Big tech has become more powerful than the Senate, says NYU's Scott Galloway

Key Points
  • Google's absence at Wednesday's Senate hearing shows big tech is bigger than Washington, New York University Stern School of Business professor Scott Galloway told CNBC.
  • "When you get to this size, you have the capital, the power, the influence, to effectively be immune from competition," Galloway says. "It is time to break these guys up."
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Google's absence at Wednesday's Senate hearing shows big technology has become bigger than Washington, D.C., said Scott Galloway, professor at New York University's Stern School of Business.

"Why did Google not find time to send a senior executive to testify at the request of elected senators? One reason: 93. They have a 93 percent market share; they don't need to show up," Galloway said Wednesday on CNBC's "Power Lunch."

"So far D.C. has been toothless and somewhat incompetent regulating them, so I think big tech has effectively become more powerful than the Senate," he said.

Facebook COO Sheryl Sandberg and Twitter CEO Jack Dorsey appeared before the Senate Select Committee on Intelligence on Wednesday to testify about foreign meddling in the 2016 U.S. presidential election. Google's seat was conspicuously empty.

The committee had wanted either Google CEO Sundar Pichai or Larry Page, CEO of Google's parent company, Alphabet, to testify alongside Dorsey and Sandberg, but the company offered its top lawyer and SVP of global affairs, Kent Walker, instead. Committee leaders Sen. Mark Warner, D-Va., and Sen. Richard Burr, R-N.C., rejected the substitution and pointedly left the open chair to shame Google.

"Our SVP of Global Affairs and Chief Legal Officer, who reports directly to our CEO and is responsible for our work in this area, will be in Washington, D.C. today, where he will deliver written testimony, brief Members of Congress on our work, and answer any questions they have. We had informed the Senate Intelligence Committee of this in late July and had understood that he would be an appropriate witness for this hearing," a Google spokesperson said in a statement Wednesday.

Jason Calacanis, internet entrepreneur and angel investor, said "the big loser in all this is Google."

"We, the people of this country and this democracy, give people at Google, like Larry and [Google co-founder and Alphabet president] Sergey [Brin] and Sundar, the ability to become billionaires. For them to not show up and answer these critically important questions at this critically important time is just disgusting and reprehensible," Calacanis said Wednesday on CNBC's "Halftime Report."

"I think they need to take a long look in the mirror and ask themselves what have they done for America," he added.

"Over the last 18 months we've met with dozens of Committee Members and briefed major Congressional Committees numerous times on our work to prevent foreign interference in US elections," a Google spokesperson said in a statement.

Despite his feelings on Google, Calacanis did say Wednesday's hearing should be reassuring to Americans.

"I think these companies are taking this deadly seriously, because they know they're on the hot seat, and they know if they screw up in this election cycle it will have significant ramifications. So I think what we saw today should be encouraging to Americans that we have a functional democracy," he said.

Divya Narendra, founder of early Facebook rival ConnectU, said he felt the session was "collaborative."

"It is not in [Facebook's and Twitter's] economic incentive to create a platform filled with fake accounts and content that's just not real," Narendra said in the same "Halftime Report" interview as Calacanis. "It's definitely something they want to solve. It's in their interest to solve it."

He said that although controversy and misinformation can generate revenue by drumming up outrage short term, in the long term, it cultivates an unhealthy environment on the platforms that risks driving away users.

"Long term, you don't want to have Facebook and Twitter to turn into, you know, a cage fight all the time, because people get tired of it," said Narendra, co-founder of SumZero.

"They understand ... what is good for engagement is aligned well with just sort of overall safety within the community and just making sure that people feel comfortable sharing views, even if they're across the aisle," he added.

Galloway said he thought the conversation was thoughtful and substantive but that he doesn't see "anything meaningful coming out of the panel, much less Washington, D.C.," because D.C. "lacks the domain expertise or the will to go after big tech."

That doesn't mean nothing should be done, Galloway said; action should come from the Federal Trade Commission or the Department of Justice, instead.

"I think this is an antitrust issue, not a regulation issue," Galloway said.

These companies are so big and so unchecked that when they make mistakes, Galloway argued, like neglecting to implement safeguards, it can undermine democracy.

"When you get to this size, you have the capital, the power, the influence, to effectively be immune from competition," Galloway said.

As to whether these companies will bend willingly to regulation, as Facebook executives have suggested they would, Galloway said he thinks they will continue along the path of "unfettered growth," which has served them and their shareholders well, until someone intervenes.

"It is time for regulators and, in my opinion, the DOJ to ... do their damn job. It is time to break these guys up," Galloway said.

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