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Monday, August 20 News

Living with Technology / The Internet: Competitive or a monopoly?

The internet started as a way to share the world’s information. The original websites and emails used the top-level domains .edu (education), .org (not-for-profit organization) and .mil (military).

The growth of the .com (commercial [for profit]) domains changed the fundamental nature of the internet because profit became possible.

The internet was intended to democratize the world, giving everyone a voice and presumably providing equality to all. Indeed, anyone can create their own site and, depending upon the geography in which you live and the respective governmental regulations, post anything you want. Even videos are easy to create and publish.

But the subject of this column is commerce or, in particular, e-commerce, such as buying things over the internet.

A recent CNBC study indicated that 44 percent of all U.S. e-commerce goes through one company: Amazon. Furthermore, 4 percent of the country’s total retail business goes through Amazon. That’s a huge amount of sales volume.

A study by eMarketeer put Amazon’s e-commerce sales for 2017 at $94.7 billion. No. 2 was Apple, at $16.8 billion, and No. 3 was Wal-Mart, at $14.4 billion. My point is that Apple and Wal-Mart are each about one- fifth the dollar sales volume of Amazon.

That is consolidating a lot of retail transactions under one company.

I would not say that Amazon is becoming monopolistic in the negative sense, as part of the definition of being a monopoly is increasing prices and limited competition. Neither of these criteria seems to be met by Amazon.

The European Union last week imposed a $5 billion fine on Google for unfairly pushing its apps on smartphone users and thwarting competitors. Whether this is true or not or what will be done about it, clearly, big some companies’ competitive activities — especially when taken by large companies — can be seen as adversely impacting commerce in general.

Note that these sorts of activities are not unusual. We’ve had monopolistic cases before, most famously the IBM case that ran for more than a decade.

Expect more of these cases, as technologies such as Artificial Intelligence start to become the keys to what drives more and more items in our lives and a handful of companies will control the technologies.

Both market forces and governments will be the primary determiners of how these technologies are used. The challenge is that our governments can move slowly and our laws are frequently not designed to handle these groundbreaking innovations.

Luckily, we have forward-thinking people in the public and private sectors who are working diligently to try to anticipate the ways these companies, technologies and markets can operate effectively for years to come.

Mark Mathias is a 35-plus-year information technology executive and a resident of Westport. He can be contacted at livingwithtechnology