Big Tech Loses Support in The USA
In a recent interview, President Biden outlined an ambitious legislative agenda for Congress to tackle alleged shortcomings of “Big Tech.” Key among these are creating a federal privacy law, reforming Section 230 of the Communications Decency Act, and increasing competition in the tech sector. Each of these is a complicated issue that legislators have been working on for years, some with more success than others. We will watch the developments and let you know.
The President’s decision to ‘do something’ needs to be put in context, as inflation rates have risen to levels not seen in 40 years, antitrust populists have been quick to lay the blame for this crisis at the doorstep of the alleged increase in corporate concentration. Senator Elizabeth Warren (D-MA) suggests companies are hiding “behind claims of increased costs to fatten their profit margins” while economist Hal Singer has said that “general inflation can serve as a pretext for a coordinated price hike.” This view that corporate concentration is a root cause of inflation has led to calls for more aggressive antitrust enforcement—including from President Biden who has called on the Federal Trade Commission and the U.S. Department of Agriculture to investigate price increases and anti-consumer behavior in the petroleum and meatpacking industries. However, others have argued that more aggressive antitrust enforcement during this inflationary period could put even more upward pressure on prices. For example, economist Larry Summers has said that “policies that attack bigness can easily be inflationary if they prevent the exploitation of economies of scale or limit superstar firms.” Thus the President can be seen to be taking an easier way out – rather than attacking fuel and food head on, he plans regulation to control Big Tech. This also makes sense in terms of revenues – fuel and food are big contributors to the US’s treasury, while some Big Tech have become notorious for their use of tax-breaks.
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