During a recent speech on competition and the American economy, U.S. Sen. Elizabeth Warren (D-Mass.) took aim at the growing concentration of power and wealth in Silicon Valley’s tech industry.
Warren, who rose to national prominence railing against Wall Street and big banks, decided to single out big tech firms due to rising concerns among privacy groups, businesses, government regulators, civil rights leaders and others about the influence of companies like Google, Comcast, Apple and Facebook; power which has gone virtually unchecked in the emerging digital economy.
The first-term senator from Massachusetts offered her critique of the industry, in a little-noticed speech titled, “Reigniting Competition in the American Economy,” at the New America Foundation in Washington, D.C., where she warned that Silicon Valley’s billionaire class and Internet-age monopolies threaten to undermine the competition that has long driven the nation’s economy.
“For markets to work, there has to be competition,” Warren explained. “But today in America, competition is dying. Concentration threatens our markets, threatens our economy, and threatens our democracy.”
Warren’s criticism comes as a number of groups have started to push back against the threat that they say is the result of the growing concentration of power among Internet giants.
For example, civil rights icon Rev. Jesse Jackson and the Rainbow PUSH Coalition continue to advocate for economic justice through his Silicon Valley race diversity campaign. The National Newspaper Publishers Association (NNPA) has also embarked on a campaign to draw attention to Facebook’s dominance in news aggregation that the group says could threaten the future of community newspapers.
In her speech, Warren pointed her finger directly at the powerful technology and cable companies with enormous leverage over markets that have worked to put up barriers for competitors to enter their markets. Nowhere are such efforts more evident than among the giants of Silicon Valley, which have been favored by some regulators inside the Capital Beltway.
Perhaps no other company embodies the alleged abuse more than Apple. The popular electronics producer has sought to block competition at nearly every turn and through nearly every avenue. According to Parks Associates, an internationally recognized market research and consulting company, Apple controls 40 percent of the smartphone market. “The Wall Street Journal” reported that Apple collected 92 percent of all profits in the smartphone industry market in 1995. Apple has effectively leveraged its position to snuff out competitors, or to dictate terms for their operations.
Late last year, Apple announced it will enable ad-blocking on its operating system, effectively marking the end of digital ads not authorized by Apple on iPhones and iPads. As mobile ad space becomes more expensive—supply has always kept prices down. Apple’s ad-blocking feature means that fewer small and start-up companies, including Black media websites, will be able to reach their audiences, a huge obstacle for businesses seeking to break into the market.
In the realm of streaming services, Apple continues to use its popularity to size out the competition. The company recently blocked Spotify, the popular music-streaming service, from introducing a new version of its app on the iPhone. Citing its “business model rules,” Apple insists Spotify must pay a 30 percent app tax in order to offer the service on the iOS platform. As one Spotify executive put it, “Apple wants to eat their cake, and everyone else’s too.”
By the same token, in an attempt to limit competition and scare off would-be competitors, Apple’s aggressive actions in the courtroom have earned it a reputation for putting litigation ahead of innovation. In a landmark case recently taken up by the Supreme Court, Apple is seeking all the profits from Samsung phones that allegedly infringe on functionless design patents. If left unchecked by the Supreme Court, Apple’s aggressive litigation strategy of using design patent infringement claims to seek total profits from their competitors — and thereby blocking competition — will have a devastating impact on consumers, innovation and the digital economy.
Apple isn’t the only industry leader accused of behaving like a monopoly. Minority groups, activists and some politicians have openly criticized Facebook over alleged bias in the selection of news stories represented in the social media platform’s news feed.
NNPA President and CEO Benjamin F. Chavis and NNPA Chair Denise Rolark-Barnes recently noted, “Like many other publishers who have recently written on Facebook’s growing power over the media and what Americans read, we too are alarmed with one company having such dominance in news aggregation.”
With 63 percent of Americans and 74 percent of millennials using Facebook as a main source of news, the social media network could hold the capability to dictate the way in which people receive their news.
Google has also received some criticism for their practices. A Federal Trade Commission investigation of Google in 2012 found that the search engine promoted its own content over competitors’, which violated the company’s search algorithm.
Meanwhile, Comcast, the largest U.S. cable and Internet provider, has consolidated over half the country’s subscribers by systematically buying up so many of its competitors. Due to the lack of options for wired broadband service, some have noted Americans may pay more for service than individuals in other countries.