The tech titans like Google, Facebook and Amazon have grown to dominate various sectors. However, their continuous growth and investment have raised concerns about fair competition. Specifically, these tech titans are increasingly investing in potential competitors, which allows them to expand influence while also neutralizing threats. This article will analyze how the tech titans invest in competitors and the impact on fair market competition.
Tech titans benefit from legal exemptions in expanding investment
The tech titans often benefit from legal exemptions in their investment activities. For example, unlike traditional publishers, Facebook and Google are rarely held accountable for users’ behavior on their platforms. Additionally, Amazon buyers did not need to pay sales tax for years. With such advantages, the tech titans can aggressively invest to become the market itself instead of just competing in it. Their platforms and infrastructure power much of the digital economy. So investing in potential competitors allows them to both expand their dominance and eliminate future threats.
Expanding investment enables more control and stifles competition
As the tech titans continue to expand investment in competitors, they gain more pricing data and control that benefits their own services. For example, Facebook’s acquisition of Instagram and WhatsApp enabled it to control more user data and attention. Google’s control of Waze expanded its dominance in navigation services. With more assistants like Alexa, tech titans also control user experience and retain their network effects advantages. Ultimately, the lack of competition means limited innovation and choice for consumers.
Restraining tech titans without stifling innovation is tricky
Policymakers face the complex task of restraining tech titans’ investment in competitors without damaging innovation. Stricter scrutiny on acquisitions of potential threats is warranted, even if targets seem small currently. Independent oversight on complaints against self-preferencing may also help. But an entire breakup could eliminate economies of scale and destroy the consumer value provided by tech titans’ platforms. The approach should balance more constraints with allowing progress.
The tech titans like Google, Amazon and Facebook leverage their scale, resources and legal advantages to aggressively invest in potential competitors. This expands their dominance and control to the detriment of market dynamism and consumer welfare. Policymakers need balanced regulatory approaches to restrain acquisition of threats without destroying innovative progress.