(Drivebycuriosity) - It seems that Washington DC began a crusade against Big Tech. Politicians & bureaucrats claim that Amazon, Google, Facebook & Apple are monopolies. They want to regulate them and maybe split them in part. Recently a bipartisan group of Washington DC lawmakers, the House Judiciary Subcommittee on Antitrust, published a 400 page report claiming that Big Tech is abusing their market powers and offering plans how to regulate them (cnbc ). Subcommittee chairman Rep. David Cicilline, a member of the Democratic Party, called the CEOs of the big tech companies “emperors” who “have the power to pick winners and losers in the economy.” (cei.org )
The monopoly claims are unfounded. Amazon´s success has been animating a legion of copycats who also benefit from the ascent of e-commerce. And many competitors are growing much faster than Amazon (image below). Amazon is competing against huge retail corporations like Walmart, Target & Best Buy who all are copying Amazon`s success and are expanding their online sales, getting better over the time. Amazon is also competing with other Internet companies like Ebay, Wayfair & Overstock. And Amazon has to compete against are rapidly growing e-commerce platforms like Shopify, where companies can sell their products & services online. Facebook (and their daughter Instagram) and Google also developed platforms where companies can sell their products & services independent from Amazon. Amazon`s cloud business AWS, which is also getting much attention from the trustbusters, is challenged by Microsoft, Google, IBM, Oracle and other companies who also want to have a large piece from the pie. Microsoft`s cloud business won recently a huge contract with the Pentagon and is already growing faster than Amazon`s cloud business AWS. And there is growing competition from foreign companies like China´s Alibaba and Japan´s Rakuten.
Today Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. More than 80 U.S. retailers have annual revenues of more than $1 billion, including Walmart, whose revenues are more than double those of Amazon. Online sales only account for about 20% of total retail sales.
Subcommittee chairman Rep. David Cicilline and other Democrates claim that Amazon abuses her marketplace, where others can sell, and they say that Amazon treats their third-party-sellers unfairly. Really? Amazon reported that on the latest big shopping event "Prime Day" (October 13 & 14) "third-party sellers—most of which are small and medium-sized businesses—surpassed $3.5 billion in sales on Prime Day—a nearly 60% year-over-year increase, growing even more than Amazon’s retail business". How could their business grow so fast, faster than Amazon`s own online shops, if they are discriminated ?
The other big tech companies aren`t monopolies either. Apple`s iPhones, iPads & MacBooks and services are competing against similar products & services from Microsoft, Google, Samsung, Huawei and a lot of other technology companies.
Washington DC and several Federal States are also attacking Google. They are alleging that the company has monopolies in Internet search and advertising. Yes, Google Search has a very high market share. My wife and I are using Google`s search engines and maps frequently, and this blog runs on Google. But we chose to, we also could use other search engines like Microsoft`s Bing, DuckDuck Go and the Apple Maps.
Google & Facebook finance themselves by selling ads and so do myriads of other firm like Facebook, New York Times & Yahoo (belonging to Verizon )
(source)
The trust busters ignore that the power of companies is always constrained by competition. When a corporation has success, her rising profits attract automatically others who want a share from the pie. The Internet makes it very easy to compare prices and to switch to other shops, news providers & entertainers, sharpening the competition. Customers can choose the company which has the best quality, the best service and/or the lowest prices which gives the consumers a lot power. As a result, customers have more power than the corporations.
What is the real purpose of the crusade? I agree with Patrick Hedger that "nothing stops politicians looking to make names for themselves ( insidesources). Democrat & Republican politicians want to profile themselves. Their crusade gets a lot media attention which might attract potential voters and impress political leaders. The trust busters also want to gain more power and acquire more access to tax payer`s money. The trustbusters seek to expand their budgets and demand more onerous reporting requirements, so they can expand their offices and hire more people which in return gives them more political influence, prestige and higher incomes.
"All of this is coupled with an oversized federal presence for enforcement, from greater congressional oversight to enhancing the powers of both the Department of Justice and the Federal Trade Commission through expanded budgets, more onerous reporting requirements, and an invigorated use of merger retrospectives" writes Wayne T. Brough (aier.org ).
Washington`s anti-Big-Tech crusade employs hundreds of high paid lawyers and burns a lot of tax payers money which otherwise could be used for education or health care. The anti-tech crusade creates a lot of highly attractive job opportunities for anti-trust lawyers and university employees which attract many young talents. Instead moving into technology, medical research and other sciences, which would benefit the society, these people are wasting their talents in unproductive skirmishes. As a result the anti-tech crusade will slow down economic growth and harm everybody who does not live from the money of the taxpayers.
Antitrust law is designed to protect the consumers but Washington`s trust busters want to create a bureaucratic world as described by Franz Kafka. The uncertainty of political demands, let alone new regulations imposed through antitrust enforcement threats and action, amounts to an enormous cost passed directly to American consumers through higher prices and reduced economic dynamism (insidesources). Big Tech are serving the consumers, the society, by spurring price reductions, delivering better quality & innovation. US politicians are making the world a poorer place by fighting the quartet of Google, Amazon, Facebook, and Apple that have helped so many Americans make 2020 a little more bearable" ( twitter)
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