What to do about the tech giants’ growing monopolies?
An interesting article in The Wall Street Journal, “The antitrust case against Facebook, Google and Amazon”, explores the arguments for applying antitrust legislation to technology companies with disproportionately high market shares, comparable to classic cases such as Standard Oil or AT&T.
In December 2017, more than 91% of global internet searches were made on Google, a percentage that in many countries exceeds 96%, and 87.7% of smartphones use Android as an operating system. Meanwhile, Facebook has more than 2 billion users worldwide, in addition to the 800 million on Instagram, 1.2 billion on Facebook Messenger and more than 1.3 billion on WhatsApp. In electronic commerce, Amazon is a monster that is active across a range of products, dominating not only its original activity, books, but industries as varied as cloud computing or smart speakers.
What is the impact of such an intensely polarized technology? Leaving aside the debate as to whether these positions are based on merit or are simply the result of anti-competition strategies, these kind of market shares have never been good news for anyone other than those who own them (and in terms of long term sustainability, perhaps not) and as with monocultures, they are one of the simplest ways to increase vulnerability to certain problems. Android’s dominance of the smartphone is great in terms of open source, but it also creates important security problems, such as Skygofree’s unprecedented spying capabilities, as has long been the case with Windows in the field of personal computers. As Facebook has become the place where Americans get their news, countries like Russia see it as a way to influence elections.
Are there any benefits for consumers from a few companies enjoying these kinds of market share? In the world of technology, the evidence suggests not: they tend to create most of the advances in their industries, which usually means innovation is subordinate to a corporate agenda, while any external threat can be removed through acquisition, as Facebook has done repeatedly. Any company that manages to innovate or stand out in its field is simply made an offer it can’t refuse”, and if they’re crazy enough to do so, Facebook simply copies its competitors’ product and sits it out.
Anti-monopoly bodies, armed with legislation, were created in response to an intrinsic problem of capitalism: the tendency toward monopoly, which has speeded up thanks to the so-called new technologies. Ever-more powerful and effective lobbying means that anti-monopoly authorities find it increasingly difficult to correct market distortions.
Have the tech giants done anything that deserves action by the anti-monopoly authorities? Overall, probably not. There have certainly been occasions when some companies have done things to hobble their competitors, but do they merit breaking them up? That said, what is the point of having the means to improve competition if it’s never used?
Has the speed at which technology is changing the business landscape now raised the need to rethink the rules of capitalism? Ours is a capitalism exclusively focused on financial results, where all that counts is the profit margin, meaning that corporate social responsibility, which should encourage the creation of value on a broader and more sustainable base is essentially anecdotal, meaningless words in the annual report, along the lines of a commitment to recycling, when in reality the company sends its waste overseas and then forgets about it. Has the time come to rethink value creation to include concepts beyond profit and that allow for optimizing the fruits of innovation to the benefit of all?
(En español, aquí)
