I refer to Amazon, Google, and Facebook as the big three. Which leads me to an eye-opening article I read in the September issue of Harper’s Magazine titled “The Big Tech Extortion Racket.” The article refers to these companies as the “middlemen.”
The corporate business model in all three is about ownership — ownership of data and the discriminatory practices that are used. It is about pay to play. The author of the article, Barry C. Lynn, compares the Amazon model to that used by the railroads in the 19th century. Discriminatory pricing was rampant due to the monopoly the railroads enjoyed, until the passage of the Sherman Antitrust Act in 1890. However, Lynn makes the case that the federal government is turning a blind eye to the business practices that exist with these three internet giants. Lynn says that Amazon’s founder and CEO Jeff Bezos’s message to sellers is simple: I control the road to the market. If you want to ride, you pay what I demand.
Now let’s turn to Google. The article states that in 2018, an Irish technologist named Dylan Curran downloaded the information Google had collected about him. He found that Google had collected 5.5GB of data on his life, or the equivalent of more than three million Word documents. He found every Google ad he ever viewed or clicked on, every app he ever launched or used and when he did it, every website he ever visited and what time he did it. They also had every image he ever searched for and saved, every location he ever searched for or clicked on, every news article he ever searched for or read and every single Google search he made since 2009, as well as every YouTube video he had ever searched for or viewed since 2008. Google’s model has enriched the company to the tune of $135 billion from advertising revenue in 2019.
Between Google and Facebook, according to the article, they captured some two-thirds of online ad revenue in 2019. And these two companies hold considerable sway over their advertisers in terms of pricing power. This is a good example of disruptive innovation.
Amazon has changed the way we buy things. Google has changed the way we have access to information that we never had before, and Facebook has facilitated online social interactions. The internet is the backbone for all of this.
I give credit to the founders of these three companies for what they created. Now they find themselves in a position of power that I don’t believe they ever imagined would be a result of their creations. But to read Lynn’s article is cause for concern. CT