Should giant companies like Google, Facebook, Amazon, and Apple be broken up under antitrust laws? Democratic presidential hopeful Elizabeth Warren is campaigning on that idea. And both state and federal regulators apparently agree with the notion: Several have opened antitrust investigations into these companies.
But breaking up Big Tech companies would be a mistake, Bill Gates said in a newly released video interview with Bloomberg. The Microsoft co-founder and famous philanthropist spent most of the half-hour interview talking about Gates Foundation concerns: global inequality, infant mortality, and the need to provide assistance to residents of poor countries who already are badly affected by climate change. Presumably, the opportunity to talk about these issues is a major reason he agreed to the interview.
But in the last couple of minutes, he was asked about current initiatives to curtail big tech companies' power by breaking them up under antitrust laws. He stressed that it would be a mistake, arguing for more direct regulation instead.
"You have to really think, is that the best thing?" Gates said. "If there's a way the company is behaving you want to get rid of, you should just say 'OK, that's a banned behavior.' Splitting the company in two and having two people doing the bad thing, that doesn't seem like a solution." In fact, he said, "It's a pretty narrow set of things that I think breakup is the right answer to."
Of course, Gates had his own bitter experience with the government over this issue. In 1998, Microsoft was sued by the U.S. Department of Justice, 20 states, and the District of Columbia over its requirement for computer manufacturers to bundle Internet Explorer with the Windows operating system, something that the plaintiffs claimed violated an earlier consent decree. Microsoft lost the case and a presiding judge ordered the company to be split into two, one company that provided Windows only and another that provided all other Microsoft software. Fortunately for Microsoft, that decision was overturned on appeal. The DOJ and some of the states then reached a settlement with Microsoft in which the company made its APIs (application programming interfaces) available to other software makers. Nine states dissented, arguing that the settlement did not do enough to limit Microsoft's anti-competitive practices.
Today, neither regulators nor presidential hopefuls are calling for a breakup of Microsoft, perhaps believing they have bigger antitrust fish to fry with Google, Amazon, Apple, and Facebook. "These companies are very big, very important," Gates told Bloomberg. "The fact that governments think about these things is not a surprise."
He added, "I was naive about this, but that was a long time ago. I didn't realize, as Microsoft gets successful, we'd come under scrutiny. We went through our thing back in the '90s, and that's made us more thoughtful about this kind of activity."
Nobody had a crystal ball about social media.
Asked if he was concerned about these huge and powerful companies' negative influence on politics and on consumers, Gates came to the tech giants' defense, saying "I think these companies are behaving totally legally, they're doing a lot of innovative things."
And--despite Mark Zuckerberg's plans for Facebook to become its own regulator--Gates says governments must be responsible for limiting the harm that big tech companies do. "The fact that the tax rules incent you to structure in a certain way to minimize your taxes, people should look if they want to change that," he said. "Social media--nobody had a crystal ball that said in some ways that would be a way of radicalizing people or splitting them into different groups. What exactly the solution to that should be, to have us more reading a common front page and not being pulled to extremes--I don't think you can rely completely on the tech industry to worry about that enough to come up with solutions. I do think government really needs to talk about what those rules should be."
He concludes: "It's not unbiased, but I see these as well-meaning, highly innovative companies that it's up to society to make sure their innovation doesn't have negative side effects."
Society itself, though, is deeply divided on this issue, as recent polls show. That's one explanation for the fact that Elizabeth Warren, when giving a speech near Amazon in Seattle, undoubtedly with hundreds of Amazon employees in the audience, did not mention her proposal for the retail giant to be broken up. We're heading into an election year. So the tech giants may find they can operate without government interference for some time to come.