Tech elites dismiss breakup threats from Washington






Jeff Bezos

CEO Jeff Bezos and others in Amazon’s inner circle aren’t preoccupied by a potential forced restructuring at government hands. | Mark Wilson/Getty Images

SCOTTSDALE, Ariz. — Top tech company executives are shrugging off the growing calls to split apart their companies gaining traction in capitals around the world.

The idea that Silicon Valley’s biggest companies should be broken apart has gotten momentum in recent months in both parties in Washington, as both Trump administration regulators and Democrats like Sen. Elizabeth Warren express interest in curbing the dominance of companies like Google, Facebook and Amazon. But leaders from several major American tech companies insist that trust-busting worries are far from their minds — in what could be taken as faith in their business models, forced bravado, or the kind of hubris that has angered regulators and activists alike.

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“We don’t spend a lot of time talking about it,” Andy Jassy, CEO of Amazon Web Services, said about the possibility that federal regulators could spin off his unit from its parent company, Amazon.

Jassy, speaking at an industry gathering called the Code Conference roughly 2,000 miles from Washington, said CEO Jeff Bezos and others in Amazon’s inner circle aren’t preoccupied by a potential forced restructuring at government hands. Far more front of mind, he said, are Google and Microsoft gaining ground into the cloud computing business AWS has long dominated. (Amazon and Microsoft are vying for a $10 billion cloud contract with the Pentagon that has inspired considerable political maneuvering in Washington.)

Likewise, YouTube CEO Susan Wojcicki said she hasn’t stopped to consider talk that her company should be severed from Google, though she added that should such a move happen, “We would figure it out.”

The executives generally conceded that Washington was unlikely to stick with the hands-off approach that accompanied Silicon Valley’s rise. “There’s definitely more regulation in store for us,” said Wojcicki. But the possibility of breakups, they said, was a remote concern.

Some of the industry’s strongest critics call the public display of confidence unconvincing.

“These companies have every political interest in suggesting this is no big deal,” said Stacy Mitchell, co-director of the Institute for Local Self-Reliance, one of the most prominent advocacy groups pushing for tougher antitrust scrutiny of Silicon Valley. “But the striking thing is that all of them are massively beefing up their lobbying muscle in D.C. The thing to do is to watch what they do and not what they say.”

Indeed, the biggest online companies have invested heavily in protecting their policy interests in Washington, manifested by their sizable and growing influence operations. Google alone spent $21.2 million to lobby the federal government last year, alongside donating to hundreds of associations and policy organizations in the capital. And they’ve also ramped up their efforts in Europe, where regulators have punished Google with a total of $9.2 billion in fines in the past three years and have opened investigations into Facebook, Amazon and Apple.

On the other hand, U.S. legal standards present serious obstacles to any attempt to break up companies through antitrust action, and the Justice Department lost a major court fight last year when it tried to stop a merger between AT&T and Time Warner. And deep partisan divides in Congress pose an obstacle to enacting any substantive legislation on any topic before the 2020 election, including antitrust.

The tone at this week’s gathering of tech elite at a cactus-strewn Arizona desert resort — where gift-bag options include a Sonos One speaker, a $100 gift card to the delivery service Postmates and a 23andMe genetic testing kit — suggests that, at least in public and among their peers, Silicon Valley leaders see little to fear in Washington’s raging debate.

The timing was particularly striking during a week when Congress is fixated on tech and antitrust. The House Judiciary committee, which recently launched an investigation into major U.S. tech companies, kicked off a series of antitrust hearings on Tuesday with a focus on news publishers’ complaints that Google and Facebook are destroying their industry.

Warren has made the issue a signature part of her presidential platform, announcing a proposal to break up Amazon, Facebook, and Google that has inspired calls from Vermont Sen. Bernie Sanders and California Sen. Kamala Harris for tougher tech industry scrutiny. Trump has sounded similar themes repeatedly, including during a Monday interview in which he said of Google and Facebook, “Obviously there’s something going on in terms of monopoly.”

Advocates for tech company breakups say that by dividing the industry’s biggest firms into their component parts, regulators can force the newly solo firms to compete with one another to the benefit of consumers. An independent Instagram and Facebook, the thinking goes, would have an incentive to compete on everything from user privacy to anti-harassment measures — rather than continue to hoover up users’ data with little or no accountability.

The company’s executives argue the opposite. Instagram head Adam Mosseri, for example, was bluntly dismissive of the prospect of his firm being cleaved from Facebook.

“I think it’s a terrible idea,” Mosseri said, saying Instagram draws on Facebook’s deep resources on everything from combating hate speech to identifying election interference.

The possibility that Washington might actually take antitrust action against tech — ranging from fines to breaking up firms — has increased in recent weeks as the Justice Department and Federal Trade Commission struck a deal dividing enforcement over a portfolio of companies, with DOJ taking Google and the FTC claiming Amazon.

The FTC has also launched a high-tech task force, staffed with a dozen-and-a-half lawyers, that will examine competition issues in the tech industry. In a speech Tuesday in Israel, DOJ antitrust chief Makan Delrahim — while circumspect about what his division will ultimately do on tech — said he sees “valuable lessons” in the government’s breakup of Standard Oil in 1911.

In one reflection of the changing realities, the tech executives gathered in Arizona expressed an openness to government setting more rules of the road for their industry. Jassy, for example, said he welcomed national regulation governing the sort of facial recognition software his company sells under its Rekognition brand. “I’d wish they’d hurry up,” Jassy said of federal lawmakers.

But when it comes to becoming the target of breakup talk, the tech leaders here portrayed it as less of a threat than a badge of honor — a natural outcome, as Jassy framed it, of a company succeeding on a grand scale.

Of the potential for a breakup, he said: “At the end of the day, we operate in the United States, and we follow United States law, so if we’re forced to do it, I guess we’ll have to.”



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