Biden anti-trust executive order is a wake-up call for tech industry and big tech companies

Observers react to the president’s call to action on surveillance, data accumulation, “big tech platforms” and that the FTC can establish rules against unfair competition on internet marketplaces.

U.S. President Joe Biden signs executive order on “Promoting Competition in the American economy” on July 9, 2021. Behind him are, from left, Secretary of Transportation Pete Buttigieg, Chairperson of the Federal Trade Commission Lina Khan, Secretary of Health and Human Services Xavier Becerra, Secretary of Commerce Gina Raimondo, and Attorney General Merrick Garland.
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Small tech businesses are applauding the Biden Administration’s Executive Order on Promoting Competition in the American Economy, while analysts think the measures are geared more at consumer companies and don’t do enough to address the B2B market.

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The EO details actions to be taken against “big tech” including greater scrutiny of mergers, encouraging the FTC to establish rules on surveillance and the accumulation of data, and also requesting that the FTC establish rules barring unfair methods of competition on internet marketplaces.

“An increase in anti-trust activities on tech companies will primarily impact B2C-focused companies like Facebook, Amazon, Apple and Google. In general, tech vendors that sell to businesses are not going to be the target of these activities,” said Andrew Bartels, vice president and principal analyst at Forrester.

The main exception would be the hyperscaler cloud providers such as AWS, Google Cloud and Microsoft Azure, Bartels added, “but even there it might be collateral impacts [such as] pressures for Amazon to spin off AWS or Alphabet to spin off Google Cloud,” since that would be likely to create more competition for IaaS or PaaS.

Bartels said he was not optimistic that the federal government would make any effort to “go after Microsoft on either the OS side or the Office angle, given the outcome of past efforts to tackle Microsoft’s market dominance.”

Forrester Principal Analyst Lee Sustar agreed that the hyperscalers might be targeted, saying that there is growing concern among enterprises that the large cloud providers “are creating vendor concentration risk. While the executive order seems more focused on consumers, businesses would like to see continued competition around pricing and service offerings as the transition to the cloud gains momentum beyond the early adopters.”

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Sustar said it isn’t yet clear if businesses will push the Biden administration to use anti-trust efforts to achieve that outcome.

Meanwhile, small tech businesses were bullish—and even ebullient—about the order’s potential.

Saryu Nayyar, CEO of SIEM provider Gurucul, said the Biden administration “fired its first shot at big tech” with the introduction of an executive order that seeks to limit possible antitrust behavior in large and wealthy social media and advertising platforms. By acquiring smaller innovative companies, firms like Facebook and Google are thought to be stifling up-and-coming competition, extending their dominance in their respective business domains,” Nayyar said.

The order indicates the federal government is more closely evaluating mergers, as well as examining how much personal data can be collected by these companies and how they use this data, she said.

“This may be a wake-up call for big tech companies who for years have operated with minimal government oversight,” Nayyar said. “In particular, those companies that have played fast and loose with data and enabled attackers to steal private data may find themselves on the receiving end of restrictions on how much privacy data they can collect and how they protect it.”

Garret Grajek, CEO of identity, governance and administration provider YouAttest, also applauded the order.

“Any action that ensures that new ideas and new methodologies are encouraged rather than crushed by uncompetitive or monopolistic practices is a welcome sign,” Grajek said. “Kaseya, Colonial, SolarWinds all show that we need our best and brightest upfront to win in this battle against the enemies of an open internet.”

Startups create new ideas and become absorbed into the larger companies for more widespread adoption and distribution, Grajek maintained. “It is important that government action does not squash this natural and healthy ecosystem of product and idea development.”

Kyle Wiens, CEO of iFixit, an online repair community and parts retailer, is also enthusiastic about the White House’s move. “Small businesses are the lifeblood of the American economy, but big tech has done everything they can to drive small repair businesses out of the market,” he said. This is a huge step by the Biden administration to protect local businesses and consumers that are being trampled.”

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Wiens noted that in the order, the White House specifically calls out “cell phone manufacturers and others blocking out independent repair shops.” Such companies “hinder repair by blocking distribution of needed parts and tools and requiring proprietary software to complete fixes, making repairs more costly and time-consuming,” he said.

The FTC was already working toward a bolder take on fair repair markets, Wiens said. The agency’s May 2021 report, Nixing the Fix, “found that companies routinely violate warranties, that repair restrictions likely impact low-income families and communities of color, and that there was “scant evidence to support manufacturers’ justifications for repair restrictions.”

The right to repair is an explicit right, he said, and “a vindication of iFixit’s mission and efforts for years. … Fixing your own things is noble, educational and a lifelong skill. Just ask Apple co-founder Steve Wozniak, who earlier this week lent his full support to the Right to Repair movement.”

The EO “recognizes what repair advocates have said all along: If you buy a product, you own it, and you should be able to fix it however you choose—either by yourself or with the help of an independent repair professional,” said Kerry Maeve Sheehan, iFixit’s head of U.S. policy. The company is “eager to see how the FTC takes up the call.”