It may be time to think about breaking up the high-tech monopolies that dominate American telecommunication, says Jonathan Taplin, director emeritus of USC’s Annenberg Innovation Lab in a New York Times article April 23, 2017. Taplin is the author of “Move Fast and Break Things: How Google, Facebook and Amazon Cornered Culture and Undermined Democracy.”
Taplin notes that Google has an 88 percent market share in search advertising, Facebook owns 77 percent of mobile social traffic and Amazon has a 74 percent share in the e-book market. “In classic economic terms, all three are monopolies,” Taplin says.
What this means is that under a standard interpretation of anti-trust law and policy, these companies should be prevented from buying out their competitors and should be made to license its patents. And, Taplin says, we should probably consider ending the “safe harbor” provisions of the Telecommunications Act of 1996, since it allows the monopolies a free ride on content that they have not produced.
Taplin’s argument revolves around whether or not these monopolies are natural, in the sense that competition would not deliver better service and lower prices. The article in the New York Times doesnt address one interesting question involving the succession of technology in the marketplace. It’s useful to remember that most of today’s telecommunications monopolies displaced earlier monopolies that missed the curve in the road. Microsoft famously displaced IBM in the early 1980s, which had been the largest target for anti-trust enforcement during the Carter administration. Apple displaced Xerox and the chaotic free software movement displaced AT&T. So, even though anti-trust law was not enforced during the Reagan years, these former monopolies did not keep their positions.
