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Are Small Businesses at the Mercy of Big Tech?

Short Answer: Yes.

We all experience the web in different ways, but what happens when the web outsmarts us? 

Where there’s a problem, there’s someone out there with a solution, or an idea of some magnitude that requires nurturing, maybe they need access to the right resources before they can move to the development phase. Big Tech offers that, and more; yet “Do they really?” is the question on Congress’ floor. 

Over the last decade, there has been growing concern surrounding large tech companies and their anti-competitive practices, like buying out the small guy with rivaling potential. Why would a company as big as Facebook, for instance, need Instagram? Did they have a good enough reason for the merge, and can they prove their intentions weren’t to stifle the opposition? 

The U.S. government is shifting that burden off of themselves and onto these tech titans, with Sen. Amy Klobuchar (D-MN) spearheading the effort. 

“When you start deliberately buying up what we call nascent competitors for the purpose of dominating the market, then you stop that innovation that might develop,” said the newly appointed chair of the Senate Judiciary Committee’s Antitrust Subcommittee. “No one has a chance of having a new product when they buy them all up and are the monopoly provider.”

Klobuchar’s bill seeks to revamp present antitrust laws that have been, in her perspective, ignoring the needs of the modern day consumer. 

The Past

In truth, these laws were made decades and decades ago to combat the issue of corruption in business and politics. Big firms in the late 1800’s and early 1900’s would consolidate and form one giant entity called a “trust” company, an example of this being the oil industry that merged into Standard Oil Trust, or the tobacco industry coming together to represent the American Tobacco Company. As these enormous trusts banded together, so did their bank accounts. 

The real problem wasn’t that they were rolling in dough, it was the threat that their partnership posed to entrepreneurship and competition, not to mention their growing influence over government affairs.

The Present 

But where this concern once existed with retail, it has now permeated across a market that is digital, a territory that, to note, won’t be as easy to regulate, especially if Big Tech has also contributed to the success of many of those consumers. 

Facebook makes for a good example as very recently the Federal Trade Commission and 48 attorneys general called for the tech giant to be broken up, alleging that the company was “suppressing, neutralizing, and deterring serious competitive threats” in order to establish more dominance online.

On the other hand and in their defense, Facebook has brought about much needed exposure to the smaller players, especially during the pandemic. If anything, the number of users soared as business owners everywhere were forced to get creative. There’s a whole hub of tools that the social network has made available, for free, from taking your store online to making consumer data work in your favor.

And studies from Pew Research Center report that roughly eight-in-ten adults go online daily, with three-in-ten of them being constantly plugged into the world of social media a reach that exists in plain, virtual view for anyone looking to capitalize on that. It gets more tedious when we factor in the role that artificial intelligence plays in accessing, storing, even selling consumer data. 

As Big Tech continues to expand, so does their power and influence over the individual and the economy:

Consider the effects that a casual tweet from the “Technoking” Elon Musk had over the market back in February, to be able to make money with “One word: Doge.” 

Or consider Amazon, and the convenience it brings for both buyers and sellers everywhere. For the consumer, there are more options and cheaper buys; for retailers, there are cuts to overhead costs and the hassle-free experience of delivery. It’s an empowering platform, until, as critics of the retail giant bring up, the math paints a different story. 

According to a study done by ProPublica in 2016, Amazon’s search engine algorithm was set up to bury bargains from independent merchants and utilize sales data to decide which products to create their own versions of, ultimately competing with the very sellers that operated on the platform. 

The Effects On SMBs

Scott Galloway, a professor at NYU’s Stern School of Business and author of The Four, a book about digital monopolies, warns of this developing concentration of power that Big Tech has and how it’s the reason for “infanticide” in small firms. “If they’re not stopping (innovation), they’re the main cause behind the slowdown in American startup creation.” 

While Congress has been more willing to have the conversation, the pace at which technology is taking over has only accelerated. Some would argue that this gap between inaction and action, respectively, is increasingly killing the economy. By the time any legislation is passed, statistics suggest there’ll be more casualties on the enterprise front. 

Maybe another question to consider here is whether there needs to be any government intervention at all. 

When these leading tech companies are offering immediate access to vast markets, ability to target ads, budget-friendly and reliable infrastructure, why would startups want to look anywhere else when the framework has already been laid out for them? Developers can reach hundreds of millions of customers overnight via Apple’s and Google’s app store; brands can rent out Amazon’s and Google’s cloud-computing power; Facebook and Instagram might be the smoothest, cost-effective marketing tool in the history of everdom. 

That also explains why Congress has yet to come to a consensus over this matter; it’s no easy feat to go against Big Tech, and then there’s the problem of whether our legislators are intellectually equipped to be making those decisions for users of technology.

The Future

One thing is for certain: the small business owner can use more support. 

Is the answer here to break companies up? Should they be prevented from buying out up-and-coming ventures, just because they have the capital to do so? Whatever comes of the resolution, Klobuchar’s antitrust bill may be a better place to start than any.

For a market to remain a breeding ground for exploration and innovation, it’s essential that there’s the room and the resources there to foster those ideas. 

It might be safe to say that Big Tech is much like that room, a Pandora’s box that’s full of the bells and whistles that appeal to many of its clients, but a box is also just a box: it’s restrictive. And Klobucar’s proposal to put more resources toward smaller agencies could be the backbone that the entrepreneurial spirit of today needs.

As she puts it,

“You can’t take on trillion dollar companies with bandaids and duct tape.”

 

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