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A public policy blog from AEI
If I were to list America’s big problems here in 2017, I’m not sure it would occur to me note the huge success of Big Tech—Amazon, Apple, Facebook, Alphabet/Google, Microsoft—as one of them.
But I know there are those who would. As Axios reporter Kim Hart points out in a longish piece today, there are political activists, academics, and economists who are deeply worried that such huge concentrations of wealth and data mean the platform companies “have captured the economy.”
And where might this concern about the techopoly lead? Hart includes an ominous quote from a bank analyst: “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.”
It kind of already is happening. Recall that Elizabeth Warren has cited Amazon, Apple, and Google as examples of concentrated corporate power, comparing them to Wall Street’s “too big to fail” megabanks. And some progressive definitely want to break up Big Tech.
Coming to the issue fresh, I might find the piece—which gives pros and cons—making a slightly stronger argument that “something needs to be done,” such as greater regulation or antitrust action. Not only does it include plenty of scare stats (“The market cap of tech giants is already greater than the GDP of large U.S. cities”), but there is this compelling pro-growth argument from economist Luigi Zingales:
People don’t fully appreciate that the reason we have Google and Facebook today is because there was an antitrust enforcement action against Microsoft that slowed down the ability of Microsoft to monopolize the internet, the browsers, the data, search, and so on. Today’s monopolies are yesterday’s startups. In a good system, this keeps changing.
But I would at this point still take the other side of the trade. From my The Week column last year, which I think still holds up:
Google’s top economist Hal Varian had an op-ed in the Financial Times in which he made the case that tech giants are nothing like the robber baron monopolists of old. Rather, they are constantly subject to “disruption” while continuing to innovate and bring cool new products and services to consumers and small businesses alike. … It wasn’t so long ago that MySpace was the largest and most dominant social networking site. Fortune magazine once declared Yahoo the winner of the “search engine wars.” The founders and executives at top tech firms hardly think their positions are forever secure. Will smart bots threaten Google’s core search business? Will the fast-growing Chinese market undermine the iPhone in Asia? Look out Facebook, here comes Snapchat! … [One should also point out] all the ways — in addition, perhaps, to an anti-trust rethink on the right — to make the economy more competitive, including reforming occupational licensing laws, less stringent patent and copyright protection, and reviewing tax and regulatory rules that benefit incumbents over startups.
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