Economist says US tech giants are turning into harmful monopolies, should be broken up

midian182

Posts: 9,633   +120
Staff member

The size and influence of today’s technology companies are unparalleled. From Apple’s $216 billion per year revenue, to Facebook’s 2 billion users, to Amazon’s ever-increasing share of all US commerce, these firms have become unstoppable juggernauts that affect our lives in numerous ways. But some economists argue this is a bad thing, and if their continuing domination can’t be stopped, the tech titans should be broken up.

Jonathan Taplin, director emeritus of the Annenberg Innovation Lab at the University of Southern California, strongly says that the country’s biggest tech firms have become too large, and that’s led to a lack of innovation and problems for the economy as a whole. He also believes that Google’s domination of the internet is as close to a monopoly as the Bell telephone system in 1956.

Bloomberg notes that Google gets about 77 percent of US search advertising revenue. Together, Google and Facebook control about 56 percent of the mobile ad market. Amazon takes about 70 percent of all e-book sales and 30 percent of all U.S. e-commerce. And Facebook’s share of mobile social media traffic, which includes WhatsApp, Messenger, and Instagram, is around 75 percent.

In addition to problems like inequality, fewer business startups, and stagnating job creation, Taplin warns the tech titans’ focus on AI will lead to mass job eliminations. It’s been an issue long associated with the - admittedly slow - rise of self-driving vehicles, along with other forms of job automation.

In a Wall Street Journal piece, Taplin writes:

Over the past decade, Google, Facebook, and Amazon have wreaked havoc on much of the creative economy—journalists, musicians, authors, filmmakers. In the decade ahead, the tech behemoths will use their dominance in artificial intelligence to overturn much of the service economy as well, including transportation, medicine and retail. With what result? To give just one example, Goldman Sachs recently reported that self-driving cars (a technology that both Google and Apple are developing) could eliminate as many as 300,000 jobs a year in two decades or more. Will we be ready when the flood of unemployment brought about by the artificial-intelligence revolution is upon us?

Taplin goes on to note the crushing effect large tech companies can have on smaller competitors, citing Facebook’s attempted acquisition of Snapchat as an example. After the social network’s $3 billion offer was rejected in 2013, the company introduced a number of features that were almost identical to those found in its rival’s app. A photo editor, self-destructing messages, and Stories (which Facebook also called Stories), all appear to have been ‘borrowed’ from Snapchat, which has seen its shares drop to $15 from the $17 initial offering price.

While the likes of Apple, Google, and Amazon face antitrust charges in Europe, monopoly cases have fallen in the US, from an average of 15.7 per year from 1970 to 1999, to fewer than 3 per year from 2000 to 2014.

Not everyone agrees with Taplin. Many believe breaking up the companies will have little to no effect. As the Economist writes: “Breaking up a firm like Google into five Googlets would not stop network effects from reasserting themselves: in time, one of them would become dominant again.”

Permalink to story.

 
Off the headline theme, I don't agree with the WSJ piece about the flood of unemployment. It's natural technological progression. It will generate huge amounts of jobs to support the research and fabrication of anything and everything related to self-driving, support networks have to be setup with people employed to take action, administration of all of this will also create employment. Mapping, programming and logic will spawn new specialized employment positions.

They're simply pointing at one side of an equation to support their opinion and completely ignoring the other side.
 
Monopolisation has been around since time began and isn't going anywhere any time soon but the good thing is that nothing lasts forever. All these titan tech companies have their time in the sun but all will eventually fade from existence and memory as other monolithic tech companies take their place. The dominant alpha male of any pack can't live forever and has to be replaced by another pretender to the throne eventually, just like the Tsar's & Tsarina's of Russia's past were replaced by their Tsardines. ;)
 
Last edited:
It's almost impossible for a new thing to go big due to the way IT corporations run, when and if it does go big, it's soon acquired by a bigger company.
 
Maybe we need to dig up Teddy Roosevelt and put him back to work ... he did a pretty good job of busting up some of the larger ones!
 
I do not have a problem with Google, they support civil and technical freedom, equality, net neutrality and I swear if they made an OS for a desktop PC I would switch from Windows.
Google can get as big as it wants as far as I am concerned.

