Ma Bells of Silicon Valley Raise Monopoly Concerns

(Bloomberg Gadfly) -- In the last week or two, I've read several thought-provoking pieces about giant technology companies that have grown into monopolies and perhaps should be broken up like the old AT&T.

Cries of monopoly are not a new phenomenon for tech. Just ask Google. But this latest round of hand-wringing feels different.

For one, it's not just coming from the usual anti-corporate worrywarts; people from deep in the Silicon Valley hive mind are among those concerned about whether a handful of businesses have become too big for the industry's own good. And two, it's not a single tech titan that people fear has grown dangerously powerful, but at least three -- Google, Facebook and Amazon -- at once.

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A favorite concept in tech circles is Ben Thompson's Aggregation Theory, which lays out why the big in technology tend to get even bigger, although in ways different from a nasty monopolist that uses its power to force up prices. People don't pay Google parent company Alphabet Inc. and Facebook Inc. for anything, so there is no price gouging. Product prices at Amazon might go down, not up, and shopping there is convenient. People like using Google, Facebook and Amazon.com Inc. The tech giants have monopolies by popular choice.

That doesn't mean their dominance can't take its toll. If you have a product and it is not for sale on Amazon -- or if it's not available for free shipping to Prime customers -- it might as well not exist. If you record a video and the algorithms at Google and Facebook don't give it prominence, it is invisible. Facebook is harnessing its nearly 2 billion users and army of developers to try to murder Snapchat. 

One of the most interesting pieces about technology I have read this year was from an unlikely source: the Yale Law Journal. The article in January argues that U.S. legal doctrine became too narrowly focused on higher consumer prices as evidence of monopoly power and therefore is ill-equipped to deal with today's technology superpowers. (The piece was about Amazon, but elements of it were applicable broadly to the internet economy. It's worth reading alone for the reference to a Supreme Court case about pie.)

The idea is that these network effects -- the growing usefulness of an online service as it gains more users, consumer data and suppliers -- can be just as damaging as jacking up supermarket prices. It's hard to imagine our lawmakers trying a Glass-Steagall Act to separate Amazon's retail business from its marketplace operation, as the Yale article suggests. But it is clear the fears about tech's Too Powerful to Fail are only getting worse

A version of this column originally appeared in Bloomberg's Fully Charged technology newsletter. You can sign up here.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

To contact the author of this story: Shira Ovide in New York at sovide@bloomberg.net.

To contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.net.