Here's a trivia question for you: can you name all five of the most valuable companies in the world? If you’re struggling, I’ll give you a clue. They’re all US technology businesses, not oil companies, which tells you something about how the global economy has changed over the past few decades.
Movie producer Jonathan Taplin certainly knows the answer to the question (it’s Apple, Google, Microsoft, Facebook and Amazon, by the way), and his entertaining new book is all about the damage he thinks these digital behemoths are doing to our economy and society.
Taplin (who is speaking at my social enterprise Second Home on May 9) is angry as hell about the immense size and power of the tech giants, and has a compelling pitch for why we should all be worried too. Let’s start with the numbers. Facebook owns 77 per cent of mobile social traffic, Amazon has a 75 per cent share of the e-book market, while Google has a whopping 88 per cent market share in search advertising.
For Taplin the implication is clear: “In classic economic terms, all three are monopolies.” He argues that musicians, film-makers and other creative people are getting screwed because YouTube, Facebook and all the rest allow users to publish content online for free. One example he cites is that if a million people buy a new music single, the performer and the record label will earn around $900,000 in royalties — while a million views of the same song on YouTube will generate a measly $900.
According to Taplin, it’s not just the artists who are getting a raw deal. He also points to newspapers and the publishing industry as proof of the negative impact that the biggest tech companies are having. As he puts it, profits at Amazon, Facebook and Google have rocketed in recent years, while the revenues of media businesses have fallen by 70 per cent since 2001.
But that’s not even the worst of it. Because Taplin is convinced that Google, Facebook and the rest are monopolies he concludes that they’re bound to stifle innovation across the economy. Buying up the competition — as Facebook did with Instagram, or Amazon did with Zappos — and using their huge scale to crush rivals means consumers will lose out.
Like any smart polemicist, Taplin deliberately chooses not to present any facts that contradict his worldview, or get in the way of his witty invective. For example, there’s nothing on the way that Apple, Google, Amazon and Facebook are making it easier and cheaper for small companies to reach a global market or sell to customers on the other side of the planet. There’s also nothing on the real human benefits that have been created by open access to online information — and the way we can communicate instantly and easily via email and social messaging apps, completely free of charge.
But it would be unfair to criticise the author for failing to present a balanced picture — that would be like having a go at Marx and Engels for neglecting to mention the benefits of entrepreneurship in the Communist Manifesto. As with a prosecutor in a courtroom, Taplin has an argument to make, and he does a brilliant job of making his case.
Whether or not politicians will agree that US tech companies are monopolies that should be smashed, only time will tell. In any case, if you’re interested in how technology is shaping the world around us, this book is well worth reading. But whatever you do, just don’t buy it from Amazon. The author would definitely not approve.
£12.91, Amazon, Buy it now