All of us love a good David and Goliath story—but what happens when Goliath remains unopposed? In the terms of companies, the heavy hitters are equivalent to this fictional juggernaut. Names like Amazon and Google are recognized worldwide for everything from products to television streaming options. But when is enough, enough? The rapid increase in these companies could lead to disaster… or it could lead to a new era altogether.
Tech is certainly the common denominator between the market kings. The five largest being Amazon, Microsoft, Google’s parent Alphabet, Facebook, and Apple. This could potentially mean that the size increase of these companies could be effectively regulated.
Investors are elated about the rise of these companies, which is exhibited most notably by shares in both Amazon and Alphabet cracking the $1,000-mark this month, and Amazon being on track to account for half of the USA’s online sales by 2021. But while the investors are rejoicing, the public, as well as legislators, are questioning whether this is a positive prediction.
By looking to these five king companies for all material needs, we essentially eliminate the need for more boutique retailers, possibly driving down the production of quality ‘want-based’ products.
Many believe that tougher stipulations in regards to mergers and acquisitions would curtail the inevitable growth of companies like Amazon and Apple. It has been proposed that, if done correctly, mergers suggested by said companies could possibly be regulated to the point where their overall acquisitions could be monitored to avoid overgrowth. While these companies already gain power with the more user data they amass, overgrowth could lead to dire outcomes, including controlling consumer access to the firms using their specific platforms.
John Kwoka, a professor at Northeastern University in Boston has been quoted, “They steer choice and do so in ways that have ripple effects throughout a broader economy.”
Amazon has been a particular culprit when it comes to swaying the public to acquire what they want. One particular and troubling case lies with their acquisition of diapers.com, a baby products retailer. Amazon lowered their prices, making it impossible for diapers.com to sustainably stay afloat. As a result, Amazon was able to acquire it.
The United States government is still prehistorically lackadaisical when it comes to regulating the growth of these companies and the shady ways they go about it. The UK seems to be more on track with their regulation rules, coming down much stricter on companies who seem to be out of boundaries.
In 2013, the European Commission found Microsoft guilty of giving preferential treatment to its own browser, Internet Explorer. Similarly, this year they fined Facebook for not providing detailed enough information in regards to its acquisition of the text app WhatsApp. The EU has also held animosities with the other companies in the five mentioned.
Overall, the EU, while certainly more on top of the task than the US, still lacks when it comes to bringing the giants down to size. But consumers are the ones who ultimately make the decision on growth of these companies; and as of now, the verdict is still out. Brick and Mortar shopping is still taking precedence in the mind of the consumer, leaving online shopping to remain the outlier.
So while the growth of these companies could mean big changes in capitalism in general, it does seem to appear that there are steps moving in the right direction.
Sources:
http://www.bbc.co.uk/news/business-39875417