If Elizabeth Warren became POTUS and broke up big tech

'If the US senator Elizabeth Warren were elected to the White House and carried through on her promise to loosen the grip that big tech has over society and business, the resultant changes would flip the marketing landscape on its head' – says Ben Poole of Reprise

United States senator Elizabeth Warren has vowed to break up the tech giants, if she is elected to the White House in 2020.

A bold claim. But what are the ramifications for media and marketing land, if that ever happens and she keeps to her word?

Firstly, let’s clarify what Warren is proposing, from her blog post: “First, by passing legislation that requires large tech platforms to be designated as ‘platform utilities’ and broken apart from any participant on that platform.

“Amazon Marketplace, Google’s ad exchange, and Google Search would be platform utilities under this law. Therefore, Amazon Marketplace and Basics, and Google’s ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.

“Second, my administration would appoint regulators committed to reversing illegal and anti-competitive tech mergers. I will appoint regulators who are committed to using existing tools to unwind anti-competitive mergers, including”:

• Amazon: Whole Foods; Zappos
• Facebook: WhatsApp; Instagram
• Google: Waze; Nest; DoubleClickLet’s look at the potential implications through a couple of illustrations.

Say Amazon Marketplace gets separated from Amazon Basics. The implication for brand manufacturers would be positive.

Until now, Amazon has held a wealth of data on sales of Huggies diapers on its platform and has then launched its own diapers under the ‘Mama Bear’ brand. If I were a manufacturer, I would indeed be suspicious of Amazon being both platform owner and participant on the platform.  

How does Amazon assure me that it is fair in providing equality in manufacturer presence on its platform? How does Amazon convince me that its Mama Bear brand does not have a competitive advantage on the platform?

There would ensue a much greater level of brand trust in partnering with Amazon Marketplace were it split from Amazon Basics. Manufacturers would feel assured of competing in Amazon’s paid and organic listings on a level playing field. Their sales data would be protected from Amazon’s ‘own label’ competitors.

Now let’s say Facebook, Whatsapp and Instagram get broken up. Assuming that Warren could pull this ‘unwinding’ off (and it is a major assumption), there would be benefits and drawbacks for marketers.

The ultimate positive would be diversification in the marketing plan. According to estimates, in the first quarter of next year Instagram will account for 28% of total Facebook ad revenues.  This would mean a 72/28 investment separation in the media plan, just for starters.

The ‘Zuck’ will not be a fan of Warren’s brand of politics

Marketers here in Asia are investing in Facebook and Instagram at a dizzying rate. A more balanced plan with multiple partners would mean more competition between the partners, more innovation between the partners, more partner appetite to comply with third-party industry standards and less advertiser reliance on fewer partners.

So more advertiser leverage in the market and lower walled gardens than exist today

The downsides would mean less automation, reduced efficiency and potentially effectiveness across platforms plus more hours required to plan, buy and optimise campaigns. There would also be less innovation from one platform being deployed on another and lower investment leverage with single entities. For example, Facebook spend would decrease by 28% based on the above projections.

In addition, we could expect a less seamless user experience across platforms, more complex future payment mechanisms, more user IDs required and more partners for marketers to manage.

Look, this is very early days and let’s see if Warren actually makes it to The Oval Office. However, the rising concerns with big tech’s power and influence will continue regardless of whether she becomes POTUS or not. 

The European Union has already dished out multi-billion dollar fines to Google for abusing its dominant position with Android and shopping search. Anti-competitive behaviour will be continue to be punished by governments and regulators.

In fact, I predict that at the very least the big tech separation of platform utility from platform participant will come to fruition. That in itself would be an earthquake.

Poole says there are pros and cons to breaking up ‘big tech’

This piece is by Ben Poole, Asia-Pacific managing director of Reprise and first appeared on Mumbrella Asia here