There are a bevy of political buzzwords that generate a visceral reaction from people. Monopoly (and any variation of the term) is a word that elected officials are fond of bandying about and misusing. When most people hear it, their minds are called back to images of the so-called “robber barons” from the early 20th Century Gilded Age. Because of that, many of these same elected officials have dedicated outsized portions of their time to tackling these supposed monopolists, almost exclusively in the tech sector.
The leader in this crusade, Sen. Amy Klobuchar (D-Minn.), cites an “overgrown standing army of monopolists” opposing her antitrust efforts. On the other side of the political aisle, the rhetoric is no less intense. Sen. Josh Hawley (R-Mo.) says fervently, “These monopoly powers control our speech, our economy, our country – and their control has only grown because Washington has aided and abetted their quest for more power.”
All this doom casting begs the question: Who are these monopolies that are allegedly thwarting legislative progress and controlling the American way of life? Efforts from Senators like Klobuchar and Hawley are primarily targeted towards American “big tech” companies. However, a closer look at the tech market in America over the years can only lead one to one simple conclusion: The use of the word “monopoly” to describe any of them is disingenuous and done purposely to elicit a reaction.
First, it’s important to understand that monopoly is defined as “having exclusive possession or control of the supply or trade of a commodity or service.” Hence, the root of the word is “mono” meaning “one.” However, lawmakers like Hawley and Klobuchar just can’t seem to agree on that one controller. Their attacks range from Amazon to Google to Apple and to a variety of social media companies.
It is also difficult to identify a single monopolist in any space because the tech space is so dynamic and market share statistics are rapidly evolving. Social media is a great example. At its height, Facebook controlled roughly 70 percent of the market share in this space, though that figure may be much lower if you categorize YouTube as a social media site as some do. That dominance has proven fleeting. Without any kind of significant antitrust policy interventions, Facebook’s share has dropped to roughly 50 percent – and some estimates have the number as low as 36 percent.
This is not even to mention that as recently as October of 2008, MySpace still reached twice as many users as Facebook. It’s likely that Klobuchar and Hawley would have lambasted MySpace as a monopolist before they were outdone by Mark Zuckerberg’s innovative new site. Competition came in and thrived without government interference or antitrust litigation.
Similarly, in 2000, Yahoo dominated the global search market with roughly 50 percent of the market share. Microsoft was in a distant second with 20 percent. Suddenly, Larry Page and Sergey Brin’s new search engine overwhelmed the established players in a matter of months. While antitrust proponents point to Google’s dominance now, they miss the entire picture. Google, just two decades ago, was an afterthought. To call them an unassailable monopoly now is to be ignorant of the lessons this century has already taught.
When it comes to smartphones, though, surely there must be utter dominance for a company like Apple to be in the crosshairs of would-be regulators. Yet, according to Counterpoint Research, Apple isn’t even the global leader. With just 27.8 percent of mobile vendor market share, Apple falls second to Samsung, who has 28.4 percent. Apple is also just beginning to cut into the overwhelming market share that Microsoft has had over desktop operating systems for years.
Maybe Amazon is the shadowy monopoly keeping everyone in Washington up at night. Again, this is not so. Amazon began as an online bookstore in Jeff Bezos’ garage in 1994. It soon rose to compete with commerce giants like Walmart. Despite its current success, Amazon did not surpass Walmart’s market share until late 2015. Even now, it only occupies 35 percent of the e-commerce market, and an even smaller share of the total retail market in which it truly competes.
All the behemoths being smeared as greedy monopolists today were once the scrappy upstart companies we purport to champion. Their respective rises came about because of unregulated and open market competition against entrenched powers, not in spite of it. Observers can point to their popularity today, but that is only a small sliver of data in the overall stories of these companies.
It is altogether possible that the next generation of tech disruptors are just around the corner. Beyond that, these companies actively and vociferously compete against one another for business and content viewership in one form or another. While lawmakers might use terms like “monopoly” to scare Americans into supporting their self-serving political agenda, it does not fit the current situation. Broad proposals targeted at today’s tech giants could prevent tomorrow’s from emerging with innovative, life-changing services.
