Timothy Wu on how Canada can take on U.S. Big Tech and thrive in the age of monopoly

For more than two decades, lawyer, author and Columbia Law School professor Timothy Wu has studied the rise of platform companies from Amazon.com Inc. to Alphabet Inc.‘s Google LLC and helped devise policies to check the growing power of America’s Big Tech behemoths.

These technology platforms have optimized convenience and entertainment, yet they are also among history’s most advanced tools to extract wealth and resources from the broader economy, Wu says.

“Consequently, as they become essential to everything, we are at risk of building an economy that is perpetually unfair for much of humanity,” Wu warns in his new book, The Age of Extraction: How Tech Platforms Conquered the Economy and Threaten Our Future Prosperity.

It didn’t have to turn out this way; Silicon Valley infused the world with a sense of techno-optimism in the 1990s and early 2000s in a way that is “hard to overstate,” Wu writes. But by the 2010s, tech’s utopian dreams began to collide with the prospect of extraordinary profit. Big Tech swiftly perfected their use of platform power and extractive methods to grab as much data, attention, and profit as possible “in one of the greatest examples of economic extraction the world has ever seen.”

Solutions to remedy Big Tech’s dominance over our daily lives are still in sight, Wu says in his book. The author, who spent nearly two years steering competition and technology policy for the former Biden administration, calls for “anti-monopoly programs done right (that) force the dominant firm to fight on the merits.” As Wu writes: “It is not too late to restore the early promise of the Internet economy as a common square for commerce and an agent of economic uplift for all. Prosperity, fairness, and growth aren’t incompatible.”

In this Q&A with the Financial Post, Wu, a McGill University and Harvard Law School graduate who grew up in Toronto and Switzerland, discusses the lessons Canada can learn from American antitrust regulation, how Ottawa should approach platform regulation in an era of digital sovereignty and frayed ties with the United States, and the role of artificial intelligence in the new digital economy. This interview has been edited and condensed for clarity.

FP: In your book, you dive into the history of antitrust regulation in the U.S., noting that the country “has long abhorred monopoly.” What are the different eras of U.S. antitrust regulation? And where does the U.S. stand now — does antitrust regulation remain a key pillar of America’s industrial policy?

TW: The United States, during one of its progressive phases, invented antitrust as an antidote to excessive power, but also as an alternative to communism and monopoly capitalism. Over the past 140 years it has waxed and waned, through weak and strong periods. The strongest phases were the 1900s to 1920 or so, and the 1950s to 1970s; and in our era, the 2020s.

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U.S. antitrust enforcement reached a zenith during the Biden administration, particularly in merger and anti-monopoly policy. The Trump administration is a cypher. The U.S. government is still, on paper and in court, committed to the law, and the Republican base would react negatively to dismissing of the cases. Yet there is also clearly a sense that wealthy donors or friends of the president could make cases go away.

FP: In September, in one of the biggest antitrust cases in decades, U.S. district judge Amit Mehta saved Google from a breakup, and instead imposed other orders to remedy the tech giant’s monopoly over the online search market. This decision came even after Mehta called Google a monopolist and ruled that it had violated U.S. antitrust law. What does this recent ruling signify for Big Tech antitrust regulation ahead?

TW: Judge Amit Mehta was impressive in some ways. (Mehta) really understood the case, but was decidedly wimpy when it came to the remedy. He, in some ways, fits the stereotype of the learned philosopher who understands all but has trouble acting. Judge Mehta had diagnosed the problem but his own timidity prevented him from imposing a real remedy.

That said, it’s important not to overread the remedy decision. Google still lost — and that wasn’t even the only Google case. There are many more cases still in the docket. Remedy decisions are not in a technical sense precedent for anything else. So the decision matters, but I wouldn’t overread it.

FP:Ottawa has promised that the federal government will be “hawkish” on competition to restore affordability for Canadians. What lessons can Canada learn from the U.S.’s recent competition and antitrust regulation?

TW: Canada, like the United States, suffers from oligopoly, monopoly and other market power problems that are contributing to its affordability crisis. It is true that Canada has smaller markets, but that is hardly a good excuse for being okay with the known problems of reduced output, higher prices and the sluggishness characterized by uncompetitive markets.

I will concede that there are cases where the need for a certain minimal scale might, for Canada, recommend different policies. But the danger is having that become an excuse. Even if Canada is seeking to compete in export markets, a competitive domestic market keeps firms stronger. Consider that by metaphor Canada’s export of the world’s best hockey players does depend on competitive local leagues to train the best. The same can be said in other areas of the economy.

FP:How might the ongoing Canada-U.S. trade negotiations and the impulses of U.S. President Donald Trump influence Ottawa’s regulation of Big Tech?

TW: Canada needs to think of Big Tech’s monopoly extraction powers as akin to a private tax on Canadian business. Given that the platforms are essential to commerce, they are not unlike toll bridges being operated by a foreign company. As such, limiting the extraction is naturally seen by this U.S. administration as an economic attack. That doesn’t mean Canada shouldn’t do it, but it all needs to be part of the calculus.

FP: Canada is pursuing a digital sovereignty strategy while trying to maintain its partnership with the U.S. But is Canada necessarily beholden to American tech companies? How can Canada keep Big Tech accountable, and balance competition, innovation and user protection?

TW: Great question. As I detail in my new book, the original idea of a tech platform is that it should help others make money or do things. The ancient ancestors of today’s tech platforms, like city squares or infrastructure like the electric grid, were never free to take as much as they liked from the economy.

At a minimum, Canada should be policing how the platforms treat local firms. Imagine that Ontario’s electric grid had a foreign owner. It would seem crazy to let that owner favour its own appliances, preferentially charge some businesses more and others less and otherwise use its position as an essential service to extract what amounts to a private tax. The platforms, similarly, have become essential and should be treated as such.

More boldly, Canada could try supporting its own platforms — the equivalent of the Canadian National Railway, Hydro-Quebec and so on. That’s the path China took about 25 years ago, and it succeeded. It would be bold, though it’s also the case that many of the technologies used by the tech platforms have become commodified, and it would bring a lot of money home.

FP:You wrote in your book that “we should fear a future in which private power and wealth aggregated in tech platforms comes to influence and combine with the public powers of government.” Are we seeing this trend play out? What kind of consequences might arise from this?

TW: A major change in Silicon Valley culture has been embracing government and seeking to become a government contractor. A generation ago firms tried to keep their distance. At the risk of stating the obvious, combining the power of the great tech platforms with the coercive power of the state makes for a very dangerous combination. If we want to see how that plays out, China provides a pretty good guide.

FP:Will the rise of AI extend and entrench platform companies’ monopolies or challenge it? What direction are we headed in, and are there factors that could flip the race in the other direction?

TW: You are asking the key question of our time: the question of succession. While it seems widely assumed that AI will reinforce the power of the main platforms, I hold it important to the future that the AI firms come to challenge today’s tech platforms. As it stands, the major platforms are doing everything within their power to prevent AI becoming a challenge. However, I think the antitrust authorities should have a thumb on the scale; most clearly by preventing the platforms from buying or controlling the major AI players.

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FP:What can Canadians do to push for a more just and equitable future where monopoly power is held in check?

TW: The 21st century has been rough, and I think the root cause has been a neglect of the political consequences of economic unfairness. That said, I think Canada has done better than many other nations in this regard, and not. But while Canada has a better social safety net than some places, it has too often let monopolies get out of hand and get away with taking too much. So I think Canadians should support leaders who stand for a distinct Canadian approach, but also a clear anti-monopoly mandate.

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