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Are Big Tech Companies Growing Too Big To Fail?

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Are Big Tech Companies Growing Too Big To Fail?

Combining the earned revenues of Facebook, Amazon, Apple, Microsoft, and Google equates to 68% of US GDP growth. As the companies continue to capitalize, and purchase subsidiaries, civilians and politicians are calling for immediate change. In March, Elizabeth Warren released a campaign advertisement summoning the division of tech big tech companies. Following its release, Facebook removed the advertisement – sparking a bipartisan backlash.

Accompanying the Anti-Big Tech campaign is Ted Cruz, having said, “Big Tech has way too much power to silence Free Speech. They shouldn’t be censoring Warren, or anybody else. A serious threat to our democracy.” Interestingly enough, 2 in 3 Americans – regardless of their political party – support the break up of Big Tech. 

Google, YouTube, and Facebook are the three most visited websites on the Internet across the globe. Since Google owns YouTube, this gives the two aforementioned companies a major power. To put this further into perspective, nearly all Americans conduct searches using Google-owned platforms. 89% of all Internet searches are conducted through Google Search, 73% are on YouTube. 

The issue lies with not only a violation of free speech, but also with antitrust. Tim Wu, author of The Curse of Bigness: Antitrust in the New Gilded Age and Law Professor at Columbia University, says, “There’s been a profound change in the tech economy, and I think one that’s very dangerous for the United States’ economy.” 

In 1890, the Sherman Antitrust Act outlawed monopolies and cartels to promote economic competition in response to consumer outcry against exorbitant prices and competitor anger by being unfairly shut out of production. In 1914, the Clayton Antitrust Act amended the Sherman Antitrust Act to add specific, clear definitions and regulations to the unclear. As a result, anti-competitive mergers were prohibited, as well as predatory pricing. Additionally, the Clayton Antitrust Act allowed the injured party to bring a private antitrust lawsuit. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) was placed in charge of enforcement by the 1914 Antitrust Act, as well.

In 1998, the DOJ filed charges against Microsoft, alleging monopolistic acts following the collapse of Netscape. Netscape was Microsoft’s primary competitor; however, when Microsoft began offering a free browser with its expanded software bundle, Netscape dissolved.  In 2000, the DOJ’s ruling ordered Microsoft to be split into two companies: Windows Operating System and Office Software Suite. However, the ruling was softened upon appeal.

Today, Big Tech owns its own digital and consumer supply chain. Amazon owns Whole Foods and Zappos, Facebook owns WhatsApp and Instagram, Google owns Waze, DoubleClick, YouTube, Nest, and many more.

Although awareness is growing around the potential monopolization by Big Tech brands, courts cannot act until a company owns at least 50% of a specific market. Of course, Big Tech companies haven’t reached 50% market share yet, but are extremely close.

For example, Amazon dominates 49% of eCommerce sales, Apple dominates 41% of the smartphone market place and 46% of the smartwatch industry, and FAAMG (Facebook, Amazon, Apple, Microsoft, and Google) and Netflix are hubs of 43% of global Internet traffic. Things get tricky as more than half of Americans use the very platforms in question. Like this: 7 in 10 have a Facebook account. 2 in 3 have purchased something on Amazon, and 9 in 10 use Google Search by default.

The proposed solutions have been to amend antitrust. Additionally, the free market suggests implementing regulations to stop practices that harm consumers and limit competition. The future of Big Tech is complicated, but more information can be found on it in the dialogue below.

Are Big Tech Companies Growing Too Big To Fail?

Brian Wallace is the Founder and President of NowSourcing, an industry leading infographic design agency , based in Louisville, KY and Cincinnati, OH which works with companies that range from startups to Fortune 500s. Brian also runs #LinkedInLocal events nationwide, hosts the Next Action Podcast, and has been named a Google Small Business Advisor for 2016-present and joined the SXSW Advisory Board in 2019. Follow Brian Wallace on LinkedIn as well as Twitter.

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