The latest round of antitrust hearings has been a high drama distraction from the pandemic. But while parading the CEOs of Apple, Google, Facebook, and Amazon before Congress provided ample opportunities for both sides of politics to score points in an election year - it also highlighted just how different competition has become in the 21st century. Obvious questions were asked about personal data, political bias, and predatory pricing - but more interesting were those brief glimpses of how the leaders of the world's biggest tech companies really think. If the antitrust hearings proved one thing, it is that the right data can allow you to reframe the rules of marketplaces, precisely target acquisitions, and make oblique strategic moves. And therein lies the problem: just how exactly do you regulate a different way of thinking?
We are well familiar with the idea that data is valuable. As I explain in this talk, one of the best illustrations of the value of data was not a technology company being bought, but a casino operator going broke. In 2015, weighed down by $24 billion of debt, Caesars Entertainment Corp filed for bankruptcy. The curious part of the proceedings was a complaint made by the creditors, who argued that an item in Caesars' asset list had been grossly undervalued. In their view, the most valuable thing that Caesars owned was not its real estate or brands, but its data. The creditors argued that the Total Rewards customer database, made up of seventeen years of data on some 45 million program members, should have been valued at US$1 billion.
Naturally, in this age of inflated tech deals, US$1 billion is not quite what it used to be anymore. It certainly sounded like an outrageously large amount of money when Facebook bought Instagram in 2012. Now, not so much. Almost a decade later, it is tempting to wonder whether Instagram sold itself too cheap. Could they have become successful without Facebook?
That, among other questions, were raised in the antitrust hearings. Besides more colorful provocations that included references to Amazon as a cartel style enforcer and why competitors feared triggering Facebook's 'destroy mode' - the most revealing discussion focused on how Big Tech leaders make complex business decisions, and the implications for competition. Is Facebook buying potential competitors an anticompetitive act? What about when it copies features of companies it was negotiating to buy, but doesn't? Does Amazon use data from its third-party merchants to expand its line of Amazon-branded products? Is Google using its dominance of search to push its own set of algorithmic products and services? Are tech companies able to use their superior access to data to have an inside edge on investments and acquisitions? Do tech giants exert too much influence on markets that they control - whether it be for advertising inventory or App Store subscriptions?
Despite the carefully rehearsed responses of the Big Tech CEOs, there are no easy answers to any of these questions. Unlike more traditional industries, it is hard enough for antitrust regulators to define what an algorithmic market is, let alone specify how data leads to improper conduct. Data is not an asset in the traditional sense. Sure - you can collect it and store it, but if you don't have a sensible plan for leveraging it to either create smarter products or make better decisions - it isn't much use to you or harm to anyone else.
Antitrust hearings aside, it would be naive to place too much faith in regulatory protection. We are unlikely to see a coherent, sophisticated, and global regulatory regime anytime soon. Perhaps, we will never will.
For now, the good news is that the existential threat posed by the big four is arguably not as bad as you think. The most significant risk to your future isn't the tech giants using data as a weapon against you; it is your failure to adopt the same data-driven worldview. My advice? Smarten up - and learn to think as they do.
Data changes the way you see the world. As a leader, it helps you grasp that we live in a probabilistic universe in which rather than trying to be right, it is better to be less wrong with time. As an organization, it helps you abandon your outdated processes and orthodoxies, and reimagine how you do things. And as a consumer and an individual, it is a reminder that you still have agency. Understanding how your data is used and having a plan for using it yourself - is likely to be a foundational skill in this brave new world of smart machines.
