Tech Markets Are Dynamic and Competitive, Not Monopolistic

By SBE Council at 26 August, 2022, 1:59 pm

SMALL BUSINESS INSIDER PERSPECTIVE

by Raymond J. Keating –

Federal politicians and their appointees asserting that various U.S. technological leaders are monopolies that need hyper-regulation, perhaps to the point of government breaking up these companies, is striking for its ignorance and/or arrogance. In reality, technology markets rank as hyper-dynamic and hyper-competitive. And that of course includes current market leaders having to compete against current, emerging and future competitors.

If any doubts linger about this, consider a new report from Pew Research titled “Teens, Social Media and Technology 2022.”

The following chart from the report shows how much the social media landscape has changed in recent years among teenagers.

Source: Pew Research, “Teens, Social Media and Technology 2022

And consider the following summary from the Pew report as well:

“YouTube tops the 2022 teen online landscape among the platforms covered in the Center’s new survey, as it is used by 95% of teens. TikTok is next on the list of platforms that were asked about in this survey (67%), followed by Instagram and Snapchat, which are both used by about six-in-ten teens. After those platforms come Facebook with 32% and smaller shares who use Twitter, Twitch, WhatsApp, Reddit and Tumblr. Changes in the social media landscape since 2014-15 extend beyond TikTok’s rise and Facebook’s fall. Growing shares of teens say they are using Instagram and Snapchat since then. Conversely, Twitter and Tumblr saw declining shares of teens who report using their platforms. And two of the platforms the Center tracked in the earlier survey – Vine and Google+ – no longer exist.”

Indeed, what jumps out from all of this information is just how dynamic and competitive this market is. There’s no other takeaway possible on such issues.

Another Pew report showed how numerous were social media choices in 2021 (see the following chart).

Source: Pew Research “Social Media Use in 2021”

Any company thinking that they can play at being a monopoly and not be worried about competition would be doomed in such an environment. That’s especially the case when one considers that social media leaders like Meta (Facebook) and Alphabet (Google) are not just competing with entrepreneurs and businesses within the social media sector, but against entrepreneurs and businesses in a wide assortment of other sectors covering communications, entertainment, leisure activity, information, and so on. Again, all of this should be obvious, including to elected officials and their appointees.

In order to score political points, elected officials often like to pretend that markets can be frozen in time, narrowly defined, and monopolists easily identified. The realities of free enterprise tell us the exact opposite. Markets, in fact, are fluid, dynamic and highly competitive. One gets just a taste of that from this Pew Research data.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.