“Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version. Google allegedly snuffed out a competing small search engine by demoting its content on its search algorithm, and it has favoured its own restaurant ratings over those of Yelp.”
Warren would force companies with annual global revenue of more than $US25 billion and that offer an online marketplace, exchange or platform for connecting third parties to be designated as “platform utilities” and be prohibited from owning both the utility and a business that operates on the platform.
“Platform utilities would be required to meet a standard of fair, reasonable and non-discriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.”
Companies who breach these rules could be fined 5 per cent of annual revenue.
“Amazon Marketplace, Google’s ad exchange, and Google Search would be platform utilities under this law. Therefore, Amazon Marketplace and Basics, and Google’s ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.”
Warren would also unwind a series of mergers in the tech sector, including Amazon’s purchases of Whole Foods and Zappos, Facebook’s acquisitions of WhatsApp and Instagram, and Google’s purchases of Waze, Nest and DoubleClick.
She says the changes wouldn’t stop people searching on Google, buying from Amazon, or connecting on Facebook as they do today.
“Here’s what will change: Small businesses would have a fair shot to sell their products on Amazon without the fear of Amazon pushing them out of business. Google couldn’t smother competitors by demoting their products on Google Search. Facebook would face real pressure from Instagram and WhatsApp to improve the user experience and protect our privacy. Tech entrepreneurs would have a fighting chance to compete against the tech giants.”
It’s an aggressive manifesto. And while it is further than Sims would ever go, it does speak to some of the issues that he has raised.
As he told a room full of media executives last month: “Being big is not a sin. Australian competition law does not prohibit a business from possessing substantial market power or using its efficiencies or skills to outperform its rivals. But the dominance held by Google and Facebook in certain markets, plus the incentives they face, does mean their conduct should be subject to particular scrutiny to identify whether it is creating competitive or consumer harm.”
Warren’s suggested changes would be highly unlikely to get past a Republican-controlled Senate, although Donald Trump has occasionally made dark mutterings about the market power of Amazon, controlled by his enemy Jeff Bezos.
Perhaps the Democrats will have to eventually settle for increasing levels of disclosure and transparency from Big Tech – something likely to be central to whatever solutions the ACCC arrives at.
But one fascinating point out of all this is how these platforms have also allowed competition to flourish. Amazon has made it easier than ever for small brands to sell their wares. Facebook and Google have made it easier than ever to advertise those wares.
Blunting the market power of these companies without blunting the effectiveness of their platforms may be an interesting balance.
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