Have The Tech Giants Grown Too Powerful?
It is difficult to be jazzed about the latest smartphones, social networks, and technologies when they might be ruining the world.
Let's look at this from another angle. If power tends to corrupt, and absolute power corrupts absolutely, how can we best describe the kind of power Big Tech wield?
How about this: The big tech companies have all the power and absolutely no accountability for how they use that power - at least the power that matters.
Apple, Amazon, Google, Facebook, and Microsoft are the top five most valuable companies in the US stock market, they all are tech companies. These companies collectively have the power to influence everything that happens in Tech as well as the global economy.
So, what makes them this powerful?
First of all, the thing that makes them powerful is their size. These companies are very, very big. And also that they all play a huge role in our lives- personally as well as at a society-wide level. If you live a kind of modern or semi-modern or in today's world normal life then it is impossible to live without all of them for most people. And more than that they know more about us than any cooperation ever has. With the amount of money and power they have over democracy, they have become more like Governments.
We are seeing that with the way that news on Facebook and Google affects elections, how the working of the retail sector changed because of Amazon, and eventually they all are working on future technologies like artificial intelligence. And their technologies will affect our jobs. Most of the ways that people make money now are going to be changed by the technologies that these companies make.
Recently, Facebook’s Zuckerberg, Amazon’s Jeff Bezos, Apple’s Tim Cook, and Google’s Sundar Pichai were summoned to Capitol Hill – appropriately, via video stream and were questioned about their anti-competitive behavior. This is a perfectly valid question to ask.
Will these companies let their competitors survive?
There is a huge change in how tech companies used to work earlier than they do now. I mean all these giants were once someone's dream. They all started from garages or dorm rooms. It is still possible to come out with some new app or a new piece of hardware that everybody loves and lots of people use. But now there is kind of a ceiling or limit on how successful your idea can be and that ceiling is determined by these five companies.
To get more understanding of this matter I'll explain to you how Amazon is hard to compete with.
Amazon as we know is an e-commerce company. It allows users to shop online for all the products anyone would want but that is not the only thing that Amazon does. It is into space technologies, and artificial intelligence and one of them is AWS, Amazon Web Services. They provide cloud storage, web hosting, and all other Web Services that anyone would require. Most of the revenue of Amazon, in 2018, was generated by its online retail store but AWS accounted for 58% of Amazon's profit.
Amazon presents itself as an online retail company even though its profit comes from something completely different. This means the retail section of Amazon does not need to earn profit. Now the question is how do you compete with someone that does not need to earn profit. This is the biggest problem for small or new businesses in this segment. Amazon can lower its prices without thinking about earnings.
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| Amazon's Revenue |
Not just the retail sector but the big fives have stretched so far horizontally. These companies have created these platforms that start-ups require to gain customers. For example, all the movies that you watch on Netflix are actually stored on Amazon servers - so every time you use Netflix, Netflix is kind of paying Amazon for that kind of storage.
Also a small example of Google. Google has been accused multiple times of pushing its own sites or content first. And Google is the most used search engine. Thus, eliminating its competition.
Do these giants have a Monopoly?
The difference is that they are still growing in new markets. And in those markets, it's sort of early to call them winners. For example, big retailers like Reliance to every small shop in a local market have some fear and strategy for responding to the threat of Amazon. But if you look at the size of Amazon and the scope of the whole retail market it is not that big. Don't get me wrong there is nothing small about Amazon. It is just that if you take the entire thing into consideration then Amazon looks small.
So if you are a regulator worried about monopoly threat, then it is difficult to look at traditional ways of measuring monopolies, like how much market concentration there is. Or another thing you would worry about as a regulator is, whether Is the company big enough to control prices? Well, none of the five giants are that big. Also, another way the government regulates companies is by looking at prices, but for example, Amazon really doesn't have to raise prices. It constantly lowers prices. It has this effect on the rest of the retail business that results in lower prices. So if you were looking at prices alone, you would say this is a great company. It's great for customers that this company is kind of constantly lowering prices and forcing everyone else to lower prices. Under the kind of current view of antitrust, Amazon seems like a positive force rather than a negative force.
Conclusion
All the things that I talked about above do not mean to be scared of these tech giants. I personally use almost all the latest products offered by these companies. You know all those internet-of-things products that Google and Amazon have to offer.The point is there must be some strict rules to control companies like Apple, Amazon, Google, Facebook, and Microsoft. Because these are not the only companies that have grown to this extent. There will be countless others in the future.
My personal reflexive bias in the past towards any new technology used to be optimistic. I used to be very excited by all the possibilities that these technologies opened. But recently my thinking has shifted from optimism to skepticism. It's now more of a balanced view now.
These tech companies will continue to grow, we can't stop them and I think the governments can also not control them at least not with today's rules and regulations. They will continue suppressing new start-ups or just buy them out if they pose a threat to them.
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