Streetwise Professor

January 11, 2021

The Stupidity–and Evil–of Giving Big Tech Firms Carte Blanche Because They Are “Private”

Filed under: Economics,Politics,Regulation — cpirrong @ 6:42 pm

Big Tech’s war on speech–or more precisely, on speech that they dislike–escalated wildly in the aftermath of the Capitol “insurrection.” Starting with the erasure of Trump (and others deemed in his orbit) from Twitter and Facebook–actions that drew rebukes even from France and Germany–it continued to expand over the weekend, most notably with Amazon’s abrupt termination of its hosting agreement with Twitter competitor (and nascent conservative platform) Parler, and Apple’s and Google’s extirpation of the Parler app from their app stores.

This is an escalation, yes. But in a war that has been raging for years. Amazon, Apple, Facebook, Google, and Twitter merely see an opportunity to gain a big victory in that war.

During that war, a standard response from many on the non-left has been: “They are private companies. They can do what they want. Constraining their ability to take these actions is anti-capitalistic, and anti-liberty.”

These arguments are simplistic, and as a result, it is easy to conclude that many of those making them are simpletons.

The simplistic presumption behind these arguments is that only governments can coerce, or exercise power to constrain liberty.

It is no doubt true that government power to coerce is typically greater than that of private individuals and enterprises, and that therefore government is most likely to be the enemy of freedom. But that does not imply that government is the only enemy thereof, and that therefore only governments should be constrained from limiting freedoms.

The presumption that private entities possess little coercive power is based on an implicit assumption. Namely, that competition between firms and individuals in markets sharply constrains coercive power, whereas government faces little competition and can therefore coerce more effectively.

The implicit assumption is reasonable in many contexts. I don’t have to worry about being coerced by my grocer or even auto manufacturers. Competition is robust, and if they try to coerce me, I can shop elsewhere. Absent collusion, I can rely on competition to discipline coercion.

The implicit assumption is definitely and wildly unreasonable in the case of the large tech companies. There network effects have sharply reduced competition, and greatly constrained choice. Further, as Amazon/Google/Apple v. Parler show, these companies are willing and able to utilize their control over certain assets to destroy those whom they oppose.

The standard arguments discounting the likelihood of predatory pricing or other predatory conduct don’t apply here. Those arguments presume profit maximization as the corporate goal. But the underlying motive for Amazon or Apple or Google to cut off Parler is almost certainly not to make higher profits later–Parler is not even a competitor of Amazon. Instead, their motive is nakedly political. Jeff Bezos is no doubt willing to take what for him (richest man in the world) is a small economic loss in order to advance his political and ideological objectives. (Do you think he bought the WaPo to make money? As if.)

It’s also essential to note that these “don’t interfere with private contracting decisions” arguments completely fail to recognize that the ship sailed decades ago, and that the current legal and regulatory environment represents almost a complete inversion of the appropriate spheres of which contracting decisions should be left alone, and which may justify some restrictions.

In the US, federal, state, and local governments have imposed extensive restrictions on the freedom to contract in competitive industries, while allowing firms in highly non-competitive industries (like the tech firms) to operate with impunity. Bakers and florists operate in high competitive markets–yet they cannot exclude some customers due to their religious convictions. Restaurants in highly competitive markets are highly constrained in their ability to choose whom to serve. The same goes for landlords in highly competitive rental markets, employers in highly competitive labor markets, and banks in highly competitive lending markets.

If you agree with–or even accept–such restrictions on private firms in competitive markets, you have no basis to demand that no constraints be imposed on firms in highly uncompetitive markets, just because they are “private.” Moreover, even if you disagree with the imposition of such restrictions in competitive markets, that does not necessarily entail disagreeing with restrictions imposed in uncompetitive ones. It is quite logical to oppose restrictions in competitive markets and oppose them in uncompetitive ones.

Indeed, as I noted when I first took on this issue some years ago, there were common law restrictions on firms with considerable market power even in what is arguably the most libertarian/classical liberal period and country in history–18th/19th century England/UK. Common carriers like inns and coaches were deemed to have market power, and the common law required such “common carriers” not to discriminate. That it an era of laissez faire that has not been equaled since.

