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SXSW: Instagram founders critical of sweeping antitrust regulation in tech

While there is a considerable amount of animosity against big tech firms, and their reach is expansive, breaking up those firms requires a "nuanced" approach, Instagram Inc. founders Mike Krieger and Kevin Systrom said during a March 11 SXSW keynote talk. South by Southwest, or SXSW, often represents a touchstone for startups and burgeoning innovation in tech and media.

The problems with growth and consolidation in tech cover a wide range of issues, whether it's Amazon.com Inc. white labeling products to compete with vendors on its marketplace, the social media dominance of Facebook Inc. through its acquisitions of Instagram and WhatsApp Inc., or Apple Inc. allowing one app store for its device downloads, the pair said. The problem is further complicated because every company today is a tech company, convoluting the concept of tech regulation, they said.

SNL ImageSocial media apps
Source: Pexels

"Whether property prices or Russian meddling in elections … there's a long list of reasons people are angry at tech right now, some of them I believe are well-founded," Systrom said. "That doesn't mean the answer is breaking all the big companies up."

The executives' comments come after Sen. Elizabeth Warren, D-Mass., who is running for president in 2020, released a March 8 blog post detailing how she would like to break up big tech companies — specifically Amazon, Facebook and Alphabet Inc.'s Google LLC — if she is elected to the White House. She said regulators would use existing tools to undo mergers deemed as anti-competitive, such as Facebook's acquisitions of Instagram and WhatsApp, as well as large deals involving Google and Amazon.

Systrom said he is concerned that policies like Warren's are not specific enough, and they attempt to solve nuanced problems with an overly broad antitrust solution. Krieger pointed to the outcome of the sweeping online privacy policy in Europe — known as General Data Protection Regulation, or GDPR which has led to more of the digital advertising market being held by fewer large companies rather than leading to diversification and innovation in the industry.

Warren said her administration would pass legislation that requires tech platforms that offer an online marketplace or exchange and collect global revenue greater than $25 billion to be designated as "platform utilities," and they will be broken up from any participants on that platform. Those companies, Warren wrote in a recent blog post, would be barred from owning both the platform utility and any participants on the platform. They also would not be allowed to transfer or share data with third parties. This would potentially break up Facebook, Google and Amazon.

When asked if keeping Instagram and Facebook separate would enable more competition in the social media space and make a more diverse experience for consumers, Systrom said he does not believe the growth of Instagram and its combination with Facebook was bad for consumers.

"For Instagram to get to the stage it did, I think … it's incredible for consumers," he said.

Additional SXSW coverage:

SXSW: Media, entertainment, enterprise, health, policy, and AI to bind them all

SXSW: 'Enormous' opportunity for bankers willing to embrace fintech

SXSW: Instagram founders recap on ads, authenticity with Facebook integration

SXSW: Venture capital looking for targeted enterprise AI opportunities