inquiry. Tech giants rule our lives by sometimes imposing their laws. Have they become too powerful? Should they be dismantled?

In the viewfinder. Jeff Bezos (with Lauren Sanchez and Anna Wintour, at a Tom Ford show in February 2020, in Los Angeles), CEO of Amazon. Mark Zuckerberg, co-founder and CEO of Facebook (here, in 2018, in Washington). Sundar Pichai, CEO of Google.

Jamis MacNiven is rare at the moment at the Buck's of Woodside , his restaurant, one of the mythical places of Silicon Valley, located a stone's throw from the home of Joan Baez. This big guy, who, when he was 29 years old, spent his days retyping the house of Steve Jobs, has less fishing. Not only because Covid has limited service on a shaded terrace next to his establishment. But because, twenty years after having welcomed behind his bar Reid Hoffman, the creator of LinkedIn, or Jerry Yang the founder of Yahoo!, he can no longer find in his guests, who came to taste an avocado burger or a killer calamari in front of the painting of a Mona Lisa wearing a yellow cowboy hat, the same creative effervescence. Long gone are the days when the precursors of Silicon Valley came to him for advice. "To say that I didn't buy any shares Google," sighs Jamis MacNiven. I really lack pif. When Larry Page showed up here in 1997, I told him that against Altavista he had no chance... »

Today, the companies he saw born are in the firmament, but they are also the target of all criticism - and, above all, the main focus of the attention of regulators around the world, from Washington to Beijing to New Delhi, or Brussels (see interview with Thierry Breton).  Oh, not because they didn't invent anything. Not only do they attract the brightest minds, but they also file patents in abundance. Nor can they be blamed for their lack of imagination. the creator of Facebook, Mark Zuckerberg, dreams of being able to dictate text to a screen by thought, when Jeff Bezos, the founder of Amazon, invested to develop an artificial milk from chicory root and cabbage concentrate. As for DeepMind, the artificial intelligence research team of Google, it has just made available in open source the code of a neural network simulating the behavior of electrons.

Problem, these companies have become powerful. Too powerful. Their dominant position in markets that they have mostly cleared increasingly grips an ecosystem that can no longer live without them. Professor at the Chicago Booth School of Business, Luigi Zingales sees in this power - " Google, is not a king but an emperor," he explained to the Wall Street Journal - a threat to our democracies. Agreeing with the liberal economist Frédéric Bastiat (1801-1850), who saw in the monopoly a plague of humanity, in the same way as war, slavery or theocracy (see box). Should we, therefore, return to the radical positions of the American authorities who, from the end of the nineteenth century, attacked giant trusts? Dismantled, the Standard Oil Company, in 1892, into 33 small oil companies, including Chevron, Mobil, or Esso (after the INITALES. Dismembered, American Tobacco in 1910. On its ruins will bloom in particular the powerful Reynolds. Dismembered, the American Telephone & Telegraph (AT & T) which, in 1984, lined up 1 million employees. Sacred hunting board! Trustbusters have their bible: the Sherman Act, drafted in 1890 by Senator John Sherman to tackle mergers - more than 200 mergers had taken place in the United States between 1,898 and 1902! - supported by President Theodore Roosevelt, a liberal Republican and worried about the excesses of capitalism. Should we come to such an extreme?

Unbreakable giants

"The power of these companies is measured by the number of their users, the amount of their market capitalization, but also by their influence on their market," explains Marc Bourreau, director of the innovation and regulation chair at Télécom Paris. The reason for such an acceleration? "Economies of scale, first of all: when you develop an algorithm, the additional cost to each user is almost zero," adds the one who, at the end of October, co-authored for the Council for Economic Analysis the note entitled "Digital platforms: regulate before it's too late." To this must be added the network effect, that is, the tendency for consumers to register on platforms that have already attracted the largest number of users. "Today, even if you create the best social network in the world, you will not register if your friends are not there," explains the vice-president of the Competition Authority, Emmanuel Combe. Economists also agree on a range effect: in the same way as Uber, for example, which, having a good idea of traffic time in the city, launches Uber Eats, which transports food to your home, Google is about to launch Plex, a service that will allow users of Google Pay to open an account at a partner bank. In reality, Big Tech has embarked on a race forward that nothing seems likely to stop and that calls into question the creative destruction dear to Schumpeter, according to which a more innovative competitor came to question the established situations. "Most companies in the industry see the only way to survive is to get fat," said Tim Wu, a Columbia law professor and author of The Curse of Bigness.

