Cable says the tech titans have become oligopolies, Kay says the sector is working as it shouldby Vince Cable and John Kay / July 17, 2018 / Leave a comment
Published in August 2018 issue of Prospect Magazine
Yes, says Vince Cable
The online landscape is dominated by a handful of tech titans, with nine in 10 internet searches made through Google, 99 per cent of smartphones using Apple’s iOS and Google’s Android operating systems, and Facebook remaining the dominant social media platform. It is time to call the big tech companies what they are: oligopolies. They use their might to maintain market position—just look at the travel site Expedia, which owns Travelocity, Hotels.com and Trivago.
The tech giants protect their interests through buying potential challengers and spending millions lobbying governments. Their increasingly dominant position often leaves entrepreneurs feeling they have little to no choice but to sell or shut up shop. The gobbling up of small rivals stifles innovation and limits consumer choice.
And because tech titans operate across borders and as intellectual property is their main source of income, they are extremely difficult to track. That means authorities struggle to keep up and gather their proper tax take. Supranational bodies, notably the EU, are in the best place to regulate and, where necessary, break-up these oligopolies.
There are some obvious candidates. Amazon could be three separate businesses—one offering cloud computing, another acting as a general retailer and a third that acts as a third-party marketplace. Facebook could be forced to divest itself of Instagram and WhatsApp as a condition for operating in the EU, immediately creating two new social media networks. Google could be asked to divest YouTube.
The sheer openness of the internet offers almost endless creative opportunities. But it requires regulatory help in order to thrive.
No, says John Kay