We live in an age of digital giants. Amazon has joined Apple as the world’s second trillion-dollar company. Jeff Bezos, its founder, has seen his net worth rise by $405 million a day in 2018, becoming the richest man in history. The value of the ‘Big 5’ – Alphabet (the parent company of Google), Apple, Amazon, Facebook, and Microsoft – is more than that of the UK’s 100 biggest companies combined. The evidence of their astonishing wealth and power goes on and on.
Though they provide different functions and services, this immense power resides in a shared business model: the extraction and analysis of data and the control of digital infrastructure – from mapping to cloud computing – that underpins all digital technology. And as a result of this control, they are also poised to dominate artificial intelligence markets, extending their power far into the future.
Profiting from data generates a circular, expansive dynamic: the more data that is captured, the greater the potential for revenue. As such, the impulse to accumulate more and more dominates the strategies of the tech giants, and dictates how they develop and deploy their technology. By instinct, they seek to move into more markets, buying out more competitors, driven by their voracious appetite for more data and infrastructure. Amazon, for example, has filed for 5,860 patents, while Alphabet has acquired over 190 businesses since its foundation.
These companies will counter, accurately, that in the process they provide many benefits. Consumers get useful services at low to no immediate cost, with greater convenience through coordination, and with more personalisation. Businesses get access to new markets and experience lower transaction costs. At a societal level, their platforms increase access to information, and enable social connections and greater efficiency.
But this business model is driving platforms to behave in ways that create serious economic, social and political problems. By acquiring innovative start-ups and limiting access to their large datasets, platforms are almost certainly limiting the innovation potential of the economy.
As the digital giants increasingly dominate their markets, their profits are soaring, and with relatively low levels of employment these labour-light digital firms are helping drive inequality. Their dominance in advertising markets has already eroded news media, while social network platforms have potentially been used to manipulate democratic proceedings. And as the power of the tech monopolies grows, these problems will grow with them.
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