From dominance to abuse, a thin line

"These companies have strong positions in the markets, they have often earned it. We would dream of having such companies in Europe. On the other hand, what is reprehensible is to prevent the arrival of new competitors by unfair means," explains Jacques Crémer, a researcher at the Toulouse School of Economics. An example? " Google was caught red shoes in the bag to do self preferencing: when you typed red shoes in the search engine, it referred to its own comparator, Google Shopping, to the detriment of competitors like Kelkoo  " explains the economist Emmanuel Combe. Another trend is bundles. Amazon uses its power to expand its services: the merchant offers Prime subscribers (fast delivery and price reductions via a subscription) access to Prime Video, which could well overshadow Netflix. Same scenario at Google, essential in online advertising for advertisers as well as for site publishers: "With their platform strategy, Big Tech easily become a "gatekeeper", a must for actors. When you are dominant, you must be transparent with customers about the conditions of access to the platform's services," continues Emmanuel Combe. And even when Big Tech is slapped on the fingers, the next generation has a hard time taking advantage of it. Thus, in 2018, taking into consideration the very strong position of the Android operating system (which equips more than 7 out of 10 smartphones sold in Europe), which was accompanied by the highlighting of the search engine signed Google, the European Commission condemned the American to make room for alternative engines such as the American DuckDuckGo, the German Ecosia, the French Lilo and Qwant or the Czech Seznam. A decision that Google interpreted in a very personal way: to have the privilege of appearing in this "choice screen", alternative search engines had to participate every three months in auctions - and only those who paid the most were highlighted. This "solution" certainly had the advantage of filling the coffers with Google, but it was particularly unstable for the interested parties who wrote, on October 28, an open letter to the European Commissioner for Competition, Margrethe Vestager. Pending response.

The death of small business?

The controversy born with the confinement resulted in the launch of a petition #NoelSansAmazon signed by several public figures, including the mayor of Paris, Anne Hidalgo. They accuse the company of being a "predator of jobs", "predator of land", or "predator of trade". Amazon, new big bad wolf? For its part, the platform, which claims, in France, 9,300 permanent jobs and the creation of "110,000 additional jobs within its supply chain", offers the possibility to no less than 11,000 French entrepreneurs to sell their products there. This is the case of papeterie Neveu for example, installed in Le Havre for eighty years, which explains that it has multiplied its turnover by five since it is present on the Amazon platform, L'Artisan du cristal which sells 30% of its handmade sales there since Baccarat or Maison Victor, a butcher shop in Montélimar, which has found a new showcase with Amazon. Jeff Bezos' company is putting the small dishes in the big ones by offering the first three months of membership in Amazon's marketplace. An offer that Francis Palombi, president of the Confederation of traders of France (CDF), encourages to decline, pointing to the commissions of 15% that the platform takes. "When they no longer need these small businesses, they will send them to graze. The fall is likely to be very brutal. Another risk: see the Seattle giant use the data collected on the marketplace to launch its products itself at a lower cost or to highlight them. The practice is the subject of an investigation for abuse of a dominant position by the European Commission: verdict expected in 2021. Until then, Amazon, which explains that it generates only 1% of retail worldwide - but still 49.1% of online sales in the United States - promises training to small merchants, to help them digitize. And, often, offers them remote management of their data, the famous cloud.

Already, in 1845, Bastiat... He was one of the great thinkers of liberalism and (therefore) one of the worst enemies of monopoly. In Physiologie de la spoliation, Frédéric Bastiat classifies it among the four great evils, along with war, slavery and theocracy. He explains that "its distinctive character is to allow the great social law service for service to remain, but to involve force in the debate, and consequently, to alter the fair proportion between the service received and the service rendered. And adds that monopoly "shifts wealth from one pocket to another; but he gets a lot lost in the journey"...

