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Finding a new business model for big tech monopolies

  • 09 March 2021
The increasing censorship by the tech monopolies is, reasonably enough, raising fears about attacks on free speech. Facebook’s ban on Australians’ finding or sharing news on its site has exposed the intense bullying, although in many ways this is a battle over who gets advertising revenue between News Corp and Facebook with the Federal government caught in the middle. Facebook is not interested in news; it is an advertising company.

What has been less noticed is that social media companies are adopting a strategy that may go down in history as among the worst corporate mistakes ever. Google and Facebook are, respectively, the fifth and sixth most valuable companies in the world. On the way up they were exceptionally innovative; so effective at providing better value to advertisers that they destroyed much of the world’s mainstream media industry by capturing over half of the world’s advertising revenue.

But they are now monopolies and, like all monopolies, they no longer see their main interest as serving customers but rather to capture governments in order to protect their market dominance. When Mark Zuckerberg donated $US400 million to ‘help’ local election offices in the recent US election, the commercial rationale was unmistakable.

What most troubles monopolies is the threat of being broken up with anti-trust laws (which exist in the United States, unlike Australia). Google is being targeted with three anti-trust cases, including one filed by 40 US state Attorneys General last December. US states and countries are starting to legislate against the censorship. Other threats are the potential removal of Section 230, which protects the social media monopolies from civil liability as publishers. There are also moves to decentralise social media to give users more control over their own data.

Seventy five million Republicans voted for Trump, and according to polling three quarters of them believe the election was subject to widespread fraud, as do many independent voters. Yet if they try to discuss that on social media, they are at risk of being silenced.

It represents a massive opportunity to citizen Donald Trump — always more a business person than politician — is set to take advantage. Trump’s plans seem to be well advanced and there would be a strong commercial logic. The biggest barrier to entry in the digital media space is not so much technology as marketing, which is what Facebook and Google excelled at. Marketing is labour intensive and small competitors lack the funds to compete.