Senator Elizabeth Warren unveiled a bombshell policy proposal on March 8 that would radically remake the global technology industry if enacted. Effectively, the Democratic presidential candidate wants to dismantle Silicon Valley giants like Amazon, Facebook, and Google.
The Massachusetts senator is calling for the creation of new regulatory categories for U.S.-based businesses. The legislator’s program would force companies that bring in more than $25 billion in annual revenue to break up into segments. In essence, Warren’s rules would disallow corporations of that size from selling products within marketplaces they own. The senator’s proposal would also impose new regulations on firms generating between $90 million and $25 billion.
The Congresswoman is also proposing reforms in how technology companies handle personal information. Warren’s new laws would disallow corporations from sharing user data with third parties. Moreover, her initiative would reverse some of the tech sector’s most high-profile mergers.
On her blog, Warren framed her ideas as a necessary corrective to Big Tech’s perceived monopolistic practices. In her post, the lawmaker compared her plan to the U.S. government’s antitrust lawsuit against Microsoft.
“Today’s big tech companies have too much power—too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else,” wrote Warren. “And in the process, they have hurt small businesses and stifled innovation.”
How Warren’s Plan Would Effect Amazon, Facebook, and Google
Warren’s initiatives would have a massive and potentially devastating impact on some of America’s largest technology firms. For example, the senator’s plan would effectively deprive Google’s parent company, Alphabet, of most of its revenue. That’s because 86 percent of the company’s income is derived from its advertising business.
Her plan would have a similarly seismic effect on Facebook. The proposal’s data sharing rules would decimate the company’s advertising revenues. The senator’s new regulations would also force Facebook to spin Instagram and WhatsApp into their own companies. That change would likely be catastrophic for the social media corporation.
Facebook has become an advertising powerhouse because it harnesses the personal data of its three social networks. Facebook, Instagram, and WhatsApp have a combined user base of over 2 billion people. However, Warren’s pitch would effectively take away the social media corporation’s unparalleled targeting capability. In 2017, 89 percent of Facebook’s revenue came from its ad sales.
Interestingly, the legislator’s plan would have a major but not ruinous effect on Amazon. The e-commerce platform would have to give up Whole Foods and spin its various brands off into new companies. Moreover, Amazon would be legally prohibited from bolstering its profits by recommending its own products to consumers. However, the senator’s plan would not destroy the corporation’s core retailing business.
Would Warren’s Proposals Be Good for America?
As with most contemporary political issues, the answer depends on who you ask. Democratic politicians like New York State Senators Julia Salazar and Mike Gianaris support her proposals. That aligns with their recent efforts to keep an Amazon campus out of their state and belief that companies like it are harmful monopolies.
Conversely, Carl Szabo, a law professor and e-commerce association executive, argues that the lawmaker’s plan is a clear-cut example of government overreach. Indeed, the scale of Warren’s legislation would make it one of the biggest acts of economic intervention in recent American history. If realized, Warren’s proposal would disrupt the tech sector on an unprecedented level.
RealClearPolitics’ latest polling data places Warren third in the current field of 2020 Democratic presidential candidates.