When we traditionally talk about monopolies, we talk about companies that control an entire sector. Yet, in Big Tech, we face a combination of horizontal monopolies, where they control a sector, and verticle monopolies, which abuse the sector control to push other products and services. But what does it mean for businesses and end users? Let’s find out in this week’s look at Big Tech Monopolies.
Walled Garden of Big Tech Monopolies
If you think back about how we installed software on our devices, we used to buy the software separately from the device, either as a CD or Download. Once we owned the device, no one could make any rules about what software we could or could not use and which rules they had to follow. If you buy an iPhone today in the US, you can choose precisely one browser engine from one store with one set of features.
Yet, it isn’t just our phones. What to autosave your Microsoft Word document? That only works with OneDrive.
Google search prioritizes its services over competitors until it gives the impression that nothing else exists. Thus, if you can’t find another service, you might stick with GSuite.
When big tech companies can abuse their sector control to lock us into their other services, we get locked into walled gardens. Then, suddenly, we lose control over our data and digital lives, as we are at the mercy of a few companies.
Monopolies Eliminate Innovation
The walled gardens, in turn, allow the gatekeeper to control innovation. By controlling access, the big companies can keep out products that compete with their offering or threaten an established, often highly paid, partner.
Yet walled gardens aren’t the only way to stifle innovation. Bundling likewise leads to a loss of innovation. The most well-known bundling case is still the antitrust case against Microsoft. In the late 90th, Microsoft used its power to bundle Internet Explorer with Microsoft Windows. By giving away the browser at no cost, Microsoft hoped to strengthen the sales of its web server, Internet Information Service, and Windows Server. As it was free, consumers and businesses soon used Internet Explorer over the better, faster, and more secure alternative provided by Netscape. In the end, Netscape went out of business. Consequently, Microsoft faced Antitrust actions first in the US and later in the EU.
History doesn’t repeat itself, but it often rhymes. Today, we see the same anticompetitive behavior from Google and Microsoft surrounding their office suits. While Google Meet and Teams are less attractive, they came bundled into the same price as the word processors and spreadsheet editors, making them the default choice over the better alternatives. It even went so far that the EU prohibited Microsoft from bundling Teams with the rest of Mircosoft365.
Yet, in the same way that Netscape’s elimination removed the more innovative and better alternative in the web browser, the current video conference war might well remove the forward-thinking alternatives. After all, if you control the market, it is tough for a challenger to overcome the initial inertia. Thus, the big player has little incentive to spend money on innovation. The little player doesn’t have any customers to get cash for innovation. Consequently, no one is innovating, and we get stuck with the same old software.
Unrestraint Monetization
The last issue with big tech monopolies is how they contribute to today’s monetization and commoditization of users. The best place to start is by looking at big tech’s privacy policies and what they can do with your data and metadata. Most didn’t need to change their policies to allow them to use customer data to train their AI models. The terms already grant them the right to use your data and the associated metadata for any purpose.
While using customer data as AI training data is still catching on, utilizing and sharing the data for marketing purposes is already the norm for many big tech companies.
Without competition, they are less pressured to change their habits, improve their cybersecurity, or offer us better services. They can focus on extracting the maximum value from every user and increasing monetization at the cost of our privacy and security. Yet, as it doesn’t directly hit our pocketbooks, most of us never see these hidden costs until we get the letters telling us of yet another data breach.
Monopolies Play The Long Game
Today’s tech monopolies have a myriad of ways of making money. They can trade data, act like hedge funds, or raise supplier fees. Without the apparent need to fix and raise prices, it is hard to see the cost big tech puts on consumers. Yet, with the loss of innovation, the loss of privacy, and by forcing us into walled gardens, they make the world a little bleaker and might prevent the next big thing from challenging our ideas and worldviews.