Tech giants and antitrust laws

Recently, there has been a lot of criticism of tech giants like Google, Facebook, Amazon, and Apple for monopolizing the market with tremendous power. Amanda Lotz, professor of media at Queensland Institute of Technology, talks about why these tech giants should be antitrust regulated.

In recent years, the gaze of checks against tech giants is increasing. Google has been fined from the EU for violating antitrust laws, and Kaspersky Lab has appealed for antitrust sanctions, saying that Apple has been monopolized on the App Store. Prof Amanda Lotz points out that traditionally, when a company gets huge, it can lead to market monopoly, and for a long time, the focus of antitrust laws has been on corporate size.

Recently, technology companies provide many services to consumers for free. For example, you can exchange with friends through Facebook, do a route search using Google Maps, and use Google search for free. Therefore, it is difficult to regulate Facebook, etc., only in terms of the existing antitrust laws such as price control by market monopoly.

But Professor Lotz points out that information such as what consumers are doing and what they are interested in is creating great value for technology giants such as Google and Facebook. Consumer-related data is used for advertising services. It also allows you to discover unexplored markets in high demand and move ahead of potential competitors. To give the tech giant a market edge. Consumers are giving away such personal information to giant technology companies in exchange for free use of convenient services.

Another antitrust problem is the natural monopoly. It is said that natural monopoly is a state in which monopolies by a small number of companies are allowed on condition of price management and establishment of a supervisory board in some industries, as fixed costs such as initial investment are high and it becomes inefficient when multiple companies divide demand.

Prof Rotz points out that the recent antitrust debate faces the problem of justifying natural monopolies by huge social media such as Facebook because of network externality. Network effect means that the value of a product or service depends on the number of users, and the higher the number of existing users on SNS, the higher the value of signing up for a new service.

Building new social media doesn’t require large capital investment costs, but the number of users already secured leads to increased obstacles for other new participating companies. Although competing new social media have convenient features, it is not easy to fight Facebook, which boasts an overwhelming number of users. How to deal with this point can be said to be the future task.

He says tech giants are competing with giant tech companies as a general refutation of allegations of antitrust violations. However, although the tech giants feel like they exist in one industry, they say that the entities belong to completely different industries. For example, Facebook owns popular services such as WhatsApp and Instagram, as well as social media companies, driven by advertising. Accordingly, Facebook has excellent data collection capabilities and demonstrates its presence as a communication tool.

Meanwhile, 85% of Google’s revenue comes from advertisements, but it is mainly search engines that display advertisements. The overwhelming share of Google search leads to lack of competition in search. It’s hard to say that Amazon is competing with Facebook or Google because most of its revenue comes from online retail.

In the midst of these discussions, US law enforcement agencies are conducting an antitrust investigation with Google. According to foreign media reports, online companies, such as news sites, travel reservation sites, and online shopping sites, are cooperating to collect evidence about Google’s antitrust laws. These include publishing media companies such as Oracle and The Wall Street Journal, which have been suing Google for years. Looking at this move, antitrust surveillance of tech giants is expected to intensify. Related information can be found here .