The monopoly power of Silicon Valley remains a massive public policy issue. Nowhere was this clearer than in the recent announcement by FCC Chairman Ajit Pai that he was seeking to end net neutrality, a set of regulations beloved by the industry. The response from tech was best exemplified by Matthew Prince, CEO of Cloudfare, who started seriously questioning whether there was a legal way to downgrade Pai’s internet connection in retaliation. So much for information being free, and all data being equal. Apparently, in techworld, if you disagree with its policy preferences, no internet for you.
This isn’t news, and Washington regulators should have stomped on the industry’s arrogance long ago. And now, there is an example to show them how to do it: the power of tech giants like Google, Apple, and Facebook, and of sharing giants like Uber and Airbnb might baffle the Swamp, but in the Land of the Rising Sun, there are no such illusions.
Yes, that’s right, Japan is doing a better job of holding Silicon Valley’s feet to the fire than the people who actually govern Silicon Valley. Witness the recent decision by Japan’s own Fair Trade Commission (JFTC) to target the home sharing company Airbnb for an antitrust action after discovering that the company allegedly banned hosts from hosting their houses using other services, effectively turning those very hosts into arms of a monopoly. Given that hotel rooms have a suspicious habit of popping up on Airbnb, this allegation seems particularly hypocritical, and good on Japan for at least investigating the problem.
U.S. regulators should take lessons, because the company’s behavior at home makes this alleged practice look positively pro-market by comparison. They could, for example, investigate Airbnb’s dubious tax sharing agreements with state and local governments, its own laxness on sending forms to its users, or its willingness to permit felons to host through its platform, regardless of the alleged terms of service.
But the problem goes well beyond Airbnb. The fact of the matter is that U.S. regulators’ inaction on such abuses by Silicon Valley seems to be due more to unwillingness than incapacity. A combination of tech industry money on the Left, and misguided market purism on the Right, have turned tech into being politically untouchable with too many of Washington’s elite, many of whom no doubt fear having their attempts to rein the industry in attacked through platforms like the front page of Google. Some may even fear the ability of tech to degrade them personally, as was experienced by former Sen. Rick Santorum (R-PA), about whose experience with Google searches little explanation is necessary.
This fear is understandable in many respects: the failure of anti-tech policies like the Stop Online Piracy Act (SOPA), a bad piece of legislation that deserved to be buried, has no doubt been mistakenly interpreted as a proverbial horse head in the bed by Washington’s policymakers. Indeed, the very recent dominance of tech in America’s economy may explain why Japan was more willing to take a stab at the Silicon Valley giants: Japan’s industry has relied on its tech sector for far longer than the U.S., and thus knows the ins and outs of what such an industry can do far more intimately than D.C. policymakers do. Nevertheless, the stomach will have to be grown over here, and sooner rather than later. Groups like the Open Markets Institute on the Left have already provided blueprints for similar antitrust actions against giants like Google, while former White House Chief Strategist Steve Bannon has proposed using the full regulatory muscle applied to utilities against the same companies.
Japan’s action can and should spur more attention to such proposals. That is, if the CEO of Cloudfare thinks you’re still allowed to read about it.