It’s been a big week for Big Tech, with the CEOs of Amazon, Facebook, Google and Apple summoned via video link for a grilling from the US House Judiciary Committee.
Though nominally about antitrust and competition issues, the hearing was a scattergun affair, with questions on issues like political bias, online harm and content moderation. At one point a Republican congressman even asked Google’s Sundar Pichai why his campaign emails seemed to be going into supporters’ Spam folder.
The pick ‘n’ mix approach to the questioning was partly a result of different politicians’ personal preoccupations, but also a sign that they were not all that clear what the central charge against Big Tech is meant to be.
On the competition point, the word ‘monopoly’ is bandied about as if it’s self-evidently the case that these four companies dominate all that they touch. Granted, there are areas where this is the case – last year’s report from the Competitions and Market Authority found that Google accounts for over 90% of search advertising revenue in the UK, for instance, and Facebook for half of display ad revenue. Undoubtedly this gives both companies advantages they can use to enhance other areas of their business and anyone interested in competition should be, if not panicked, then certainly alert to this dynamic.
But the overall picture is more nuanced than a simple narrative of Big Tech dominance might have you believe. Each of the big four is ranged across many markets and faces multiple competitors, many of whom are not necessarily what you’d think of as tech companies – Amazon vs Walmart in the retail sector being a good example.
Then there’s the intense competition they have with each other. As Alec Stapp of the Progressive Policy Institute notes “it is deeply ironic that multiple Big Tech companies have been accused of monopolising the advertising market at the same time”. Just as importantly, as CapX contributor Ryan Bourne points out, it is not clear that the firms’ pre-eminence in certain areas is having a negative impact on consumer value – though this is clearly something to keep a close eye on.
There’s a lot of hindsight bias at work when it comes to tech company acquisitions too. It’s easy to look at a platform like Instagram, with its huge number of users, and assume it was always destined to be thus. But back in 2012 when Mark Zuckerberg bid $1bn for a company with 13 employees, many analysts saw it as an enormous gamble. There’s certainly no guarantee the app would have got anything like as big without Facebook’s enormous clout behind it.
Of course, defending the Silicon Valley firms from often unsubstantiated political attacks does not mean being seduced by their claims to be fighting on the side of the angels. When Jeff Bezos talks about Amazon “doing the right thing” or Mark Zuckerberg about his mission to help people “connect with people they care about”, we should treat it as the kind of PR fluff it is. The same goes for tech moguls spouting hoary pieties about whatever today’s progressive cause célèbre happens to be.
Altogether more compelling than nebulous stuff about ‘values’ is the concrete matter of value – the $1tn that Amazon has dispersed to shareholders, for instance, or the hundreds of billions the firm has invested in the US economy. Most important by far, though, is the enormous value these companies have provided to consumers, not just in lower prices, but product range, connectivity and convenience – much of which is now so ingrained in our lives that the miraculous has become hum-drum.
But however unassailable these firms might seem right now, they are acutely aware that the only surefire way to maintain their position is to carry on creating that value. We need only look at the fates of some other tech giants – from AOL to Yahoo and even Sony – to appreciate just how quickly the mighty can be laid low.
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