Are Tech Firms Like Google Too Powerful?

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What are the real implications of tech market monopolization?

Do the largest tech firms, such as Amazon, Google, and Facebook, have too much power? Within the tech sector, many would perceive this question as alarmist or irrational. But with the global dominance of these firms rising, perhaps a more relevant question would be; could this power be dismantled? And under what circumstances would we need to?

The Growth Of Google And Friends

The growth of firms like Facebook and Google has been shocking, to say the least. The reality is that these firms have amassed mind-boggling resources and influence in a very short timeframe, and the repercussions of that fact are not yet clear. With such rapid growth and deep societal entanglement, are they too large for the kind of judicial regulation, in hindsight, we could have benefitted from?

Complicated By The Network Effect

The network effect is a phenomenon within economics that states: every additional user of a service or goods, adds additional value to other users of the same service or goods.

Essentially, the market becomes more difficult to break into as an existing network acquires the lion’s share of users. For example, Airbnb without any users wouldn’t attract many hosts. With very few hosts, the service would be less attractive to users.

When it comes to the largest tech firms, the network being leveraged for market dominance is arguably the biggest in history.

Gartner estimates that 44% of the data center cloud infrastructure market is owned by Amazon, with the other hyperscalers like Microsoft comprising the rest of the market. Google owns over 90% of the Global search market, and Facebook owns 80% of social networking ad revenue.

For context, notorious monopolist John D. Rockefeller controlled 88% of the refined US oil flows, whilst Andrew Carnegie monopolized 67% of US steel production. There’s little disagreement that these market monopolies were extremely detrimental to society, with low wages, exorbitant profit margins, and price hikes just some of their consequences.

The control of those behemoths of the gilded age was broken up without too much difficulty, but perhaps it would be naïve to presume that the same could be achieved as easily with Amazon and friends!

Is Regulation A Worthy Defense?

Even if we did seek to apply oversight to these firms, traditional government regulatory systems have not proven effective so far. One need only look to congressional sessions with Mark Zuckerberg to understand how the lack of insight that government institutions can have into these firms can derail traditional procedure. This is a new, continuously expanding sphere, with its own set of precedents, that defies the world our traditional regulatory systems were designed for.

Systems can evolve, but can consequent solutions keep up with the rapid growth we are witnessing? The government has the power to shut down these companies if they became tangibly deleterious to the nation, and it certainly isn’t blind. The recently introduced legislation, known aptly as the BEZOS act, would tax corporations for every dollar that low-wage employees receive in government assistance.

However, many possible dilemmas are more likely to manifest in a more subtle and insidious way.

As a hypothetical example; Google and Facebook could implement complex machine learning algorithms to control content for a political agenda, influencing millions of people.

Most machine learning is a black box, and even the people that write the code don’t always understand it; Google recently created an AI software that created better AI software than its own creators. Essentially, a program was more effective at programming than a team of humans were.

So without a competitive wealth of software intellectual property such as that contained within Google, how exactly would a government committee begin to prove that they were selectively controlling the internet?

But tech firms wouldn’t do that, would they?

How Rational Are These Concerns?

The chairman of the FCC, Ajit Pai, has recently penned a letter to tech giants raising concerns about exactly that. Contesting the ‘zero’ visibility into how these companies filter content and questioning several instances of liberal-biased policing of the internet by these firms without any explanation or recourse.

He claims that tech firms have been selling private consumer data to overseas entities in what “US intelligence agencies have indicated raise national security concerns.”, and that data is collected even when users specifically elect to retain their privacy.

This leads to another question:

How Secure Is Data, Really?

If Google is collecting this wealth of data, is it within the realm of possibility that it could be stolen?

Despite the expanding number of data security companies claiming infallible protection, the number of data breaches increased from 157 in 2005 to 783 in 2014. Most statistics are not very reassuring.

Beyond the applications in malicious filtering, tech firm’s application of machine learning in data control could also cause a plethora of concerns. A cross-disciplined team of AI world experts compiled a 100-page research paper detailing how progress in AI could open up a Pandora’s box of cybersecurity threats.

These questions may appear alarmist to many, but when the stakes are a potential dilemma that could have global repercussions, how justifiable does caution need to be? You tell me.

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About the Author

Brian McMullin is the Operations Director for Exit technologies, an R2 certified, global IT asset disposition company (ITAD). He has over two decades of experience overseeing large real estate contracting projects and tweets at @ExitTech.