The Federal Threats Against Big Tech Bring New Meaning to Superfluous
Big-government crusaders have tech companies in their sights, threatening to bring down government power on them through anti-trust actions. The Luddites forget one thing: If consumers aren’t getting what they need from a company - or if they are getting something they don’t want, like threats to their privacy - a new corporate competitor will emerge.
Advocates of anti-trust action against Facebook, Apple, Google and Amazon argue that ‘big tech’ is getting too big. But it will only get bigger as it gets better. And new contestants will enter the field to take advantage of the opportunities that present themselves if 'big tech' doesn't keep getting better.
The U.S government’s attempt to break up Microsoft is a good example of the counter-productive nature of anti-trust actions. The Department of Justice case against Microsoft in the 1990s still stands as the largest anti-trust action in history against a high-tech company. DOJ investigated whether Microsoft was abusing its market power with the Windows operating system to push consumers to use the company’s Internet Explorer web browser. DOJ apparently forgot that Netscape Navigator used to dominate that space.
DOJ thought that the Windows operating system was too big for anyone to challenge - exactly what many used to say about WordPerfect. When is the last time you heard about WordPerfect?
The case against Microsoft ultimately fizzled. Microsoft had shrunk in market power, falling behind by missing the move to mobile. DOJ settled with Microsoft when the company agreed to refrain from entering into exclusive deals with computer manufacturers. There was no need to break Microsoft up; it was simply overtaken by Apple, a company that seemed on the ropes just a decade or so earlier.
Today, many argue that Facebook is too big to be constrained by the market. They forget that people used to say the exact same thing about MySpace - before it was overtaken by Facebook.
MySpace was by far the dominant social network until 2008. News Corporation paid $600 million for MySpace in 2005 - only to sell it six years later for a mere $35 million, or about a nickel on the dollar.
It is easy to understand why News Corp valued MySpace so highly. The site surpassed Google in 2006 as the most visited website in the United States. Now, it has fallen to 1,650th place. From 1,600 employees in 2009, it has shrunk to 150.
MySpace was overtaken because Facebook offered users options they couldn’t obtain on MySpace - options they liked and wanted. Similarly, Facebook will be overtaken when it fails to satisfy its users - or if Facebook users think they are being taken advantage of.
Consumers don’t need the obtuse and imposing hand of government to protect them from big companies. All they need is a market alternative. And there will always be someone who can assess what the market wants, and provide it.
