"Consumer choice, willingly made"

Elizabeth Warren made headlines last week by outlining several proposals to break up Big Tech, including tighter regulation of acquisitions and mergers, and prohibiting companies from offering a marketplace for commerce and competing in that marketplace—or often choking off competition. (Watch Hasan Minhaj’s excellent outline of how Amazon does this, if you haven’t already.)

The policy proposals seems to have been met with excitement by consumers (including me) who think Big Tech is getting too powerful, and hasn’t done enough to self-regulate. But some of the specifics have been met with criticism.

Ben Thompson had an excellent, nuanced take about where the proposals fall short yesterday, but one phrase he used caught my eye.

Thompson makes a compelling argument that the reason it’s hard to regulate platforms like Google and Facebook is because consumers choose to use them:

There is certainly an argument to be made that Google, not only in Shopping but also in verticals like local search, is choking off the websites on which Search relies by increasingly offering its own results. At the same time, there is absolutely nothing stopping customers from visiting those websites directly, or downloading their apps, bypassing Google completely. That consumers choose not to is not because Google is somehow restricting them — that is impossible! — but because they don’t want to. Is it really the purview of regulators to correct consumer choices willingly made?

As I noted above, there are some important points made here by Senator Warren; at a fundamental level, though, any sort of antitrust proposal that does not seriously grapple with the reality that the power of these companies flows from controlling demand — that is, consumer choice, willingly made — not from controlling supply, like monopolies of old, is going to be fundamentally flawed. (emphasis added)

Thompson’s right that this argument—that we use Google, Facebook, and Amazon not because we have to, but because we want to—is at the heart of why regulating tech companies like we would regulate other monopolies is hard.

But do we really have that choice?

Two arguments for why for why we have to think about demand differently when it comes to Big Tech: winner-takes-all market dynamics and the social practice of valuation.

Digital economies are built on winner-takes-all market dynamics, where the biggest players are able to quickly capture a large portion of the market share—and, as Warren points out, acquire or stamp out any real competition. As consumers, we feel this in very real ways: sure, we can choose a product that has 50 to 70 percent less functional value than the market leader, but why would we?

We also make decisions in herds. The economist Daniel McFadden, in his studies on irrational consumer behavior, has said we often let our tribes do the thinking for us, and that social networks make us even lazier decision makers. (There’s also an argument that social media has an availability bias affect, reinforcing the same choices for us over and over again.)

The philosopher Elizabeth Anderson goes one step further, and argues for a pluralistic theory of valuation that includes social dynamics, arguing that people “are not self-sufficient in their capacity to value things in different ways.” In Value in Ethics and Economics, she says, “I am capable of valuing something in a particular way only in a social setting that upholds norms for that mode of valuation.”

This is a different way of framing the network affect that many of the biggest platforms aim for: not only do increasing numbers of participants improve the value of a service, they add a social pressure that changes our capacity to evaluate it as anything but a rational choice.

I’ve often said that the only way we’re going to make progress on the most pressing digital-ethical issues of today is some combination of a) consumer pressure, b) advertiser pressure, and c) regulatory pressure. The latter is the one that seems like it’ll be the most difficult to accomplish, but we have to start by redefining what it means to be a monopoly in a digital economy.