Over at Café Hayek, Don Boudreaux points to this essay by William Shughart, pushing back on the idea that Amazon is a monopoly in any economically interesting or relevant sense. The essay is good and well worth reading, but there is another angle I think is worth adding.
Shughart describes how Lina Khan of the FTC currently “oversees two antitrust cases targeting two of the globe’s three biggest online platforms: Amazon and Meta, Facebook’s parent company. (The Department of Justice is going after a third tech giant, Google.)” One company that doesn’t come up in the article, but has itself been the target of similar cases, is Microsoft. Along with Apple, Google, Amazon, Facebook and Microsoft are often collectively referred to as representing “Big Tech.” Each of these companies has in various ways and at various times been ominously described as too big, too powerful, too entrenched, and representing a threat to economic competition.
However, that last claim seems much less poignant when you consider that all of these companies are in competition with each other.
Shughart correctly points out that when you include brick and mortar retailers as competitors to Amazon’s retail business, Amazon only has a 6% market share. I’ve also pointed out in a different post that Microsoft’s Xbox gaming division is in competition with Sony, a company only about 5% as big as Microsoft, and Nintendo, a company only half the size of that. Nonetheless, Microsoft is currently being trounced by both of these much smaller companies. Competition from smaller competitors shouldn’t be dismissed – mere size is no guarantee of success when nobody is required to use your products, and when competitors, however small, have the ability to give customers a better offer.
But even if we set that aside and kept our eye on the biggest tech giants, what’s the cause for alarm? Why should I fear, say, Microsoft on account of how big it is, when Microsoft faces competition every day from comparably huge companies like Apple, Amazon, Google, and Facebook? Even with this limited view, Microsoft is currently fighting a four-against-one battle – or so it would feel to them. Apple, too, would feel themselves to be in a four-against-one battle, as would the others. Of course, these companies don’t compete against each other in every aspect. Microsoft isn’t competing in the smartphone space against the iPhone (RIP Windows Phone, your passing was mourned by dozens), but PC vs Mac is a serious market. Microsoft also doesn’t compete much with Amazon in retail, but cloud-computing services are another story. Apple and Google compete in smartphones and the iOS vs Android market. But overall, each of these companies competes with the other in various ways.
Maybe the concern among these would-be reformers is that competition among five giant companies is too small – a healthy competitive market requires more comparably sized competitors. If that is truly their concern, just wait until they find out about the size, power, and resources commanded by the federal government where the only meaningful competition is the two-party system! None of these companies can hold a candle to that along any of the dimensions over which these reformers express their concern. So I don’t share Khan’s priorities here – there are much bigger fish to fry first.
READER COMMENTS
David Seltzer
Oct 26 2023 at 11:41am
Kevin said; “If that is truly their concern, just wait until they find out about the size, power, and resources commanded by the federal government where the only meaningful competition is the two-party system! None of these companies can hold a candle to that along any of the dimensions over which these reformers express their concern.” Kevin, they already know about the size, power and resources of the government because they use them when going after firms with large market share. The antibiosis of the feds threatening the techs or pharma with regulations provides incentives to industries to capture regulatory agencies.
Dylan
Oct 26 2023 at 1:20pm
Have to start out by saying I agree that there should be bigger priorities, I don’t know that the dominance of the big tech companies is a problem at all, if it is a problem whether it is one the government should be trying to solve, and I’m very skeptical that any of the proposed remedies I’ve heard would actually do anything constructive to solve that problem, and feel somewhat confident that they would make the problem worse (again, assuming there is a problem)
That disclaimer out of the way, I want to talk a little about this:
Require is kind of a slippery concept, what does that really mean? Back in 2014, after the Snowden revelations, I made a conscious effort to reduce my use of services from some of the big tech companies who were so readily sharing data with the government. I started by trying to remove Google from my life. I stopped using my Gmail accounts and moved to a more privacy focused email service, I hacked my Android phone and removed all of the parts that phone home information back to Google (breaking much of the basic functionality of the phone), I’d mostly stopped using Google search already, I blocked third party tracking cookies in all my browsers, setup filtering on my router to block known Google domains (and others). And other things that I’m sure I no longer remember. Yet, at the end of the day, I still barely made a dent in how much I use Google services, because all of the people I wanted and needed to communicate with use Google. And, you don’t even really know who those people are, since it was easy to host your own domain with Google.
These days it is even harder. The last 4 jobs I’ve had, all have used Google for email and documents and I’ve needed to sign into that account on my personal phone to do my work. And, if your company doesn’t use Google, they will use Microsoft. And, all of the data that you generate on any of these platforms is accessible by government authorities as part of routine collection efforts.
So yes, there is competition in any individual category, and big tech won’t be the winner in every category they compete in. But, the ability to simply choose to not do business with even one of them, let alone all of them, is mostly impossible if you want to live anything resembling a modern life.
Matthias
Oct 27 2023 at 7:51am
You could buy a cheap spare phone instead of logging in with the one you conduct your personal affairs on.
You can get cheap Android phones for less than a hundred dollars.
(Ideally, you’d get your employer to pay for this. But even out of pocket it’s not much.)
Dylan
Oct 27 2023 at 11:08am
Sure, and that is what I did for the first company I worked for. But, that doesn’t help all that much. If I’m going to use that phone at home, it still needs to connect to my network. And if I take it and my other phone with me and have them both connect to the same network points a lot can be done with correlation. I started to see that almost right away. On my personal devices I have things locked down pretty tight, which has the side effect that I don’t see ads. But, I didn’t have the option to do as much on the work phone, and I noticed I’d start seeing ads for weird things I’d been searching for on the other phone. And that happened repeatedly. Was a bit of a wake up call that all the work I’ve done for years to try and maintain privacy online has been next to useless.
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