- In the congressional hearing on Wednesday about antitrust concerns in the technology industry, the four CEOs, who all testified, touted their company's American roots, and Facebook's Mark Zuckerberg warned of competition from China.
- The appeal to patriotism and nationalistic feelings is a familiar tactic; The technology companies have used it repeatedly in recent years as they have been increasingly scrutinized.
- But it also has a long history – giant companies routinely advertise their purely American roots and the threat posed by foreign competitors when their market power is questioned.
- Policy makers should ignore such appeals because they are designed to distract from the real damage that businesses are doing, and the best way to compete with foreign competitors is through innovation that is being choked by monopolies.
- You can find more stories on the Business Insider homepage.
Patriotism, as Samuel Johnson noted 245 years ago, is the villain's last refuge.
Appealing to national sentiments – or warning of the terrible threat posed by foreign competitors – is also an old-fashioned tactic used by company executives who are trying to evade control over their companies' behavior or lose what they view as burdensome regulations.
And so the CEOs quickly dusted off the old game book on Wednesday, when big tech was under the hard light of an antitrust investigation into the congress.
The success of Facebook, Google, Apple and Amazon – four companies with a combined market value of around $ 5 trillion – is the epitome of the American dream, their CEOs told lawmakers during the antitrust hearing of the House of Representatives.
The success of these four technology giants is gratifying. They insisted on the result of the American system, no shameful acts or problems in the market rules.
Apple, said CEO Tim Cook, is "a unique American company whose success is only possible in this country".
Jeff Bezos from Amazon discussed the lessons of independence and ingenuity he had learned as the son of a single high school mother and adoptive son of a migrant father. And it went on.
Above all, as the CEOs implied or said directly, the US needs national champions like its companies to lead the Internet age, because without them, foreign competitors – most worryingly Chinese – will take over.
"China is building its own version of the Internet that focuses on very different ideas and is exporting its vision to other countries," warned Mark Zuckerberg, CEO of the "proud American company" Facebook.
"We believe in the values - democracy, competition, inclusion and freedom of expression – upon which the American economy is built," he said.
If it sounds familiar …
These types of arguments are not new. Facebook's Sheryl Sandberg, Chief Operating Officer, distracted questions about the power of their company by pointing out the threat posed by Chinese competitors in an interview with CNBC last year.
In fact, these arguments go back long before the technology giants are examined. They have been used by all stripes of American companies for decades to escape concerns about their power.
Financial services companies made similar arguments in the 1980s when they sought to repeal regulations that restricted their size and ability to operate across national borders, arguing that they would have to be big to stand up to huge foreign banks. IBM and AT&T made such appeals when they were subject to antitrust review in the 1970s and 1980s, arguing that they were needed to protect the United States from the growing threat of competition from Japanese technology companies.
Indeed, such patriotic or nationalist arguments date back to the 1910s when Matt Stoller, author of "Goliath: The 100 Year War Between Monopoly Power and Democracy" made some of the first attempts in the United States to break up monopolies. ""
"This is a longstanding trend," he said. He continued: "It is always & # 39; give us more power, we will defend you. & # 39;"
Every US company has a purely American history
The problem with such arguments is that they are banal, irrelevant and misleading.
Pretty much every large or small US company has a purely American story to tell. Basically, the success of Amazon or Apple is no more or less impressive than that of the corner food that was founded by immigrants who fled war or oppression. Almost all founders and entrepreneurs face challenges and hardships, and the American system has led to huge successes for many companies in the past and present. Amazon, Apple, Alphabet, and Facebook weren't the first, and they won't be the last, regardless of whether regulators try to limit their powers.
In addition, many of the companies that are suppressed by technology giants also have American stories. For example, we shouldn't ignore how Amazon used sneaky tactics to undermine Quidsi, the owner of Diapers.com, or how it was said to slow down the business of a small company that sold books through its website just because Amazon had many American workers and Jeff Bezos was born to a single mother. While Americans can benefit from the services Amazon offers and related jobs, they are hurt if they cut competition. Prices can go up and employees of the competition that has hindered Amazon lose their jobs.
There is little doubt that China and Chinese companies have a different vision for the Internet than US companies. There are legitimate concerns that Chinese companies are transferring the surveillance and censorship endemic to other countries. The best way to meet such international challenges is to promote innovation and competition here at home – and not to give the U.S. technology giants the opportunity to trample on their smaller domestic rivals.
Huge monopolies tend to stop innovating. They become sclerotic and struggle to adjust when markets and fashions change. However, the dissolution of these monopolies can stimulate innovation and the creation of entirely new markets.
Concentrated power destroys companies
History repeatedly confirms this. The global dominance of the three major automakers in the 1950s and 1960s left them unprepared for the oil shocks of the 1970s and the start of competition from more nimble Japanese companies. Likewise, Boeing's problems in recent years are due to its ability to wipe out all US competitors in the commercial airline market, Stoller said.
"If you focus power, you destroy businesses," he said.
On the other hand, the antitrust proceedings against IBM and AT&T have opened up the tech industry for Microsoft, Apple and Intel as well as for the Internet itself. The later antitrust proceedings against Microsoft enabled the emergence of Google, Facebook, Netflix and other companies.
"It is fairly obvious that these companies would not exist," said Stoller if the Microsoft cartel had not occurred.
So ignore the patriotic appeals and grim warnings from desperate CEOs of Chinese competition. We'll all be better off if we separate big tech.
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