Soon the monopoly in the clouds

Because it is this data storage and analysis service, called Amazon Web Services (AWS), that is the real nugget of the Seattle company. Born in 2006, AWS posted last year an insolent growth of 37%, very enviable margins of 20% and, above all, relies on data collected from its million (!) customers - including SNCF, the video game giant Ubisoft  or the online payment start-up Payfit - to continuously improve its offer. Admittedly, Amazon is not alone in this market, but, in its conquest, it has multiplied the price reductions - no less than 44 between 2006 and 2014 - and offers scalable offers, which are based on the $ 23 billion that the company spends each year on research and development. "Today, tens of thousands of customers in France rely on AWS, including 80% of CAC 40 companies and more than 75% of the Next 40," Amazon explains. This is also the case for 80% of companies in the German DAX. As a result, European publishers - recently grouped in the Gaia-X consortium - are struggling to resist. "It's all the more cruel because the cloud solutions on which Big Tech rely are largely born in France, such as the Qemu virtual machine manager, developed by developer Fabrice Bellard, the free software Docker, invented at Télécom Paris, or Scikit-Learn, a library developed at Inria," says Jean-Paul Smets, creator of the free cloud provider Rapid. Space, based in Paris.

Cryptocurrency, military field... the temptation of the regal

You have to go to the southern suburbs of Geneva, in a former free port located in Lancy, then on the 5th floor of a building dedicated to coworking to find the team of thirty-somethings in shirt arms who are active in the creation of Libra. The idea of this cryptocurrency currently concocted by Facebook ? Create a currency that is not volatile, free from the power of central banks and easily usable on the WhatsApp (1.5 billion users), Messenger (1.3 billion) and Instagram (1 billion) platforms Facebook. Facebook  "We do not want a company like Amazon or Facebook develops digital currencies that can compete with sovereign currencies. Libra should not compete with the euro or the dollar," explains to the Point the Minister of the Economy, Bruno Le Maire. The tech giants are advancing ausi on the military field. Even if Amazon lost the gigacontract Jedi military cloud computing (of the order of $ 10 billion) to Microsoft Azure, it is indeed the prime contractor of C2 E, the CIA cloud. This sometimes poses problems internally among Big Tech: in 2018, Google suffered a wave of resignations from employees refusing to work for "Project Maven", a mapping system intended to guide the Pentagon's autonomous drones. Since then, he has won a cybersecurity contract for the Pentagon.

Taxes: catch me if you can!

Big Tech has been in trouble with the French tax authorities in recent years. Google had to pay 965 million euros, Apple more than 576 million. Facebook was the last to conclude an agreement. The social network has accepted a recovery of 106 million euros for the period from 2009 to 2018 and has been paying more annual taxes since 2019. If the state has won these battles against the American digital giants, the game is far from won. Big Tech always uses tax differences between European countries to reduce their bill as much as possible. For this, there is nothing like going through Ireland, where corporate tax caps at 12.5%. The technique consists in invoicing the services sold in Europe via a subsidiary established in that country or other states which then make it possible to send the profits made to offshore structures. For the purpose of doing so, subsidiaries which carry out the genuine economic activity are regarded as providers of technical assistance and marketing services for which they are paid modestly by the Irish company. An agreement is currently still under negotiation within the OECD to reform the rules of international taxation, despite AMERICAN reluctance. If it were validated, large companies would no longer be taxed according to their physical presence in a country but according to their activity, their turnover and their profit. Above all, they would have to pay a global minimum tax on their results, of the order of 12.5%. According to an assessment by the Council of Compulsory Levies, such a reform would save the France €7 billion in revenue per year from multinationals. In case of failure, Bruno Le Maire calls for the generalization in Europe of the tax on digital giants that he voted in France. It represents 3% of the turnover generated in France and brought in 350 million euros in 2019. While it had been suspended in 2020, a payment should finally be required in December, announced Bruno Le Maire.

