TikTok: Time is Running Out for the Free Market – Conservative Article
Facebook. Amazon. Apple. Alphabet. The big four tech giants have violated the law for far too long. They are destroying the free market that nurtured them when they were only startups.
Over a century ago on 2 July 1890, the Sherman Antitrust Act was enacted by the U.S. to restrict concentrations of power that hinder trade and weaken economic competition. The act banned unreasonable restraint of trade and monopolisation, allowing for fair competition amongst corporations. It recognised the importance of the free market within a functioning economy.
This leads us to July 2020, where the big four tech companies have appeared before Congress to decide whether the corporations have breached antitrust laws. During the trial, it became known that Zuckerberg had openly discussed buying startups Instagram and WhatsApp in order to prevent the companies from reducing his business.
Microsoft, though not part of the big four, has also had their fair share of antitrust controversy. For example, they were sued in 1998 for illegally attempting to protect Internet Explorer from its competing browsers.
Taking even a quick glance through the history of the ‘big four’, it is evident that they are competing to monopolise the commercial market. This leads me to question how much power is too much? And are they disrupting the free market economy that allows for innovation?
Let us consider the case of TikTok.
TikTok, the latest social media craze, is under threat of being banned in the U.S. by Donald Trump. This threat stems from Trump’s concern that the short-video app poses a risk to U.S. national security.
Microsoft, who is worth over $1 trillion, are aiming to complete a multi-billion dollar acquisition of TikTok by 15 September. The tech giant, who tends to focus on computer software, seems like an unnatural fit for an app that is 60% 16-24-year-olds. Microsoft’s sudden urge to enter this area of the market is a tactical move to monopolise the social media market, especially whilst the big four are on the receiving end of antitrust allegations.
Facebook has also jumped onto the TikTok train. Rather than attempting to acquire the ever-growing app, Facebook has created a rival platform: ‘Reels’. In fact, Facebook has directly contacted TikTok stars and offered to pay them to move onto their rival app. Even social media stars that haven’t been contacted by Facebook are talking about moving to Reels, fearing that TikTok will soon be banned in the U.S. It is ironic that Facebook is making this move in the midst of an antitrust trial! It just goes to show how much commercial power they have in a market that is supposedly free.
Where is the space in the market for the next generation of innovative thinkers?
If our free market is to allow for the natural life cycle of companies, antitrust laws must be applied more strictly to prevent monopolisation. The big tech companies have too much power over the market, and the entire concept of the free market is floating further away from us. The free market needs to be protected at all costs.
Written by Guest Conservative writer, Rebecca Selt
Point of Information
You spotted a problem, but your analysis is completely wrong! – A Liberal Response
Once again, when politicians and political journalists step into the world of tech, they end up making basic mistakes. There are some sensible ideas here, but I would say the answers are all in the wrong places.
Firstly, I want to analyse the claim that companies want to ‘monopolise the social media market’. Facebook has a monopsony, ‘a market dominated by one buyer and many sellers’. Facebook doesn’t own or operate any news company, but 43% of Americans use Facebook for news. Sellers (e.g. The Guardian) only have one platform to sell to, Facebook. In turn, what we see here is suppliers being hurt, while users and buyers (us and Facebook), profit with free, easy access news.
Also, to say that you are stopping the next wave of tech and innovation needs more of an interrogation. One could argue that big tech companies help innovation. Instagram was bought and grown by Facebook when they had 55 members of staff. It is unlikely, without Facebook’s backing, they could of grown to what they are now.
This ability to grow tech fast is incredibly important. When competing against China, big tech companies are the only ones that can keep up. There is a race to ‘AI and autonomous vehicles’ and if China gets there first, they will dominate the market. China has support from its government and virtually no regulation; it is why Tencent (Chinese tech company) has grown so quickly.
There is an argument about whether big tech companies nurture or squash innovation? It is a debate for another article. However, removing our biggest pieces off the board when competing against China will hurt us, especially when we refuse to use Huawei.
Finally, no mention of Amazon, which really is the only major worry at the moment. The power-play bullying of the markets you mention is minor compared to Amazon’s authority. They can choose a market on a dare and still dominate it. Amazon is possibly five years away from replacing banks! Yes, you actually read that right. If Facebook decided to start writing news, then we will have an issue, but that isn’t what’s happening right now.
Amazon is a problem and needed more attention during this article.
Facebook, Alphabet and definitely Apple (10 years max. before they say bye-bye) should not be number one on the target list. It should be Amazon, purely for their current ability and power to go in and dominate any market. I literally mean any. Facebook playing their own field with social media? Actually, is pretty small. Amazon going after every market in the world, there is your panic!
Written by Senior Liberal Writer, Max Anderson
Capitalism in Action – A Labour Response
This situation is a direct product of the Capitalist society we live in. The ‘Zuckerbergs’ of the world have a sole purpose: the accumulation of gross amounts of wealth. It should not be a surprise to anyone that the tactic of the greedy is to subsume the tech startups that threaten to compete with them.
The key to this is that when the big four incorporate other projects they pay handsomely. The acquisition of Instagram and Whatsapp cost Facebook $20 billion combined. The love of wealth bred by our society will protect innovation because the reward for threatening ‘the big four’ is a nice office and a huge salary.
Kevin Systrom (Instagram founder) netted $400 million and continued to lead Instagram for 6 years after selling to Facebook. The financial security that comes from a shares buyout and the freedom to continue nurturing your project, sounds to me like a very good incentive to keep innovating. Don’t you agree?
One of the issues with antitrust laws is that, at present, they are relatively toothless. The Sherman Antitrust laws have a maximum penalty of $100 million for companies per infringement and $1 billion for individuals. For context, in 2018 Facebook had annual revenue of $70.7 billion. The governments of Capitalist societies are highly unlikely to ever want to target the top 1% due to their belief in trickle-down economics. This renders prosecution of the big four a fairly redundant exercise.
The real issue with the big four is the baffling lack of regulation or social responsibility imposed on them. The news has been full of scandals regarding these big firms: Facebook came under pressure for leaving up posts by the US President that incited violence against US citizens and Amazon had whistleblowers about the poor working conditions and lack of compensation schemes it offered employees. Surely after such damning reports, these companies and their wealth-driven CEO’s suffered consequences?
Shocking as it sounds, of course they didn’t. Bezos (Amazon CEO) has seen his personal wealth reach unprecedented heights and Zuckerberg has recently joined the centibillion club. The issue is not that these people are damaging capitalism; the issue is that these people are the epitome of Capitalist Heroes.
Written by Guest Labour Writer, Henry Mckeever
I am a third year student studying English and Film Studies at the University of Exeter. After completing my degree, I will be converting to law to begin my journey of becoming a commercial lawyer. As an avid reader of the Financial Times, I have begun to understand how important the commercial market is in forming global politics.
I am currently in my second year of reading Politics at the University of Exeter. My first interaction with politics was at the tender age of four years old.
I am entering the third year of a BA in History and Ancient History at the University of Exeter. I have a fascination with the past otherwise and you would hope so, otherwise I may have chosen the wrong degree. But, writing for POI gives me the opportunity to talk politics which is something I simply can’t avoid.