do the tech industry's four biggest players amazon apple facebook and google
have too much power these tech titans attended a congressional hearing last
week where lawmakers tried to figure out whether they have used unfair business
practices to stifle smaller competitors to maintain their monopoly of the
markets and the fact that they hold massive amounts of data on people's
lives businesses and other information that they've accumulated
over the years also adds to concerns over their capacity to influence users
in their favor but at the same time hundreds of
millions of people use and benefit from these services every
day and it's unclear where we should draw the line today we
discuss the power of big tech companies with
william kefalcic professor of law and policy at the george
washington university and former chairman of the u.s federal trade
commission how are you today sir excellent thank
you thanks for having me today thank you for joining us we also connect
with luigi zangales finance professor at the university of
chicago booth school of business hello it's lovely to see you my pleasure
and we're also joined by haman bogava technology management chair at the
university of california davis it's lovely to see you today sir
delighted to be here thank you well before we go straight into the
discussion let's talk about microsoft and its possible purchase of chinese
social media platform tick tock so why don't we start with you dr
kovacic is microsoft making the right decision
by expanding further into social media it's a move that will undoubt
undoubtedly add to their market power and
this does come at a time when there's a lot of concern about big tech monopolies
uh there's an enormous amount of pressure in washington today on the
competition agencies to look skeptically at transactions that
involve large technology companies that are thinking
about buying smaller firms that might emerge as
major competitors so there's if they do it they're going to get a very close
look from the agency that examines this probably the
department of justice uh so they're in for a very careful review if they decide
to go ahead with uh a developing skepticism about
whether these deals help and it does this development does come
at a rather sensitive time but president trump wants the u.s treasury
to have a stake in this still for quote making the door
happen what do you make of the suggestion and um is it right for a
sitting u.s president to be so involved in a
private company's business this question goes to any of you really
i just say that there's a general view that some national security review
of the implications of mergers uh is appropriate
but the method of doing it getting the dosage right is critical
and i think for competition people there's a great deal of apprehension
when the head of state reaches directly into the transaction
and seeks to micromanage what takes place uh
and there's a suspicion that the decision isn't being made on the merits
so uh in general is some national security review appropriate
certainly but does the head of state have to become involved in putting
together the partners in the transaction and overseeing the details i think
there's a lot of anxiety about that and dr bhagava would you perhaps have
anything to add to that i'm curious to know what you think about
michael's possible purchase so i think from their point of view it's absolutely
wonderful it's probably something that's being
handed on a platter to them that they would have liked to do anyway so first
of all like you said there were four companies in the
defendant's seat at the hearing last week
and microsoft was not one of them right so they are not
they were a big giant you know and certainly they are a big company now
but they are not perceived as as powerful and as dangerous so i think
their acquisition of tick tock is probably not going to be looked at in
a very bad light especially because it will shift uh
market power in social media and bring in one new player
beyond the ones that already are there and from microsoft's point of view i
think it's critical to note that they have tried for many years to go
outside the perception that they are an office work software computing company
and so the acquisition of tick tock would really get them something they've
been trying to do for many many years and more importantly it may create a new
generation of users who when they go into work would
be willing to use microsoft products in the future
and then i think for them that is really the key thing if they were to get
this company right a whole new user base really of the younger generation and
well as you just mentioned uh microsoft
wasn't included in this congressional hearing that was held last
week where the uh where the chiefs of amazon apple
facebook and google attended and after the nearly six hour session david
cislini chairman of the subcommittee said that these companies today they do
exist as monopolies and some of them need to be
broken up would you agree with that i mean let's
go to doctors and dr singhales so let me start by saying i think that
these companies do have an enormous power
with the data they accumulated and i think that they move by
president trump to say that uh tick tock cannot operate independently
in the united states because they are afraid that the chinese would use the
data is a terrible move because suggests that
they're going to do the same with the american companies so the fact that they
are afraid that the chinese will use the data suggests that there are no
uh shields no protection between the private companies
and uh the the government and if this is true
in the uh uh you know in china it's gonna be true in the united states i
think that probably uh the europeans will do the
same by stopping every deal or every
influence and demanding to they have their own
companies because i think this is lead to really a
segmentation of the market based on nationality i
think this is the end of globalization and the beginning of uh
nationalism in technology
and would you also have anything to add add to that uh dr kovacic
i i i think there's uh i think luigi is correct that there's a a good reason to
be worried about uh high-level intervention
in all of these transactions and we're at a time when globalization has a bad
name there's a great revisiting and in many
instances repudiation of assumptions that we've made for decades
about the benefits of global integration at the same time i think there will be
an awareness of the cautions that luigi mentioned
and i would expect that given the the consequences the adverse
consequences that flow from extensive intervention that some
degree of caution will set in and that there will be a lot of policy
makers who step back and say do we want the balkanization that luigi
referred to to take place the answer will be no so i don't think
this is going to be the end of globalization i think there'll be a
rethink of this but but i accept the view that there are
dangers when you start marching in this direction you don't necessarily stop
but with the enormous amount of data that these big tech companies are
accumulating and their means to influence their users via
algorithms and such can we actually say that um they are
competing fairly and there shouldn't be market intervention to stop these
companies from perhaps breaching the line
i think there's been a view from the the beginning of modern commerce that
the commercial process does not work effectively
unless buyers users know what they're getting into
so a crucial starting point is is there adequate disclosure and do
