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All that Competition? They’re Missing It


Over at Café Hayek, Don Boudreaux points to this essay by William Shughart, pushing back on the idea that Amazon is a monopoly in any economically interesting or relevant sense. The essay is good and well worth reading, but there is another angle I think is worth adding.

Shughart describes how Lina Khan of the FTC currently “oversees two antitrust cases targeting two of the globe’s three biggest online platforms: Amazon and Meta, Facebook’s parent company. (The Department of Justice is going after a third tech giant, Google.)” One company that doesn’t come up in the article, but has itself been the target of similar cases, is Microsoft. Along with Apple, Google, Amazon, Facebook and Microsoft are often collectively referred to as representing “Big Tech.” Each of these companies has in various ways and at various times been ominously described as too big, too powerful, too entrenched, and representing a threat to economic competition. 

However, that last claim seems much less poignant when you consider that all of these companies are in competition with each other

Shughart correctly points out that when you include brick and mortar retailers as competitors to Amazon’s retail business, Amazon only has a 6% market share. I’ve also pointed out in a different post that Microsoft’s Xbox gaming division is in competition with Sony, a company only about 5% as big as Microsoft, and Nintendo, a company only half the size of that. Nonetheless, Microsoft is currently being trounced by both of these much smaller companies. Competition from smaller competitors shouldn’t be dismissed – mere size is no guarantee of success when nobody is required to use your products, and when competitors, however small, have the ability to give customers a better offer. 

But even if we set that aside and kept our eye on the biggest tech giants, what’s the cause for alarm? Why should I fear, say, Microsoft on account of how big it is, when Microsoft faces competition every day from comparably huge companies like Apple, Amazon, Google, and Facebook? Even with this limited view, Microsoft is currently fighting a four-against-one battle – or so it would feel to them. Apple, too, would feel themselves to be in a four-against-one battle, as would the others. Of course, these companies don’t compete against each other in every aspect. Microsoft isn’t competing in the smartphone space against the iPhone (RIP Windows Phone, your passing was mourned by dozens), but PC vs Mac is a serious market. Microsoft also doesn’t compete much with Amazon in retail, but cloud-computing services are another story. Apple and Google compete in smartphones and the iOS vs Android market. But overall, each of these companies competes with the other in various ways. 

Maybe the concern among these would-be reformers is that competition among five giant companies is too small – a healthy competitive market requires more comparably sized competitors. If that is truly their concern, just wait until they find out about the size, power, and resources commanded by the federal government where the only meaningful competition is the two-party system! None of these companies can hold a candle to that along any of the dimensions over which these reformers express their concern. So I don’t share Khan’s priorities here – there are much bigger fish to fry first.

Rayna Prime

Rayna Prime

Rayna Prime Editor