The world’s largest tech companies — Google, Facebook, Amazon, Microsoft and Apple — have become enormous concentrations of wealth and data, drawing the attention of economists and academics who warn they’re growing too powerful. “Platform companies have captured the economy,” said Jonathan Taplin, who argues in a new book and a recent NYT op-ed that the dominant platforms are so big that they’re undermining competition.
Our thought bubble: Despite populist promises, cracking down on Silicon Valley is not one of President Trump’s near-term priorities. Makan Delhrahim, Trump’s top antitrust enforcer at the Justice Department, has pledged to to enforce antitrust violations with respect to online platforms just as he would with any other industry, but insiders expect him to be cautious. And Maureen Ohlhausen, acting FTC chair, said in a recent speech that the agency has no intention of meddling in the way tech companies use algorithms and data.
- Facebook, Amazon, Apple, Microsoft and Google parent company Alphabet are the top five contributors to the S&P’s 500 gains this year and their climbs helped drive the stock market’s recent rally
- These mega-cap tech stocks have earned the acronym FAAMG from Goldman for their performance, adding $660 billion in market value this year.
- The market cap of tech giants is already greater than the GDP of large U.S. cities: On that basis, Google is bigger than Chicago, Amazon is bigger than Washington DC.
- “It could ultimately lead to populist calls for redistribution of the increasingly concentrated wealth of Silicon Valley as the gap between tech capital & human capital grows ever-wider,” according to a recent Bank Of America Merrill Lynch note.
Economists tend to agree that concentration has increased across U.S. industries, including the internet platform industry. What they don’t agree on, though, is whether it’s time for antitrust authorities to step in and if there’s even a legal mechanism to do so.
Who’s the regulator? The FCC regulates the networks these companies use to reach consumers, but not the online platforms themselves. That duty falls to the FTC, but the agency doesn’t have the same rule-making authority and therefore relies on after-the-fact enforcement actions when companies mislead consumers or violate their own rules, such as privacy policies. Antitrust laws, some lawyers argue, were designed to oversee physical industries like steel and oil— not the new breed of digital commerce companies that have created entirely new markets.
“High-tech has no regulator so there’s a huge policy gap” said Gene Kimmelman, CEO of consumer interest group Public Knowledge and former DOJ official under the Obama administration, who expects greater antitrust scrutiny of tech company moves. “The pot is simmering and it’s getting hotter. I think it’s a question of whether they overreach in an environment where people are distrustful of their power.”
SOURCE: Kim Hart