Apple would be just fine under Elizabeth Warren’s regime

Amazon, Google and Facebook? Not so much.

warren apple just fineWhen Sen. Warren called for the break-up of Amazon, Google and Facebook but didn’t mention Apple, the tech press (including yours truly) went a little nuts. Did or did she not plan to dismantle the fourth horseman of tech?

The Verge‘s Nilay Patel put the question to Warren at SXSW, and she was happy to oblige.

Q: There was one company that fits that description that you did not mention.

A: Apple. They’re in.

Q: You want to break up Apple as well.

A: Yep.

A: You were very specific in how you’d break up Google and the rest. How would you break up Apple?

A: 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… If you run a platform where others come to sell, then you don’t get to sell your own items on the platform.

My take: Apple just dodged an anti-trust bullet. The real money on the App Store comes from the 30% cut Apple takes from developer sales. Most of the big apps Apple distributes there (Keynote, Pages, Numbers, GarageBand, iMovie) are free. Imagine if Warren had called for Apple to do something really painful, like license its operating systems or release its APIs!

By contrast, consider the remedy she proposes for Amazon, Google and Facebook. From Warren’s Here’s how we can break up big tech:

America’s big tech companies have achieved their level of dominance in part based on two strategies:

  • Using Mergers to Limit Competition. Facebook has purchased potential competitors Instagram and WhatsApp. Amazon has used its immense market power to force smaller competitors like Diapers.com to sell at a discounted rate. Google has snapped up the mapping company Waze and the ad company DoubleClick. Rather than blocking these transactions for their negative long-term effects on competition and innovation, government regulators have waved them through.
  • Using Proprietary Marketplaces to Limit Competition. Many big tech companies own a marketplace — where buyers and sellers transact — while also participating on the marketplace. This can create a conflict of interest that undermines competition. Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version. Google allegedly snuffed out a competing small search engine by demoting its content on its search algorithm, and it has favored its own restaurant ratings over those of Yelp.

We must ensure that today’s tech giants do not crowd out potential competitors, smother the next generation of great tech companies, and wield so much power that they can undermine our democracy.

This is a direct attack on the so-called platform economy, and if it ever came to pass it would constitute an existential threat for Amazon, Google and Facebook.

ONE MORE THING: From the Patel-Warren Q&A:

Q: Why not mention Apple in your letter yesterday?

A: No special reason.

I call B.S. She left Apple off because it didn’t fit.

UPDATE: Warren has posted a video that makes her case for breaking up the other three.

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