Furthermore, and most importantly, it is simplistic–and actually idiotic–to presume that there is a bright line between public and private. The tech companies wield enormous political power, both through traditional means (lobbying, rent seeking, influence buying) but more importantly through their control over information flow, and their information about you, and their use of your information to control the information you get. The ability to manipulate politics, political outcomes, and government policy that this information dominance provides is arguably unparalleled in history. The two most powerful weapons in politics are money and information. Big tech has wild amounts of both.

What do you think that we are seeing right now, other than an attempt to utilize that dominance to manipulate political and policy outcomes? Saying that this is acceptable because these entities are formally private companies is to give them power that a US government with monopoly of violence is not permitted to wield. If you are fine with that, then you are my enemy, and the enemy of most Americans.

I also note that amidst all of the accusations that Trump is a fascist, and his supporters are fascists, a defining characteristic of classical fascism is collaboration between the state and large corporate enterprises. Who is the puppet and who is the puppeteer is not always easy to determine, and can change over time, but an alignment of interest between the state and large enterprise is characteristically fascist, and antithetical to liberty.

At the very least, these tech companies should be subjected to non-discrimination requirements–requirements that common carriers have been subject to for centuries, and which even non-common carriers (e.g., the baker and florist) are routinely subject to today. These platforms have market power, and those that control them use that power to discriminate, most notably on the basis of viewpoint and political belief/affiliation, and do so to influence how the government coerces you. They should be stripped of their right to do so.

With respect to Parler in particular, it has sued Amazon and Twitter, on three grounds. The most interesting is a Section 1 claim alleging a conspiracy between Amazon and Twitter to destroy a Twitter competitor. This is potentially the most dangerous claim, but also the one that is least likely to survive a motion to dismiss. Yes, such a claim of conspiracy is plausible, but evidence of a conspiracy must include more than parallel conduct or mutual interest. So far, what we know publicly does not provide evidence of an actual conspiracy.

The second claim is tortious interference. This could potentially have legs. Amazon has clearly interfered with Parler’s ability to provide services to its customers. It is very plausible that that interference is tortious.

I am thinking that Parler customers might have a tortious interference claim as well, that could be pursued via class action.

The third claim is breach of contract. Amazon gave Parler 30 hours notice of termination: Parler claims the contract requires 30 days notice. No doubt the contract is byzantine and complex and long, and that Amazon can point to some clause which permits termination with less than 30 days notice under certain conditions. Then it becomes a matter of fact whether those conditions were met. Parler will no doubt argue that they were not, and at the pleading stage the court has to accept plaintiffs’ version of the facts.

Truth be told though, Amazon may well be willing to accept a loss on the breach claim, and maybe even the interference claim. It will be all rather moot for Parler: it is likely dead even if it prevails on those claims. But Amazon will have achieved its true objective: killing an apostate.

Big tech is our enemy. It must be fought. It must be defeated. Posturing about their inviolability because they are private companies is simplistic, wrongheaded, downright stupid–and highly destructive to the point of being evil. They dominate the public space in ways no “private” entity has ever done, and thereby have directly and indirectly immense powers of coercion that must be controlled. They are currently wielding those powers ruthlessly. Only fools and knaves accept that based on some imagined principle that private entities are immune from any constraint.

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  1. @48 libte, all percents again. You didn’t learn the first time.

    @49 Tatyana, freedom of speech, freedom to ignore.

    Comment by Pat Frank — January 17, 2021 @ 11:44 am

  2. It is so much easier to ignore if the subject (and objects) exist somewhere outside of my sphere of perception.
    Besides, I don’t think the fact of an open tread means it should become a port for the internet garbage collection, to the garbage’ delight.

    Comment by Tatyana — January 17, 2021 @ 1:40 pm

  3. @52 Tatyana, I didn’t post garbage. Honest. Wasn’t the 0.998 polynomial correlation between the S&P 500 Index and value earned an interesting find?

    On the other hand, G. Udny Yule famously found a 0.95 correlation between Church of England marriages and life expectancy in the UK. So, forbid CoE marriages and every British person lives forever. 🙂

    Life is always more complicated than statistics.

