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6 Reasons Why Elizabeth Warren Is Just Plain Wrong About Breaking Up Apple, Amazon, Facebook And Google

This article is more than 4 years old.

Elizabeth Warren has suggested we break up tech giants like Amazon, Apple, Facebook and Google, she has even gone so far as to erect billboards in Silicon Valley announcing her initiative. A lot of politicians across the world have made similar populist soundings as a resolution to a world radically transforming in both physical and virtual terms. 

It is not a solution to the challenges we face, because resorting to populist ideas to try and solve a complex set of challenges demeans the nature of the challenges we face. Here are six reasons why it is illogical to try and handle the transforming world with the idea of breaking up the tech giants, and it is a shield for what really needs to be helped by the government.

An appeal to DC or any other government

We live in a world of constant change. Company leaders who get this (28%) have learned to guide their organizations into leveraging the idea of constant change as an asset. Legislating with these changes (data broking laws, changing skill sets of citizens) is the key. Legislating against these changes is not the world ahead. Politicians have immense power to change our futures, but they need to be comfortable getting uncomfortable with the ambiguity of changes happening now, and they have to think one or steps ahead, not behind. 

1.   Searching for anything is infinitely easier than ever before

Yes, Google prioritizes what you find on page one, but it takes less than five seconds to go two or three pages deeper. Even if you find a company on page one, you can still look at their customer feedback. Yellow pages, TV and magazine advertising has neither of these two conveniences (array of choice and consumer feedback). The media and marketing industry is one of the worst sectors for digital transformation success. According to the June 2018 Digital Genome DNA Research, less than 23% of major corporations are being successful with their digital transformations. Complaining about the nature of the competition and hoping for government help is not the pathway to success.

2.   Online retail is not a monopoly and retailers need to adapt, or they will die

By the end of 2020, online retail in total will still be less than 20% of everything sold in the US. While the top six online retailers have 6 billion SKUs, we still go to physical retail over 80% of the time. The 40% of retail companies thriving with their digital transformations have recognized how their DNA needs to become more digital, in both the front and back office, to thrive (June 2018 Digital Genome DNA research). Walmart, Zara, and others are learning to adapt digitally. Digitally healthy retailers will thrive in this new environment but they need to shift away from just availability as an asset to towards experiential values for consumers (service, knowledge, etc).

Yes, we are going to see an increasing ability to try and buy from digital suppliers (just think Zappos on steroids). Yes, traditional shopping malls (a poor substitute for online browsing) are dying or evolving into complete experiences. But choice has never been better for consumers, anywhere in the U.S. or the world. Near instant price checking can now be done on billions of products and brands. Why would we want to take that away from consumers or business to business buyers?

3.   Data matters, but not in the way Senator Warren claims

Senator Warren argues that brands like Amazon can see patterns of purchasing that give them an advantage that allows them to launch competitive brands to smaller suppliers on their platforms. That may be true, but what about Costco and its Kirkland brand, or the fact that over 15% of products on physical retailers’ shelves are inhouse brands designed to compete with non-store brands right next to them? Go to Amazon and see how many Amazon branded products there are in any category. It will be less than .05%. Our purchasing data is a super complex network effect. I want to be shown what people like me have done, and also see my purchase history. The 40% of retailers and distributors who are thriving digitally are very highly indexed around using new forms of information for success (physical or online). Most of the valuable new data forms are available to all retailers, not just Amazon, and you can ask customers for it.

The challenge is that data is going to be very powerful in how it can be used by other organizations. Imagine the danger of your DNA data in the hands of a consumer company, or live location data being tapped into by somebody about to break into your house. Data brokers, the one area we can legislate against, are not being focused on by Senators. Companies like Facebook who have access to very personalized information need to be given limits to what they can sell or pass on. It isn’t just social media giants doing it.

4.   Content online far exceeds TV or the Cinema

Companies like Netflix, Amazon, and Hulu have amazing on demand content pools. You can watch whenever you want, switch programming, turn it off, rewind and abandon it whenever you want to. There is no magical Thursday night, there is now every night in every moment could be magical. They do have vast arrays of data about us but why should we mind if they know that I watch re runs of MASH on Netflix and the Grand Tour on Amazon Prime, while occasionally taping into Dawson’s Creek on Hulu. Why would we want to throttle that opportunity? Yes, traditional TV (with its advertisers) have objected, but the failure to adapt is not going to be helped by legislation.

5.   News is an issue – We need to invest in new learning methods, not legislation

Mostly because the level of authentic vetting is questionable (no matter what view point we each have). Yes, we have no Walter Cronkite anymore, we have to filter what we want to see, hear and believe. Yes, we all have a subconscious bias to certain ideas and views. Legislation cannot handle this idea, we have to educate ourselves better and invest in helping our children handle this new filtering world far better than we have. Irrelevant of the last election filtering good from bad information requires investigative skills and governments should be helping all of us learn these skills right now. You cannot legislate for fake news but you can re train citizens.

6.   Skill sets are radically changing, we need government encouragement

Nobody could claim that the skills needed to thrive in the 21st century are going to be the same as the previous fifty years. We should be focusing on building these new skills and we need help here. For example, more tax support for people and companies looking to retrain people. More investment in seeing education and re-training as an ongoing personal responsibility. Where are the PSA’s about the need to adapt to the future and evolve our personal and technical skills?

Populism is dangerous

Populism and rhetoric of any kind is not helpful to generate the right solutions for our children, grand-children or Millennials about to take over as the largest portion of the global workforce.

The power of the tech giants is that they have based their whole enterprise on the idea that Michael Schrage (MIT Media labs) eloquently described as, “digital making the esoteric the norm.” Twenty-eight percent of all corporations get this and are scrambling to digitally transform themselves into platforms for business and not businesses that have technologies. If we are to succeed then we need to innovate in many different ways in how we think, design and act for success. This does not mean legislating based for the future based on old world assumptions.

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