Presidential hopeful Elizabeth Warren talks antitrust at SXSW

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SXSW GETS POLITICAL
Over the weekend, presidential hopeful Senator Elizabeth Warren used the South by Southwest (SXSW) festival as a platform to speak about her plan to break up the big tech giants -- specifically Amazon, Google, Facebook, and Apple.

South by SouthWhat?
Founded in 1987, SXSW is an annual gathering in Austin, Texas for creatives: featuring film, music, and technology (plus a Cholula-sponsored taco museum). It’s essentially what you’d get if you combined Sundance, Coachella, and CES.

The event looks increasingly important for politicians -- aside from Warren, AOC (feat. Bill Nye) and Beto O’Rourke made appearances this year to appeal to forward-thinking, influential millennials. 
 

Warren’s beef with big tech

In a Medium article, Warren argued that the tech giants are hurting small business and innovation by preventing competition in two ways:

1. Through mergers and acquisitions
Increasingly, big tech companies are paying top dollar to purchase potential rivals before they become a real threat -- see Facebook acquisitions of Instagram ($1bn) and WhatsApp ($19bn). 

And if startups refuse, the consequences can be devastating. After Snapchat refused Facebook’s $3bn buyout offer in 2013, Facebook-owned Instagram relentlessly cloned Snap’s features -- now Instagram Stories are more popular than Snapchat's entire user base. 
Amazon (another Warren target) is notorious for using its size to outcompete smaller rivals on price until they have no choice but to be acquired. In competing with Diapers.com, Amazon happily dropped diaper prices 30% and lost $100 million in just three months until their competitor capitulated. 

2. By being the market and the vendor
The other sticking point with large tech companies is that they often operate a marketplace and offer products on it -- leading them to favor their own interests. For example, Google famously serves its own restaurant reviews above review services like Yelp. Google was hit with a $5 billion fine from EU regulators last year for a similar offense. 


The breakup plan

Warren outlined a couple of tactics she would use to take on tech monopolies if elected:
  • Companies with upwards of $25 billion in revenue that have an online marketplace would be restricted from participating in their own marketplace. For example, Amazon wouldn’t be able to run its online marketplace and sell Amazon “Basics” products. 
  • Regulators will be appointed to reverse big tech mergers that hurt competition (Warren cited Google and Waze as one example). 

Silicon Valley tech giants have become an increasingly attractive target for politicians but Warren’s new proposal is the most aggressive from the Democratic side thus far.

It's unclear how exactly her administration would follow through on her plan (it won’t be easy) but there is definitely growing support for more tech regulation. Look out for responses from companies in the coming weeks. 
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Brendan Uyeshiro
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