President-elect Joe Biden has signaled that his administration will take an aggressive posture toward big tech, which will likely include the pursuit of an ongoing antitrust lawsuit against Google (GOOG, GOOGL) as well as an effort to repeal liability protections for social media platforms like Facebook (FB).
But observers wonder whether Biden will ultimately push to break up the tech giants altogether.
In a new interview, LinkedIn co-founder and top Democratic donor Reid Hoffman cautioned against the breakup of major tech companies, arguing that their size strengthens the U.S. economy as big competitors ascend in China and elsewhere.
Hoffman predicted that heightened competition in the tech sector will soon double the number of U.S. tech giants, even in the absence of strong intervention from the federal government.
“The classic notion of an antitrust or a break up — I think those are generally speaking going to be actually in fact counter to American health and prosperity,” says Hoffman, a top tech investor in Silicon Valley at venture firm Greylock Partners.
“We have maybe five tech giants today,” he adds. “Five years from now, we’re going to have 10 tech giants.”
In Washington D.C., scrutiny of the the four largest tech companies — Amazon (AMZN), Apple (AAPL), Facebook, and Google — has escalated, including last month the release of a scathing House antitrust report and the opening of a Justice Department antitrust lawsuit against Google that alleges the company illegally ensured its dominance in search and search advertising.
Meanwhile, a string of strong earnings reports from the tech giants in recent weeks showed thriving business amid the COVID-19 pandemic, which has forced many Americans into their homes and induced further reliance on services like e-commerce and streaming entertainment. The tech giants have also propelled gains in the stock market.
While “stay at home” tech stocks like Amazon and Facebook fell after news of promising initial data for a COVID-19 vaccine on Monday, they regained some of their losses later in the week.
Hoffman predicted that the increasingly competitive sector will beget even more success stories, empowering small companies to join the ranks of the biggest firms.
“Competition between those tech giants is what creates lots of space for startups to either get their initial base, or to grow into being the 11th [tech giant], or to be bought by one of them,” he says.
“That’s part of the reason why I think — actually, in fact — the antitrust isn’t the right thing,” he adds. “But figuring out how to contribute the right way to the health of our society and global society is the right thing.”
He said he supports some regulation of tech companies, such as an effort to contain the spread of misinformation online. But he wants to ensure that the firms can continue to innovate.
“You want to shape them,” he says. “What are the tools and sets we can do to build regulation to the outcomes we want? But don’t try to enshrine the past; allow adaptation into the future.”
Hoffman spoke to Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
Setting aside Chinese firms, Hoffman cited U.S. companies like Airbnb and Salesforce (CRM) as among those that can grow into multi-faceted tech giants that compete across multiple product categories.
“There’s a range of these companies that can become a multi-part technology platform,” he says. “Then with China, you’re going to see a ton more.”