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August 19th, 2018

Insight

The trillion-dollar chameleon

Victor Davis Hanson

By Victor Davis Hanson

Published Jan. 18, 2018

Twenty years ago, no one had heard of either Facebook or Google, neither of which existed yet. For that matter, no one knew much about social media or search engines in general.

Cellphones were still simply mobile, small and expensive telephones. There was no concept of a phone as a handheld computer.

Today, five companies -- Amazon, Apple, Facebook, Microsoft and Alphabet (Google's parent company) -- have a collective worth of more than $3 trillion. Yet such transnational companies remain mostly exempt from the sort of regulations and accountability faced by most other industries.

Major corporations understandably fear product liability laws. Oil companies are hectored by class-action lawsuits and headline-grabbing attorneys badgering them to pay up for supposed climate change brought on by commuters filling up each week. Tobacco companies have paid out billions of dollars due to cigarettes' contribution to lung cancer. Pharmaceutical corporations are often forced to pay millions in fines when their prescription drugs cause dangerous side effects.

Yet every year, nearly a half-million Americans are injured in traffic accidents due to distracted driving involving a cellphone. No one knows how many millions of people worldwide are addicted to the apps on their smartphones -- a habit that can be harder to break than an opiate addiction and can leave addicted users in a similar zombie-like condition. Yet unlike Big Pharma, Big Oil and Big Tobacco, Big Tech is rarely held responsible for the deleterious effects of its products on millions the world over.

In most states, public boards and commissions regulate companies that provide public utilities. The theory is that such corporations use public spaces -- from power poles to underground pipelines -- to serve a captive public domain and provide an essential need. Radio and television stations are likewise regulated by the federal government on the similar assumption that the airwaves are not private property.

Tech companies such as Google and Facebook are also utilities of sorts that provide essential services. They depend on the free use of public airwaves. Yet they are subject to little oversight; they simply make up their own rules as they go along. Antitrust laws prohibit one corporation from unfairly devouring its competition, capturing most of its market and then price-gouging as it sees fit without fear of competition. Google has all but destroyed its search engine competitors in the same manner that Facebook has driven out competing social media.

Facebook and Google are now called a "duopoly." The two companies rake in roughly half of all internet ad revenue. Both companies sometimes censor and electronically snoop on their customers, massaging everything from the daily news to what we should buy. Could a Silicon Valley startup company offer an alternative to either Facebook or Google? It would likely be bought out or crushed the moment it became large enough to gain notice.

Why are huge tech companies seemingly exempt from the rules that older corporations must follow?

First, their CEOs wisely cultivate the image of hipsters. The public sees them more as aging teenagers in T-shirts, turtlenecks and flip-flops than as updated versions of J.P. Morgan, John D. Rockefeller or other robber barons of the past.

Second, the tech industry's hierarchy is politically progressive. In brilliant marketing fashion, the internet, laptops, tablets and smartphones have meshed with the hip youth culture of music, television, the movies, universities and fashion. Think Woodstock rather than Wall Street.

Corporate spokesmen at companies such as Twitter and YouTube brag about their social awareness, especially on issues such as radical environmentalism, identity politics and feminism. Given that the regulatory deep state is mostly a liberal enterprise, the tech industry is seen as an ally of federal bureaucrats and regulators. Think more of Hollywood, the media and universities than Exxon, General Motors, Koch Industries and Philip Morris.

Third, the tech industry boasts that it is green and clean. Plastic cords and screens almost magically produce podcasts, videos, email, social media pages and the internet. Few in the public worry about how lithium-ion batteries are made, or where and how their ingredients are mined. Pods and pads do not emit smoke. They require no gas, grease and oil. Smartphones and laptops apparently were spontaneously generated out of the clean air of the cool San Francisco Bay area and will dissolve back into it when they wear out.

Finally, high tech is an American specialty and a huge earner of foreign exchange. Politicians are understandably afraid of turning a golden goose into a sick hen. Without taxable trillion-dollar revenues from Facebook, Google and Apple, a dysfunctional, cash-strapped California would likely go broke.

The result is that high tech has become is a brilliant chameleon -- invisible in plain sight.

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