Genesis
Response
Penultimate
Finale
June 14th, 2021
The main 5 technology companies - Facebook, Apple, Amazon, Netflix and Google have inserted themselves into the fabric of our lives in ways few companies have until now.
Facebook has revolutionized information sharing and upended the news business with very negative consequences for democracy, Apple reinvented itself to become the most valuable company by selling its computer hardware to billions, Amazon fundamentally reshaped retail, Netflix changed our film and TV habits, and Google is the “glue” of our web via its domination of search.
These FAANG dominate their current sectors but also crucially dominate future offshoots by operating as vertically and horizontally integrated platforms. An analogy to the 19th century: they control the land the train track is built on, the track, the train itself and the freight pricing.
Antitrust laws set up in the US starting with the Sherman Act in 1890, set out to prevent price fixing and cartels. These laws are not entirely retooled for the 21st century economy but there’s clear indication that the FAANG are in near monopoly territory in their respective operations. The example of Amazon Basics is telling: Amazon collects data on the popularity of items sold on its platform and circumvents the normal vendor relationship to sell items copied on the products sold under its own brand. Facebook’s data collection on users’ digital lives outside its own software platform via cookies is another example of a platform allowed to overshoot.
The response to this state of affairs has so far oscillated between righteous indignation among activists and the imposition of fines by the European Union. Margrete Vestager, Europe’s formidable commissioner, is building the case to force the break up/reversal of certain acquisitions. The next logical step: a concerted effort via the arrival in the Biden administration of longtime Big Tech critics Tim Wu and more crucially Lina Khan who has been made FTC Commissioner. My personal hunch: the shot across the bow will be the breakup of Facebook’s 2 main acquisitions of Instagram and WhatsApp. The invoked reason will be that both constitute an undue monopolistic position in the near term on digital advertising in certain categories for Instagram and for IP voice traffic for WhatsApp.
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