Francis Fukuyama Quotes

Widespread distrust in a society...imposes a kind of tax on all forms of economic activity, a tax that high-trust societies do not have to pay.

Big Tech’s critics now include both Democrats who fear manipulation by domestic and foreign extremists and Republicans who think the large platforms are biased against conservatives.

Among the many transformations taking place in the U.S. economy, none is more salient than the growth of gigantic Internet platforms. Amazon, Apple, Facebook, Google, and Twitter, already powerful before the COVID-19 pandemic, have become even more so during it, as so much of everyday life moves online. As convenient as their technology is, the emergence of such dominant corporations should ring alarm bells—not just because they hold so much economic power but also because they wield so much control over political communication. These behemoths now dominate the dissemination of information and the coordination of political mobilization. That poses unique threats to a well-functioning democracy. 

But the jury is still out on the question of whether the massive technology companies reduce consumer welfare. They offer a wealth of digital products, such as searches, email, and social networking accounts, and consumers seem to value these products highly, even as they pay a price by giving up their privacy and allowing advertisers to target them.

The First Amendment envisioned a marketplace of ideas where competition, rather than regulation, protected public discourse. Yet in a world where large platforms amplify, suppress, and target political messaging, that marketplace breaks down.

As for the allegation that the platforms purchase startups to forestall competition, it is hard to know whether a young company would have become the next Apple or Google had it remained independent, or if it would have failed without the infusion of capital and management expertise it received from its new owners. Although consumers might have been better off if Instagram had stayed separate and become a viable alternative to Facebook, they would have been worse off if Instagram had failed altogether.

The economic case for reining in Big Tech is complicated. But there is a much more convincing political case. Internet platforms cause political harms that are far more alarming than any economic damage they create. Their real danger is not that they distort markets; it is that they threaten democracy. 

It is true that digital markets exhibit certain features that distinguish them from conventional ones. For one thing, the coin of the realm is data. Once a company such as Amazon or Google has amassed data on hundreds of millions of users, it can move into completely new markets and beat established firms that lack similar knowledge. For another thing, such companies benefit greatly from so-called network effects. The larger the network gets, the more useful it becomes to its users, which creates a positive feedback loop that leads a single company to dominate the market. Unlike traditional firms, companies in the digital space do not compete for market share; they compete for the market itself. First movers can entrench themselves and make further competition impossible. They can swallow up potential rivals, as Facebook did by purchasing Instagram and WhatsApp. 

Since 2016, Americans have woken up to the power of technology companies to shape information. These platforms have allowed hoaxers to peddle fake news and extremists to push conspiracy theories. They have created “filter bubbles,” an environment in which, because of how their algorithms work, users are exposed only to information that confirms their preexisting beliefs. And they can amplify or bury particular voices, thus having a disturbing influence on democratic political debate. The ultimate fear is that the platforms have amassed so much power that they could sway an election, either deliberately or unwittingly. 

Digital platforms’ concentrated economic and political power is like a loaded weapon sitting on a table. At the moment, the people sitting on the other side of the table likely won’t pick up the gun and pull the trigger. The question for U.S. democracy, however, is whether it is safe to leave the gun there, where another person with worse intentions could come along and pick it up. No liberal democracy is content to entrust concentrated political power to individuals based on assumptions about their good intentions. That is why the United States places checks and balances on that power.

In view of the dim prospects of a breakup, many observers have turned to “data portability” to introduce competition into the platform market. Just as the government requires phone companies to allow users to take their phone numbers with them when they change networks, it could mandate that users have the right to take the data they have surrendered from one platform to another. The General Data Protection Regulation (GDPR), the powerful EU privacy law that went into effect in 2018, has adopted this very approach, mandating a standardized, machine-readable format for the transfer of personal data.

Data portability faces a number of obstacles, however. Chief among them is the difficulty of moving many kinds of data. Although it is easy enough to transfer some basic data—such as one’s name, address, credit card information, and email address—it would be far harder to transfer all of a user’s metadata. Metadata includes likes, clicks, orders, searches, and so on. It is precisely these types of data that are valuable in targeted advertising. Not only is the ownership of this information unclear; the information itself is also heterogeneous and platform-specific. How exactly, for example, could a record of past Google searches be transferred to a new Facebook-like platform?

Such rules are designed to address one of the most potent sources of platform power: the more data a platform has, the easier it is to generate more revenue and even more data. 

The public should be alarmed by the growth and power of dominant Internet platforms, and there is good reason why policymakers are turning to antitrust law as a remedy. But that is only one of several possible responses to the problem of concentrated private economic and political power.

Since digital platforms both wield economic power and control communication bottlenecks, these companies have become a natural target...

Consider also that the platforms—Amazon, Facebook, and Google, in particular—possess information about individuals’ lives that prior monopolists never had. They know who people’s friends and family are, about people’s incomes and possessions, and many of the most intimate details of their lives. What if the executive of a platform with corrupt intentions were to exploit embarrassing information to force the hand of a public official?

Moreover, almost every abuse these platforms are accused of perpetrating can be simultaneously defended as economically efficient. Amazon, for instance, has shuttered mom-and-pop retail stores and gutted not just main streets but also big‑box retailers. But the company is at the same time providing a service that many consumers find invaluable. (Imagine what it would be like if people had to rely on in-person retail during the pandemic.)

More broadly, such laws would close the door on a horse that has long since left the barn. The technology giants have already amassed vast quantities of customer data. As the new Department of Justice lawsuit indicates, Google’s business model relies on gathering data generated by its different products—Gmail, Google Chrome, Google Maps, and its search engine—which combine to reveal unprecedented information on each user. Facebook has also collected extensive data about its users, in part by allegedly obtaining some data on users when they were browsing other sites. If privacy laws prevented new competitors from amassing and using similar data sets, they would run the risk of simply locking in the advantages of these first movers.