Just as a reminder to our readers and anyone new to the site, GorT is an eight-foot tall, time-traveling robot. By virtue of that ability, GorT sees things coming years ahead of time. Case in point: the growing grumbling by many, mostly on the liberal side of the political spectrum, is that the large tech firms (Google, Amazon, Facebook), need to be “split up” for monopolistic reasons. However, those advocating this don’t understand the big picture. A monopoly is an organization using its power to charge higher prices and earn greater profits. There are cases to be made that these companies aren’t acting monopolistically:
- Amazon’s fiver year net profit margin is 1.3% – Microsoft’s is 18.9%, eBay is 21.4%, and WalMart is 2.7% Amazon is hardly running up its profits.
- Amazon adjusts its prices frequently – cutting those to match or beat competitors and raising them when it can to see what the market will bear.
- Amazon’s Web Services business repeatedly cuts prices – many times as they improve the service and add capabilities – can you say the same of Verizon? Comcast?
As I stated almost six years ago – these companies care about the data. The services they offer they could (and sometimes do) give them away for free. Tesla hasn’t yet, but the telemetry data from their cars – which gets uploaded at each charging session – is incredibly valuable. I could see a future where their cars are really cheap for this reason. Sen. Warren and others calling for these break ups don’t get that. They see a company that “controls” eCommerce or one that “controls” social media or one that “controls” internet searching. But that’s wrong. These companies are using their avenue to get access to data that we, as consumers and users, are giving them for free. We willingly post information to Facebook or Twitter. We buy products via Amazon because it’s efficient in both cost and timing. We “google” things because it’s easy and quick.
Imagine the information that is at the tips fo these companies’ fingers – even if you anonymize the source away from a specific person to a generic demographic: what are popular subjects/information (Google/Facebook), what products are people buying by demographic (Amazon), etc.
Breaking up these companies isn’t the solution as it only would impair or destroy the advantages that these technologies give us. The real challenge is understanding how to work and govern in a data driven economy. As Jeremiah Smith wrote in a HackerNoon article last year:
The issue with data is that creating an open marketplace for it presents a unique set of challenges as it is an intangible non-rival asset unlike virtually all things which are commercially traded today.
This is the time for innovative thinkers in business and government to start addressing the “data economy”. Maybe we can price our data and when a company like Facebook or Amazon uses it, we get a royalty-like payment. Let these companies continue to innovate, but let’s understand what we’re giving them in return for what they’re providing. I frequently complain that my Verizon bill for FiOS and cell service keeps rising, but I’d argue that I’m not get proportional increases in services capability. My phone is still chock full of apps I don’t want that Verizon has a deal with those companies to load and present to me. But Amazon’s Web Service cuts their prices as they become more efficient and gain more customers. Is that really a bad thing?