Amazon is like Under Armor, while the product/services are solid, rather its the popularity and ability to capitalize on trends that keeps them in business. Most of the time I beat Amazons prices on ebay or other sellers, getting the exact same thing with free shipping from a proven seller. Facebook takes advantage of the boredom and human nature to be accepted and part of the greater tribe, allowing users to show what they want and hide what they don't. Facebook will be around for a long time, probably longer then I will live.
 
Well, without AMD, intel would still be overcharging for their products. AMD releases something nearly as good for less money and intel prices suddenly drop. hmmmm... competition is good. The more they have to compete for out business the better products we get, bottom line. Companies only reduce prices enough to be the one we do business with. Once they are the only choice those prices slowly rise and rise and rise, until some competition comes along.
 
The more they have to compete for out business the better products we get, bottom line. Companies only reduce prices enough to be the one we do business with. Once they are the only choice those prices slowly rise and rise and rise, until some competition comes along.
Hi and welcome to Economy 101. Companies don't really put the price for their items, they end up baking up a formula where they get to charge the most while consumers still pay for it, this is called Supply and Demand. If there is more demand than there is supply, prices go up, if there is more supply than demand, prices go down.

Heck, I remember the AMD video cards everyone was getting to mine Bitcoins, how was that for overpaying for an AMD product? Simple, supply and demand.
 
Well, without AMD, intel would still be overcharging for their products. AMD releases something nearly as good for less money and intel prices suddenly drop. hmmmm... competition is good. The more they have to compete for out business the better products we get, bottom line. Companies only reduce prices enough to be the one we do business with. Once they are the only choice those prices slowly rise and rise and rise, until some competition comes along.

This article mentions nothing about AMD or Intel and has nothing to do with AMD vs Intel.
 
Well, without AMD, intel would still be overcharging for their products. AMD releases something nearly as good for less money and intel prices suddenly drop. hmmmm... competition is good. The more they have to compete for out business the better products we get, bottom line. Companies only reduce prices enough to be the one we do business with. Once they are the only choice those prices slowly rise and rise and rise, until some competition comes along.

This article mentions nothing about AMD or Intel and has nothing to do with AMD vs Intel.
Personally, I think the OP implies that competition is good which is at the heart of this article. The companies in this article are so big that they are, effectively, squeezing out competition, and from the example Intel set, without competition, prices for products go unchecked and become unreasonable.
 
Monopolisation has been around since time began and isn't going anywhere any time soon but the good thing is that nothing lasts forever. All these titan tech companies have their time in the sun but all will eventually fade from existence and memory as other monolithic tech companies take their place. The dominant alpha male of any pack can't live forever and has to be replaced by another pretender to the throne eventually, just like the Tsar's & Tsarina's of Russia's past were replaced by their Tsardines. ;)

Typical natural selection excuse. You do realize that the only reason there isn't a telephone, salt & bacon, railroad, ect monopoly isn't because people waited long enough, it's because the government stepped in. Waiting hundreds of years is a piss poor idea.

Well, without AMD, intel would still be overcharging for their products. AMD releases something nearly as good for less money and intel prices suddenly drop. hmmmm... competition is good. The more they have to compete for out business the better products we get, bottom line. Companies only reduce prices enough to be the one we do business with. Once they are the only choice those prices slowly rise and rise and rise, until some competition comes along.

This article mentions nothing about AMD or Intel and has nothing to do with AMD vs Intel.
Personally, I think the OP implies that competition is good which is at the heart of this article. The companies in this article are so big that they are, effectively, squeezing out competition, and from the example Intel set, without competition, prices for products go unchecked and become unreasonable.

Competition isn't just good in a capitalist system, it's a requirement. No competition = no incentive to keep prices low. In addition, transactions must be voluntary. A monopoly forces customers into a single choice.
 
This article mentions nothing about AMD or Intel and has nothing to do with AMD vs Intel.
The article is about Monopolies. It was just an example of why it's good that Intel doesn't have an Monopoly. With Ryzen you saw the direct affect competition has on prices and how Intel had to react saving us all money and giving us more options. Usually you don't get such a clear example of how it works out in the market place.
 
