Is Big Tech’s hardware a defence against anti-trust regulators?
US anti-monopoly regulators face a problem in their imminent attempts to break up Big Tech: the biggest competitive advantage that these companies have is beyond the scope of the regulators in question. That is, anti-trust law doesn’t include anything that would let it deal with companies’ fundamental infrastructure – think Amazon’s warehouses, Alphabet’s computer networks, and more. Big Tech has effectively built a moat that anti-trust law is ill-equipped to cross.
Over the past 30 days, Facebook, Amazon, and Alphabet shares have rallied
Source: Yahoo Finance
Consider this: many of the world’s most successful start-ups have been customers of Big Tech, as well as competitors to it. Without Amazon’s sales platform, or it (and Alphabet’s) cloud computing power, where would they be? Without a Facebook presence and Facebook advertising? Without Google Maps? This makes one thing clear: Big Tech is actually enabling competition – there’s no way companies like Lyft could have created an alternative system of Google Maps’ vehicle routing software. There’s no way any company that relied on cloud computing could do without Amazon, Alphabet, or Microsoft. There’s no way any new company reliant on online advertising or social media could do without Facebook (and Instagram) and Google.
This presents a problem for regulators. They can’t touch, for example, Amazon’s fulfilment centres or the contents therein, nor their delivery planes or any other part of its logistics network and physical infrastructure. And, even if they wanted to, it may actually be worse for competition than leaving it alone. As Big Tech continues to pump billions into widening this moat, the situation will exacerbate.
Over the last year, Big Tech spent almost $90 billion on a range of physical advantages, from computer data centres to internet cables to warehouses to other specialised equipment. The advantage this gives it is not clear when you’re surfing Facebook, watching YouTube, or ordering your latest Kindle thriller from Amazon. But it’s real, it’s powerful, and – probably to regulators’ dismay – it is beyond the scope of anti-trust law.
Dominion holds Alphabet, Facebook, and Amazon in its Global Trends Ecommerce Fund.
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