🗿 Monopoly - Big Tech Edition

GM. Hope every one of our subscribers lived through the weekend and yesterday. That was tough. We’re hopeful it’s not the end of the world, but if it is we’ll turn this into a comedy newsletter so you have a reason to go on.

For now, let’s talk about Google being ruled a monopoly.

Without Further Ado. ☕ *knuckle cracks* ☕ Let’s get into it.

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Are All Big Tech Companies Monopolies?

A federal judge just ruled that Google violated US antitrust law by maintaining a monopoly in the search and advertising markets.

So, are all these big tech companies just modern monopolies?

In recent years, the dominance of big tech companies in the United States has sparked significant debate. Amazon, Google, Facebook, and Apple have amassed unprecedented power, leading many to argue that they function as monopolies. It’s been going on for a while, but no one really talks about it. Today we’re talking about it. 

First, let’s bring back everyone’s favorite 9th grade essay trick and define Monopoly.

Market Dominance

Are they just too dominant? For example, Google dominates online search and advertising. Statistics show that Google holds over 90% of the global search engine market share. NINETY. The other two with any share over 1% are Microsoft and Yahoo, you know, the disruptive startups. 

As of 2023, Amazon controls approximately 38% of the U.S. e-commerce market, dwarfing its closest competitor, Walmart, which holds around 6% (Walmart another struggling little guy, lol). Their market share translates to over $469 billion in net sales, nearly ten times more than the next largest online retailer. Amazon's logistics network, including over 175 fulfillment centers worldwide and a fleet of delivery vehicles, also creates a significant barrier to entry for potential competitors. 

Do we technically have substitutes? Yes. But does anyone have a realistic chance to be competitive against them? Absolutely not. Let’s say you started an incredible search engine, how are you going to get the word out if not advertise on Google?

Anti-Competitive Practices

Anti-competitive practices are their specialty. Let’s take Facebook who has acquired potential competitors Instagram and WhatsApp, effectively eliminating threats to its social media empire. Now they are front and center in the battle against TikTok in the U.S. due to “national security” worries. I’m sure it has nothing to do with the advertising revenue they’re losing. 

Similarly, Apple has been accused of using uses its App Store policies to disadvantage any rival app developers. It’s Apple’s club, they are the bouncer, security, and juror. If you do something they don’t like, goodbye app store placement, goodbye users. 

Impact on Us, the Users

Whether we realize it or not, all this monopolistic behavior has significant implications for consumers. Reduced competition can lead to higher prices, fewer choices, and stifled innovation. If you think this has had no impact on the borderline out of control inflation in the US, you need to wake up and smell the roses. 

Okay, so back to this google ruling. Is this the turning point in breaking apart big tech monopolies? Doubtful. But the judge seems convinced to help, and there is a long list of people who’s companies have been smothered by the giants waiting for their revenge.

What We’re Reading

• OpenAI co-founder Schulman leaves for Anthropic, Brockman takes extended leave 

• Judge rules that Google ‘is a monopolist’ in US antitrust case

• Lucid pumps $1.5B from Saudi wealth fund after CEO warned relying on its ‘bottomless wealth’ was ‘dangerous’

• Bitcoin decline is similar to the start of the 2016 bull run — Peter Brandt

• How the Bank of Japan wrecked the yen carry trade — and crypto markets

• 'Game changer' AI detects hidden heart attack risk

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.