Even China breaks monopolies

It was to be the largest IPO in history: Ant, the financial arm of the empire of Jack Ma, the founder of e-commerce champion Alibaba, was supposed to raise more than $ 35 billion in Hong Kong and Shanghai on November 5, 2020. But two days before the fateful date, the Chinese regulator abruptly suspended the operation. On October 24, Ma had the audacity to demand "reforms" that would give him free rein to attack the traditional banking sector. But never should a billionaire in China demand anything from political power. Xi Jinping himself has therefore ordered the spectacular sanction. However, the episode must not be reduced to the tensions of an authoritarian regime. The Committee for Stability and Financial Development, a super-regulator headed by Liu He, the Chinese president's economic adviser, has made it its mission to clean up the Wild West of fintech, digital financial services. With its payment (Alipay, 60% of mobile transactions in China) and credit (Zhima) apps, Ant generates considerable volumes and therefore intolerable systemic risks in a regime concerned with stability. Especially since finance is at the heart of the Chinese state's recovery policy... and his power struggles, with Jack Ma sponsoring "red princes" close to former President Jiang Zemin. Never will one clan let the other bring out such a behemoth that would have control over the Web and the country's finance. On November 10, Beijing published a draft antimonopoly regulation specifically targeting the tech giants, in the name of "undistorted competition" and the "market economy".

The hand on the pipes

Should we see this as a nod to Standard Oil which, in 1875, had control over a good part of the American railways? Apart from telecom operators, with sometimes aging infrastructures, Google is the first company to have deployed its own intercontinental submarine cables. After getting its hands on a small link between Rio de Janeiro and São Paulo, Brazil, in 2018, the giant inaugurated in 2019 and 2020 two cables of several thousand kilometers each: one between Los Angeles, in California, and Valparaiso, Chile, and the other between the East Coast of the United States and France. Google is to commission two more cables by 2022, one connecting the East Coast to Great Britain and Spain and the other between Portugal and South Africa. In addition to these "100% Google " cables, the search engine has also invested in 16 global links - of which it is co-owner. Each allows data transfers with a pharaonic throughput, the equivalent of tens of millions of 4K videos transmitted simultaneously. On the Amazon side, the submarine cable map reflects a strategy focused on Asia and the Pacific, with investments in submarine cables connecting North America to China and Australia, but not to Europe. In addition, Jeff Bezos unveiled in 2020 the Kuiper project, a constellation of 3,200 satellites that should cover the entire planet via the Internet and will cost $ 10 billion. More modestly, Facebook put balls in nine submarine cables connecting North America to Asia and Europe. The social network also seems to be pursuing its Athena satellite project, with its blurred outlines. Today, 99% of the world's Internet traffic passes through submarine cables, optical fibers surrounded by Nylon and steel sheaths deposited on the ocean floor. They are the object of all the attention, including from nuclear submarines specially modified to put cookies ...

Our attention under infusion

"Every forty seconds on average, we are solicited by a new activity," explains Tristan Harris. The one who appears in the documentary The Social Dilemna studied computer science at Stanford, before joining the B. J. Fogg Persuasive Lab, where he specialized in behavioral psychology. Leaving college before completing his studies, he launched the start-up Apture, a web glossary bought by Google in 2011, which allowed him to integrate the search engine before he decided to resign five years later. Concerned about the increase in suicide among teenagers, he sounds the alarm against the dependence on social networks that play on our stress, on the activation of dopamine, and where fake news is multiplying, which has led to a fragmentation of society. The thirty-year-old regrets the current world where when a young girl wants to learn about a slimming diet, she is confronted with a succession of videos on YouTube where, for two hours, will parade anorexic girls without obtaining any scientific or medical information. "We need to move from an economy of attention capture to one that regenerates attention," says Tristan Harris, who founded the Center for Humane Technology in San Francisco, and who dreams of a model "where success is not measured on the the rate of attention I manage to get, but how much I manage to enrich the social bond." A 180-degree change? "Technology is not bad in itself. It just needs to be reoriented to be constructive. The same applies, he explains, to our mental health as well as that of democracy. »

Acquisitions galore

Should we oppose the purchase of Fitbit, a specialist in connected watches, by Google ? The question divides economists when we know the decisive role that acquisitions can play in the growth of Big Tech: revenue gain and clearing of new sectors of activity of course, but also talent recruitment, not to mention the cross-referencing of data, as shown by the less and less disguised merger of Messenger services with WhatsApp and Instagram, two acquisitions of Facebook. For the Nobel Prize in Economics Jean Tirole, the burden of proof must be reversed: "Currently, it is up to the Directorate-General for Competition in Brussels or the Department of Justice in Washington to prove that a merger will be anti-competitive. When acquisitions arrive very early in the life of a company, which was the case of the acquisition of WhatsApp or Instagram by Facebook, you can only get an idea after the fact. It should have been up to Facebook to prove that these acquisitions would not put it in a dominant position.  »

