Should Big Tech Be Regulated?

• Author: Zingales, Luigi
• Position: SCIENCE & TECHNOLOGY .

AT THE BEGINNING of the 20th century, the invention of the automobile liberated individuals from the yoke of distance. While people could travel before the invention and widespread use of the automobile, they were bound in their daily lives by the limited distance horses could cover. Railroads alleviated, but did not eliminate, those restrictions--movement was confined by the location of railroad tracks and by train schedules. It was only the automobile that gave individuals the freedom to move at their own leisure.

A century after the invention of the automobile, the invention of the smartphone triggered a similar revolution--and, while history never repeats itself, sometimes it rhymes, and these rhymes can help us understand the present.

Before the smartphone, people were tethered to their landlines. In the 1990s, the proliferation of mobile phones and increased access to the Internet greatly expanded our freedom to communicate and our access to information, but it was the introduction of the smartphone in 2007--coupled with mobile communication and the Internet--that brought unprecedented access to information to the Western world and to a significant portion of the developing world.

We have at our fingertips today more advanced hardware and computing power than was used to send man to the moon, more information than is contained in the best library, and more power to communicate than any propaganda machine ever dreamed of possessing. The average individual, however, would not be able to take advantage of these hardware advances and computational powers without the proper applications. Companies like Apple, Google, Facebook, Twitter, and Amazon--what the press now calls "Big Tech"--enable average people to use these powers to improve their lives.

Yet, however much the automobile revolution improved lives, it also presented challenges that required regulatory responses--e.g., speed limits and traffic lights in response to lethal accidents and emission standards in response to air pollution. The Big Tech revolution poses challenges as well--including to free markets--and it is foolish to ignore them. While we no more want to go back to a world without smartphones than we do a world without cars, the question is whether we should manage this new technology so that it helps all of us and does not become just an end in itself.

From the outset, the car industry was fragmented. Roughly 3,000 companies were started in the U.S. with the intent to produce cars. Despite the fact that Henry Ford's introduction of mass production with the Model T in 1908 significantly increased economies of scale, there still were 44 independent car companies in the U.S. at the outset of the Great Depression. Only after that did the number of U.S. car manufacturers drop to eight...