“If monopoly persists, monopoly will always sit at the helm of government… If there are men in this country big enough to own the government of the United States, they are going to own it.”
Over a century old, this quote from Woodrow Wilson still has huge bearing on today’s big businesses. After eight years of unbridled expansion under the Obama administration, the political tide is finally turning against the world’s largest tech companies. Colloquially known as ‘BAAD’ (Big, anti-competitive, addictive, and destructive), three US companies are dealing with the brunt of the backlash: Facebook, Alphabet (Google’s parent company), and Amazon.
Combined, these companies have a market capitalisation of $1.9 trillion dollars and are three of the ten most valuable companies in the world. Their dominance in each company’s respective fields has not gone unnoticed either: Facebook has 88% of social media traffic in the US, Google has a 90% market share in search advertising and it is estimated that Amazon captures over 40% of online shopping in America.
This level of clout poses a huge risk to the tech industry. For potential market competitors, the barriers to entry have become insurmountable because they cannot compete with the access to personal data that these three companies have. Facebook has two billion users worldwide and has the largest ‘social graph’, which not only lists their members, but shows how they are connected. Consequently, Facebook can exploit this data for advertising services, much in the same way that Amazon does with online purchasing habits.
Another ramification of this clout means that these tech giants can swallow up any competition, or threat of competition, that lies in their wake. Google’s acquisition of Waze (software for a navigation system), Amazon’s acquisition of Souq, Graphiq, and Facebook’s acquisition of Whatsapp, Instagram, and tbh (a messaging service that allows users to compliment each other anonymously) has only served to entrench their dominant standing.
Remarkably, none of these acquisitions were deemed anti-competitive by the US regulatory bodies but since 2016, each company has been marred by a series of political setbacks: Facebook has been embroiled in US investigation into Russian-back election meddling; Google was fined €2.4 billion over antitrust in 2017 by the European Commission, and Amazon has been on the receiving end of Donald Trump’s fiery tweets, which knocked its stock price.
Since the US presidential election last year, burgeoning antitrust sentiment in Washington has made BAAD companies become a popular target for politicians. An analysis led by Guy Rolnik of the University of the Chicago found that there were six mentions of ‘antitrust’ in last year’s election compared to zero in the previous four. With the upcoming midterms in November, it will be interesting to see if this sentiment materialises into actionable legislation.
Companies in Silicon Valley have not been oblivious to the turn in public opinion against them. In a statement last month, CEO Mark Zuckerberg promised that the Facebook newsfeed would return to a more familial focus in place of branded and publishing content. Given, however, the deepening crisis of misinformation spreading across the world, this is an underwhelming response. Until there is a clearer and more effective system of rewarding legitimate content publishing, fake news will continue to metastasise for some time yet. Ultimately, it will be left to the governing bodies to control these tech giants before they, as Wilson warned, control them.