During the five-and-a-half-hour “Big Tech” hearing on 29 July, in which the House antitrust committee grilled CEOs of America’s four largest tech companies on their alleged anticompetitive and anti-consumer practices, Representative Jamie Raskin made a particular quip: “In the 19th century, we had the Robber Barons. In the 21st century, we’ve got the ‘Cyber Barons,’” he said.
Subcommittee chair David Cicilline was more succinct. “These companies as they exist today have monopoly power,” he said. “Some need to be broken up, all need to be properly regulated and held accountable.” He expressed concern that antitrust laws first penned more than a century ago might not hold in a digital age.
Cicilline was correct. US antitrust laws rely on the premise that consumers are being charged too much due to a company holding an almost monopolistic interest. A key difference between tech giants and the monopolies of old, however, is in their ability to turn a profit without overpricing. Much of Amazon’s dominance is owed to underselling its competitors; Google and Facebook provide their services for free. It is this accessibility that has allowed these relatively young companies to become ubiquitous.
With the addition of Microsoft, the companies that came under scrutiny in the hearing – Apple, Amazon, Facebook and Google parent Alphabet – represent the largest companies in the world by market capitalisation. The ‘Big Five’ hold a combined market cap of more than $4.9 trillion, greater than that of any single nation on Earth save for Japan, China and the United States. While not always overt, the influence of Silicon Valley has come to dominate almost every aspect of modern life.
The ‘Big Five’ hold a combined market cap of more than $4.9 trillion, greater than that of any single nation on Earth save for Japan, China and the United States.
The largest of the Big Five, Apple produces and sells the most popular smartphone in the US and Europe. By extension, it operates the most popular mobile app store. In a time when every member of the populace is all but required to own a smartphone, whether as a working adult or a social adolescent, Apple uses the App Store to touch the lives of billions; its apps are the middlemen when we share documents, chat with friends, sign in for work, browse the internet, track our fitness, play games and order food. The platform’s market dominance has enabled Apple to take a 30% commission from transactions made through the apps it hosts – a revenue stream worth hundreds of billions – which most app developers simply accept as the price of tapping into Apple’s world-spanning market.
The second-largest mobile app platform, the Google Play store, also scoops 30% of sales revenue from its hosted apps, but that is far from Alphabet Inc.’s primary source of income. The greater part of its influence is in the Google search engine, which commands a staggering 92% market share.
It is now well-documented that Google has built a global empire on the harvesting of data from its search engine users and the sale of that data to advertisers. This simple business model netted Alphabet $113.26 billion from ad sales in 2019 alone, and continues to shape the content that is presented to us when we use Google’s service – which is so omnipresent that it became a part of our language more than a decade ago.
Data-based dominance is also enjoyed by Facebook, which holds access to the personal lives of more than a third of the world population on an even more intimate level than Google. The social media giant’s reach is enhanced by its ownership of WhatsApp and Instagram, each boasting over a billion active monthly users continually sharing data with the parent company. As mundane as the concept of selling ad space might seem, Facebook’s grip on the global consciousness has magnified the power of targeted ads enormously; motivated actors can even affect national elections using its reach.
As mundane as the concept of selling ad space might seem, Facebook’s grip on the global consciousness has magnified the power of targeted ads enormously; motivated actors can even affect national elections using its reach.
Amazon is no stranger to the data trade; in fact, it earns more than its retail division. Its ownership of a 44% market share in US eCommerce, a staggering level of control over the world’s fastest-growing sales medium, fuels an even more profitable data collection vehicle and the growing digital presence of Amazon Web Services. While high street stores fade into obsolescence, those who take their business online are hard-pressed to compete with a titan that can one-up them on price and delivery speed – and which already knows exactly how to target their customer base.
Even in the face of a global pandemic that has brought multiple industries to their knees, the tech giants’ expansion has only accelerated. The western world now relies on the devices built by Apple and Microsoft to do their jobs, on Facebook’s social platforms to connect with absent family and the wider world, and on Amazon’s next-day delivery service to replace shuttered retailers. With restrictions placed on public transport and entertainment options, rising giants like Uber and Netflix have grown to fill the void. Profit margins for tech players have been stabilised or strengthened while the rest of the world has struggled to account for losses.
The changed state of society has given the monopolies a greater boon than a simple profit boost, however. The new reliance on access to technology has changed public attitudes towards their influence and notably curtailed enthusiasm for breaking up the tech monopolies. People enjoy the services that the likes of Amazon and Netflix provide when the COVID-19 pandemic has restricted their options for entertainment. The recently released FutureBrand Index showed Apple topping the list on internal and external perception. Even in the aftermath of the 29 July hearing, almost half of 18-to-34-year-olds who witnessed its coverage came away with a better opinion of the Big Tech companies being questioned; 63% reported using their products and services more often. Only 40% of those questioned believed that any of the companies should be broken up by the government, with 29% opposed to the idea and 30% unsure.
In this tech-dominated climate, where the largest companies enjoy both market dominance and widespread customer approval, we are unlikely to see the Big Five fall to antitrust suits like Standard Oil. Given tech’s natural bent towards innovation, they are also not likely to be outpaced by smaller competitors like US Steel – they are more likely to add them to their portfolio, as Facebook added emerging rival Instagram.
We have yet to see what action Congress may take to stem the expansion of America’s tech monopolies. What is certain, however, is that in the meantime their influence in modern life will continue to grow ever more pervasive and ever more profitable.