Economics: Are Big Tech Corporations Really Monopolies?

 

(Drivebycuriosity) - There is a crusade against Big Tech. Politicians and journalists claim that Amazon, Apple, Google & Facebook are monopolies. Senators like Klobucher and Lina Khan, chair woman of the power Federal Trade Commission (FTC), America´s antitrust authority, state that Big Tech corporations abuse their power, harming their competitors and damaging the society.

They are wrong. Big Tech ain`t monopolies. Since Amazon started in the late 1990s the number of competitors has been swiftly climbing year over year. Amazon`s success story inspired myriads of copycats to offer similar services. There are now thousands of companies selling online, including giants like Walmart, Target, Best Buy & Costco, who all developed large online departments, and there also exist a lot online platforms like Overstock, Shopify, Wayfair, Etsy & Ebay, who all are copying Amazon`s success. The online giants Facebook & Google also provide online shopping on the websites. The number of foreign online shops like MercadoLibre, Alibaba, Tencent & Rakuten (Japanese) is also expanding. Many of these competitors are growing faster than Amazon (emarketer ). And Amazon`s cloud business (AWS) is competing against strong competitors like Microsoft, Google, IBM, Oracle and others.

Lina Khan claims that Amazon`s low prices drive competitors out of the market and lead to a monopoly ( yalelawjournal reason consequences ). Khan is wrong. Amazon`s success - and low prices -  did not hinter potential competitors, quite the contrary, their number has been rising year over year. A former Amazon employee used his knowledge to start in 2012 Instacart, an online grocery with annual revenues around $1.5 billion. These competitors all are getting better over the time, challenging Amazon more and more. Apparently Chair woman Khan and her fellow crusaders lost the sense of reality.

The other Big Tech companies aren`t monopolies either. Apple has a lot competition for their iPhones, iPads, iMacs, MacBooks and services. Customers can purchase similar products & services from Microsoft, Google, Samsung, Huawei and a lot of other technology companies. And customers can choose between Apple´s iOS, Google`s Android, Windows other mobile operating systems. 

Google`s & Facebook`s business models are based on advertisement. Both are fiercely competing against each against other and against myriads other ad-based companies for user numbers & advertiser billions. Google`s search engines are competing against similar services like Microsoft`s Bing, DuckDuck Go, Yandex & WolframAlpha. Google Maps are competing against Apple Maps, MapQuest & TomTom. And YouTube competes with Rumble and other video platforms.

 

 

 (active users, billions source )

Meta (mother of Facebook & Instagram) competes against media services like Tiktok, Snap and many others. The recent quarterly numbers from Meta show that the compitors of Facebook & Instagram are catching up (chart above). Years ago I give up Facebook and I am using Twitter instead. Did I go to prison for that? Nope, Facebook does have no power over me. Data privacy? Try that with the IRS. Government authorities can force you to give them your data, Big Tech can not!

The Big Tech haters ignore, maybe even don`t understand, that the power of companies is always  constrained by potential competition (except competition is forbidden by patents or other laws. Don´t print US Dollars!). When a corporation has success, her rising profits attract automatically others (copycats) who want a share from the pie. There are myriads of investors, including big funds, who are happy to put their money on the next Amazon, Google, Facebook etc. It is very easy to finance to new ideas. 

And the Internet makes it very easy to compare prices & services 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.

The crusade against Big Tech, known as hipster antitrust, is based on economic illiteracy, ignorance and hatred for successful companies.