Let's understand what monopoly by technology companies is.
What is monopoly?
Can you imagine a day without one or more of these FAGA technology companies? Most of us can’t.
In recent years, tech companies have grown significantly to play an important role in our society from
e-commerce to mobile phones, social networking, digital advertising, and much more. It is difficult to
function without them. But this is not necessarily bad since technology also makes our life easier.
The worrying part is that, specifically top tech companies have grown too big to control and they
have an unfair advantage over smaller competitors. This situation is known as a monopoly - a single
player dominating the market. For example, 91 out of 100 web searches are done on Google.
Why is monopoly bad?
Supposing there is a single vegetable vendor serving a very large population. He or she quickly
realizes how important he/she is. Very soon they could be hiking prices or set the rules of the
business that is harmful to consumers. They could also prevent other vendors from setting up a
business by asking farmers not to sell them their produce. One powerful vendor can control the
business and deter innovation in the industry by killing off competitors. These practices are anticompetitive and unfair. Antitrust law prevents such monopolies from forming.
Antitrust Subcommittee
Instances like this were seen in the tech industry. Since the industry is relatively new, US senators
realized that current laws were too outdated to regulate it. So, since June 2019 the House of
Representatives Antitrust Subcommittee is investigating these practices. As a part of this Mark
Zuckerberg (Facebook), Sundar Pichai (Google), Tim Cook (Apple), and Jeff Bezos (Amazon) were
asked to testify. After the investigations, the committee will submit a report with recommendations
on new laws that should be drafted.
Unfair Practices in FAGA
CEOs were questioned about the functioning of their companies which deterred competitors, especially small businesses. A few instances are:
Amazon acts as both a platform for sellers and a seller itself. It collects seller’s data as a platform and then uses this data to set lower prices for its own products to drive other sellers out of business. Once there are no other sellers, Amazon increases the prices.
Facebook’s acquisition of Instagram in 2012. By that time Instagram had become very popular but its founder feared that unless they sold the company to FB, it wouldn’t be allowed to survive.
Google’s search engine has often been charged with a higher ranking for its own products and services.
Apple charges developers as high as 30% of the price for listing apps on the App Store and forces them to pay
through Apple Pay.
All of these companies are also held accountable for tracking users extensively and storing their data with little respect for data privacy. For the most part, CEOs tried to evade these questions. They expressed willingness to cooperate
with law-makers in draftin and implementing rules.
What is monopoly?
Can you imagine a day without one or more of these FAGA technology companies? Most of us can’t.
In recent years, tech companies have grown significantly to play an important role in our society from
e-commerce to mobile phones, social networking, digital advertising, and much more. It is difficult to
function without them. But this is not necessarily bad since technology also makes our life easier.
The worrying part is that, specifically top tech companies have grown too big to control and they
have an unfair advantage over smaller competitors. This situation is known as a monopoly - a single
player dominating the market. For example, 91 out of 100 web searches are done on Google.
Why is monopoly bad?
Supposing there is a single vegetable vendor serving a very large population. He or she quickly
realizes how important he/she is. Very soon they could be hiking prices or set the rules of the
business that is harmful to consumers. They could also prevent other vendors from setting up a
business by asking farmers not to sell them their produce. One powerful vendor can control the
business and deter innovation in the industry by killing off competitors. These practices are anticompetitive and unfair. Antitrust law prevents such monopolies from forming.
Antitrust Subcommittee
Instances like this were seen in the tech industry. Since the industry is relatively new, US senators
realized that current laws were too outdated to regulate it. So, since June 2019 the House of
Representatives Antitrust Subcommittee is investigating these practices. As a part of this Mark
Zuckerberg (Facebook), Sundar Pichai (Google), Tim Cook (Apple), and Jeff Bezos (Amazon) were
asked to testify. After the investigations, the committee will submit a report with recommendations
on new laws that should be drafted.
Unfair Practices in FAGA
CEOs were questioned about the functioning of their companies which deterred competitors, especially small businesses. A few instances are:
Amazon acts as both a platform for sellers and a seller itself. It collects seller’s data as a platform and then uses this data to set lower prices for its own products to drive other sellers out of business. Once there are no other sellers, Amazon increases the prices.
Facebook’s acquisition of Instagram in 2012. By that time Instagram had become very popular but its founder feared that unless they sold the company to FB, it wouldn’t be allowed to survive.
Google’s search engine has often been charged with a higher ranking for its own products and services.
Apple charges developers as high as 30% of the price for listing apps on the App Store and forces them to pay
through Apple Pay.
All of these companies are also held accountable for tracking users extensively and storing their data with little respect for data privacy. For the most part, CEOs tried to evade these questions. They expressed willingness to cooperate
with law-makers in draftin and implementing rules.
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