Sen. Elizabeth Warren is right to call for more aggressive enforcement of antitrust laws in our new digital era. Google and Facebook particularly deserve greater scrutiny from U.S. regulators.
Washington voters should follow closely, however, because the tech giants Warren called out — Microsoft, Amazon, Google and Facebook — are responsible for a large share of the state’s recent job growth and increased tax revenue.
Warren, a consumer advocate and former law professor, is well qualified to start this conversation. But she may be squandering the opportunity. Her antitrust treatise, posted last week, seems designed to stoke resentment of big companies as much as protect consumers. It sets an arbitrary threshold on revenues of big tech companies, above which they are prohibited from selling products that use their platform. This could raise prices and stifle innovation, because services help cover the cost of investing in cloud services.
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Breaking these companies up is likely to cause massive price increases or losses in quality, said Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania. This would be particularly painful for Warren’s Democratic working-class constituents who earn less and are more sensitive to price increases, he noted.
While it may play well with her activist labor base, demonizing popular companies like Amazon won’t always fly with voters. This was demonstrated last year in deep blue Seattle, where City Hall killed its “Amazon tax” on jobs only after labor polling found widespread public opposition to the measure.
The timing of Warren’s attack on mergers is significant. She’s part of a last-ditch, labor-affiliated effort to scuttle the merger of Sprint and T-Mobile US, a deal expected to bring enormous benefits to Washington.
Disappointingly, U.S. Rep. Pramila Jayapal, D-Seattle, has joined with Warren and other left-leaning members of Congress in opposing the deal, even though it’s expected to preserve jobs held by many of Jayapal’s constituents, create thousands of new jobs and prevent the loss of the Seattle area’s last major telecom company.
Jayapal was unavailable to comment. But she recently co-signed a letter, leaning on research by the Communications Workers of America, opposing a “deal designed to destroy jobs and drive down wages, hurting American workers and consumers and threatening our economy.”
T-Mobile’s merger would combine the third- and fourth-place wireless companies to create a stronger competitor for the giants, Verizon and AT&T. T-Mobile also plans to use Sprint’s spectrum to push into home broadband, creating new competition for Comcast and other broadband providers.
Although T-Mobile isn’t unionized, the company has benefited working people by driving down wireless prices. It’s forcing larger carriers to offer more affordable wireless options to compete with its aggressive pricing. Some sort of merger is all but inevitable.
T-Mobile’s Bellevue headquarters is in the congressional district of another progressive, U.S. Rep. Adam Smith. He said the merger “holds great promise for our region’s workers and local economy.
“If approved by regulators, I expect this merger to promote greater competition within the wireless industry; benefiting the Puget Sound area through the preservation and growth of jobs as well as our country’s wireless customers through innovation and competition,” Smith said in a statement.
Also supporting the merger is U.S. Rep. Suzan DelBene, a Medina Democrat whose district includes many T-Mobile employees. “Even combined, T-Mobile and Sprint will still be number three in terms of market,” she noted.
Politicians calling for antitrust enforcement and stronger regulation of the internet’s dominant gatekeepers are more than welcome. Especially if they avoid grandstanding and focus on truly protecting consumers and increasing competition.