On this episode of “The Breakdown,” NLW analyzes President Joe Biden’s “Factsheet: Executive Order on Promoting Competition in the American Economy,” including:
- The shift in public sentiment against Big Tech
- The order’s implications to the tech and finance sectors
- Crypto’s decentralized nature as intrinsically anti-monopolist
For a period of time, tech companies enjoyed the highest public opinion among large corporations. However, the rise of ad-focused platforms and the advent of social media (with all its demons) encouraged increased scrutiny. Privacy concerns only add to the distaste toward companies including Amazon, Google, and Facebook.
With public opinion souring, governments are similarly implementing various regulation schemes as they become wary of the threat of monopolization. Take Europe, for example, which created the General Data Protection Regulation system, and China’s more aggressive actions against social media. The U.S. has dabbled in tightening its reins on big tech with an assortment of antitrust lawsuits, but President Biden’s recent executive order takes the mentality to a new level.
The public mindset and regulatory shift places crypto as the potential solution to concerns of monopolization. Crypto’s decentralization – its lack of CEOs and corporate power structures – make it an attractive path away from monopolies in the American economy.
Image credit: Tom Brenner/Bloomberg/Getty Images, modified by CoinDesk
Transcript
What’s going on guys, it is Friday, July 9, and today we are talking about Biden’s new executive order that targets, among other things, Big Tech. And I have to acknowledge before I start that this has been something of a “think-boy” week here on “The Breakdown,” I haven’t had the normal briefs, I haven’t had a lot of guests. And for whatever reason, it’s just seemed like a week to, instead of digging deep on specific news, to really explore some bigger picture things. I don’t know if that’s just because it’s the summer and this is a slightly slower news cycle, or just because we’ve had a bunch of small pieces of news that are reflective of much larger, bigger, more important trends. But, either way, I promise every week won’t be so high level and meta, but hopefully you’re enjoying it for now as something a little bit different.
Let’s talk about Biden’s executive order and moreover, a reminder that decentralized technologies are anti-monopolist. One of the major trends in American public life over the last five-ish years is a falling out of love with big tech. There was a fairly long period during which tech companies enjoyed the highest public opinion among large corporations. There are many reasons for this one, simply put, we use it to interact with technology so much that I think we have an active sense of how those tools have impacted our lives. Can you, for example, imagine the world pre-Amazon Prime? Second, there was a perception of technology companies as the underdogs for a very long time. This goes back, I think, to the 1990s and battles like Napster versus the record labels, and in that mental paradigm, who wants to root for Goliath over David? This was reified by countless media pieces for decades.
But then, things started to shift. First, the sheer size of these companies made it harder and harder to view them in those upstart terms. What’s more, many of the platforms weren’t young anymore, they had decades under their belts and had undeniably become the incumbents. Second, frankly, many people just didn’t like the personalities behind these companies. No one wanted to root for Zuckerberg. Third, many started to ask questions about whether their lives were really better off because of these platforms, particularly social media platforms. And they didn’t necessarily love the answers they came back with. Fourth, at some point regulators on both sides of the aisle started to turn away. For the right, this was mostly driven by former President Trump’s incessant insistence that the major tech platforms were suppressing conservative voices, more notably his voice. And for the left, that started as a hyper reaction to the idea that Russian bots on Facebook stole the election from Hillary.
In both cases, histrionics and hysterics inside, the real question underneath was power. These platforms represented a fundamentally new force that broke old paradigms and divides between politics, civil society and business by recreating the global public commons in a way that included billions of voices but, which prioritized engagement for the sake of advertising revenue, they had unleashed an undeniably society shaping force. One set of reactions to this that is growing as regulatory. This is taking different flavors in different parts of the world. Europe has tried to regulate around data, creating a labyrinthian morass and the General Data Protection Regulation, or GDPR system, that has ended up unintentionally further concentrating power in the hands of Google and Facebook, as they’re pretty much the only advertisers who can afford to pay for compliance. This is an overstatement, but not by much. China, meanwhile, has taken on a much more aggressive tactic. We’ve spent a ton of time on this over the last eight months or so especially. Hold the side of strict regulation around social media. The last year has seen the Chinese government focus especially on curbing the power of private mobile money apps like Alipay and WeChat pay. While those apps had started as simple mobile payment solutions, they had increasingly taken on more bank-like activities and that was not something the Chinese government was interested in letting happen. The most dramatic turning point moment came late last year when the government halted Ant Financial’s IPO which was at the time anticipated to be the biggest in history. Jack Ma, founder of Ant parent Alibaba was taken off the public scene for a couple months around the same time, when Ma and the company resurfaced Ant had been voluntarily air quotes “restructured” into a financial holding company, overseen by one of China’s state control banks. The U.S. too has seen a growing focus on Big Tech. In particular, after a couple of dormant decades, antitrust action is back on the menu. Elizabeth Warren made antitrust one of the centerpieces of her campaign and while she didn’t win, the sentiment clearly reflected, or infiltrated, the democratic D.C. establishment. The last year has seen a number of high profile antitrust cases brought against companies like Google and Facebook. Although late last month, the Federal Court ruled in favor of Facebook and an antitrust lawsuit brought by the Federal Trade Commission. Today, however, the focus on big tech ratcheted up.
Last night, Politico published an article called “Biden Launches Assault on Monopolies.” and here’s their summary: “The sweeping executive order takes aim at concentrated markets and industries including agriculture, airlines, broadband and banking and includes efforts to lower drug prices and protect privacy.” This morning, we got a Whitehouse overview of an extremely sweeping executive order. It’s called “Factsheet: Executive Order on Promoting Competition in the American Economy” and just to get a sense of how they are thinking about and presenting their case of the public, let’s read a couple of paragraphs. “For decades, corporate consolidation has been accelerating. In over 75% of U.S. industries, a smaller number of large companies now control more of the business than they did 20 years ago. This is true across healthcare, financial services, agriculture and more. That lack of competition drives up prices for consumers, as fewer large players have controlled more of the market, markups, charges over cost have tripled. Families are paying higher prices for necessities, things like prescription drugs, hearing aids and internet service. Barriers to competition are also driving down wages for workers. When there are only a few employers in town, workers have less opportunity to bargain for a higher wage and to demand dignity and respect in the workplace. In fact, research shows that industry consolidation is decreasing advertised wages by as much as 17%. Tens of millions of Americans, including those working in construction and retail, are required to sign non compete agreements as a condition of getting a job, which makes it harder for them to switch to better paying options. In total, higher prices and lower wages caused by a lack of competition are now estimated to cost the American household $5,000 per year. Inadequate competition holds back economic growth and innovation. The rate of new business formation has fallen by almost 50% since the 1970s as large businesses make it harder for Americans with good ideas to break into markets. There are fewer opportunities for existing small and independent businesses to access markets and earn a fair return. Economists find that as competition declines, productivity growth slows, business investment in innovation decline and income, wealth and racial inequality widen. Today, President Biden is taking decisive action to reduce the trend of corporate consolidation, increased competition and deliver concrete benefits to America’s consumers, workers, farmers and small businesses. Today’s historic executive action established a whole of government effort to promote competition in the American economy. The order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.”
