2. Analyze the power of the big tech firms to control the market and limit competition. Support with cited research.
Big tech firms have continued to grow leverage in control their specific markets over the last couple of decades. Likewise, companies such as Facebook, Amazon, Apple, and Google have been under the scrutiny of the federal government due to the seemingly limitless power they have acquired. For instance, Amazon has the ability to control their market through their brand name products as well as their third party sales practices. A key factor in these practices that must be considered is whether or not these practices are a monopolistic behavior. An example would be if Amazon sold one their own brand name products such as a lawn chair. For the most part, their lawn chairs are very competitively priced. By itself, this may it hard for other competitors to have a fair chance of competing with this product since Amazon is able to market their product will an inexpensive cost to the customer (Kang, 2021). Also, if their third party sellers want to sell through Amazon. They will be charged fees, and rates to utilize Amazon’s resources (How Much Does it Cost to Sell on Amazon? | Pricing Calculator, n.d.). In turn, lawn chair competitors have little chance to compete, and their best chances for success are to sell through Amazon, which ultimately generates a profit for Amazon as well.
Another example of a big tech firm that has the ability to control the market and limit competition is Facebook. This social media giant has also displayed monopolistic conduct by limiting competition. For instance, Facebook took on the acquisition of competing companies such as Whatsup, and Instragram back in 2012 and 2014. This type of behavior limits the user’s available options for social media platforms and also limits the competition for the advertisement companies (FTC, 2020). Furthermore, Facebook was accused on conducting anti-competitive behavior with their third party software that would prevent users from accessing certain applications through other social media platforms.
FTC. (2020, December 9). FTC Sues Facebook for Illegal Monopolization. Federal Trade Commission. https://www.ftc.gov/news-events/press-releases/2020/12/ftc-sues-facebook-illegal-monopolization (Links to an external site.)
How Much Does it Cost to Sell on Amazon? | Pricing Calculator. (n.d.). Sell.amazon.com. Retrieved September 28, 2021, from https://sell.amazon.com/pricing?ld=seussoagoog-sitelink-pricing-D#other-costs (Links to an external site.)
Kang, C. (2021, June 11). Lawmakers, Taking Aim at Big Tech, Push Sweeping Overhaul of Antitrust. The New York Times. https://www.nytimes.com/2021/06/11/technology/big-…
Hi everyone. Below is my initial discussion post along with the attached word doc in APA format.
2. Analyze the power of the big tech firms to control the market and limit competition.
“A marketing strategy can achieve its desired results only if implemented properly” (Ferrell & Hartline, 2021 p. 276). The big five tech companies today are Facebook, Amazon, Apple, Microsoft and Google, and they know exactly how to implement their marketing strategy (Lekkas, 2021). The total value of the big five tech companies is over $5 trillion (Lekkas, 2021). They make up as much as 13% of the value of the whole S&P 500 by market capitalization (Lekkas, 2021). Along with this, they bring sociocultural evolution at a big scale and drive social change at full speed (Lekkas, 2021).
Facebook has the ability to control the market and limit competition by securing their dominance in a highly concentrated market. They do this by identifying rivals and copying, acquitting or getting rid of them before they can mature into competitive threats (Staff, 2020). Instagram and WhatsApp fit this image as they are now owned by Facebook (Staff, 2020).
Amazon has an advantage in the market by selling its own products as well as goods from independent merchants on a single platform (Staff, 2020). They have monopoly power over many of the merchants, as in the merchants do not have a viable alternative to Amazon for reaching online customers (Staff, 2020). This gives Amazon an incentive to use competing merchants’ data and in-turn advantage its own goods and services (Staff, 2020). Although some claims are against this, Amazon has countered those claims stating it was designed as customer want it and going back to separate retail sales from its third-party marketplace would bring back a model that consumers and sellers rejected as inconvenient (Staff, 2020).
Apple has the ability to control the market and limit competition by creating a monopoly on distributing software onto the iPhone (Staff, 2020). They charge above-market prices to developers in the form of a 30% commission on App Store sales (Staff, 2020). This excludes rival apps and services and to misappropriate data from developers and use that to create competing services and features (Staff, 2020). It has been said that the App Store costs Apple an estimated $100 million a year to run, but it generates billions of dollars in revenue (Staff, 2020).
Google has the ability to control the market and limit competition in several ways. They have used restrictive customer and partner contracts to ensure its own services are favored over those of competitors (Staff, 2020). This includes in searching, phone and tablet software, advertising technology and mapping technology (Staff, 2020).
The big tech firms have the power to control the market and limit competition in several ways. Some are good and some not so much. Overall, if consumers and sellers are satisfied, then the companies must be something right.
Ferrell, O. C., & Hartline, M. (2021). Marketing Strategy (7th ed.). Cengage Learning. https://ebooks.cenreader.com/#!/reader/650b6451-95ec-46b6-9107-a3d003cd94a0/page/4366066460a00da5267d1a247c7e1604?search=value%20created (Links to an external site.)
Lekkas, N. (2021, August 12). The Big Five Tech Companies & Their Big Five Acquisitions. GrowthRocks. https://growthrocks.com/blog/big-five-tech-companies-acquisitions/ (Links to an external site.)
Staff, R. (2020, October 7). How big tech companies gain and maintain dominance. Reuters. https://www.reuters.com/article/us-usa-tech-antitrust-congress-factbox-idUSKBN26R3RD