Governments (politicians) and regulators are struggling to deal with the global platforms of Google, Amazon, Facebook, Instagram and the like.

They are using privacy and tax laws to attempt to reign them in. In this article I raise a number of matters for consideration none of which deal with the “politicisation and use of the platforms” to influence elections or misuse personal data. I deal only with the market themes.

Monopoly law, has since the early 1900s, been founded on the test of market manipulation and control (Standard Oil, US Steel) and predatory pricing. The description of a customer was pretty clear.

The technology platforms have thrown these principles on their ear. Firstly, they have two types of customers:

1. The one who pays for services or markets and sells their products on platforms like Amazon, this includes buying ads. 

2. The second is the billions of users who are on the platforms for no charge.  They are viewing the ads and products.  The production cost of a digital ad is much cheaper than conventional print, television and radio. The digital ad can be deployed locally, nationally or internationally. Predatory pricing is mute.

A new definition of monopoly and market manipulation

On the surface Amazon would appear to be promoting extensive competition through its digital retail, warehousing and delivery, for all sorts of small, medium and large businesses.

However, Amazon has thousands of its own white label products which compete with the above. Amazon decides; the price, positioning on the digital store page and a host of other factors for its products. There is no transparency.

Similarly, Google sells placement ads and search as does Facebook - they too decide positioning placement and exposure.

None of the tech companies will allow their algorithms to be assessed by regulators for obvious reasons.

Additionally, the cash rich entities buy up start-ups that are developing software or other devices because the start-up may have the potential to threaten them. Regulators work on what is obvious, so if a big company wants to merge with, or buy another bid company, the assessment process to allow or block is reasonably clear and transparent. Amazon is buying up physical retail businesses. The size and impact can be measured.

How do regulators and courts stop the purchase of technology start-ups on the basis of some unknown future outcome that may or may not eventuate?

Courts are bound by the existing definitions and laws and simply redefining monopoly, size and market manipulation without understanding the Internet, the algorithms and how it all works is not going to address the issue.

If those who are using the platforms for free abandon the provider, then the business model begins to collapse. Charging customers to place ads and sell services has a reducing value if no one is there to see the ads or buy the products. This explains the move by tech companies to diversify into the physical away from dependence on the digital.

Author: Kevin Beck, Associate nem Australasia

This article is based on research and opinion available in the public domain.