    Now that I have your attention, what do you see coming for the US? I’m truly interested. Your experience is certain to inform your analysis.

    Comment by Pat Frank — January 17, 2021 @ 4:44 pm

  4. Pat, you misunderstood. I know you didn’t. But you waste your valuable time arguing with people who actively don’t want to listen. How many times, in the past …say, month, you communicated with david mercer? how many times he said, after min 50 comments back and forth, that you’ve convinced him of anything? 0. Same with others. The treads became a ping-pong game between you and 3-4 liberals, and each side keeps their own score. No matter what you’ll say, you will never get thru to them. You’re just feeding trolls, and serve as a magnet for their swarm. First it was just mercer, now there are at least 5 of them – and they monopolize the treads.

    I won’t make any attempt of analysis, sorry. Internet is a very transparent thing, and I’m not savvy enough to go underground.
    Other people are braver than me; for instance:

    Comment by Tatyana — January 17, 2021 @ 6:54 pm

  5. @4 Tatyana, I spent many years arguing religion and science (contra creationism) on the net.

    There were about 10 silent lurkers for every poster. I wrote for them.

    In all those years, to my knowledge, only one guy changed his view, suddenly while on a train between NY to Boston, apparently. 🙂

    Here, too, though I’ve no idea whether this site has many who read but do not comment.

    Also, even now, something in me rises up when I see a lie that pushes unfreedom.

    Comment by Pat Frank — January 17, 2021 @ 11:58 pm

  6. “…something in me rises up when I see a lie that pushes unfreedom.”

    yes, I know it well.

    still, it is more productive to divert your energies to a channel with a better outcome.

    so, Mayakovsky’s words: step down on the throat of your own song.

    Comment by Tatyana — January 18, 2021 @ 8:02 am

  7. On a second thought – and I apologize for sheer volume of my comments lately – Pat, I’ll give you one prediction.
    While Left Fascists (LF, from now on), drunk on their success, continue push the country to the edge of catastrophe, the infighting among them will intensify. Soon today’s blm- and antifa- thugs will be writing letters from jail: “dear comrade kamala! a terrible mistake occurred!”. Useful idiots like Fox, RINOs and their silent base will be the first under knife, but the logic of knives is that they aren’t satiated, ever.
    Common sense, really. But difficult to understand for the currently triumphant LF – until it’ll be too late.

    Comment by Tatyana — January 18, 2021 @ 8:27 am

  8. Aha, just in – to illustrate my previous:

    Promise, this was my last comment for today. Apologies to all concerned!

    Comment by Tatyana — January 18, 2021 @ 9:18 am

  9. What on earth is going on with the comments. While certainly not death less prose, nor pearls of wisdom, all of mine have disappeared! if I and others are going to be made unpersons, the least we deserve is a rude message explaining our untermenschlikeit!

    Comment by Sotosy1 — January 18, 2021 @ 10:42 am

  10. Maybe the Perfesser has applied his patented AI algo pack “Remove Market Knowledge Morons “?

    Comment by Sotosy1 — January 18, 2021 @ 2:00 pm

  11. @7 Tatyana, I share your prediction.

    The horror is that by the time the LF turn on one another ala’ Stalin, they will have already obliterated the Constitution and destroyed everything uniquely wonderful about America.

    Comment by Pat Frank — January 18, 2021 @ 4:21 pm

  12. Pat, it started (sooner, than thought):

    Comment by Tatyana — January 21, 2021 @ 9:30 am

  13. I wish them luck with their cannibalism, Tatyana.

    But I mourn for America.

    Comment by Pat Frank — January 22, 2021 @ 12:39 am

  14. Pat, let me translate and rephrase a [very non-PC] comment from one of my expats;
    Re: reaction on the Right to the election and accompanying events, he said:
    “I’m tempted to order a seal with a quote from my old sergeant and stamp a comment to every lament I hear. The quote is “In the Army there is no words “stolen from me”, there is only “I fucked up”

    Comment by Tatyana — January 22, 2021 @ 6:55 am

  15. Dead on right, Tatyana.

    The only remaining question is, now what? It seems the American road forks into tyranny or civil war.

    Comment by Pat Frank — January 22, 2021 @ 10:53 am

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