Every historical era has its power structures and nothing is more powerful now than multinational corporations. The ability to organise very complex workflows, produce, market and sell goods and services at a massive scale, requires a huge amount of resources and expertise.
Involving sophisticated software and operations with thousands of people across continents, large corporations leverage billions of dollars spent in research and development, science and innovation.
As much as this is amazing and life enhancing for us all, in recent times these behemoths have been concentrating more and more power. How much power concentration can be deemed desirable or healthy for the functioning of a modern and democratic society, is yet to be known.
In less than 30 years from inception, Amazon is one of the most prominent tech conglomerates today. With $469 billion in sales, It is more than a company, it’s a state like monster with tentacles spreading across cloud computing and services, logistics, third party ecommerce, online and physical stores, Alexa, Whole Foods, advertising and Hollywood studios. Amazon sales are larger than the economies (by GNP) of Austria, Israel or Hong Kong.
Amazon keeps its e-commerce margins low, bypassing low prices to consumers, while on the other hand, building other business segments with very high margins. This means convenience and lower prices for us all, and the increasing virtual impossibility to compete for smaller companies.
Inventory is turned into cash quickly, and suppliers/third-party stores are paid back within 30-60 days. That gives the company short-term liquidity that can be invested in its operations.
The relationship with its partners has been gradually and steadily shifting in the company’s favour. Unethical or illegal exploits allegedly included rent-seeking behaviour, like steadily increasing cost of doing business on their platform, abusing their dominant market position to manipulate pricing, copying popular products of third-party retailers, and unjustifiably promoting its own brands.
Huge balance sheets and financial prowess allow modern multinational corporations to invest at a loss for years. This helps them to grab market share and set the tone and tempo for others who either follow or die trying. As small and big shops closed down during the recent pandemic, Amazon business grew. Is this fair competition, good for a market economy that should rely on a multitude of participants, on an even playing field? I don’t think so.
In Europe, Amazon recorded sales of 51.3 billion euros in 2021, up 17% from 43.8 billion euros in 2020. A lot of Amazon revenues are routed through the Luxembourg-based business entity. This reported a loss and allowed the company to pay no income tax and receive 1 billion euros in tax credits.
In July 2020, Amazon along with other tech giants Apple, Google and Meta was accused of maintaining harmful power and anti-competitive strategies to quash potential competitors in the market.
Big Tech companies like Google, Meta and Amazon have deceived lawmakers by lobbying European Union institutions through smaller front organisations. You see where dodgy practices are employed to gain more influence and control over public institutions and influence policy makers.
Innovative Small & Middle Sized Enterprises have no chance to exert the same authority in markets and with policy makers. Yet, arguably, SMEs serve as a source of entrepreneur skills, innovation and employment. They stimulate competition for prices, product design and efficiency. If there are no SMEs, big enterprises become monopoly.
As a minimalist, I am not into the consumerist lifestyle, although I bought various useful stuff on Amazon over the years. I am not trying to say we should go back to subsistence farming, bartering and small rural communities.
Beside the fact a lot of stuff people buy is quite useless and ends up in the landfill very quickly, we are coming to a reality where everything is dominated by these huge multinational platforms, as everyone else is gone out of business.
I think we might have tipped the point. The current system is resembling less of a market economy, and more of a state controlled cartel. Redistribution of power is overdue and necessary at this stage. I am talking about splitting up large conglomerates into autonomous and independent parts and creating real antitrust balance and regulations.
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Global oligopoly in economic sectors:
Automobiles: the top 4 largest corporations accumulate 42.5% of market share.
Chocolate: the top 4 largest corporations accumulate 50.3%.
Airplanes: the top 4 largest corporations accumulate 100%.
Smart phones: the top 4 largest corporations accumulate 68.2%.
Digital cameras: the top 4 largest corporations accumulate 60.2%.
Operating systems: the top 4 largest corporations accumulate 100%.
Search engines: the top 4 largest corporations accumulate 98.2%.
Beer: the top 4 largest corporations accumulate 50.3%.
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I also think the government and other institutions should support small entrepreneurs with redistributing tax credits from big companies. Quite the opposite of what’s going on today.
Large concentration of power needs always to be seen with suspicion, particularly when it forms outside of the democratic process. Democracy, with all its weights and balances through the division of executive, legislative and judicial branches, allows broad participation and is the best system we have so far. We should treasure it, protect it from corruption and too much influence of the powerful. This collusion between government and big business seems very unhealthy.
Have you looked into the Bill Gates foundation for just a minute? This is a huge private entity not dissimilar to a corporation or an investment fund in many ways, with the added glow of carrying a charitable purpose and having previously unseen powers, way out of the ordinary.
The influence this private entity has in international global health organisations like the WHO is quite amazing. Critics also look at the foundation approach toward the agriculture of small-holder farmers around the world on one side and the close links to agricultural multinational giants, with a history of shady practices, like Monsanto and Cargill.
Staying on the food theme, junk manufacturers enjoy a very cosy relationship with regulators, so much so they can advertise their toxic stuff to kids and continue to fuel a global obesity epidemic.
The system at the top is very friendly and connected, with industry executives moving into regulators with supposedly independent oversight. Support is regularly shown through favourable laws, tax cuts and loopholes all the way to unlimited funding with quantitative easing.
If you fully understand what happened with quantitative easing, you’d be amazed.
Governments and central banks were all out to support the banking system in 2008, that’s when the market economy was lifted through the public hand and those private financial institutions were quite literally bailed out. Capitalism when they like it, state and public money when needed.
Huge flow of cheap capital was made available to banks and corporations and inflation in prized assets and financial instruments began to spiral.
As the real economy lingered and the middle class with it, the Great Recession increased the wealth and power gap between ordinary citizens and the elite.
The same happened recently through the pandemic crisis when the real economy tanked and the stock market artificially sored, at the same time. The opposite of a market economy.
After so many years of monetary expansion, now inflation has eventually impacted the cost of bread and butter and we are all paying for it. The impoverishment of middle and working classes that started in 2008, continues to the advantage of the rich and powerful.
You’ll also notice big business gains the regular and pretty much overwhelming indulgence of the mainstream media.
“Brought to you by Pfizer” is a well known slogan in recent times, as corporations command big advertising money to sponsor the content and narratives they like. Read my previous post on the media here.
On top of this, the likes of Google and Meta are “media” themselves, with the added advantage of being able to track, real time, global reactions to stories and then prioritise or, in other words, arbitrarily direct audiences to a narrative or another.
I think few people fully recognise the huge power of owning our data and everything around it. Location services are on, my phone has a complete history of where I have been the past few years.
Tech companies have the means to profile and target individuals based on a multitude of characteristics and sophisticated segmentations.
All this data results in the ability to understand personalities and predict behaviour to manipulate individuals’ commercial, cultural and political action. Is this the ultimate power? Awareness and scepticism for media and corporations is the first step towards finding a solution.