On Friday, US senator Elizabeth Warren announced a wide-reaching new plan to break up big tech companies, including Apple. In an interview with The Verge at SXSW this weekend, Warren elaborated on her plan to break up Apple, explaining how the company can’t both run the App Store and sell apps on the App Store.
Apple, you’ve got to break it apart from their App Store. It’s got to be one or the other. Either they run the platform or they play in the store. They don’t get to do both at the same time. So it’s the same notion.
The Verge pressed Warren about how Apple would distribute apps without running the App Store, especially with the App Store serving as one way Apple is able to secure the iPhone ecosystem. She ultimately, however, didn’t address the security concerns.
Warren explained that if you run a platform where other people sell, you can’t also sell on that platform “because you have two competitive advantages.” In Warren’s eyes, those competitive advantages are the data collected from buyers and the ability to favor your own product over others:
Well, are they in competition with others who are developing the products? That’s the problem all the way through this, and it’s it’s what you have to keep looking for.
If you run a platform where others come to sell, then you don’t get to sell your own items on the platform because you have two comparative advantages. One, you’ve sucked up information about every buyer and every seller before you’ve made a decision about what you’re going to sell. And second, you have the capacity — because you run the platform — to prefer your product over anyone else’s product. It gives an enormous comparative advantage to the platform.
Warren likened her plan to break up “big tech” to when railroads were dominant. She explained that railroad companies discovered they could not only sell tickets on the railroad, but also buy steel companies and then cut the price of steel for themselves.
This, Warren argued, is “not competition” but rather “just using market dominance.”
Back when the railroads were dominant, and you had to get steel or wheat onto the railroad, there was a period of time when the railroads figured out that they could make money not only by selling tickets on the railroad, but also by buying the steel company and then cutting the price of transporting steel for their own company and raising the price of transporting steel for any competitors. And that’s how the giant grows.
The problem is that’s not competition. That’s just using market dominance, not because they had a better product or because they were somehow more customer-friendly or in a better place.
We’ll likely hear more from Warren about her plans to break up big tech as the 2020 presidential campaign continues. Silicon Valley in general is expected to be a hot-button issue in this campaign, so Warren will likely not be alone in her calls for increased oversight and regulation. Read The Verge’s full interview with Warren here.
FTC: We use income earning auto affiliate links. More.