Politicians Go After Amazon and Facebook: Regulations Proposed

Graphic Credit: Bernadette Berdychowski

Last week at SXSW, a mix of music, film, and tech festivals and conferences in Austin, Texas, New York Congresswoman, Alexandria Ocasio-Cortez answered questions at a Q&A about automation in the United States economy. She believes that “[W]e live in a society where if you do not have a job you are left to die and that, at its core, is our problem.”

She reaffirms Bill Gates’ statement with Quartz that the United States should implement a 90 percent tax on robots, which she explains really means taxing corporations 90 percent.

Her proposal for a 90 percent tax on robots fired up both sides of the aisle. To some, this is a fresh take on an important issue that needs to happen now. To others, this is a nonsensical unrealistic way to aid the issue of automation. While Gates and Ocasio-Cortez’s proposal has good intentions, there are dangerous consequences that come with it.

First, what counts as a robot? Is a robot the Roomba in your home? Is it Alexa? Is it what creates the cars we drive? There needs to be a concrete definition of what a robot is.

Second, a 90 percent tax will disincentives companies to operate within the United States. Instead, companies will move their business elsewhere, like New Zealand.

WIRED’s Israel Vargas reports that work visas granted to Americans have increased by 78 percent in the past seven years. Techies are taking their startups to Auckland, Wellington, and Christchurch for easier market penetration, simple immigration criteria, and the “same no-BS attitude” Texas native turned Kiwi Shawn O’Keefe said.  

Elizabeth Warren also made headlines earlier in March with a proposal to break up Amazon, Facebook, Apple, and Google. Similar to Ocasio-Cortez’s comments, Warren’s push to break up “Big Tech” was met with either hostility or praise.

According to Techcrunch’s Jonathan Shieber, any company that makes over $25 billion in annual revenues and provides a marketplace, exchange, or third-party “platform utility” must be broken up from said “platform utilities.”

Warren continues by saying that “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.”

Host of Gadget Lab Podcast, Michael Calore, is skeptical that legislation is the way to make Facebook or Amazon “play nice”. He believes that a “cultural shift in lifestyle decisions en masse is the thing that would have probably more of an impact.” He addresses that Washington is famously slow and that they’ll be legislating to solve problems that maybe don’t exist anymore and there will be new problems that need to be tackled.

But, Academic Fellow at Columbia Law School and Senior Fellow at the Open Markets Institute, Lina Khan shared Warren’s concerns for competition amidst Amazon’s actions that are, as Khan believes, “bad for competition.”

In NPR’s Planet Money Podcast, Khan breaks down how Amazon Marketplace works and the conflict of interest within the marketplace. Like an actual market, businesses sell their product to customers who are wanting the product. Amazon joins in on the selling of products by creating their own Amazon Basics products. But, Khan argued, in the long run, Amazon selling Amazon products on the Amazon Marketplace is bad for competition since Amazon has the capability of “deciding who comes up where on the search rankings” even though it competes with other brands.

Some argue that this happens in grocery or retail stores. Kroger can make their own generic version of Frosted Flakes and put the real Frosted Flakes on the bottom shelf where their own generic version is at eye-level. Khan says this is different since there is more competition in the grocery or retail industry than in the e-commerce industry. Amazon is the juggernaut of online marketplaces in the United States.

Scott Hemphill, Law Professor at NYU, on the other hand, does not think the system needs to change the way Lina Khan does. Instead, Hemphill wants to investigate tech mergers, like Instagram and Facebook, or Waze and Google, and find the “why.” Hemphill is concerned that Facebook is suppressing competition by buying any company that is deemed a threat.

So, is a 90 percent tax on robots reasonable? Should we advocate for breaking up the tech elite? There is much to learn about both of these issues before forming a strong opinion because any decision made will greatly impact the way our society functions economically and ethically.