Hi and welcome to Economy 101. Companies don't really put the price for their items, they end up baking up a formula where they get to charge the most while consumers still pay for it, this is called Supply and Demand. If there is more demand than there is supply, prices go up, if there is more supply than demand, prices go down.

Heck, I remember the AMD video cards everyone was getting to mine Bitcoins, how was that for overpaying for an AMD product? Simple, supply and demand.
What happens when they are the only company in the industry and have full control over the supply?
 
Typical natural selection excuse. You do realize that the only reason there isn't a telephone, salt & bacon, railroad, ect monopoly isn't because people waited long enough, it's because the government stepped in. Waiting hundreds of years is a piss poor idea.
A salt & bacon monopoly I can agree with but as for a railroad monopoly? All emerging markets suffer from government owned railroad monopolies and even some developed countries as well.
 
Just because you are successful, this guy wants to break you up. Typical Liberal outlook on life, I don't have to use any of those companies if I don't want to, but when I do use them it is because they bring value to me. Let every company be as successful as it can be and if that means that smaller companies can't compete, then so be it. Bringing somebody down since that would help you be successful is a ludicrous approach.
 
I do not have a problem with Google, they support civil and technical freedom, equality, net neutrality and I swear if they made an OS for a desktop PC I would switch from Windows.
Google can get as big as it wants as far as I am concerned.

Amazon is like Under Armor, while the product/services are solid, rather its the popularity and ability to capitalize on trends that keeps them in business. Most of the time I beat Amazons prices on ebay or other sellers, getting the exact same thing with free shipping from a proven seller. Facebook takes advantage of the boredom and human nature to be accepted and part of the greater tribe, allowing users to show what they want and hide what they don't. Facebook will be around for a long time, probably longer then I will live.

Google already has their own OS, its called Android. They are bigger than Microsoft as a company. Crazy to say, but MS is the underdog with Google now. Google will also stagnate one day (just like MS) as its becoming too big of a company to manage.
 
Google already has their own OS, its called Android. They are bigger than Microsoft as a company. Crazy to say, but MS is the underdog with Google now. Google will also stagnate one day (just like MS) as its becoming too big of a company to manage.
You didn't read my comment thoroughly.
Official Desktop OS, although Remix has my attention.
 
Just because you are successful, this guy wants to break you up. Typical Liberal outlook on life, I don't have to use any of those companies if I don't want to, but when I do use them it is because they bring value to me. Let every company be as successful as it can be and if that means that smaller companies can't compete, then so be it. Bringing somebody down since that would help you be successful is a ludicrous approach.
Exactly!
 
What happens when they are the only company in the industry and have full control over the supply?
Welcome back to Economy 101. It's actually quite simple, they will continue to use the same exact formula to get the most out of what they are offering. If they ask too much for something people will simply not purchase it, as the demand gets stiff the prices get lowered. No company makes stuff to pile them in a warehouse and not see the day of light, that's extra costs for them, they have to maintain the warehouse for as long as they have stuff in there, which makes their producing lines much more expensive and the company less profitable.
 
If Jonathan Taplin pays the increase price difference on my more expensive mini-amazon purchases, and personally pays the fees for using google and other sites now with a decreased add revenue, he can have at it.
Don't care about Facebook since I don't use it.
 
Off the headline theme, I don't agree with the WSJ piece about the flood of unemployment. It's natural technological progression...
This has been the cry since the earliest days of automation. Automation = Job Losses. The reality is the creation of multiple jobs that produce and maintain automation. If Automation was a job killer, the US job growth would have stagnated by the late 60's and would be terminal today. Politicians and worry mongers love the idea that a majority of the population will fall behind the curve. As of June 2017 the US has 6 million unfilled job openings.
 
Maybe we need to dig up Teddy Roosevelt and put him back to work ... he did a pretty good job of busting up some of the larger ones!
We could perhaps employ Tom Selleck as his avatar. After all, "Blue Bloods" does exactly that, week after week. In fact, there's even a portrait of Teddy behind "Frank Regan's" desk in the police commissioner's office. I gotta say, this now older incarnation of Tom, looks quite a bit like him.

cbs%2Bblue%2Bbloods%2Bteddy%2Broosevelt%2Bportrait%2Bdeeauvil%2Bblog.jpg
 
Last edited:
Back