Vince Cable has compared Google, Amazon and Facebook to the US oil monopolies that exploited their market power more than a century ago – and called for them to be broken up.
In a speech in London, the Liberal Democrat leader said a series of recent scandals, including revelations about Facebook and Cambridge Analytica, meant the “tech titans” had “progressed from heroes to villains very quickly”.
“Just as Standard Oil once cornered 85% of the refined oil market, today Google drives 89% of internet searches, 95% of young adults on the internet use a Facebook product, Amazon accounts for 75% of ebook sales, while Google and Apple combined provide 99% of mobile operating systems,” he said.
Cable, a former business secretary who worked as an economist before entering politics, said the power the giant firms exercised was not like that of traditional monopolies, which exploited their control of scarce resources such as raw materials to overcharge customers.
“Whatever these companies do, they are not price gouging – since their headline price is always zero,” he said. “It is the forces underlying this apparently free bounty that politicians must address.”
Cable raised four concerns: the use of platforms such as YouTube “as a conduit for content which society regards as unacceptable”; the systematic spread of fake news; the firms’ sheer size, making them “a barrier rather than a boon to entrepreneurship”, and the inability of tax authorities to force them to pay their fair share.
“The new internet giants operate in a largely borderless world where their main source of profit is intangible intellectual property rather than measurable ‘things’. This is difficult to track and quantify and has turned national tax authorities into largely powerless bystanders,” he said.
He called for mergers to be more closely scrutinised and for authorities to engage in “trust-busting” – breaking up oversized companies that can exploit their dominance to harm consumers – adding that the European Union was better-placed to do this than national governments working alone.
“There is a case for splitting Amazon into three separate businesses – one offering cloud computing, one acting as a general retailer and one offering a third-party marketplace. Other examples would be Facebook being forced to divest itself of Instagram and WhatsApp as a condition for operating in the EU, creating two new social media networks. Divesting Google of YouTube would be another,” he said.
Cable also said it was time to consider whether the public should be paid for handing over their data.
“The new oil is data. Data is the raw material which drives these firms and it is control of data which gives them an advantage over competitors,” he said.
“By putting data in people’s hands and empowering them to choose who to sell it to, personal data would no longer be monopolised by the tech giants, and innovative insurgents could buy the data they needed instead of letting themselves be bought up to access the giants’ data pools.”
Politicians have been scrambling to address the challenge of regulating the sprawling tech firms, after a series of recent scandals.
Facebook founder Mark Zuckerberg donned a suit and tie to face hours of questioning by US politicians. And in Britain, the culture secretary, Matt Hancock, hauled in Facebook executives and warned them he would not allow them to “shirk their responsibilities to our citizens”.
