U.S. Markets closed

Why the US should go after Facebook before Apple, Amazon, or Google

So the federal government is finally creaking into action and has seen fit to go after Apple (AAPL), Facebook (FB), Google (GOOGGOOGL), and Amazon (AMZN). Congratulations Washington, what took you so long?

After years of untold news stories, state and federal hearings and investigations, and actions by governments overseas, the U.S. government, (both the executive and Congressional branches) indicated this week that they are ready to take on the likes of Facebook, Google, Amazon, and Apple.

But by waiting as long as they did, the Feds make things that much harder. For instance, if one remedy is to break up Facebook, that company has been working like the dickens to stitch its platforms, especially Instagram, that much closer together.

The Facebook logo is seen displayed on a mobile device in front of a screen with data in this photo illustration in Warsaw, Poland on March 19, 2019. (Photo by Jaap Arriens/NurPhoto via Getty Images)

Moreover, going after all these companies simultaneously is a nearly impossible task. Remember the years and years the Feds spent pursuing AT&T (T), IBM (IBM) and Microsoft (MSFT) in decades previous? If anything, the current big tech companies are even richer, more powerful, and more sophisticated.

Plus, even though big tech has critics across the board — liberals who think it compromised our elections; conservatives who believe social media stifles right-wing voices; and national security wonks — getting consensus will be extremely difficult. And it's hard to believe that a Trump administration Justice Department or Federal Trade Commission really has a strong taste for these battles.

Because of all of this, Washington will need to prioritize its activity. Here is my handicapping of the government's war on big tech, from smallest priority to biggest.

Target No. 5 — Twitter

In many ways they are the worst actor when it comes to blocking bad behavior on their platform. (The company is doing a study on whether white supremacicts belong on the platform. WHAT?) Still even though Twitter is President Donald Trump’s medium of choice it is just not big enough and therefore bad enough to warrant government action. Remedy: Leave it alone, for now.

Target No. 4 — Apple

Critics say that its App store behaves monopolistically. What critics? News organizations have complained about its 70/30 revenue cut, as have some app developers and consumers who have filed antitrust lawsuits against Apple. But there are other options, like Android, which by the way, has a bigger market share. And websites! Of course it has no monopoly at all when it comes to its hardware; phones, watches, laptops etc. Apple is also increasingly framing itself as the privacy company, which of course plays to its competitive strength, but there is truth to that. Trustbusters don’t have much of a case here. Remedy: Not much. Maybe change the rev split to 60/40.

Target No. 3 — Amazon

Here we have an old-fashioned, it-has-too-much-market-power story, in terms of online retail. Amazon does in fact now have some 47% of digital sales, according to Emarketer. (Ebay is No. 2 at a paltry 6%.) That looks bad, and the company will for sure need to watch that birdie. But if you look at retail’s big picture, in terms of brick-and mortar and digital, Amazon comes in No. 7 after France’s Carrefour. Walmart (WMT) is No. 1 by a mile. AWS has big scale too but has Microsoft and others as big competitors. Remedy: Watch ‘em like a hawk.

Target No. 2 — Google

Alphabet — the parent company of Google — has two issues; YouTube, which is very Facebook-like and Search, which has crazy market share. First YouTube: As I noted, it has many of the same issues as Facebook, a huge platform with unclear rules and not enough oversight. (In other words a highly profitable software business.) It hasn’t been as egregiously negligent as Facebook, but I would say its business still needs addressing. As for Search, Google has 92% market share, as of of May 2019, according to web-traffic tracking company StatCounter Global Stats. Our parent company Yahoo has 2.7% and Bing (owned by Microsoft) has 2.4%. This is pretty extreme and the Europeans have seen fit to take action. Personally, I’m not so uncomfortable with the trade-off, i.e., Google knows everything about me and I get mail, maps, search etc for free. But it begs for oversight. Remedy: Apply same fixes for Facebook to YouTube. Create oversight commission to study and monitor Search.

Target No. 1 — Facebook

This is a company that dominates social media and stifles competition (it bought Instagram and squelched Snap). And it has shown time and again it has next to no control and little understanding of its platform. It has also been disingenuous about its problems and about fixing them. Its platform has led to deaths around the globe. It says it isn’t a media company, but its most prominent feature is called a News Feed. (Right.) Facebook Live is a mess. Facebook caused problems with our elections. How much? Who knows? Facebook doesn’t. What about the next election? Who knows? Remedy: Break it up.

So that’s my take. Let’s see what the Feds do!

Andy Serwer is editor-in-chief of Yahoo Finance.

Read more:

The downfall of 3 iconic German companies is nothing short of stunning

The splintering internet means trouble for Facebook, Twitter, and Google

Why a major tech investor has a ‘growing unease about technology’

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn,YouTube, and reddit.