Take a look at the five most valuable businesses in the world. Alphabet (the parent company of Google), Amazon, Apple, Facebook, and Microsoft. Do you know what links them?
Obviously, they have huge profits. Combined, they brought in over $25 billion in net profit – in the first quarter of 2017 alone. These are not businesses short of a dime. Half of all money spent online in America goes into Amazon’s pockets. The digital advertising growth in America last year was nearly all because of Google and Facebook.
Some have called into question their dominance, claiming that they should be broken up, much like Standard Oil was in the 20th century, the largest refinery at the time. But antitrust law doesn’t penalise a company for being large – indeed, a superior product or good management can lead a company to become a monopoly.
Plus, there’s the benefit to consumers to account for. For many, imagining a world without being able to search on Google, use a Windows computer, or buy on Amazon is impossible. If you take into account offline rivals, plus the ability for new entrants like WhatsApp and Snapchat to upset the market, all is fine.
However, something else that links these companies together is data. They all hold vast quantities of it and it’s equally valuable – if not more so – than the actual dollars they bring in. The economy runs on data. Google and Facebook are free, but not without cost. They get their value from your personal data.
Businesses can use this data to improve their products and services. This then attracts more users, from which they gather more data, and the cycle continues.
Everything in the digital age creates data. Whether it’s the websites you browse, the streaming platforms you watch, the cooking apps you use… everything and anything in a lifestyle can be supported through the digital ecosystem. Google know what you search. Amazon know what you buy. They own consumer and business markets – Amazon’s server renting infrastructure is a prime example of this. For many people, this is an accepted fact of being able to use these services. All this data fuels those businesses.
However, this oversight of the industry is questionable. Facebook’s decision to buy WhatsApp in 2014 for $22 billion, a company with no real revenue, was to stamp out the competition before it grew even larger.
Antitrust regulators need to stop thinking about the size of a company purely in terms of revenue or number of employees. Data assets need to be considered in the exchange. Facebook owns the data of everyone on their platform, plus WhatsApp and Instagram. That’s a big digital footprint and a concerning oversight into the behaviour of consumers.
Also, there should be more transparency around personal data, in how it’s transferred, handled, and how much it’s worth. Privacy needs to be concerned, of course, but governments need to rethink their approach to avoid the data economy being controlled by a select few. Splitting companies up will not solve the problem, since one will just become dominant again. Instead, data needs to be recognised as the valuable oil that it is.
Should Anti-Trust Regulators Consider Huge Data Stashes?
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