The untact industry is cruising through its golden ages.
Increased demand towards online communication technology has necessitated this boom, evident from the crucial role that the tech firms play in the recent hikes in the major stock exchange indices of the United States of America. Whilst most of the other conventional forms of industries have been hardly hit by the spread of COVID, the demand for technology is soaring through the sky driving its stock levels up. To support this claim, Jeff Bezos, the CEO and founder of Amazon, recently found himself on top of the list of the wealthiest people in the world. Thus, one cannot deny the fact that the market demographics have swiftly transformed from a market saturated with conventional industries such as banking, automobiles and natural resources to more innovation and technology driven firms.
However, for every momentum of growth and change comes a resisting force.
The prospering of such large tech firms easily attracted numerous market regulators, which included political figures who deemed it necessary for something to be done in order to create fair market competition by preventing monopolies. One of the largest and most controversial ‘victims’ of this hunt was the renowned tech giant, Google. Google, possessing 92% of market share in the search engine industry, was accused of violating antitrust laws, robbing consumers of their agency and finally blocking innovation and diversity. Given a closer look, these problems were de facto caused by Google being ‘too’ big. Following such allegations, government officials made it clear that Google should be broken down in order to create a healthier market.
What the officials proposed as an attempt to disintegrate Google was threefold:
- Google needs to choose whether they would be a platform provider or product provider in a given platform. In other words, they cannot sell or promote their product through their own platform. For example, Google’s Ad Exchange and Google Search are both platform utilities under the proposed law and would need to be spun off.
- Google would have to stop including its own comparison shopping service, restaurant ratings etc. in search results and separate its business from Ad Exchange.
- Google would be restricted from future merge and acquisition of venture businesses and its past acquisitions of Waze, Nest and DoubleClick would also be unwound.
The reasoning behind this is as follows: the utmost priority and responsibility of the government is to protect consumer rights and ensure a platform for fair competition in case there are evident harms incurred to society due to market failures.
So, what exact harm is Google posing to society?
Hinders Market Competition
One way that Google manages to monopolise the search engine industry is to manipulate the order and frequency of the contents that appear on screen when users search a particular keyword. Due to such manipulation, consumers are much more likely to click on and use “google related” products simply because they see it much more easily, more often. Such manipulation makes it almost impossible for small firms to survive, as the playing grounds are seriously tilted. By blocking out opportunities of exposure for small firms and their products, Google thrives while small and new ideas and corporations are pushed out of the competition.
Even in cases where luckily new businesses thrive and prosper, Google simply buys off the technology to eliminate potential competition in the future, or make them dive out by creating similar competitors with huge capital support. Yes, it may be true that Google contributes to the market by investing in start-up firms and buying the products of some companies. However, this means that no matter how much potential a product has, it can never be developed over a certain level as Google will simply buy it off before they become a “threat” to them. In the long run, since innovation comes from competition as corporations are motivated to improve product quality and come up with new ideas, Google’s actions of eliminating competition will do nothing but decrease competition. The impact of this is that innovation is deterred and the hope of ambitious entrepreneurs are destroyed by gigantic entry barriers. Clearly, fair competition is non-existent and the pain will be suffered by the consumers who have no alternate option but to abide by the rules set by Google to use their service. This forced decision also leads to individuals being coerced to give up their personal privacy for the profit of Google, which is the next point.
Violation of Privacy
When a user wants to sign-up for Google, one has to agree with the terms and agreement to use their services. Among the terms include the consent to allow Google from using our personal data for advertisement purposes. Google packages it to seem like they are trying to provide targeted advertisement when in reality, it eliminates consumer agency by making it extremely difficult out of purchasing products. By tracking our past search history, Google will flash advertisements that they judged as “relevant” to our wants literally until one purchases the product. For example, once you search for a hotel in Paris, no matter which other site you access for whatever other purpose, you will see ads about Paris hotels on the side of your window. This is not informed choice or targeted advertisement, but a form of forced-selling that does not respect consumer agency. During this process where consumers are pushed into buying products that they otherwise would have not, google profits trillions of dollars each year through this utilisation of private information and search history. This is even worse as consumers are unable to opt out of this abusive system as whether you are in school, at work, or having a social life, you need Google to use the Internet. Consumers do not have alternative options, as they have to opt-in even if they don’t want it.
Impacts on Other Industries
Google goes further than just raising the entry barrier for tech-firms; they jeopardise the very existence of other industries. For instance, the news media industry is heavily impacted by Google: with Google’s absolute control of the flow of the information which is an essential part in creating advertising revenue, Google is killing newspapers across the country and around the world and eliminating potential competitors in a host of areas. Local and paper news die off whilst Google makes astronomical amounts of money each day through targeting advertisements in the news agencies that they choose to flash on their search engine. Since 2007, a little less than half of all journalism jobs in the US have been eliminated. Out of America’s 3,000 counties, two-thirds now have no daily newspaper. Every sector of news gathering is in decline, and not because the appetite for news is down and is now dominated by Google.
Furthermore, not only does Google pose an existential threat to news media companies, it also directly screens agencies for their benefit. For example, Google punished Wall Street Journal for enacting a certain type of paywall by downgrading the newspaper’s search ranking, lowering the WSJ’s traffic by 44%. During the same period, Google’s business was unaffected.
Ergo, all these harms that Google uniquely brings onto society is the reason why Google must be the next subject of antitrust actions. As the very reason behind antitrust laws is to protect consumer rights and ensure that they are enjoying services of high quality which can only be made possible via healthy competition, it is imperative for the government to break this unfair market dynamic and restore equilibrium back by weakening Google’s market dominance. In fact, such actions which may seem radical are not radical at all!
We have already seen such responsibility carried out by the government through the activation of antitrust laws against Standard Oil and AT&T in the past for monopolising the market and ultimately harming consumers. In a world where competition is dysfunctional and consumers are being harmed due to the huge asymmetry of power and size between the consumers and Google, it is not only justifiable but also obligatory for the government to step in and rebalance the market. No company can outweigh the rights that consumers deserve: in the case that corporations are a threat to free competition, consumer agency and market diversity, the government can, and should intervene to balance the market.
We must not hesitate to take swift action.
It is time to break free from this Google universe that we are trapped in.
- Chris Isidore; Jon Sarlin, C. (2021) Big Tech is way too big, CNN. Available at: https://edition.cnn.com/2018/12/17/tech/big-tech-too-big-tim-wu/index.html.
- Opinion | Tech Companies Are Destroying Democracy and the Free Press (2019). Available at: https://www.nytimes.com/2019/10/17/opinion/tech-monopoly-democracy-journalism.html
- Rogoff, K. (2021) Opinion: Has Big Tech gotten too big for our own good?, MarketWatch. Available at: https://www.marketwatch.com/story/has-big-tech-gotten-too-big-for-our-own-good-2018-07-02.
- The push to break up Big Tech, explained (2019). Available at: https://www.vox.com/recode/2019/5/3/18520703/big-tech-break-up-explained.
- Washington Post | These local newspapers say Facebook and Google are killing them. Now they’re fighting back. (2021). Available at: https://www.washingtonpost.com/lifestyle/media/west-virginia-google-facebook-newspaper-lawsuit/2021/02/03/797631dc-657d-11eb-8468-21bc48f07fe5_story.html
- Yes, the tech giants are big – in truth, probably too big to break up (2020). Available at: https://www.theguardian.com/business/2020/aug/02/tech-giants-too-big-break-up-panic-markets-facebook.