Unsanitized: No, Zoom Does Not Prove the Impotence of Big Tech

Google’s attempt to unseat the video conferencing upstart already provides evidence of monopolization. This is The COVID-19 Daily Report for June 6, 2020.

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First Response

We did a public Zoom webinar this week, and we have another one next week (sign up here), and like the rest of you I’m seemingly on a Zoom call every three hours. Even radio and podcast hits that are audio-only are connecting via Zoom, and are then surprised when I don’t want to use the video function. (You’re aware that barbershops haven’t opened yet, right?)

Zooming has become a verb, and the videoconferencing tool, ubiquitous. And since the free service is time-limited and, incredibly, not end-to-end encrypted* (the company has essentially said it will collaborate with the FBI on free calls), this has translated into big money. Net income was up 135-fold in the latest quarter, and revenue up 169 percent. And that only covers a small portion of March affected by the pandemic. By late April participants were up to 300 million per day, with revenue expected to grow in the second quarter. The stock has risen to $207/share, down from its peak but three times were it was in December.

This has led some to muse that the entire notion of “Big Tech” having a hammerlock on all associated markets was mistaken. If a little company like Zoom can use superior technology to attract a big following, jumping from commercial sales to friend and family get-togethers, then maybe the powerful companies aren’t so powerful.

Read all of our Unsanitized reports

First of all, this is a very premature take. We use Google Suite tools at the Prospect (guilty as charged), and they’ve been overrun with what amount to ads for Google Meet, the company’s answer to Zoom. There’s a big Google Meet option inside Gmail, and if you add any Calendar entry, there’s a big blue box that says “add Google Meet video conferencing” near the top of the item. This isn’t all that different to Amazon putting its products at the top of searches.

This alone is a borderline antitrust violation; Google is attempting to tie its software to video conferencing, the same way Apple loads Safari and iTunes on its phones, or Microsoft bundled Internet Explorer with its Windows computers. I know prosecutors are looking at Google’s ad tech dominance, which is appropriate, but we have an attempt to monopolize in real time here, in line with the philosophy of today’s tech platforms: leverage their prodigious audience to crush the competition with knock-off technology.

Now, Google Meet could fail; it’s not like the company has an automatic Midas touch. (Remember Google+?) But as much as Zoom has risen during the pandemic, so has Skype, once an independent product now in the hands of Microsoft. (The company’s Teams product, based on and interoperable with Skype, is also becoming widely used in the workplace.) If Big Tech can’t copy rivals, they often opt to buy them outright. Tech giants are scooping up companies at the fastest rate in a half-decade right now, and even if it misses out on a couple, it has still established a record of catching competitors in its netting. For every Zoom and TikTok, there are dozens of others who succumb.

Also, FYI, Zoom's infrastructure mostly runs on Amazon Web Services, so whether you see it as a disruption from Big Tech is an eye-of-the-beholder situation.

That’s not to say that I believe the tech platforms are impenetrable fortresses. Indeed, I’ve questioned whether the wholesale move to delivery during the pandemic might lead to Amazon losing market share to local businesses. But what Big Tech is attempting to do right now—tying products, buying rivals—could already violate our antitrust laws. It doesn’t matter whether or not these actions are successful; there’s such a thing as attempted murder. Enforcing the law will help upstarts thrive, and we won’t have to point to the few that manage to survive the thicket of Big Tech cannon fire to “prove” that the free market works.

* An earlier version said free Zoom calls are not encrypted. They are not given end-to-end encryption, which their paid calls are.

Housekeeping Note

Expect somewhat smaller Unsanitized dispatches on Saturdays and Sundays going forward, as I slowly claw my weekends back.

But you can always check out our coronavirus coverage at prospect.org/coronavirus. And continue to email me your tips and perspectives.

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