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ANALYSIS: Good Luck Regulating ‘Big Tech’

Nov. 4, 2019, 11:45 AM

Big Tech spent much of 2019 under a big microscope of public scrutiny, from the highly visible Facebook apology tour(s) to the slew of data privacy laws enacted around the world to the copious amounts of attention from, and the ire of, domestic and international regulatory bodies.

But if their recent product announcements are any indication, Big Tech—a term commonly used to refer to the quintet of technology companies Amazon, Apple, Facebook, Google, and Microsoft—does not seem to be particularly worried. From recent upgrades to Google Nest to the unveiling of Amazon Frame, Big Tech is betting on the expansion, not contraction, of consensual surveillance.

The source of this corporate equanimity lies partly in the complexity of regulating Big Tech. Although Big Tech companies share a common business drive to leverage network effects of digital platforms to dominate their respective market segments, the approaches differ. Amazon, Google, and Microsoft are modern technology conglomerates while Apple is one massive vertically integrated business revolving around a single ecosystem and Facebook mostly consists of three big social media platforms. Matt Yglesias from Vox has laid out how an umbrella categorization of the five companies obscures from the layperson the structural differences between them.

To regulate Big Tech more closely, regulators may need to take on multiple industry subgroups—and evolving data monetization tactics—simultaneously and potentially collaboratively across agencies and jurisdictions. Moreover, that concerted effort by government enforcers would have to be backed up by resources beyond current levels.

If regulatory challenges do gain momentum, compliance programs at tech companies in general will need support from attorneys, compliance professionals, and software engineers—costs that could be shouldered by a Big Tech firm but perhaps not by a smaller competitor. Significant changes to the data privacy landscape, therefore, may lead to a loss of competition-driven innovation.

Taking on the diversified, well-fed, and well-defended giants of Big Tech would be a daunting task for regulators even in the best of times. It’ll be even harder in the year ahead, with the Trump administration having repeatedly signaled a policy of deregulation and Congress operating in an election year.

Bottom line: Headlines and clamor aside, don’t expect federal laws and regulations to dampen Big Tech’s seemingly insatiable appetite for data and willingness to overlook the potential social and personal impacts of their products in 2020.

Read about other trends our analysts are following as part of our Bloomberg Law 2020 series.