Do you know what’s the most epic fail of all time?
The war on drugs.
The politicians behind this war didn’t foresee its negative consequences. Since its inception, our prison population has more than quadrupled, and we’re still fighting it.
Yet, both sides of the aisle are clamoring for another war. And, just like last time, it’s against a force they don’t truly understand.
Breaking up big tech is the worst idea since the war on drugs. It’s anti-American. It will destroy America’s only competitive advantage. And, there’s no evidence to suggest it will work.
What makes America the greatest country is our entrepreneurial mindset. People abandon everything to come here and pursue big ideas. 43% of Fortune 500 companies were founded by 1st and 2nd generation immigrants. Consider Andy Grove, who broke free from the chains of communism before upending the semiconductor industry at Intel. Or, Sergey Brin, who co-founded Google. And more recently, the Collison brothers, who make it easy for startups like mine to collect payments through Stripe.
Part of the appeal of coming to America is that you’re encouraged to think big and take bold risks. I would say the sky’s the limit, but Elon Musk would disagree. Breaking up big tech sends a clear signal that there’s a hard limit to success. If you create a product that is too good, your success will be capped.
But, do billionaire founders need to get any richer?
No, but it’s un-American to put an artificial limit on the success of their companies. It would tarnish our image as the land of opportunity. And, since when do we put a limit on anything in America? We don’t even put a limit on the number of magazines you can buy for a semi-automatic rifle.
So why are the biggest and most successful entrepreneurs in America under attack? It seems like everyone is picking on Jeff Bezos these days. Amazon is a $1.5 Trillion company because we enabled them. We demand the cheapest products delivered to our doorsteps within 48 hours only to turn around and chastise those who fulfill our requests. It’s not like these companies force us to us to use their products. We’re all free to shop on Etsy, and search via DuckDuckGo. So why don’t we? Because it’s easier to criticize than to change our habits.
Instead of denigrating American entrepreneurs we should stroll to the local bookstore and pay 30% to 50% more for our books. But, who wants to do that when you can get it delivered to your Kindle with a single click?
Have you ever wondered what makes America unique? Don’t give me some B.S. about freedom and liberty. We score some points there, but you can’t tell me Canada, Netherlands, Germany, and other developed nations don’t enjoy those same benefits. We rank 7th in literacy, 26th in life expectancy, and claim the 33rd spot in infant mortality (behind Hungary and Latvia). And, according to U.S. news, we didn’t even crack the top 30 in math.
So what gives America it’s competitive advantage in the world?
Innovation.
Who’s leading the charge in innovation? Our tech sector.
“Not only is the technology sector the biggest driver of U.S. economic growth for many years now, but U.S. Internet companies have come to dominate most of the world, conveying U.S. soft power like McDonald’s and Hollywood on steroids.” – Ben Thompson
https://stratechery.com/2020/india-jio-and-the-four-internets/
Big Tech makes up almost 25% of the S&P 500 and these stocks have been the most resilient amid a global pandemic. Can you imagine how much more the quarantine would suck without FAANG? No Zoom and no Tiger King. Both run on Amazon Web Services. How sad would your 401(k) be if our tech sector hadn’t recovered?
If anything we should be proud of our mega tech companies. What other sector do we dominate on a global level? Automotive? Japan makes more reliable cars and Germany makes more desirable ones. Our influence through music and entertainment is unparalleled, but in 2019, this entire sector, which includes motion pictures, TV, music, and video games generated $717 billion. That’s less than what Apple, Google, Microsoft, and Amazon generated.
There’s a reason China keeps cloning our tech companies (a practice referred to as shanzhai). Why spend money on R&D when you can copy Google and call it Baidu? Or, replicate Apple and call it Xiaomi?
Very few people are discussing the negative consequences of breaking up big tech. China is right on our heels in the tech race and they will surely benefit if we ruffle the feathers of our golden goose. I know you’re mad at Zuckerberg for the Cambridge Analytica scandal. And, yes, Amazon covertly used the data of its independent sellers to build competing products and sold them at cheaper prices. Despicable.
