More on Tech Giants

The tech giants like Facebook, Google, Amazon, Uber, etc are different from the monopolies of old. Today's monopolistic behaviours are quite unlike earlier ones, like Standard Oil when it inflicted predatory high prices on consumers. Today's consumers like what they can obtain from the tech giants, eg inexpensive goods, free social media connections, etc. These consumers do not seem to be worried about

- their private information being sold to third parties like advertisers, marketing manipulators, etc.

- market domination

- annihilation of competitors (which includes buying them)

- favouring their own products/technologies on users, like Google with those with Android (a mobile operating system)

- that we expect disruptive technologies to handle the monopolies, eg like Apple, Google, etc handled Microsoft.

Also, the tech giants are the basis for economic growth.

(source: Michael Hirsh, 2021)

Size

"...by market capitalisation of five largest US tech platforms - Alphabet (Google), Amazon, Apple, Facebook and Microsoft - rose by $US 3.4 trillion in 2020. Following the addition of Telsa to the S&P 500, the big six tech firms now represent nearly a quarter of the index's value..."

Mariana Mazzucato et al, 2021

Power

"...there is a growing consensus that platforms have been abusing their power, driving profits by exploiting customer privacy, crushing the competition and buying potential rivals..."

Mariana Mazzucato et al, 2021

In addition to how these organisations treat their customers, there are concerns about

"...how Google treats content creators, how Amazon treats sellers, how Uber treats drivers and how Facebook treats merchants..."

Mariana Mazzucato et al, 2021

Politicians, regulators and the public are getting concerned about the power of the tech giants, ie it is not a level playing field in which they operate, the power of these online platforms is matchmaking by bringing different groups together, the use of data collected from users, etc. Some examples of their extraordinary matchmaking

- Facebook and Google (advertisers and consumers)

- Amazon (merchants and buyers)

- Uber (drivers and passengers)

Additionally

"...Platforms have also started to emerge in other sectors. Industrial machines and their products are packed with sensors and connected to the Internet, digitalising the real world and creating opportunities for matchmakers to connect manufacturers with suppliers..."

Economist, 2016a

Furthermore, there is the network effect, ie the bigger the number of one of a kind customers, the more attractive these services appear, and vice versa. For example, Facebook and its subsidiaries (Instagram and WhatsApp) provide a social network connecting friends and relatives plus an important news source.

There is also concern about how these platforms collect data from users and connect services. Ostensibly, data is used to improve services and target audiences. However, it can be a source of market power, ie exclusive access to multiple sources of user data can infer an unmatched advantage.

How to handle the big tech with laws, regulations and rules?

There are some parallels the car industry, ie

"...the first laws set rules for vehicles and manufacturers...... the second phase was about policy for a society reshaped by almost every family owning a car. If cars created the suburbs, computers are changing cities...... governments are heading into the second phase where the thinking must go beyond digital equivalents of speed limits and crumble zones..."

Benedict Evans as quoted by Robert Shrimsley, 2021

Maybe some digital services should be considered as social infrastructure and not be in private hands;  especially as digital markets have become extractive and exploitative.

 

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