More on Market concentration
In addition to technology concentration, market concentration has increased in industries ranging from infant formula (where 90% is made by 4 companies) to coffins (where the top 2 producers make 80% of all coffins), ie literally cradle to grave phenomena.
There has been a plethora of mergers such as Facebook's purchase of Instagram, Google's purchase of YouTube and the Brewer AB’s purchase of SAB Miller.
Some of these large firms are on the scale of nations:
“...Walmart is about the economic size of Thailand. Amazon is the size of Austria. Exxon Mobil is the size of Peru...”
Andrew Leigh, 2024
The MAMAA Grouping (Meta, Apple, Microsoft, Alphabet and Amazon) dominate social media, smartphones, software search and online shopping Industries.
In China BATX (Baidu, Alibaba, Tencent and Xiaomi) dominate search, e-commerce, social media and smartphones.
Market concentration is influencing workers as well as consumers, ie
“...1/5 of US workers have a clause in their employment contract limiting their ability to take a job with any company that competes with their current employer…”
Andrew Leigh, 2024
Furthermore, there is a clandestine deal between Silicon Valley firms about not hiring each other's software engineers; this has reduced employee salaries.
Monopolies can occur with both buyers and sellers, ie monopsony refers to buyers. Some examples:
- Apple’s App Store charges app developers up to 30% of any revenue they earn through the App Store
- Alibaba used to prevent merchants selling their goods on rival platforms.
Also, they tend to outsource their activities, such as Amazon's delivery drivers don't work for Amazon, most of Meta’s contact moderators don't work for Meta, etc
Traditionally, technology and its breakthroughs have been a way to challenge and break up monopolistic organizations like IBM, Kodak, Nokia, etc. Will this continue to happen as MAMAA and BATX are world leaders in new technology like artificial intelligence? Rather, it will most likely help them to maintain their dominance.