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Are America’s Tech Giants an Economic and Political Threat?
If I were to list America’s big problems here in 2017, I’m not sure it would occur to me note the huge success of Big Tech—Amazon, Apple, Facebook, Alphabet/Google, Microsoft—as one of them.
But I know there are those who would. As Axios reporter Kim Hart points out in a longish piece today, there are political activists, academics, and economists who are deeply worried that such huge concentrations of wealth and data mean the platform companies “have captured the economy.”
And where might this concern about the techopoly lead? Hart includes an ominous quote from a bank analyst: “It could ultimately lead to populist calls for redistribution of the increasingly concentrated wealth of Silicon Valley as the gap between tech capital & human capital grows ever-wider.”
It kind of already is happening. Recall that Elizabeth Warren has cited Amazon, Apple, and Google as examples of concentrated corporate power, comparing them to Wall Street’s “too big to fail” megabanks. And some progressive definitely want to break up Big Tech.
Coming to the issue fresh, I might find the piece—which gives pros and cons—making a slightly stronger argument that “something needs to be done,” such as greater regulation or antitrust action. Not only does it include plenty of scare stats (“The market cap of tech giants is already greater than the GDP of large U.S. cities”), but there is this compelling pro-growth argument from economist Luigi Zingales:
People don’t fully appreciate that the reason we have Google and Facebook today is because there was an antitrust enforcement action against Microsoft that slowed down the ability of Microsoft to monopolize the internet, the browsers, the data, search, and so on. Today’s monopolies are yesterday’s startups. In a good system, this keeps changing.
But I would at this point still take the other side of the trade. From my The Week column last year, which I think still holds up:
Published in Culture, EconomicsGoogle’s top economist Hal Varian had an op-ed in the Financial Times in which he made the case that tech giants are nothing like the robber baron monopolists of old. Rather, they are constantly subject to “disruption” while continuing to innovate and bring cool new products and services to consumers and small businesses alike. … It wasn’t so long ago that MySpace was the largest and most dominant social networking site. Fortune magazine once declared Yahoo the winner of the “search engine wars.” The founders and executives at top tech firms hardly think their positions are forever secure. Will smart bots threaten Google’s core search business? Will the fast-growing Chinese market undermine the iPhone in Asia? Look out Facebook, here comes Snapchat! … [One should also point out] all the ways — in addition, perhaps, to an anti-trust rethink on the right — to make the economy more competitive, including reforming occupational licensing laws, less stringent patent and copyright protection, and reviewing tax and regulatory rules that benefit incumbents over startups.
Given that Big Tech companies are generally friendly to progressives (sometimes blatantly promoting their ideology) . . . I think I’ll stand back and watch the fun. Left on left activism is so fascinating.
I think the biggest threat posed by Facebook, Twitter, et al. is the use of these media by terrorists and perverted criminals.
When I hear of YouTube accounts shut down because of politically incorrect posts, yet radical Islamic militant YouTube posts remain, I wonder exactly whose side these tech giants are on. It’s certainly not ours . . .
There’s a problem but we’d screw it up if we try to control it through anti trust. Big tech will easily blend with big government which they support through their liberalism. It is totally different than the robber barons. First, robber baron was a fiction. Railroad were government created from the beginning and Rockefeller never had a monopoly and to the extent he had market power for a while it was as a monopsonist. Monopsony is the power the Japanese use to control markets, it is why Wallmart and Amazon are so powerful and will continue to be so. The other thing that is different is that tech enjoys falling marginal costs. This means that supply curves do not slope upward so that all of them are natural monopolies. However, if we try to regulate their market power they will capture the instruments of regulation and control both the government and their sector. The only way to deal with the threat of big tech is to make sure market entry is easy, markets are global, that our schools keep getting better and our government stays the hell away of trying to control them or our schools. They will have to scramble to stay ahead of each coming generation of brilliant young people from all over the world. How we deal with security, privacy, and similar modern technology issues are not market power anti trust regulatory issues. We’ll need teams of Epsteins’ to figure that one out.
For an allegedly educated woman I find Warren’s apparent lack of basic economic understanding alarming. It’s not just about size. The central arguments about Big Banks being “too big to fail” were regarding systemic risk and cascading deleterious effects. With the complicated intertwined financial and credit issues in the economy with big banks this argument can’t just be dismissed. There isn’t systemic risk with Facebook, Google, Apple, and Amazon. These companies certainly provide useful services and products but they’re all replaceable. The US economy won’t implode if these companies that hire few people hit the rocks. Though the stock market would for sure take a hit with how much these companies have contributed to growth.
On politics it’s basically my understanding generally the Tech Giants have a rather technocratic view of things with an abundant faith in committees of supposed experts being given a large amount of power to solve society’s problems and plan the future. This isn’t the view of most on the Right I believe. Also, Bit Tech currently benefits a lot from a chic cool image that largely insulates itself from criticism. A large part of the US population also have high levels of trust in these big name companies. However, they’re not so “cool” in regard to a number of things and not beyond critique. For Example it’s my understanding that they oppose free movement of workers between the companies yet like to have high levels of foreign workers to bring in for competition within the company. So if an employee works at Google and wants to work for Apple after a period of time, Apple won’t hire that person. It limits people. This type of dubious labor practice occurs in a some other economic areas too in order to better control labor and drive down its cost. Privacy information is another issue and so on.
Yes the immense tech companies are a serious threat to both the economic and political health of the United States and maybe progress everywhere. The only solution is to go completely laissez faire on the Internet and disengage them from all influence with more competition and more diversified voices.
Twenty years ago we were terrified that Microsoft was going to take over the world. Microsoft is still a big deal, but who worries about Microsoft’s power today?
Railroads, telephone, cable television. Even those companies with government granted monopolies eventually get overrun by some new creation, especially if they abuse their monopoly status. Leave the markets alone, and we’ll find a way to deal with some entity that gets too big for its britches.