Innovation vs. Regulation: How Google and Amazon Achieved Digital Dominance
[Photo: Internet Giants (Univ. of Calgary wiki.]
By Beth Kotz
As the Internet has extended its reach into almost every segment of society and sector of business, the “gatekeepers” that control it have amassed considerable power. These technology firms continue to brand themselves as edgy, innovative, social-good entities, eager to “shake up the system” and do away with corrupt corporatism. But today the opposite couldn’t be truer. While this image may have been accurate a decade or so ago, the fact is these businesses have themselves become the established order during the intervening years. And now, with over half of the world’s population online, never before has such vast flow of information laid in the hands of so few.
Yesterday’s tech start-ups have become the monopolies. When Google started in 1998, it was just the latest of a number of web search engines, but it has now achieved total dominance in this space. According to some estimates, Google processes more than 80 percent of global Internet search requests – if they wish to capture their share of traffic, webmasters and other content creators must deploy advanced search optimization techniques, and the lion’s share of these efforts attempt to boost Google rankings, not those of other engines like Yahoo or Bing. Paid search ads are a huge revenue stream for the Mountain View-based corporation, which possesses a hitherto-unknown ability to put marketing messages in front of millions of eyeballs in a targeted way.
The billions of dollars that the organization spends annually on Washington lobbyists call into question Google’s unofficial motto: “Don’t be evil.” It has leveraged its public platform to influence legislative activities as in 2012 when it ran a message on its homepage urging users to email their congress people to try to defeat the Stop Online Piracy Act. Some are worried about the firm’s ability to subtly manipulate consumer shopping choices and political elections by fiddling with its search results to promote the entities that it approves of.
And in another corner, Amazon is in the process of monopolizing more than just our shopping dollars. Founder Jeff Bezos purchased the Washington Post in 2013, giving him a prominent media platform, and the company’s recent announcement of intent to acquire grocer Whole Foods has raised concerns about its increasing societal footprint. Having transformed itself from a small book distributor into a massive retailer in little more than two decades, besides selling virtually every category of goods imaginable, it has also expanded into other areas like streaming video and cloud computing. With the “intelligent” Echo speaker as a flagship product, the company has combined artificial intelligence and speech in a way that could make it the sole “vocal oracle” of the Internet.
Amazon’s distribution and warehouse network allows it to rapidly send merchandise all the way around the world, and it is exploring the use of drone aircraft to augment its capabilities. Smaller retailers are shutting down because they simply can’t compete with the company’s impossibly fast service and low prices. It’s indubitably true that these companies and other tech giants, like Facebook and Microsoft, provide incredible value to users. But the same could have been said of Standard Oil or the old, monopolistic AT&T. Many are calling for stronger regulations or even the breakup of these corporations lest they begin to exercise too much (more) influence on the free market and our daily lives.
President Trump has been critical of Amazon in particular, and there are rumblings that his administration may initiate legal action against it. Representative David Cicilline (D – R.I.) has called for an antitrust hearing on the proposed Amazon-Whole Foods merger. The deal is unlikely to fall afoul of existing law, however, because U.S. antitrust regulations are geared toward preventing undue concentration within a single industry, and Amazon’s forays into the brick-and-mortar grocery business wouldn’t give it a huge market presence in that arena.
Google meanwhile has already faced antitrust lawsuits. In June, the European Union fined it €2.42 billion ($2.91 billion) for favoring its own comparison shopping service in search results over those of its competitors. In the United States, a similar suit was dropped in 2013, perhaps as a result of Google’s extensive lobbying of federal lawmakers.
Besides using antitrust laws to go after these entities, another avenue lies in treating them as utilities and forcing them to adhere to standards that are designed to ensure the public good. They could be enjoined to offer equal access to all and to perform their duties in ways that don’t unfairly privilege certain individuals or advertisers at the expense of others.
A few observers think that the government should take no action on this matter. After all, none of these huge companies has a monopoly on the entire tech field, and so we can expect them to compete heavily against each other. Amazon, Apple, Microsoft and Google are all rivals in producing digital assistants, and Google’s YouTube competes directly with Amazon’s Prime Video. Myriad examples exist of these firms encroaching on one another’s territory.
Now that Internet-focused businesses constitute an alarming share of global GDP, it’s only natural to try to predict what they may do in the future. Almost by definition, though, developments in the high-tech arena are difficult to accurately forecast. It’s only by viewing the actions of these enterprises with a critical eye going forward that policymakers will be able to attempt to thwart any nefarious plans that they devise without creating a climate that stifles room for ongoing inquiry and debate.
Beth Kotz is a freelance finance and tech writer with a strong interest in artificial intelligence and its vast potential for society. A graduate of DePaul University, she is currently based out of Chicago, Ill. You can find more of her personal work here.