"Power grows and is abused when the victims have no recourse."
I’ve been thinking about power, how it’s gained, how it’s used. In the pandemic, powerful countries have been accused of everything from vaccine hoarding to vaccine politics. Individuals have been accused of using their personal power to jump vaccine priority lines.
The use and misuse of power is not limited to politics or personal interaction. It extends to business activities and management decision-making.
Power and the New Economy
In business news, Facebook is fuming over an Apple iOS update that threatens its over US$86 billion in ad sales. Tile CEO CJ Prober has alleged that following Apple’s introduction of Air Tags, a product that essentially competes with Tile’s object trackers, Apple made changes to its iOS that made it more difficult for Apple’s Find My app to enable Tile.
Horacio Gutierrez, Spotify head of global affairs, calls Apples App Store fees an “Apple Tax.” The “Apple Tax” also exists for customers. Many mobile apps that are free to download on Google’s Google Play come with a fee to download on Apple’s App Store. Both companies have been accused of using their dominance to charge exorbitant fees, as much as 30 percent commissions for paid downloads.
In business, strategy is focused on gaining competitive advantage. Essentially, competitive advantage allows a company to dominate its market. Of course, when a company becomes too big, then it gains the power to behave in a manner that is inimical to customers. This happens when a company is so big that no competitor is strong enough to challenge its dominance. To guard against this, most countries have anti-trust laws meant to prevent monopolies and ensure that a certain degree of healthy competition exists. These laws are meant to curb corporate power.
In the United States, senators are investigating Apple and Google over claims that cooperation between Apple’s App store and Google’s Google Play constitute a violation of anti-trust law. Representatives from Spotify, Tile and Match have accused the two firms of charging exorbitant fees, including mandatory fee sharing arrangements. Epic games, makers of the popular mobile game Fortnite, is suing Apple over what it calls exorbitant charges.
Apple has come under fire for copying the ideas of developers and creating an unfair playing field like using its control over the platform to hurt the usability of competitor products.
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has declared that Google and Apple not only dominate the app store space but also compete with developers. He expressed concerns about the two companies forcing developers to use Apple and Google’s own payment systems for any in-app purchases. Spotify, a direct competitor of Apple Music, has said that Apple’s rules make it impossible for Spotify to inform customers that the service is cheaper if bought away from the App Store.
The ACCC has suggested the two companies give developers and users more control over purchases, including allowing users to remove and replace Apple and Google pre-installed apps from their phones. Developers are not the only companies hurt by platform dominance. While Google forces developers to share income, it routinely uses content from newspapers and other publishers without payment. The ACCC’s warnings follow the passage of an Australian law that forces Google and Facebook to pay for news content on their platforms.
Meanwhile, in China, regulators have mounted antitrust investigations on its tech sector. Pundits trace the recent clampdown to an investigation of the Ant group and Alibaba on antitrust issues following Jack Ma’s 24 October speech when he criticized China’s regulatory system. A few days after, the Ant Group’s $37-billion initial public offering was suspended and the Ant Group scrambled to distance itself from its founder. It seems difficult to imagine that the industry-wide clampdown was caused simply by Jack Ma’s speech. After all, Ma’s speech was a reaction to planned regulations that would require FinTech companies to be regulated like other financial institutions, including requiring better capitalization. Other investigations involve data tracking activities and potential regulations to put such activities under government regulation.
Whatever role Jack Ma’s harangue of government regulators played in current regulatory scrutiny, two things are clear. China is bent on reining in the power of some of its largest businesses. And Jack Ma has certainly fallen from grace.
In the United States, the announcement that Bill and Melinda Gates have agreed to divorce has opened a flood of unflattering news about Bill Gates. Gates, long portrayed as likable nerd and global philanthropist, is now having to deal with news about office affairs, preying on female employees, and generally creating an uncomfortable work environment for women, one in which sexual predation by men became acceptable.
While there may be comfort in knowing that neither Jack Ma nor Bill Gates got away with teasing fate, the reality is that both individuals managed to accumulate so much personal power that they felt they could do whatever they wanted and get away with it.
The reality is that power can be abused. Some say power corrupts. Some people say power attracts those who will abuse it. Both are probably true. Most importantly, power grows and is abused when there is no sufficient balance and those who are abused have no recourse. It is the job of government to rein in power. Antitrust regulations are one of them. Is it enough? What do we do in a world where, more and more, businesses are growing more powerful than countries?
Readers can email Maya at firstname.lastname@example.org. Or visit her site at http://integrations.tumblr.com.