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Last Wednesday, the House Antitrust Subcommittee detailed how Big Tech firms Facebook, Amazon, Google, and Apple have too much power. CEOs from the firms on many occasions admitted these harms. Then the next afternoon, the firms themselves confirmed it all in numerical form.
In the same quarter when the U.S. economy suffered the biggest contraction in recorded history, all four of these companies posted profits that beat expectations on Wall Street. Facebook, Amazon, Google, and Apple took in a combined $206 billion in revenue and $29 billion in profit over the three-month stretch, which saw a reduction in GDP of an annualized 32.9 percent.
This soaring market share has grown during the pandemic, cementing that the products of these companies are essential national infrastructure that needs to be monitored as such for anti-competitive harms. It also shows that a boycott-dominated approach to limiting Big Tech’s power is simply impossible.
Facebook, for example, has spent over a month mired in an advertiser boycott over the promotion of hate speech on its platforms. If this were a properly functioning market, the pressure from some of the largest advertisers in the world would bear down on a company that makes almost all of its money from advertising. But Facebook’s revenue grew 10 percent in the quarter despite the boycott, and specifically its advertising business increased. Facebook even did better at avoiding the pandemic-related ad slump than Google. (Some of us expected this, because Facebook relies on local ads rather than the large brands that were performatively boycotting.)
Consumer boycotts are unlikely to do much damage to these companies either. Anger at Facebook’s privacy policies and penchant for disinformation didn’t stop it from growing daily active users to 1.79 billion, with a “b.” Google’s earnings showed vulnerability because fewer people are searching for events and travel listings, hurting search-based advertising. Yet the company’s revenue still jumped 13 percent, amid a historic collapse, making up for the ad revenue stall with increases in work-from-home G Suite tools for businesses.
This is indicative of how the structure of post-pandemic America, not just the collapse of smaller firms because of the economic crisis, is boosting Big Tech. For example, cloud computing is soaring due to telework and the inability to gather for social activities. As Zoom and Netflix predominate, Amazon, Google, and Microsoft’s cloud services benefit. With phones one of the only sources of entertainment left, Apple also had a solid quarter, with nearly $60 billion in revenues and profits well above expectations.
The surge of home delivery and e-commerce boosted Amazon to an incredible $88.9 billion in revenue in the second quarter, and net income at $5.2 billion, with year-over-year growth more than doubling. Local businesses and restaurants have been forced by circumstances to get into the delivery game, but Amazon as the first mover has thus far blown out the competition.
What we are seeing is an economy where Big Tech represents an outsized share of stock gains. The world is converging to a new normal where these firms are poised to supremely benefit. This cannot be boycotted or ignored; it’s legitimately difficult to spend much time in your life free from the shackles of these four companies.
There are many other important monopolized sectors that get too little attention because of a tech press hype machine that flattens everything in the economy to a Big Tech issue. It does a disservice to the anti-monopoly cause and the need to address hospital, telecom, pharmaceutical, agricultural, and prison monopolies, to name just a few, to presume that the entire problem with corporate power is wrapped up in a few tech firms.
But what this earnings blowout does signify is that these companies are essential infrastructure, just as railroads were in the late 19th century and Ma Bell was in the 20th. This suggests the need for treating Big Tech like public utilities to ensure that the public—not just consumers but workers, suppliers, platform partners, and citizens—aren’t abused due to their overwhelming dominance.
What this earnings blowout signifies is that these companies are essential infrastructure, just as railroads were in the late 19th century and Ma Bell was in the 20th.
That means preventing the continued acquisition frenzy, where these companies buy up rivals, for the express purpose, we learned in the hearings, of “increasing market position” or taking out competition. It means an end to the “copy-acquire-kill” strategies that are destroying startups and innovation. It means rate regulation, like we had with the Bell telephone monopoly, to ensure that not just consumers but third-party sellers aren’t ripped off by Amazon’s rent-seeking capabilities and Apple’s pay-for-access policies. It means common-carrier standards that prevent discrimination on these essential lines of communication, and interoperability so a competitor isn’t crushed by network effects.
This will not be easy. Big Tech might have had one shaky hearing, but they still have an astounding amount of power, unshaken by economic disaster. It would be foolhardy to assume that the momentum from the hearings will be automatically converted into action, and more likely that the future will be determined on the terms of the tech giants.
But Big Tech’s recording of ostentatious wealth extraction, a day after Congress, in unexpectedly thrilling fashion, exhibited the extreme harms that can accompany such economic power, cannot be ignored by any policymaker any longer. It’s up to the people to make fights against corporate power a priority. But the tech firms are doing at least a little of the work themselves.
