Digital Gabe
Cutting Edge Commentary On All Things Media

Weekend Read: Tech Monopolies In The Making?

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Right now four US tech companies control a disproportionate amount of power in the marketplace.  GAFA (the industry acronym for Googe/Apple/Facebook/Amazon), have a combined market value of almost $3T (yes, that’s T for trillion.)  Google and Facebook, who are simply referred to as the “the duopoly” in digital media, vacuum up 73% of all digital ad spending in the US.  Apple consistently earns $50B in net profits each year on the strength of the world’s most lucrative device-to-app ecosystem.  Amazon, the relative newcomer to GAFA, is in the process of disrupting how we buy pretty much everything.  With all this power aggregated under four companies it’s fair to ask if we’re seeing the dawn of a new set of monopolies, similar to the Standard Oils and AT&Ts of centuries past.

The Wall Street Journal has a fairly interesting take on this question in the attached link.  Instead of simple yes/no votes on each GAFA members’ monopoly status, they give a little more nuance to each answer.  For instance Google and Facebook aren’t just search and social networks who make billions from selling ads – they’re information aggregators who have turned data into a utility like electricity or water.  So should these companies be regulated like any other utility?  The answer is probably an eventual yes, but think regulation and not a full anti-trust breakup.

On the other hand Apple probably isn’t a monopoly as much as it’s the device superstar of the moment.  While iPhones are arguably the greatest tech invention of our time, Apple will only be as successful as its next hit.  Just think about how well Amazon’s Echo smartspeakers are selling compared to Apple’s HomePods, and you’ll have an idea of how quickly our device de’ jour tastes can change.  So no, Apple isn’t going to be a monopoly any time soon.

Then there’s Amazon.  While already incredibly profitable, it sort of feels like they’re just in the top of the third inning.  By hooking tens of millions of consumers with Amazon Prime subscriptions to corral the purchase of goods and the consumption of entertainment, they’re starting to control the marketplace.  Then factor in the way we’ll make these purchases going forward – by giving voice commands to Amazon-made devices – and you can see how they could start to corner the market.  For this reason Amazon may actually be the biggest monopoly threat of all.

So will Amazon eventually be broken up by the Federal Government the way AT&T was in 1982?  We’re probably a few years away from knowing that answer.  But if it is what will we call the new entities of a subdivided Amazon?  Instead of AT&T’s “Baby Bells” how about “Baby Bezos”? 😉

 

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