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Do big tech companies act like traditional monopolies?

By EconoFact
NO

Firms with outsized market power can negatively impact the economy in many ways—for example, by raising prices and reducing innovation in the market. However, the rise of “big tech” firms complicates the picture. Five companies—Apple, Google, Microsoft, Facebook and Amazon—account for 22% of the total value of the S&P 500 list of the largest U.S. companies by stock-market capitalization.

The network effects, unique pricing structures and informational advantages for users that these tech companies offer make it difficult to assess their net impact on consumers. For example, Google and Facebook are two-sided platforms that are free for users but may act as a monopoly for advertisers or app developers. Determining an appropriate standard of antitrust analysis is a challenge that courts in the U.S. and Europe are working through today, with Google currently facing its fifth antitrust lawsuit as of July 31, 2021.

This fact brief is responsive to conversations such as this one.
ABOUT THE CONTRIBUTOR
EconoFact is a non-partisan publication designed to bring key facts and incisive analysis to the national debate on economic and social policies. Launched in January 2017, it is written by leading academic economists from across the country who belong to the EconoFact Network. It is published by the Edward R. Murrow Center for a Digital World at The Fletcher School at Tufts University.
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