John Oliver’s masterful explanation of tech monopolies—and how Senate Majority Leader Chuck Schumer (D-NY) is blocking legislation to reign them in—is must-watch television for anyone who cares about innovation and competition in America. He detailed how Amazon, Google and Apple use their core products, as well as their market share, to dominate their competitors and create new businesses, while also taking advantage of every day Americans.
Anybody can easily see why Amazon copies popular bags and then offers its own version on Amazon Basics. That’s one example of “self-preferencing,” the term used to describe the behavior of monopolists who leverage their control of a marketplace to hurt players in that market, that Mr. Oliver expertly described.
But Oliver didn’t talk about Meta, which is arguably the biggest winner if Senator Chuck Schumer chooses not to lift his de factoKeep your hands on the American Innovation and Choice Online Act. It is a bipartisan bill in the Senate. The AICO would reduce the market owner’s power to dominate other participants. Take Amazon, for example. Amazon was accused of copying the best sellers on its marketplace, and using that control to direct traffic to its copy.
Meta’s platforms—Facebook, Instagram, and WhatsApp—operate marketplaces that appear at first glance to be different from those of Google, Amazon, and Apple. Meta is spending unprecedented resources to kill the AICO. This seems like a deliberate attack on the other Big Tech Monopolies. Meta uses self-preferencing, just like other Big Tech Monopolists to destroy the viability and sustainability of small companies dependent upon it.
AICO threatens to unravel some of Meta’s less recognized anti-competitive practices. Facebook, for example, blocks chat users from communicating on chat platforms with other users. One chat start-up CEO says there’s “very little innovation in chat” because companies like Facebook “lock people into using their product.” You don’t need to take that CEO’s word for it. Facebook actually cut off another messaging service’s access to its infrastructure, fearing it might become a competitor.
Meta’s deeper motivation for fighting AICO is that AICO could be an obstacle to Meta realizing its long-term goal of controlling what Mark Zuckerberg calls the next internet revolution, the metaverse.
My role as an advisor for Zuckerberg was from 2006 to 2009. I also led my firm’s early investment in Facebook. Since then, I’ve written and spoken (again and again) about how the company has lost its way, how its culture, business practices, and algorithms undermine public health, democracy, privacy, and competition in our economy.
After forty years of working in the tech industry, I witnessed it change from an industry that empowered customers with technology to one that exploits human weakness. The monopolies that now control half of the tech industry are able to limit innovation and keep their customers locked into. This is a devastating blow to an once innovative, dynamic sector. Facebook has been a symbol of that change in many aspects. Its sixteen-year journey from an idea in a college dorm to becoming a multimillionaire company was remarkably short.
Facebook created a whole new industry that gave people useful, innovative products. Now, it behaves the way aging monopolists always do—protecting its turf, copying the best ideas from emerging players, and exploiting consumers instead of serving them. I had a front row seat to the transformation, and I’m here to tell you that Zuckerberg must be stopped.
The transformation of America’s tech industry from an engine of growth to a collection of parasitic monopolies occurred over the past fifteen years, slowly at first, then decisively. This happened at a time where there was almost no oversight over tech companies. Facebook reached the top of the economy when it bought up potential competitors WhatsApp and Instagram. This allowed the company to control the worldwide messaging market and create giant barriers to protect and extend its social media monopoly.
Later, Facebook added a “Stories” feature copied from a smaller competitor, Snapchat, and was able to corner the market on a new way to share photos and videos that was made possible by its ownership of Instagram. Facebook has admitted that it will repeat that strategy. In an effort to stop any emerging competitors from undermining its social media dominance, Facebook should try to feel and look like TikTok.
Last Fall, Facebook suddenly changed its name to Meta and Zuckerberg gave a demo of the metaverse, which he described as “the next chapter for the internet.” The timing was unexpected and appeared to be rushed. Coming as it did on the heels of whistleblower Frances Haugen’s earth shaking revelations, analysts like me hypothesized that the name change was a desperate effort to change the subject. It worked largely.
When Zuckerberg says he wants to build “immersive, all-day experiences” and says the metaverse will “become the primary way that we live our lives and spend our time,” what he is really saying is that he will build a platform where every participant, from users to corporate partners to merchants, will be at his mercy. Meta can manipulate any metaverse user’s choices and undermine any company’s business if the AICO isn’t passed. AICO stands for a philosophy that allows a company to either own the marketplace or take part in it.
Meta may be motivated to make the metaverse open to users and partners in its early stages, however, Facebook’s past history shows that it will become anticompetitive once it reaches critical mass. The most likely endgame is a metaverse where you can only participate with Oculus VR technology, which Meta already owns; only log-in via a Facebook account, which Meta already owns; only chat with Messenger, which Meta already owns; and pay for coffee through WhatsApp’s new payment feature, which Meta also owns. Meta will likely continue its previous behavior and buy the best innovators in the metaverse, then use its market power and bury them all. This is similar to what Amazon and Google did on their respective platforms.
It is not in the world’s interest for any Big Tech company or companies to control “the next chapter” of the internet. However, if we sit still and continue to ignore the possibilities that this could happen, it is what’s likely.
Schumer is able to partially restrain Zuckerberg, and other tech monopolists by snapping a finger. AICO could encourage innovation in tech and provide better products for consumers by cracking down against self-preferencing. It has been approved by the Senate Judiciary Committee in an overwhelming bipartisan vote. This bill is popular in blue and red states.
Schumer is allowed and required to vote for AICO. In doing so, he has a chance to make the internet better and sharpen America’s technological edge.
Will he seize the opportunity or will he do Big Tech’s bidding?
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