But, if you cherish Western values then surely you prefer FAANG at the helm versus copycat Chinese companies spreading authoritarianism. We’ve already gotten a taste of that with TikTok.
They block videos that condemn the Chinese government as evidenced by taking down the Tank Man video. They censor anti-government protests in Hong Kong. They also censored #BlackLivesMatter posts, only to chalk it up to a technical glitch. Mark Zuckerberg can be sketchy, but posts on Facebook helped bring mass awareness to the murder of George Floyd.
Do we want to relinquish our only competitive advantage to an authoritarian regime?
Our tech sector is the manifestation of America’s entrepreneurial mindset. Unlike Japan where failure is frowned upon, we encourage entrepreneurs to risk it all and change the world. Bezos, Jobs, and Zuckerberg realized that vision and gave us our only indisputable competitive advantage on the global stage. If we mess with it, we will create a vacuum that China will gladly fill.
The loudest politicians fueling the “break them up” movement site privacy and anti-competitive concerns as their key motivations.
But, do we have a track record of success with breaking up big companies?
We broke up AT&T in 1984, but if you look around today, there’s no evidence to suggest this resulted in long-term benefits for consumers. Everybody hates their wireless service provider. In fact, cable and internet providers achieved their lowest customer satisfaction rate in 11 years.
What politicians won’t tell you is that big tech has actually made some sectors more competitive.
Thanks to AWS it’s never been easier to launch and scale an application. YouTube and Facebook enable entrepreneurs to get their message in front of a global audience. This is the only reason Direct-to-Consumer (D2C) brands like Dollar Shave Club and Harry’s can compete with Procter & Gamble and Johnson & Johnson. The same holds true for Casper, Warby Parker, MVMT, and Away. These David vs. Goliath stories are only possible because of our tech giants.
The story is no different for our fastest growing software companies. Zoom wouldn’t be able to compete with Cisco’s WebEx without the scale provided by AWS. They can thank Bezos for building the infrastructure that enabled them to reach a valuation of $70 billion — more than the world’s seven biggest airlines combined.
But, tech companies are spying on us!
So, let me get this straight. Our government, who was implicated in NSA’s mass surveillance program, and recorded our phone calls without any public oversight, is going to lambast big tech for privacy issues? At least these companies tell us they’re going to spy on us before they do it. We’re just too lazy to read the fine print.
The concerns that sparked “break them up” are very real. But, taking a sledgehammer to big tech isn’t going to increase competition or improve our privacy. In fact, the shrapnel from blowing up big tech can wipe out the small businesses that drive 44% of our economic activity. More than 90 million small business owners rely on Facebook to connect with their customers. It’s O.K. to get angry at the tech sector, but letting anger drive our decision making with so much at stake is foolish.
Visionaries don’t like limits. Putting an artificial cap on growth will discourage the next Sergey Brin from starting a business in America. Tech entrepreneurs have given us our only competitive advantage. But, it might not last. China is no longer limited to copying our ideas. They’re rapidly innovating and their products are going viral around the globe — TikTok is the fastest growing social media platform. Breaking up big tech will only accelerate China’s ability to export their ideology. Do we want that?
Before Jeff Bezos became the richest man in the world, he was grinding it out (day and night) in a makeshift office.
This is what makes America great. You can bend the universe to your will if you consistently put in the reps. Instead of letting politicians (who have never started a business) dictate solutions for enhancing privacy and competition, we should support entrepreneurs who share this vision. Shopify is a great example. They’ve achieved massive success by putting the power back in the hands of entrepreneurs. Their model is antithetical to Amazon and it’s working. The same holds true for privacy. If Google makes you uncomfortable, support Brave and DuckDuckGo. Don’t depend on the politicians that sanctioned NSA’s mass surveillance program to improve your privacy.
Zachary Karabell from Wired said it best, ” ‘Break them up’ has the virtue of sounding simple, and all the vices of being simplistic. We have real issues that need creative thinking; the regulations of the past, which didn’t work so well even then, are not an answer.”
Growth Compound 