The technological advances of the past 30 years have been incredible. But has this dizzying array of innovations led to a blossoming of consumer choice? Not exactly.
If people need a new phone, they can choose from one made by Apple or one powered by Google. Want to search for information online? There’s Google or Microsoft’s Bing. Want an e-mail account? Sign up with Google, Microsoft, or Apple.
For too many digital products, there are, at best, a handful of options, and the same names keep coming up again and again. While there may be some other providers, they typically control just a sliver of the market.
Technology and the law
This is part of a series on the intersection of technology and law.
AI: Rein in threats to our creativity
These monopolies or oligopolies have taken root in a time of lax regulatory enforcement. That is starting to change, but governments, regulators and courts must do more – and they can look to history, such as the antitrust case against Microsoft in the 1990s, for inspiration.
It wasn’t always this way. A generation ago, if you wanted to look up information online, you had all sorts of options: Yahoo, AltaVista, Ask Jeeves and so on.
That is no more. According to an antitrust lawsuit filed last year, about 90 per cent of search volume in the United States is handled by Google. Nearly all the rest is Microsoft’s Bing, with a small share going to Yahoo, which is now powered by Bing. If you don’t like Google’s recent integration of AI into search results, well … tough luck.
Tech companies argue that their dominance is simply a result of selling a superior product. No doubt that is a factor. But it is not the only one. The antitrust case against Google, which awaits a judge’s decision, hinged on the billions of dollars Google pays phone makers and internet browsers to make their search engine the world’s default.
In other cases, the tech behemoths have stifled competitors by buying them. Facebook’s growth has slowed in recent years, but Meta remains dominant in social media because it bought Instagram and WhatsApp as they were becoming threats. It’s the same story with Google’s long-ago purchase of YouTube, or Microsoft’s recent investments in OpenAI.
Regulation of competition – or lack thereof – has had a huge influence on these developments. The United States Justice Department took action against Microsoft in the 1990s when it began to extend its dominance in desktop computing into the emerging market for internet browsers.
The action was ultimately unsuccessful, but it put a chill on the company’s most aggressive tactics. The tech industry bloomed through the late 1990s and into the 2000s, as the above list of search engines of the time shows as one example. Then, when the tendency to consolidate gripped the industry again, regulators didn’t act. Now, a handful of tech companies control critical pieces of digital infrastructure.
The tide has started to turn again, with major antitrust lawsuits in the U.S. hitting different segments of the market, including Amazon’s dominance in e-commerce and Meta’s dominance in social media. The European Union has joined in, with a case this week launched at Microsoft’s bundling of office software.
As a smaller market, Canada will not be a primary battleground in such legal battles. But this country can take action, as demonstrated by the Competition Bureau’s investigation of Amazon. And Canada should ensure that privacy and artificial intelligence regulations align with the U.S. and Europe.
Courts in all jurisdictions that judge a monopoly to be illegal should look at the full spectrum of remedies – including, if appropriate, by ordering divestments. In the U.S., such an order involving a large company hasn’t been made in decades, but it historically spurred innovation, such as the breakup of AT&T in the 1980s and the split of Standard Oil more than a century ago.
This week, this space highlighted a number of harms caused by technology that has gotten ahead of legal authority. At the root of much of the problem is the power these companies wield. Ensuring vigorous competition and broader consumer choice is a vital first step in allowing the legal system to catch up to the galloping pace of technological innovation.
The business of big tech: More from The Globe and Mail
Greek economist Yanis Varoufakis has a name for the system that gives immense power to a handful of tech companies: Not capitalism, but technofeudalism. He spoke with The Globe’s Lately podcast about what digital serfdom looks like and who, if anyone, could challenge it.