Is Big Tech's "Monopolistic" Nature Really Hurting Consumers?
If you've reached this article, you've arrived here because of devices or services created by big tech companies like Google, Apple, Facebook, etc. You may have even attained your computer, tablet, or phone from a big retailer like Amazon or Wal-Mart.
Each of these companies' products has enabled billions of people to access incredible amounts of information with merely an Internet connection. With all this innovation, why is there so much concern about how gigantic these companies are? Is that not the market at work?
Big tech firms are coming under more scrutiny in recent years because of their size. Concerns range from the spread of fake news, suppression of competitor innovation, and the crushing of smaller businesses. In response, some want these companies “broken up” through anti-trust laws, or even more extreme, to convert them into public utilities.
Is it necessary? Absolutely not, according to Michael Strain’s assessment. Director of economics studies at AEI, Strain believes that breaking up these companies would be a terrible mistake. Strain's position starts by assessing whether these companies are a net assist or net disservice to the public.
He argues that big tech has big benefits.
By the standard of consumer welfare, big tech is a blessing. I have been using Gmail every day for over a decade. It operates flawlessly. And its search feature is so good that it acts as a virtual diary, allowing me to revisit correspondence from years ago with just a few keystrokes. Google, the creator and operator of Gmail, has charged me exactly zero dollars for this fantastic product. Amazon is pushing prices so low that some believe it is reducing the rate of price inflation for the overall economy. Apple put a sleek computer -- and the ability to access previously unimaginable quantities of knowledge -- in our pockets.
Big tech companies are offering consumers something that many smaller companies have not been able to offer: a large variety of products that are highly innovative, at relatively low prices, or in the case of Gmail, no cost.
But what about these companies' impact on what we can access and how we behave in the future? What about how these companies will stifle future competition?
It is certainly true that consumer welfare can be harmed by the absence of products that might have been created if a market had had more competition. But look at what is actually happening: Big tech firms plow revenue into research and development in order to continue creating new and better products. These companies are innovation powerhouses, and there are no signs that that will change.
For the sake of argument, Strain discusses whether Amazon intends to try to control almost all retail sales. If that were to happen, there may be an appropriate regulatory response, but is that really a danger when Amazon controls less than 10 percent of all retail sales?
Perhaps, and there are certainly some issues with big tech, one of the most recent being security of individual data. But does that mean these companies need to be broken up or made into public utilities?
Doing so would be a mistake in Strain’s assessment, because consumers are being served well by these companies, and will likely continue to provide that level of service for the foreseeable future. If they become publicly managed assets, it's unlikely they will remain that responsive and helpful.
What are your thoughts on the economic impact of mega-companies like Amazon and Google? Are you concerned about the degree of influence on the economy? Tell us what you think!