Is the digital arms race leading to monopolies?

Posted 5/12/19

This week Chris

Hughes, the co-founder of Facebook, submitted an essay to the New

York Times in which he called for the social media juggernaut to be

broken up. He argues that the Federal …

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Is the digital arms race leading to monopolies?

Posted

This week Chris Hughes, the co-founder of Facebook, submitted an essay to the New York Times in which he called for the social media juggernaut to be broken up. He argues that the Federal Trade Commission should enforce existing antitrust laws and undo the 2012 and 2014 acquisitions of Instagram and WhatsApp. Additionally, Hughes insists that Facebook and CEO Mark Zuckerberg should be banned from future acquisitions for “several years.”

 

“We are a nation with a tradition of reining in monopolies, no matter how well intentioned the leaders of these companies may be,” Hughes said in his essay. “Mark’s power is unprecedented and un-American.”

 

While Facebook's growth and consequential near-monopolistic control over the social media market is startling at best, it is but one company of many doing the same thing.

 

Netflix changed the way the world consumes entertainment. Suddenly traditional broadcast and cable television became antiquated when viewers realized they could stream their favorite shows and movies for a fraction of the cost. World Wrestling Entertainment (WWE) was one of the first to launch their own “over-the-top” streaming service. WWE already owned several thousand hours of their own and former competitors' video content to support the new platform. But for others it has been an arms race to acquire as much content as possible.

 

The Walt Disney Company recently announced the future launch of its own streaming service, Disney+. Disney had already acquired Marvel Entertainment in 2009 and Lucas Films in 2012, but even with the likes of “The Avengers” and “Star Wars” under their umbrella, Disney's plans to rival Netflix and Hulu relied on more exclusive content. In March of this year, The Walt Disney Company's purchase of 20th Century Fox was completed.

 

With the Fox acquisition, Disney is now one of only six companies that control the overwhelming majority of American news and entertainment. The others are GE, Newscorp, Viacom, Time Warner and CBS. Those six parent companies control the likes of CNN, The Fox News Channel, The Wallstreet Journal, NBC News and others. Let that sink in, only six big corporations influence the opinions of millions in this country. Those companies control the mass majority of the entertainment we all consume on a daily basis, reaching and affecting millions of Americans every day.

 

The expansion of big corporations has not only affected video content. Seven out of fifteen Microsoft acquisitions in 2018 were video game development studios. After taking heavy losses to Sony's Playstation 4 console this generation, the company behind the “Xbox” shifted its focus to streaming. Microsoft's “Game Pass” saw a record number of subscribers according the company's second quarterly earnings report for fiscal year 2019. For that growth to continue, Microsoft, like Disney, needs to grow their library to support the Xbox's own streaming service.

 

As cord-cutting and streaming have become more and more prominent in our lives, so has the desire to bring first-party content directly to consumers. Amazon, Netflix, Hulu, Disney and so many others are seeking out intellectual property to deliver it straight to our screens, and in turn increase their own value.

 

Facebook has enough problems as of late with privacy issues. Perhaps Chris Hughes is right and antitrust laws should begin to be enforced, but in the midst of a digital arms race among nearly every entertainment content provider around the globe, Facebook is not the only company gobbling up intellectual property. In all likelihood before today is over, everyone reading this will watch, listen or play something produced by one of just a select few mega-corporations controlling most of America's entertainment.