Just a few years ago, companies like Amazon, Google and Facebook were scrappy upstarts, creating new industries and disrupting the old ways. Today, emerging research suggests these companies are preventing other new businesses from doing the same thing.
In previous eras, a robust legislative or regulatory response to concentrated corporate power was often spurred by widespread public anger. But the Big Five technology companies are viewed favorably by many consumers, with each in the top 10 of Fortune’s annual list of the World’s Most Admired Companies.
And why shouldn’t they be? Each has pioneered world-changing innovations and created great fortunes and great jobs. If you are one of the millions who own an S&P 500 index fund in your 401(k), you can thank the Big Five technology companies for as much as a third of the fund’s recent gains.
These companies have competed and acted in their interests, which is exactly what we expect in a free market system. But as these companies have grown, they have also become more prone to engage in the grungier anti-competitive practices that the public and political leaders decry when practiced in other industries.
In recent years, large technology companies have been investigated for colluding with a secret agreement not to hire one another’s best workers; fined billions of dollars for unfairly favoring certain services on their platforms over other rivals; and been accused of mishandling sensitive consumer information or of obtaining new customers under false pretenses.
Government can’t be expected to sit idly by if the size and power of certain companies begin threatening the vigorous competition and innovation upon which any healthy economy depends.
The power of technology companies presents government with a challenge very different from the corporate monopolies of old. These companies don’t just dominate a commodity, as Standard Oil did before it was broken up by the Supreme Court in 1911, or physical infrastructure, as AT&T did with telephone lines before it was split into the “Baby Bells” in 1984. They own an unprecedented amount of data, the most valuable asset in the world today. And the more data they own, the more powerful they become.
Successful market economies require new companies willing to challenge the status quo and find new answers to old problems. The New Center must clear the path.