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Tuesday, Aug. 24, 2021

Do big tech companies act like traditional monopolies?


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.

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