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Elizabeth Warren wants to break up Apple too

Senator Elizabeth Warren suggested that Amazon, Google and Facebook hit yesterday in a post published on Medium. Her plan, which comes as the Democratic President's primary competition continues to warm up, would classify a company running a marketplace and make more than $ 25 billion a year as a "platform tool" and forbid these companies to use these platforms from selling their own products. Under Warren's plan, Amazon would not be able to sell Amazon Basics products at the Amazon store. Google would not be able to market its own products in Google Search, and Facebook would have to divide from Instagram and Whatsapp. 1 9659003] But Warren's proposal did not mention Apple, which clearly matches the same set of criteria: The company makes a lot more than $ 25 billion a year in revenue, and it runs the iOS App Store, where it distributes its own apps. [19659004] I talked to Senator Warren after she appeared on the stage at SXSW in Austin, Texas today and she explicitly told her she thinks Apple should be broken with each other – especially that it shouldn't both run the App Store and deploy apps in it. "It must be one or the other," she said. "They either run the platform or they play at the store. They won't do both at the same time." Warren plans to break up the world's largest technology company is by far the most bold overall technical regulation proposed so far in the presidential election period…

Senator Elizabeth Warren suggested that Amazon, Google and Facebook hit yesterday in a post published on Medium. Her plan, which comes as the Democratic President’s primary competition continues to warm up, would classify a company running a marketplace and make more than $ 25 billion a year as a “platform tool” and forbid these companies to use these platforms from selling their own products.

Under Warren’s plan, Amazon would not be able to sell Amazon Basics products at the Amazon store. Google would not be able to market its own products in Google Search, and Facebook would have to divide from Instagram and Whatsapp. 1

9659003] But Warren’s proposal did not mention Apple, which clearly matches the same set of criteria: The company makes a lot more than $ 25 billion a year in revenue, and it runs the iOS App Store, where it distributes its own apps. [19659004] I talked to Senator Warren after she appeared on the stage at SXSW in Austin, Texas today and she explicitly told her she thinks Apple should be broken with each other – especially that it shouldn’t both run the App Store and deploy apps in it. “It must be one or the other,” she said. “They either run the platform or they play at the store. They won’t do both at the same time.” Warren plans to break up the world’s largest technology company is by far the most bold overall technical regulation proposed so far in the presidential election period 2020 and it will launch a fierce debate on antitrust policy among both Democrats and Republicans. After all, the driving force for stronger anti-trust management has so far come from conservatives.

Below, my interview with Warren was easily edited for clarity.


So you announced a rather bold political proposal yesterday to break up three of the largest companies in the world. You noted Amazon, Google and Facebook, and you said you would break them up because they make over $ 25 billion a year in global revenue and they run markets where they also participate.

Yep.

There was a company that fits the description you didn’t mention.

Apple. They are inside.

You want to break up Apple too.

Yep.

You were very specific in how you would break up Google and the rest. How would you break up Apple?

Apple, you have to destroy it from their App Store. It must be one or the other. Either they run the platform or they play in the store. They must not do both at the same time. So that’s the same view.

With the App Store, the App Store is the method that Apple keeps the iPhone secure. It is integrated into the platform. How would you suggest Apple and Google distribute apps if they don’t run the store?

Well, do they compete with others who develop the products? It’s the problem all the way through this, and that’s what you have to keep looking for.

If you are running a platform where others will sell, you must not sell your own items on the platform because you have two comparative advantages. One, you have sucked up information about each buyer and each seller before making a decision about what to sell. Secondly, you have the capacity – because you run the platform – to prefer your product over someone else’s product. It gives a huge comparative advantage to the platform.

It would not be the first time in America’s history that this kind of arrangement would be broken up. When the railways were dominant and you had to get steel or wheat on the railroad, it was a time when the railroad calculated that they could make money, not just by selling tickets on the railroad but also by buying the steel company and then lowering the price for to transport steel to own company and raise the price for transport of steel to all competitors. And that’s how the giant grows.

The problem is that it is not competition. It only uses market dominance, not because they had a better product or because they were in some way more customer-friendly or in a better place. It only uses market dominance. So my principle is exactly the same: what was used on railway companies more than a hundred years ago, we must now look at the technical platforms in the same way.

Why not name Apple in your letter yesterday?

No special reason.

The comparison with railways is very interesting as it was a very popular comparison during the net neutrality struggle. The ISP runs the tubes, and you do not want them to interfere with what is happening to them. Would you also break up NBCUniversal and Comcast?

Yes. I’m actually already on record. In fact, I have already weighed in on that. I have sent letters, asked for hearing. I think I have asked questions for the record in hearings. I’m already there. I am clearly on record on it.

Obviously, DOJ has just lost with AT & T / Time Warner – you don’t look very happy with it. How would you relax there?

There are two different issues. How good do I think the Justice Department and the FTC do? Not good at all, and not good long now.

But the other half – how do you break these things together? Again in the days when we applied antitrust laws, we did it for a long time. You peel off the two parts. The simple is obviously something like Amazon. It’s not that hard to see. You just say, okay, there’s an Amazon running the platform, which drives the store and people get shares of shares in it, and then all small businesses get you shares of shares in them, and they’re now separated from each other.

Then the platform has no reason to prefer what has been an Amazon-based seller of toasters or pillows for pets or whatever it will be, and we have a robust market where people compete again. [The platform] would also have no interest in moving [search results] up to the page one instead of the page six. The algorithm, at least in theory, goes back to being a neutral algorithm.

So with railways and ISPs, there is a natural monopoly element – it is difficult to build a railway, it is difficult to lay fiber. Is there an equivalent natural monopoly that you see with the giant platforms that lead to a regulatory move?

You know, the natural monopoly argument is actually … not everyone accepts it. And there is little over and over if it is the phenomenon we have to deal with here or not. My opinion is: I don’t care. [laughs] I’m sorry. What I care about is that I can see the benefits the platform gets, and because of that I say “Stop.” You cannot use that information, the data you can collect. “To literally play this game out a million times, right? It will be no competition.

There should be no six companies.

That’s right, it shouldn’t be just six companies.

At $ 25 billion [in annual revenue to trigger a breakup]you do not foresee that the local supermarket will stop having to make house brands.

Exactly, and no one is looking for it. Anyone who has captured all headlines is that for anyone over $ 25 billion, you have to break down the platform for many of the associated or affiliated companies.


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