Image by Joshua Hoehne on Unsplash
Moves by the US DoJ to challenge Google's dominance (reported in the FT) bode well for tech and the economy generally. Big Tech's overpowering position is most evident in the stock market, with five to six firms making up 25% of the S&P 500 and up to 40% of the Nasdaq. The parallels to Standard Oil, and the oil oligopoly a century ago are hard to deny. A critical backbone of society in the control of a handful of companies.
Competition is essential to a capitalist system to serve consumers, rather than share-holders. Warren Buffet speaks cryptically of 'moats', whilst Peter Thiel is far more explicit in his book 'Zero to One' when he says 'founders of businesses should aim to build monopolies'. Being the only game in town is of course beneficial for the owner / vendor, but terrible for consumers.
This is likely the best repost to libertarian types who lobby, quite actively and effectively these days, for fewer government regulations. Without anti-trust measures, 'crony capitalism' as bemoaned by pro-Brexit finance weekly MoneyWeek, would be the likely destination for our democracies (which perhaps wrongly implies we haven't already arrived there).
The political implications are also promising. In an era when accusations (whether well founded or not) of the DoJ going after opponents, action against liberal leaning institutions that are undermining capitalism, under a progressive administration, is reassuring, and repairs credibility.
However, more importantly, these moves clear the path for emerging firms. Previously hamstrung in their growth by the certainty that at some point the Silicon Valley mafia would make them 'an offer they can't refuse'. Start Up fables are full of anecdotes of buy-out negotiations with these tech behemoths, where a failure to reach a deal risks being squashed by their internal (often inferior) model, that has sole access to said giants other assets.
Big Tech is overdue an anti-trust review, and done effectively could clear the way for the next era of tech innovation.
Link to FT story here