Breaking Up Big Tech Would Be A Mistake

It seems safe to say that our honeymoon with Big Tech is officially over. After years of questionable data-handling procedures, arbitrary content management policies and outright anti-competitive practices, it is only fair that we take a moment to rethink our relationship with the industry. Sadly, most of the ideas that have gathered mainstream attention — such as the calls to break up Big Tech — have been knee-jerk responses that smack more of retributionist fantasies than sound economic thinking. Instead of chasing sensationalist nonstarters and zero-sum solutions, we should be focused on ensuring that Big Tech grows better as it grows bigger by establishing a level playing field for startups’ and competitors’ proprietary digital markets. We can find inspiration on how to do just that by taking a look at how 20th-century lawmakers reined in the railroad monopolies, which similarly turned from darlings of industry to destructive forces of stagnation. We’ve been here before More than a century ago, a familiar story of a nation coming to terms with the unanticipated effects of technological disruption was unfolding across a rapidly industrializing United States. While the first full-scale steam locomotive debuted in 1804, it took until 1868 for more powerful and cargo-friendly American-style locomotives to be introduced. The more efficient and cargo-friendly locomotives caught on like wildfire, and soon steel and iron pierced through mountains and leaped over gushing rivers to connect Americans from coast to coast. Soon, railroad mileage tripled and a whopping 77% of all intercity traffic and 98% of passenger business would be running on rails, ushering in an era of cost-efficient transcontinental travel that would recast the economic fortunes of the entire country. As is often the case with disruptive technologies, early success would come with a heavy human cost. From the very beginning, abuse and exploitation ran rampant in the railroad industry, with up to 3% of the labor force suffering injuries or dying during the course of an average year. Railroad trust owners soon became key constituents of the widely maligned group of businessmen colloquially known as robber barons, whose corporations devoured everything in their path and made life difficult for competitors and new entrants in particular. The railroad proprietors achieved this by maintaining carefully constructed walled gardens, allowing them to run competitors into the ground by means of extortion, exclusion and everything in between. While these methods proved wildly successful for railroad owners, the rest of society languished under stifled competition and an utter lack of concern for consumers’ interests. Everything old is new again Learning from past experiences certainly doesn’t seem to be humankind’s strong suit. In fact, most of our concerns with the tech industry are mirror images of the objections 20th-century Americans had against the railroad trusts. Similar to the robber barons, Alphabet, Amazon, Apple, Facebook, Twitter, et al., have come to dominate the major thoroughfares of trade in a fashion that leaves little space for competitors and startups. By instating double-digit platform fees, establishing strict limitations on payment processing protocols, and jealously hoarding proprietary data and APIs, Big Tech has erected artificial barriers to entry that make replicating their success all but impossible. Over the past several years, tech giants have also taken…