What Big Tech’s Response to Russia Really Tells Us
The Russian invasion of Ukraine has revived discussions of the foreign policy significance of the U.S. tech industry. Companies like Apple, Google, Twitter, Amazon, and Meta have either threatened to shut down or have entirely shut down services in Russia. While immediate reactions have celebrated these companies for taking an active role in condemning the invasion and the ensuing humanitarian disasters, there are also some troubling implications when a few tech companies can conspire to shutdown critical digital services for an entire nation. These companies are so powerful that, if they were to cut services within the United States, we would be living in a digital desert. As long as a few companies have this much power, the old question remains: who watches the watchmen?
It certainly isn’t the market. Google controls 90 percent of all internet searches in the world, which provides the tech giant almost unfettered access to every website. In terms of apps, Google and Apple make up about 95 percent of the U.S. app store market. Amazon houses nearly a quarter of all internet traffic on its AWS servers. In other words, Big Tech controls the market, not the other way around. But if it isn’t the market, then what inspires Big Tech to pull services with nonchalance?
Big Tech has claimed that its actions in Russia are based on humanitarian grounds, yet these companies’ relationships with China demonstrate that humanitarian objectives are not always their prime consideration. For example, China has enslaved Uyghurs and persecuted political dissenters. China has also threatened to use military force against Taiwan.
Big Tech’s response in China? A shrug and a helping hand to the Chinese Communist Party (CCP). For instance, Apple has removed apps that reference Taiwan as an independent state. Google has removed anti-Chinese content and apps that identify CCP-sponsored materials from its platforms. Amazon, together with its local partner, censored content in its comment sections based on what the CCP found offensive.
The real difference between China and Russia for Big Tech is, at the end of the day, money. Frankly, Big Tech companies do not generate as much revenue in Russia (roughly 2 percent) as they do in China. Russia’s low contributions to tech’s bottom line may have been the decisive factor in whether to deny services to the entire Russian population. By contrast, Apple generates nearly 20 percent of its overall revenue in China (and also has significant manufacturing dependencies in the country), and its revenue there is growing. Google revenues in the mainland grew by 60 percent in 2018 and they’re still on an upward trajectory.
If this is the case, however, then what happens when Big Tech’s revenues in autocratic nations exceed sales in the United States?
This possibility offers another reason why America should focus on policies that make the market more equitable for Big Tech’s competitors. There are two realistic paths to do this: antitrust enforcement or new legislation to ensure that Big Tech plays fair with competitors. And of course, the two are not mutually exclusive.
Meaningful antitrust enforcement against the tech sector is not without precedent. The government has consistently stepped in when large tech firms achieved extraordinary levels of market power. In 1956, the DOJ imposed a consent decree on IBM that required it to have open interface standards. This action paved the way for Microsoft and other PC players to compete against the Big Tech monopolists of the time. In 2001, when Microsoft became the Big Tech monopolist, the DOJ put similar restrictions on it to open the browser market. Ultimately, this helped scrappy disrupters building operating systems, like Apple and Google, to innovate and compete without falling under Microsoft’s influence.
On the other hand, antitrust suits take a significant amount of time and are inherently ad hoc. Moreover, courts have an extremely hard time assessing competitive harms or relevant markets for today’s tech sector, especially for those providing so-called free services.
New legislative efforts may therefore be the most effective way to even the odds for smaller companies. Thankfully, legislators in both chambers and from both sides of the aisle have put forward proposals offering targeted approaches to specific types of anticompetitive behaviors.
To take one example, the Open App Markets Act loosens Apple and Google’s grip over the app store market. It would prevent those companies from using their gatekeeping position to essentially extract 30 percent rents from app developers or even steal third-party developers’ apps. The bill would provide smaller developers with the appropriate leverage to challenge large app store platforms’ often arbitrary standards—some of which arguably have anticompetitive intentions—such as forcing native payments systems on developers and denying them the ability to set their own prices. Moreover, the bill would prevent Google and Apple from arbitrarily denying consumers the choice to download third-party app stores with better terms.
Ultimately, multiple approaches will likely be necessary. But if there is no perfectly “free” market, then let’s at least try to make it fair for competitors, especially as big tech companies’ profit motives, in China for example, may eventually drive them in very different political directions.