set of services that they find valuable in Facebook, Google, etc.? Lastly, given that the internet itself is a borderless entity, who will serve as the global police force, and what will keep companies from simply moving to less privacy-restrictive geographies?

While the likes of Facebook and Google certainly have much to prove that they can be entrusted with the personal data of hundreds of millions of global citizens, I’m wary that our collective interests would be properly served through this type of protracted and onerous exercise. I wholeheartedly concur with Charlotte Slaiman, competition policy counsel at consumer advocacy group Public Knowledge. According to MarketWatch, she suggests that “imposing restrictions on how social media companies use data could be a more effective strategy than breaking them up. There is simply little precedent in divesting tech companies, short of blocking mergers.”

While no one knows for sure how a President Warren might proceed with her promise to break up Big Tech, let’s just hope that whatever happens — and whoever is in power — they will think carefully about how technology can help address the root problem rather than simply appeasing the symptoms of politically inspired rhetoric.

NOTE: This post has been updated from the original to clarify that the statement from Charlotte Slaiman is a paraphrase.

Tiffany Olson Kleemann is the Vice President of Bot Mitigation for Imperva and the former CEO of Distil Networks (acquired by Imperva). She previously served as a vice president at FireEye, leading global strategic partnerships and alliance operations.