The Big Tech, despite its overarching global reach, is facing tough times with a growing trust deficit, both from the users and regulators.
More so in the European Union, which has been the most aggressive jurisdiction so far in trying to rein in superstars like Amazon, Apple, Facebook and Google.
As Apple fights a $14.4bn tax case, the world’s biggest, at the EU General Court in Luxembourg, here’s in the inevitable question: Are the tech giants monopolies?
They are powerful, no doubt. Google and Facebook together controlled 60% of mobile ad revenue and 51% of digital ad revenue globally in 2018, according to eMarketer. In the US, Apple has about 45% of the smartphone market; about 47% of all US e-commerce sales go through Amazon.com.
Under modern antitrust enforcement, however, those percentages alone aren’t enough to alarm regulators in the US. What’s illegal is for a monopoly to abuse its market power to prevent rivals from threatening its position.
US courts ruled Microsoft did so in the 1990s.
But the EU law sets a lower bar for finding abuse of dominance. It’s evidenced by three antitrust actions against Google in as many years carrying penalties that total $9.3bn.
Interestingly, the US chose not to bring charges against Google for the same conduct the EU found illegal.
The US Justice Department and the Federal Trade Commission, which both have a mandate to enforce antitrust laws, are now working together to ramp up oversight of the technology giants.
In Asia, Japan’s Fair Trade Commission says Google, Apple, Facebook and Amazon need to be examined for possible abuse of their market dominance. South Korea’s commission was reported last year to be looking into whether Google Korea was abusing its market position to pressure local game companies to upload their products only onto the Google Play platform.
In China, censorship and government control over Internet access have made it difficult for US techies to compete with the likes of Alibaba, Baidu and Tencent.
For sure, tech giants like Amazon and Facebook have leverage over both producers and consumers. They are also growing by snapping up potential rivals that might threaten market share. Data compiled by Bloomberg show the big five - Alphabet, Amazon, Apple, Facebook and Microsoft - have made 431 acquisitions worth $155.7bn over the last decade.
The companies also have control over vast amounts of data about their customers, raising concerns about threats to privacy.
The Silicon Valley executives are waking up to the backlash, striking a more conciliatory note and saying they want to work with authorities on a range of challenges. They argue that their dominance is hardly durable because barriers to entry are low for new competitors.
Google is fond of saying competition is just “one click away.”
Fundamentally, social media users are driven by the same ancient desire: Human Connection. But that has for long been crowded out by addictive technology, amazing products and invasive corporate branding.
Longer term, the inescapable truth for the Big Tech is growing loud and clear: Techies can thrive only if people and regulators trust them. Amid a growing backlash, tech superpowers will need to figure out how to regain that trust.
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