Someone turned to me the other day, mid-discussion around Facebook and their abuse of customer data, and asked: How did we get here? My answer: Because we let it happen.
In the last twenty years, America has allowed big tech firms in Silicon Valley to become monolith giant monopolies of search, media and commerce. And now we don’t like it, so we want to break them up? That’s not really going to be possible as they provide global reach and links, not just things for the American consumer. So, what to do?
I guess my thinking is that there is always something new around the corner. Wikileaks launch a social network to try to solve the Facebook issue. Tik-Tok takes over from Snapchat which took over from Vine. Bing edges with Google, but never wins. There’s always competition. No company is unassailable. However, if they gain dominance, they work hard to keep it which is why these firms are so hard to change or overcome.
The same could be said of most markets however. Look how long Richard Branson and Virgin Airlines have had a go at British Airways, but BA is still there rocking and rolling. Look how long there’s been a battle between Asda, Tesco, Sainsbury and company, but they’re still there doing well enough. Look at the big banks and their operations. Most countries have just three or four big banks and then a whole load of little ones. The big banks get bigger. Everything becomes acquired, merged, consolidated over time.
How many soft drinks can you name? Coca-cola? Pepsi-Cola? Irn-Bru? The list runs out fast. In fact, Red Bull have done a great job of breaking into this space.
In general though, outside the technology markets, the big names stay big, get bigger, get more control and get more backing thanks to lobbying, than any others. It’s that last part, the lobbying or, rather, their ability to line the pockets of those who watch them that counts the most.
Now, I’m not being a rebel or leftie here, but it’s pretty obvious who has control. Just look at the NRA in the USA. Who has control? Not the President. If the President could change gun laws in America, then ti would have been changed by now.
Look at the fossil fuel firms. Who has control? Not the governments. That’s the reason why the biggest fossil fuel firms spend $40 million a year each just on political lobbying.
The same is true of the big tech firms. They learned a lesson from Bill Gates twenty years ago: don’t ignore the politicians. I have no idea how much they’re paying in lobbying fees, but with $100 billion of tax avoided in the last decade, they can afford $1 billion a year to line the politician’s pockets. Easy.
Oh, and don’t forget the big banks. Washington Post, April 30 2019:
Wall Street banks and other parts of the financial sector spent close to $2 billion on lobbying and campaign contributions in the 2018 election cycle, a 36 percent jump from the last non-presidential campaign year.
‘Campaign contributions’ and ‘lobbying’ is just another way of saying ‘protection’. Protection from regulation, protection from competition, protection from the law. That’s why no banker got jailed when the financial crisis hit in 2008. It’s why Boeing’s executives are immune from prosecution and why people like Jeffrey Epstein hangs around with Prince Andrew. It’s all about the money. It’s all about the power.
Not that I’m being a rebel or a leftie here, but it’s always the case that if you want to find out who really is behind the decision making in any part of the world, just follow the money.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...