The Art of Lobbying

In the meantime, when it's not through acquisitions, Big Tech knows how to recruit useful talent. In 2017, Denmark was the first country to have, in the person of diplomat Casper Klynge, an ambassador to the tech giants... who became, three years later, Vice-President European Government Affairs of Microsoft. In Brussels, the lobbying team of Google is composed overwhelmingly of former parliamentary assistants of the European Union. It is always useful to speak the same language when it comes to influencing legislation, as shown by the internal document intended to influence the Digital Service Act revealed by Le Point (No. 2514).

A passion for our health

British citizens learned with astonishment last year that the government had validated an authorization for Amazon to access medical information stored on the servers of the National Health Service (NHS). Indeed, in July, Matthew Hancock, Minister of Health, announced an agreement reached with the American giant so that it could use a certain amount of health data from Britons in order to help patients get better medical advice via Alexa. Should we see a cause-and-effect relationship? In mid-November, Amazon announced that now the purchase of drugs on its platform was possible. This made former MIT researcher Joël de Rosnay react strongly on Twitter, on November 18: "Amazon's entry into the field of health illustrates what I called the 'uberization' of health. Disintermediation is underway and it will not spare large laboratories, pharmacies or even doctors. » Up to the insurers? Last year, Amazon created Haven, a joint venture company with J. P. Morgan and Berkshire Hathaway, to develop a health insurance program. For its part, Google entered into a partnership in 2018 with Ascension, a network managing more than 150 hospitals in the United States with which it launched the Nightingale Project (named after a nineteenth-century British nurse, known for the use of statistics in the medical field). The goal is to improve the administrative management of files and automatically suggest medical treatments through machine learning.

And now?

So, what to do? Betting on a change in The Behavior of Big Tech? "We grew up with the Internet economy. As a teenager, the group was mainly looking to move quickly without necessarily looking around him. As an adult, he is now trying to behave like a responsible partner," matt Brittin, head of Europe, Middle East and Africa at Google, explained in 2019. At a press conference in October, Mark Zuckerberg insisted on the role played by Facebook, especially in times of Covid-19 crisis: "We started with an idea: to give people the power to share and connect, and we have built services that billions of people use. I'm proud to have given people a platform to make their voices heard and to have given small businesses access to tools that only the largest companies used to have. What if the lasting solution came from the emergence of European competition? "In Europe, we don't have Stanford, mit, or a truly unified market. Venture capital has not been as developed there as in the United States for twenty years. Instead of wasting time playing industrial Legos, politicians would do better to build a Unified European Services Market so that an innovative company can immediately deploy at EU level," says the researcher at the University of New York  Thomas Philippon, who recommends that Europe invest "massively, including public money, but in a smart way, via tenders for research projects while instituting data protection rules that prevent the American and Chinese giants from dominating the market".

What about the idea of dismantling? The idea seduces Sébastien Soriano, author of A Future for Public Service (Odile Jacob), which offers open standards between platforms. "We can always throw in the air the idea of a dismantling because this word sounds loud, sounds brutal, but there is a good chance that it will remain a dead letter," explains Bruno Le Maire. The idea also does not excite Jean-Pierre Chamoux, professor emeritus at Paris-Descartes University: "Let's think about what such a decision would mean for transatlantic relations. In a context of the Sino-American technological cold war in any case, Californian companies are assets that Washington would have difficulty doing without. The key therefore largely lies with President-elect Joe Biden, as the US Department of Justice has taken heavy-handed action against Google in October. Biden, who in an interview with the New York Times in January accused tech executives of "excessive arrogance," has not yet made public his position on the subject, but a 449-page report from Democratic congressional representatives published this summer encourages him to tighten antitrust measures. Let's hope that the chosen solution will put a smile back on Jamis MacNiven's face§

By Jérémy André, Guillaume Grallet, Guerric Poncet and Marc Vignaud

Sebdo Le Point S.A.