Moscow, 3 APR — “News. Economics”, American Senator and presidential candidate in the U.S. Elizabeth Warren accused the tech giants, among them Facebook, Google, Amazon and Apple, in the maintenance of unfair competition.
Warren has offered to rethink the US policy in respect of mergers and acquisitions over the last 40 years. Indeed, the tech giants are merely a consequence of the expansion of monopoly and oligopoly power in the American economy. And it’s hard to disagree, given the ability of major technology to buy out potential competitors and use the dominance of the platforms to move into other areas of business.
Performances by Warren pretty bold, as technology giants bring big money to the majority of leading democratic candidates, for which California is a veritable ATM for campaign contributions. And Warren is not the only one who understands that technology giants possess excessive market power. This is probably one of the few issues in Washington on which is stored a unanimous opinion. Other candidates, especially Senator Amy Klobuchar from Minnesota, who also took a principled position.
Today, there is every reason to believe that the growth of monopoly power played a role in exacerbating income inequality, the weakening position of workers and a slowdown in innovation. Outside of China is truly a global issue, because the American technological monopoly often achieve dominance in the market faster than local regulators and policy makers understand what happened. In particular, the EU is trying to take a course on the regulation of the technology sector. Recently in the UK was created by a group of experts headed by the chief economist of Barack Obama Jason Furman. He has prepared a very useful report on the situation in the technology sector.
Discuss how to regulate this segment is very reminiscent of the debate about financial regulation in the early 2000-ies. Proponents of a light regulatory approach argued that Finance is too complicated for regulators to keep pace with innovation. They also said that trade derivatives allows banks to instantly change the risk allocation. And the financial industry has proven words. Salaries here are much higher than salaries in the public sector. And any researcher who taught the fed’s activities in financial matters, it was possible to seduce the salary is higher than his head.
Similar problems arise now and in the recruitment of staff in regulatory agencies and antitrust law departments if there is a tendency to tighter regulation. To succeed, political leaders must exercise focus and determination. Suffice it to recall the financial crisis of 2008 and its painful consequences, to understand what can happen when a sector acquires real political influence. The US and global economy even more vulnerable to technological giants than the financial sector. This is due to cyber-attacks and vulnerabilities in social networks, which in certain points help to influence the course of political debate.
Another parallel with the financial sector ─ a huge role of us regulators. The financial crisis of 2008 was caused by vulnerabilities in the US and UK, but quickly turned into a global crisis. Cyber crisis in the US could easily have done the same thing. This creates the “external problem” because U.S. regulators can lead to the fact that the system will accumulate the risks if one does not consider consequences at the international level.
This problem cannot be overcome without addressing fundamental questions about the role of government, privacy and how American firms can compete in the global market with China. As you know, the government of this country attracts domestic technology companies to collect data about its citizens.
That’s why Warren has met strong resistance when he dared to suggest that even if many services are free, perhaps something goes wrong. 15 years ago a fight like this gave the financial sector and the railway sector at the end of 1800-ies. In the release, the Atlantic, March 1881, progressive activist Henry Demarest Lloyd warned: “how we will cope with the “railroad problem” will reflect the quality and scale of our political meanings. It will outline the future of our social and political growth. It will also be an indication that American democracy, like all her previous democratic experiments became extinct, because people are not smart enough to put in the forefront the common good”.
Lloyd’s words are still relevant today. At the moment, the idea to regulate tech giants is just an outline. It is necessary to conduct a more serious analysis. First and foremost it should be an open, informative discussion of this problem. The discussion, joined by Warren, not about should or should not introduce socialism. We are talking about the fact that capitalist competition has become more honest and more strong.
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