In the Sunday New York Times, Robert Reich published an article regarding the increasing power of major tech companies in the American economy. Corporations such as Google, Microsoft, and Facebook now dominate the world of intellectual property, one of the cornerstones of the modern American economy. As part of this dominance, they are forming monopolies which threaten the free market.
As Reich warns, these monopolies bring immense power to these corporations. Being a political economist, he focuses on the economic aspect of this power. Amazon, for example, is now the place where a third of all Americans look when they want to buy something, no matter what it is. Furthermore, the concentration of web traffic into a few websites - with the top ten websites getting seventy-five percent of traffic - eliminates competition, allowing for price gouging.
My Gut Reaction: If these companies are getting to the point they can mold markets, what other type of damage can they do?
Analysis below the fold...
The problems Reich poses are bad enough. Major tech companies such as Facebook, Google, and Amazon now effectively have the power to shape markets through their purchase decisions, along with what and how they decide to market. We've seen this before with companies such as McDonald's, which to a significant extent reshaped the agricultural industry in the late twentieth century. Similarly, WalMart has reshaped manufacturing through its ability to demand ever lower prices, with catastrophic effects on workers.
With the growing power of technology, the impact becomes potentially catastrophic. Look at the power of something like Google's search engine, with millions if not billions of people rely on for information. Control of this technology through intellectual property laws potentially gives a corporation power over knowledge itself, making current debates over corporate control of the media seem mild in comparison. The implications for politics, society, and the advancement of knowledge are potentially horrifying.
Reich advocates the use of anti-trust laws to break up these monopolies. However, as he warns, getting our government to take action may be difficult:
In 2012, the staff of the Federal Trade Commission’s Bureau of Competition submitted to the commissioners a 160-page analysis of Google’s dominance in the search and related advertising markets, and recommended suing Google for conduct that “has resulted — and will result — in real harm to consumers and to innovation.” But the commissioners chose not to pursue a case. Investigators also found evidence that Google was pushing its products ahead of competitors’ on search results, though no legal action was recommended on this point.
As Americans, we need to pressure our government to take a strong stand against technological monopolies. Our economy, and our broader society, may depend on it.