Home / Technology / Big Tech and Amazon: too powerful to break up?

Big Tech and Amazon: too powerful to break up?

The emerging story about Russian influence in the last US election means that Congress is going to want some answers from Facebook, Google and Twitter. Amazon is not involved in these enquiries but it may face just as much scrutiny from a Washington that seems to have renewed enthusiasm for bringing the digital economy inside regulatory frameworks.

Image source Domenico Loia

The Senate Judiciary and Intelligence committees are looking into the tech giants’ unknowing compliance in Russia’s attempts to rig the election. There are signs that they may bring forward legislation to force the companies to reveal much more about how they operate.

All shades of opinion concerned about “Big Tech”

Worry about the power and size of the online platforms is being expressed on both the right and left of politics. Across the spectrum of opinion there is a movement in favour of controlling, or possibly breaking up, the digital behemoths that have such a dominant position in the American economy.

As far as Amazon is concerned, its market position is the main concern. Last year it had revenues of $136bn. That’s higher than Alphabet (Google’s parent) and Facebook combined. The question of antitrust action against Amazon is now very much to the fore. There are even murmurings about redrafting the current antitrust legislation to make it more able to deal with market dominance in the age of the internet and social media.

Amazon’s move into completely new business areas such as lending to small businesses and food retailing, along with its control over the companies that use it as a selling, warehousing and delivery platform, is causing concern in Washington. A hundred years ago, huge companies such as Standard Oil were strangling competition in the US. Now it’s Amazon’s turn to face antitrust action, or so some commentators think.

However other observers say that Amazon doesn’t actually have anti-competitive practices. And this summer the regulators in the US approved Amazon’s purchase of the Whole Foods grocery business.

But concerns over Big Tech’s dominance remain. Amazon is responsible for nearly half of all e-commerce transactions. Google has 81% of the market for search engines. Facebook has 77% of social traffic on mobiles.

Lack of competition being blamed for low wages

The Democrats are blaming lack of wage growth and rising prices on the lack of competition in US business, and the calls to break up Big Tech are growing. However the Democrats have a problem. The tech industry gave 74% of its campaign contributions to the Democrats in the last election.

Amazon is the general store of the digital age. It sells nearly 400 million different products. It sells cloud computing services to the CIA, it has a payment service, loan division, delivery and logistics operations. It also makes its own electronics, including the Kindle and the new Alexa. Little wonder its share price has almost doubled in less than two years. Check CMC Markets for details of how you can take a position on Amazon’s likely progress over the next period.

Donald Trump certainly thinks that Amazon has an antitrust problem by virtue of the amount of business activity it controls. He has also criticised Amazon’s effect on traditional retailers in towns across America.

Congressman Keith Ellison, of the Democratic National Committee is just one of those who believe Amazon should be forced to sell off large parts of its business. But Conservatives too, are shifting their traditional pro-market stance to something nearer an acceptance that intervention and regulation are required.

EU moves first

The EU has already led the way, with aggressive action against Google resulting in a fine of 2.4bn euros. The Commission has also gone after Amazon both for taxes due and for restrictive terms in its eBook contracts. Meanwhile vendors claim that Amazon’s control over their sales data should be curtailed.

It seems clear that if tech companies are too big to fail, there will be pressure to split them up. Many senior government and opposition figures are still smarting from the financial crash and have no intention of letting tech firms dominate the trade economy in the way large banks dominated finance.

 

Related Post

About Dan

Check Also

What’s the Newest Safety Tech in Commercial Vehicles?

Business owners and companies are constantly on the lookout for the best safety solutions that …