The big airlines. The hospital systems that dominate many metro areas. Gigantic retailers like Walmart and Amazon. And, increasingly, technology companies like Facebook and Google.The United States has an oligopoly problem — a concentration of corporate power that has been building for years but is only now starting to receive serious attention from policymakers, think tanks and journalists. (Mea culpa: I’m one of the journalists who was too slow to focus on the problem.)“In nearly every sector of our economy, far fewer firms control far greater shares of their markets than they did a generation ago,” Barry Lynn and Phillip Longman wrote in Washington Monthly, back in 2010. This consolidation has helped hold down wages, raise prices and reduce job growth — while lifting corporate profits.
“Even after eight years of economic recovery and steady private-sector job growth, wages for most Americans have hardly budged. It is tempting to think that wage stagnation is intractable, a result of long-term trends, like automation and globalization, that government is powerless to do anything about.In fact, a growing body of evidence pins much of the blame on a specific culprit, one for which proven legal weapons already exist.
But they are not being used.The culprit is “monopsony power.” This term is used by economists to refer to the ability of an employer to suppress wages below the efficient or perfectly competitive level of compensation. In the more familiar case of monopoly, a large seller — like a cable company — is able to demand high prices for poor service because consumers have no other choice. It turns out that many corporations possess bargaining power over their workers, not just over their consumers. Their workers accept low wages and substandard working conditions because few alternative job opportunities exist for them or because switching jobs is costly. In other words, in the labor market, effectively a small number of employers are competing for their labor.Monopsony power is frequently created through noncompete clauses and no-poaching agreements and is aimed at the most vulnerable workers.
Employers like Jimmy John’s have discovered that they can control and intimidate workers by putting terms in their contracts that limit their ability to find new jobs even after they leave their old one. Jimmy John’s discontinued this practice in response to public outcry and litigation, but noncompete clauses remain ubiquitous.In a new study for the Brookings Institution’s Hamilton Project, we report survey results in which we find that one in five workers with a high school education or less are subject to a noncompete. A quarter of all workers are covered by a noncompete agreement with their current employer or a past one.”
“The tech giants are too big. But what if that’s not so bad?For a year and a half — and more urgently for much of the last month — I have warned of the growing economic, social and political power held by the five largest American tech companies: Apple, Amazon, Google, Facebook and Microsoft.
Because these companies control the world’s most important tech platforms, from smartphones to app stores to the map of our social relationships, their power is growing closer to that of governments than of mere corporations. That was on stark display this week, when executives from two of the five, Facebook and Google, along with a struggling second-tier company, Twitter, testified before Congress about how their technology may have been used to influence the 2016 election.
Yet ever since I started writing about what I call the Frightful Five, some have said my very premise is off base. I have argued that the companies’ size and influence pose a danger. But another argument suggests the opposite — that it’s better to be ruled by a handful of responsive companies capable of bowing to political and legal pressure. In other words, wouldn’t you rather deal with five horse-size Zucks than 100 duck-size technoforces?”
David Lindsay Hamden, CT Pending Approval
Great reporting and analysis Farhad Manjoo. Amazon has definitely crossed the lines of propriety. Read the story of how they blackmailed Diapers.com into selling to them or going under. Amazon deserves to be broken up, and carefully regulated like a serial criminal, whose operations you often enjoy.
If the Europeans are telling the truth, Google needs severe government oversight as well. The Europeans report that Google’s searches just happen to prefer Google companies and partners.
David Lindsay blogs at InconvenientNews.wordpress.com
“The tech giants are too big. But so what? Hasn’t that always been the case?As the men who run Silicon Valley will be the first to tell you, a company’s size doesn’t matter here. For every lumbering Goliath, there are always one or two smarter, faster Davids just now starting up in some fabled garage, getting ready to slay the giants when they least expect it.
So if you’re worried about the power of the Frightful Five — Amazon, Apple, Google, Facebook and Microsoft — just look at how IBM, Hewlett-Packard or monopoly-era Microsoft fell to earth. They were all victims of “creative destruction,” of an “innovator’s dilemma,” the theories that bolster Silicon Valley’s vision of itself as a roiling sea of pathbreaking upstarts, where the very thing that made you big also makes you vulnerable.
Well, maybe not this time.”
David Lindsay Hamden, CT Pending Approval
Ever since I read the story of the Amazon’s brutal take over of Diapers.com in Bloomberg Businessweek, I have called for the breaking up of Amazon. All the little companies it blackmailed into selling themselves or get taken out by competition, should be taken away, and what is left of Amazon should not be allowed to compete with any of them for 50 years or some serious defensive number.