The mere size, power, and mostly unregulated conduct of the digital monopolies—Facebook, Alphabet, Amazon, Apple, and Microsoft—as well as the unprecedented scale and speed with which personal data is collected and turned into predictive algorithms, creates an omniscient, opaque machinery that threatens to erode the very foundation of American democracy.
The risks associated with this machinery are indeed numerous. Apocalyptic prophets highlight the ability of digital monopolies to control much of our attention, dictate which content we are—or are not—exposed to, and influence our choices and behaviors through tools like targeted advertising. More often than not, the user is faced with a binary choice: either agree to the terms of the digital platforms or not use the services at all. Their data has become the new gold, and their attention the main commodity traded in the digital economy.
The digital economy has turned into a winner-takes-all arena, with a small number of companies controlling large parts of the market. The resulting lack of competition can potentially hinder innovation and entrepreneurial growth and exacerbate inequalities in labor markets. Companies like Amazon, for example, can strong-arm taxation systems and recruit our best and brightest talent to work on tasks that are crucial to its business. But that does not help to solve more pressing societal problems.
If we want to ensure inclusive growth and shared prosperity—rather than a concentration of wealth among a few big players and their allies—we need to act now. Below, we suggest a set of players that we believe should carry the torch in providing solutions to the threats posed by digital monopolies (in order of importance):
Governments have the ability to regulate, fine, break, and change the course of monopolies. They can do so by employing the broad array of tools used to combat monopolies in other domains.
Specifically, they can employ anti-trust rules aggressively to break existing digital monopolies (i.e. break down Google into smaller corporations that are not allowed to share user data or resources); give more control to users through stricter data protection regulations (see the European Union’s new General Data Protection Regulation, or GDPR); actively encourage competition by reallocating property rights; and mandate greater transparency through public hearings, quarterly disclosure reports, or third-party auditing protocols to expose loopholes and malpractices. Prior government interventions, such as the successful anti-trust regulation of Bell Labs—which resulted in the growth of Silicon Valley—could serve as role models.
Given that the use of most digital devices and services is voluntary, one can argue that a large part of the responsibility lies with each of us. To protect yourself (and others) from potential harm and to influence the behavior of the digital monopolies, we recommend you:
- Regularly request reports on the personal data held on you
- Update your privacy settings and restrict data access and usage
- Make your voice heard by politically demonstrating or voting
- Monitor your behavior (i.e. tracking the time you spend on social media)
- Create barriers for yourself and others (i.e. implementing parental control features)
- Be critical (i.e. compare news about monopolies from different sources)
As a rule of thumb, users should realize that if they are not paying for a product, they are the product that is being sold to someone else.
Other corporate giants
Corporate giants can support the government and other players by financially backing anti-trust campaigns or spearheading transparency movements. In fact, standing up to digital monopolies is in corporations’ best self-interest, because the monopolization of data on the behavior of billions of consumers gives the digital monopolies an unprecedented advantage in various industries.
If Alphabet decided to enter the real estate brokerage market tomorrow, the sheer amount of data it holds on individuals from all over the world would make it a leading competitor overnight.
The digital monopolies themselves
While many of the digital monopolies have started out under the ethos of audacious social missions—such as “connect the world” (Facebook) and “organize the world’s information” (Google)—their current practices make their missions sound more like “exploit human vulnerabilities” or “claim the maximum amount of user attention.” This is likely to make them go down in history as the online versions of Big Tobacco, Pharma, or Oil.
Digital monopolies can, however, follow a business model that is both profitable and aligned with their original ethoses by giving users control over their data, while maintaining the intellectual property rights of the algorithms used to analyze and commercialize them.
At this point, the tech giants are too big to fail—we have to live with them. The breakdown of any of the monopolies could have severe consequences. The recent security breach in the credit bureau Equifax, for example, was minuscule in comparison to the potential data exposure that could unfold if some of the largest services like Gmail or Amazon Web Services were hacked.
Whereas it took more than six decades to regulate the tobacco industry, the threats posed by the digital monopolies call for a much faster and coordinated response. Let’s act together, and let’s act now.
Moran Cerf is an assistant professor of marketing at the Kellogg School of Management. Sandra Matz is a professor of management at the Columbia Business School. Guy Rolnik is a clinical professor of strategic management at the University of Chicago Booth School of Business.