News. GAFA, the acronym for Google, Apple, Facebook, and Amazon, plus the bigger companies who have re-invented themselves or just emerged such as GE and Samsung have become superstars of the global economy, and are empires of bits and bytes and even though they give consumers many great ‘free’ products, they squash competition and their management practices are dark. Such is the focus in a special report from the Economist.
Modern technology is lowering barriers to entry, but the idea that market concentration is self-correcting is more questionable than it once was. Slower growth encourages companies to buy their rivals and squeeze out costs. High-tech companies grow more useful to customers when they attract more users and when they gather ever more data about those users.
According to the Economist about 30% of global foreign direct investment flows through tax havens. The giants also deploy armies of lobbyists. Not to mention the trend of not paying taxes: “Paying tax seems to be unavoidable for individuals but optional for firms. Rules are unbending for citizens, and up for negotiation when it comes to companies”, writes the Economist.
Concentration is an even harder problem. America in particular has got into the habit of giving the benefit of the doubt to big business (see also: The Google Case) . This made some sense in the 1980s and 1990s when giant companies such as General Motors and IBM were being threatened by foreign rivals or domestic upstarts, according to the article, but it is less defensible now that superstar firms are gaining control of entire markets and finding new ways to entrench themselves.
Policymakers must reinvent antitrust for the digital age, is one conclusion: It must be made easier for consumers to move our data from one company to another (will happen with GDPD in May 2018), and preventing tech firms from unfairly privileging their own services on platforms they control.
Read the whole story at the Economist (the comments are also worth a read)
And read what the antitrust commissionersaid at a meeting in Copenhagen on data monopolies