Zoom’s Success Story is Inconvenient for the ‘Break up Big Tech’ Crowd

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Proponents of an antitrust war on Big Tech abandoned the traditional consumer harm test in part because it was hard to prove the giant platforms had actually raised prices or otherwise directly hurt consumers. Now, the runaway success of video conferencing app Zoom raises questions about one of the most widely-used justifications for penalties as severe as breaking up technology companies.

Zoom confirmed its status as a shelter-in-place icon of 2020 when, along with Peloton and Netflix, its stock price took brief but pronounced dips upon the announcements of both the Pfizer and Moderna Covid-19 vaccines. The provider of online conference services has seen its stock price increase almost six-fold in 2020, reflecting its dramatic and unexpected success. Conspicuously absent from the story are Apple, Google, Facebook, and Amazon.

The braintrust known most commonly as the New Brandeisians, led by law professors Lina Khan and Timothy Wu, has focused increasingly on big platforms’ power over the companies that provide applications such as Zoom’s conferencing along with other services and merchandise. October’s Democratic majority House Judiciary Report, for which Khan served as counsel, alleged the four tech giants all in various ways possessed undue power over commerce happening on their platforms.

For example, the report raises the specter of Amazon controlling how small sellers in its Marketplace program get to market. Amazon competes with these sellers through channels such as its AmazonBasics line. Facebook and Apple, according to lawmakers, similarly confer unfair advantages on the apps they own over others seeking essential access to channels like the Facebook platform and Apple app store.

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In 2019 Senator Elizabeth Warren, arguably the New Brandeisian’s most high-profile ally in politics, related the issue to bargaining power early railroads held over those producing goods for transport: “The railroads were the place you had to be. . . . You had to get your wheat or your corn onto the railroads.” Khan herself thinks the platforms owning applications serves to “entrench their dominance, thwart competition, and stifle innovation.”

Apple, Facebook, and Google all own video chat apps and services, none of which have figured prominently in the lockdown-driven explosion of market demand. Nor did one of the tech giants move quickly to gobble up Zoom. Instead we saw a company less than a year out from its IPO provide a service users liked better than the tech giants’ offerings rapidly grow in market share without distribution dependent on the tech giants’ channels. Apparently competition and innovation have not been fully thwarted and stifled, respectively.

Senator Warren’s railroad comments unintentionally illuminate one way the internet is indeed different than the corporate landscape seen by Justice Louis Brandeis, from whom the current crop of aspiring antitrust reformers get their name. Brandeis served on the Supreme Court from 1916 to 1939. By the time of his appointment in 1916, he was already seen as a crusader against big corporations and a staunch defender of antitrust laws, which at the time were only decades old.

For a farmer looking to transport goods in the early days of railroads, it was quite literally the railroads’ way or the (pre-automobile) highway. For a video conferencing app in 2020, the “highway” option of simply using a direct URL to provide services and downloads direct from web browsers may be a better alternative to begin with than partnering with a tech giant.

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None of this minimizes the size or importance of Facebook’s platform or Apple’s base of phone and laptop owners, nor the leverage they can wield over app and service providers. However, the experience of Zoom helps establish that there is a ceiling on that leverage much lower than that of the fabled railroads.

The calculus for other service and app providers, especially of the small and niche-oriented variety, may be quite different than it was for Zoom. And the tech giants certainly raise novel issues in competition, speech, and security. Before exploring and debating these issues, however, Senator Warren and the New Brandeisians might do well to remember the corporate landscape looks nothing like a century ago.

Max Gulker

Max Gulker
Max Gulker is an economist and writer who studies how poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. He holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan.

This article was originally published on FEE.org. Read the original article.

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