users on these systems understand what they're doing
if you decide that it's impossible for them to understand
and that routine disclosures simply wash over us like so much information
that we can't absorb then you have to start thinking about whether you impose
different conditions whether you have a regulatory process that limits the way
that data can be used and applied over time
but but if individuals consumers and transactions do
underst what's place and they have no way
to offer withhold their consent then a a crucial condition that governs
routine contracting in any number of settings is violated
and you have to rethink whether or not routine transactions are actually
serving the best interests of consumers and
citizens
the terms of condition of zoom skype and apple yeah
no but i would i haven't i haven't i happen to read that stuff
because of a an academics fascination with these things so
so i do that sometimes i teach contracts law and and luigi that's one
exactly one of the questions i ask students however
when i ask them the answer is routinely not
uh so so i i think that i think a fundamental question here
is whether or not traditional mechanisms that rely on disclosure
and then consumer action or response have to be rethought which is why i
think we're going to see more and more attention given to the idea that we
create regulatory mechanisms that deal with big
information services platforms and set the terms and conditions on
which they operate and jesus is not only that if your
children are in high school and they have to take classes on zoom
and you have to get information from
facebook what choice do you have can you not sign sign the contract with
facebook no because you don't get access to the
class information they are a monopoly they are taking advantage of your data
and you have no choice that's the worst forms of dictatorship
yeah but i would i think all the concerns about data policy and data
choices are valid but that is really a separate question
which applies to all companies that operate in this information age small
companies big companies tech companies non-tech companies and it
really doesn't have much to do with the issue that
you know was at the front of the congressional hearings and about the the
strong power and dominance of these big tech platforms
right i think those two have to be dealt with in a very separate way
and i think it's very important to keep in mind when you ask the question who's
complaining interestingly it is not the consumers of
these companies that are complaining about
anything including about data and i can agree with bill
that maybe they you know people are just they don't know what they're doing and
they should be concerned about how their data is treated
but they're certainly not complaining about amazon or google or facebook
exploiting market power and abusing them in any way it's it's
others who are complaining and so i think that that has to be taken care of
separately and then when you ask this question
about should they be broken up the question is
who has articulated what it would mean to break
up google or amazon or facebook or apple we really cannot i don't think we can
comment on whether picking up is a good idea
until we have an articulation of what that is it geographical is it
you know product-wise we really don't i don't think there's been a
well-articulated position on that airman is number one is not true that
the two questions are separated because when facebook was competing with
myspace the privacy options were much much
better the moment became a monopoly the privacy option became much worse so
there is a very strong correlation between protection of consumers
including privacy and monopoly and so i think that's a problem number one
problem number two i agree that it's difficult to break up
the google searches into a to b or z to l or whatever but with facebook
it's very easy you break up whatsapp instagram and facebook those mergers
should not be allowed to begin with now the investigation clearly exposed
the fact that they went after a competitors to kill it
it was clear from the investigation they should be broken up
the world will be a better place if they're broken up
well david luigi i i think the problem that you mentioned though
exists in many ways even if you have competition among firms to provide
more information and more options with respect to privacy
we still have the question about whether those different offerings are understood
by consumers and whether or not firms
actually comply with them and do that so i think we're still going to have to
face at some point the question of what the default terms
for the collection and use of information are which is why i
think we are probably moving in the direction of the adoption
of gdp or like rules from europe and the development of an entirely new
framework in the united states uh that applies to all firms not just
big tech platforms because the question you mentioned about
how people understand and absorb information and respond to it
is fundamental in a way that that that's important whether you're not your
providers street providers or 10 providers so what really is the mood in
washington right now are lawmakers really moving to regulate these
companies and really the question is are they even
controllable at this point is it even possible to regulate them
short answer to that question i think is yes it is uh is there a mood to do it
uh the mood's changing i for me one of the striking things about the
proceedings at the hearings was that google had no friends in the
room certainly no friends sitting at the panel
with the inquisitors who were asking them maybe the ranking
minority member sensing brenner was somewhat sympathetic
but he wasn't very energetic and mounting a defense there was nobody
there to watch their backs and say you didn't get a chance to
answer that question uh in in the many times i appeared
before congressional committees we often had at the ftc somebody there
who's going to protect you and say would you like to give a fuller
answer there was none of that nobody had their backs and to me that's
significant they were getting attacked from the left right and in the middle
which means that you have a more receptive mood in congress
and in the elections in november if the democrats take the white house and
both chambers of the commerce congress you have a structural condition that is
much more receptive to intervention in the
way these companies operate so so i think that was a telling feature
of the hearings well i'm afraid this is going to depends
very much on who is going to be the vice president
i think with the vice president kamala harris
or vice president susan rice uh facebook has a lot of friends at the new
white house if the vice president were to be
elizabeth warren that would be a difficult story but i don't believe
that'll be the case well i'm afraid this is where we'll have
to wrap up the discussion but clearly it's not a debate that's going to go
away soon well that but thank you so much for your
incredible insights that was dr william e kovacic professor
of global competition law and policy at the george washington university and
luigi zangale's finance professor at the university of chicago blue school of
business and heman bergava technology management
chair at the university of california davis thank you all so much for joining
the program thank you
and to our viewers thank you for watching we'll be back at the same time
tomorrow with more global insights on issues making headlines
have a good one wherever you are goodbye