Mar 12, 2019

How Senator Elizabeth Warren’s Tech Proposal Could Backfire

Post by Freedom Partners

Sen. Elizabeth Warren recently announced her proposal to give government more control over tech companies.

Warren further laid out her proposal on Medium:

“I want a government that makes sure everybody — even the biggest and most powerful companies in America — plays by the rules. And I want to make sure that the next generation of great American tech companies can flourish. To do that, we need to stop this generation of big tech companies from throwing around their political power to shape the rules in their favor and throwing around their economic power to snuff out or buy up every potential competitor.

That’s why my administration will make big, structural changes to the tech sector to promote more competition — including breaking up Amazon, Facebook, and Google.”

And it’s not just Warren – lawmakers on both sides of aisle have been offering similar proposals. They’re right that competition in the marketplace is the best check on the power of individual firms. But they fail to understand that breaking up tech companies will do the opposite of what it’s meant to achieve.

Overreaching antitrust laws do not stop political power from being “thrown around.” Instead, they take regulatory power away from the proper enforcement agencies, such as the Federal Trade Commission, and give it to politicians — further politicizing the industry.

Antitrust laws exist to protect the competitive process, which ultimately benefits consumers. Laws are meant to address instances of collusion, price-fixing and other anti-competitive behavior.

What antitrust laws are not meant to do is break up companies that have become successful through competition by meeting market demands with quality products. Punishing successful companies removes the incentive to keep innovating. It also removes incentive for “the next generation of tech companies” to grow their business and become successful.

When businesses are not encouraged to innovate and grow, consumers end up missing out on new technology while tech companies from other countries move ahead of the United States as global industry leaders.

Any attempt to nationalize the tech industry or put politicians in charge of it should be rejected. Antitrust enforcement should be based on robust evidence of consumer harm.

If Warren and other politicians truly want to foster American innovation and protect consumers, they should be encouraging joint ventures and other innovative ways of developing products and doing business.

America is home to some of the best and brightest minds. But they won’t be able to create to their full potential if they are stifled by heavy-handed government regulations.