Elizabeth Warren’s Plan to Break Up Tech Giants Is to ‘Protect Competitive Markets’

At SXSW, the senator detailed how Amazon beats out competition

"It’s a little like baseball," said Warren. "You can be an umpire [a platform] or you can own teams [brands]. But you can’t be an umpire and own one of the teams that’s in the game." Getty Images
Headshot of Kristina Monllos

Just one day after dropping a Medium post laying out her proposal to break up big tech giants, Sen. Elizabeth Warren appeared at a famed tech conference to detail how Amazon (and tech giants like it) now have a monopoly similar to that of the railroad in the early 1900s, which had to be broken up by President Theodore Roosevelt.

Warren believes her proposal could break up tech giants in the same way—and, in essence, “protect competitive markets.”

“We have companies now like Amazon—we’ll use that as the example—that have a platform,” said Warren. “But Amazon does something besides providing the platform or marketplace. They also suck out an incredible amount of information about every buyer and every seller.”

After Amazon and the like gather massive amounts of information about buyers and sellers, they use that information to dominate new marketers, Warren explained. “[They] drive out of business partly because they get this incredible advantage from having the information of the platform and the incredible ability to manipulate the platform,” said Warren. “That is to put themselves right at the top of page one—and put that competitor back at page 16, where nobody ever goes.”

By putting regulation in place and breaking up the tech monopoly of Google, Amazon, Facebook and others, Warren argues that it will level the playing field and drive innovation and growth for smaller brands and entrepreneurs.

“It’s a little like baseball,” said Warren. “You can be an umpire [a platform] or you can own teams [brands]. But you can’t be an umpire and own one of the teams that’s in the game.”

The principle, she explained, is to “break those apart. You can work for a platform. You can work for one of the teams, but if you work for one of the teams, you compete like everyone else in America. The whole idea behind this is actually for tech entrepreneurs, [for] people who have small businesses and want to grow them into big businesses.”

Warren continued: “It says we want to keep that marketplace competitive and not let a giant who has a complete advantage—and a manipulative advantage—be able to snuff you out. I’m deeply concerned right now that the space around companies like Amazon, Facebook [and] Google is now referred to by venture capitalists as the ‘kill zone’ because if you try to step a small business into that, one of two things happens: It gets bought up before it shows its worth or growth, or it just gets wiped out.”

Venture capitalist funding in the tech space, per Warren, has dropped by 20 percent in recent years due to the domination of platform giants.

“Break those things apart, and we will have a much more robust and competitive market in America,” said Warren. “That’s how capitalism should work.”

Warren also questioned Google’s purchase of connected home device company Nest. “Why would a giant buy a company like Nest?” she posed. “Maybe because it’s got the business model. But maybe it has a bucket of information embedded in it about when you wake up, when you go to bed, whether or not someone is homesick and 58 bazillion other things.”

When tech giants like Amazon, Google and others have that level of information about buyers, sellers, consumer habits and more, it has repercussions for competitive markets, explained Warren.

“The consequence of that is we have to think about competitive markets,” said Warren. “[We’re] protecting competitive markets by breaking these giants up. But it also means the urgency of new approaches and new laws and new restrictions around data, data privacy [and] data sales.”

@KristinaMonllos kristina.monllos@adweek.com Kristina Monllos is a senior editor for Adweek.