Because today’s tech landscape harbors multiple giants rather than a single behemoth, regulators trying to restrain the companies’ power face a bedeviling challenge: It’s tougher to make a “monopoly” charge stick to companies that are busy competing with one another.
Driving the news: This week’s double-whammy antitrust suits against Facebook by the Federal Trade Commission and a coalition of states comes on the heels of a Department of Justice suit against Google and a broadly damning report from House Democrats, both in October.
- Together, all these efforts aim to widen the lens of tech regulation, questioning the logic and methods tech giants have used to conquer and carve up the digital universe.
Yes, but: While the critique is broad, each antitrust lawsuit must prove a case against a specific company, and that remains daunting.
The big picture: In previous cycles of antitrust enforcement — against Microsoft, IBM and others — one colossus seemed to control the entire industry’s air supply.
- Today, Facebook, Google, Amazon, Apple and Microsoft are all remarkably powerful, and each arguably holds some kind of monopoly power.
- But these firms are all elbowing into one another’s lanes, and that makes it much harder for prosecutors, critics and smaller rivals to demonstrate that competition has been crushed and consumers harmed.
- “Monopoly” means “one rule,” and with five companies running things maybe we should be talking instead about a pentopoly.
The pentopoly’s power and reach are unparalleled. Their products and services reach into every corner of our lives:
- Google controls access to information.
- Facebook controls access to people.
- Amazon controls access to goods.
- Apple leads the high-end device market, and, on those devices, it has near-total control.
- Microsoft (still) controls the office desktop.
The pentopoly’s combined market cap is now roughly $7 trillion — or nearly one-third the total value of the S&P 500.
“No company should have this much unchecked power,” New York State Attorney General Letitia James said in announcing the states’ Facebook suit — but the complaint is one regularly heard about all five companies.
The companies say their power is checked — by one another. They compete and quarrel in myriad ways:
- Google’s Android mobile operating system challenges Apple’s iOS.
- Apple and Facebook tussle over privacy protections.
- Facebook and Google are rival titans of the online advertising market.
- Amazon, Google and Microsoft have all staked out big chunks of the burgeoning cloud services market.
- Amazon, Google, Apple and Microsoft all offer competing voice assistants.
- In every developing digital market — from gaming and virtual reality to “internet of things” devices and AI — these companies are all up in one another’s business.
This tangled web of oligarchic competition places a tough burden on the government’s antitrust cases.
- They must define a market that a particular company is monopolizing broadly enough for the fight to matter but narrow enough for the “monopoly” claim to hold.
- “Internet search” and “social networks” seem to hit that sweet spot, and that’s how the lawsuits against Google and Facebook define their targets.
- But each phrase feels woefully inadequate to describe these companies. Google also delivers your email and YouTube videos. Facebook provides news and is creating a digital currency.
Of note: Of the five, Microsoft has most expertly avoided the antitrust spotlight despite its continued power and size. That’s probably because the company learned from its experience 20 years ago as a solo target of federal antitrust prosecution.
- Microsoft, like IBM before it, made a juicy, inviting target because its business practices made enemies, its employees left trails, and its executives behaved arrogantly in court.
- Today’s Microsoft is smarter — and, unlike Facebook, Google, Amazon and Apple, its CEO was not summoned when Congress convened a videoconference inquiry into tech’s abuse of power last July.
- For tech’s big four, big contrasts
- Tech giants’ life cycles shape their crisis responses
- Tech giants are the new gatekeepers
Editor’s note: This story has been corrected to reflect that the combined market value of the five companies is $7 trillion, not $7 billion.