Is It Time to Take the Bite Out of FANG-Plus?

By Paul Maxwell Report Archives
Cover image for  article: Is It Time to Take the Bite Out of FANG-Plus?

Bloomberg Businessweek hit the nail on the head in its July 24 edition asking: "Are Amazon, Facebook and Google too big for our own good?" and "The tech giants may be contributing to the U.S. economy's most persistent ailments. Should they be broken up?"

They, of course, are the FANG+ -- the three new-tech Goliaths plus Netflix.  And Bloomberg isn't the only voice questioning their growing dominance.  For example, in both an editorial and a story in its August 4 edition, The Week writes: "The inexorable growth of Google, Facebook and Amazon has raised fears these giants are becoming too powerful."

Just consider how the fantastical growth of the FANG+s has led those who they ride over (for little, if any, cost) into a frenzy of merger-making as they attempt to counter the FANG+'s power by becoming even bigger themselves.  Of course, the FANG+s aren't quite classic monopolies (yet), but they're sure close.

These statistics tell the story (from both Bloomberg and The Week):  Google has about 77% of U.S. search advertising.  Google and Facebook together control about 56% of the mobile ad market.  Amazon boasts 70% of all e-book sales and 30% of U.S. e-commerce.  Facebook and Google control more than 70% of the $73billion digital ad market in the U.S.

Meanwhile, between 2006 and 2016, U.S. newspaper ad revenue dropped from $50billion to $18billion and employment in the newspaper business dropped by half.  In other words, these mega-companies are destroying democracy, free press and, just for kicks, suburban malls.

That's how it goes.  But there's a way to put a dent in their dominance!  Those giants of the digital age got that way because of the openness of the Internet.  The Internet made communications and transactions easy and virtually cost free!  That's why they want to maintain the Federal Confusion Commission's Title II regulatory rights.  And that's why others want to kill it.

Net Neutrality is the rallying cry.  For both sides.  The incumbent infrastructure companies versus the new mind-boggling, financially successful companies.

FCC Chairman Ajit Pai's drive to move regulations back to Title I (the loose hand of former FCC Chairman Michael Powell) sets the battleground. It's all about who pays for what.

So, who will do what?  That is, besides the bots filing drivel at the FCC.

Well, there's always new antitrust laws to address the new reality.  Some Democrats have proposed new regulations regarding competition in their newly christened "A Better Deal" mantra.  Given political realities, that's a long shot and, frankly, a side-show for now.

On the infrastructure side, consolidation continues and, for some of the smaller players, will accelerate.

Coming up on September 7 will be a House Energy and Committee hearing entitled Ground Rules for the Internet Ecosystem.

One solution would allow the infrastructure companies (that's cable, telecom, wireless and, to a lesser degree, satellite) to charge the free-riders.

Now that will be a battle! Stay tuned.

Random Notes

Where is former Senator Tim Wirth when you need him?  Wirth solved pole attachment headaches for almost 40 years.  FCC Chair Pai wants to emulate him and solve them, mostly in rural areas, for another 40 years.  Good luck.

Today's reality is: Big is best. Given that, I hope the reauthorization of the FCC includes a dropping of media cross-ownership rules.

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