This week will see the next step in the currently floundering mission to bring Silicon Valley to heel as US lawmakers examine the strategies which made the technology industry the force it is today.
What we are seeing unfold is not an uncommon sequence of events in US corporate history. There are several examples of when industries are allowed to flourish in self-regulating environments before being brought into line by regulators and politicians. The railways, oil production, telecoms operators and tobacco to name a few. The objective is to encourage uninhibited growth, fuelling employment and prosperity, before reigning in the CEOs when these organisations become powerful.
The question which remains today is whether the US lawmakers allowed these technology companies to go to far, become too powerful before lurching into action. These antitrust investigations from US politicians might uncover some uncomfortable truths about these organisations, but can anything be done to wrestle back control?
According to one politician, the ‘copy-acquire-kill’ strategy is one element which is facing scrutiny as the grilling of Facebook, Amazon, Apple and Alphabet CEOs kicks off tomorrow (Wednesday, 29 July).
The Antitrust, Commercial, and Administrative Law Subcommittee, which is conducting the investigation, supposedly has documentation which suggests the ‘copy-acquire-kill’ strategy is one which is championed by top-level executives at each of the technology giants. More details will emerge tomorrow, though it should not surprise anyone.
Part of being a dominant company is creating value, products and services no-one else on the market can compete with. This means being the best, but also responding to innovators. Defensive strategies will be in play to protect market position and ensure competitors are not creating better alternatives. The representatives of the Antitrust, Commercial, and Administrative Law Subcommittee will have to decide whether this is deemed anticompetitive behaviour.
For example, in 2018 Facebook-owned Instagram introduced the Stories feature, which has proven to be very popular. However, critics will argue this is simply an imitation of Snapchat, which at the time was rapidly gathering popularity. By copying this feature, some might say this is reacting to the wants and needs of the market, but could such blatant copying be deemed anticompetitive?
A more niche example would be Picasa. This company created a cross-platform image organizer and image viewer for digital content, which was integrated with a photo-sharing website. It proved to be very popular and was acquired in 2004 by Google which began offering it as freeware. In the eyes of a few this might be deemed as anticompetitive behaviour, as a start-up was acquired before it could emerge as a commercially viable company. By offering the service for free, Google effectively killed any opportunity for other companies to make money out of such services.
These are areas which are likely to be examined through the investigation, but will it actually mean anything?
The technology industry is probably more influential than politicians today, an assumption which will sit very uncomfortably with some egomaniacs. Like in the 1910s, when Standard Oil was broken up, or the Justice Department’s attempt to invigorate competition in the telecoms industry in the 1980s, the lawmakers are attempting to dilute the influence and dominance of Silicon Valley today.
But can it be done? Some might suggest Silicon Valley has been allowed to get too powerful, the complexities of the digital economy will confound and confuse the bureaucrats, or these businesses have been structured in such a manner there is little which can be done to unwind the power play. The US Government wants to put Silicon Valley in its place, but it might find out its own during this investigation.