The New Digital Monopoly Capitalism

The New Digital Monopoly Capitalism

Capitalism has always been marked by relentless growth, the destruction of smaller businesses by larger, and ultimately the creation of oligopoly and monopoly corporations. From the earliest descriptions of capitalism, even by proponents like Adam Smith, this tendency towards concentration was warned against. In the US this feature of capitalism has engendered repeated efforts by progressive political forces, representing working and middle classes and small business owners, to use government to create protections against the negative outcomes of oligopoly and monopoly. The excesses of the Gilded Age were curbed by anti-trust legislation of the turn of the 20th century. Politicians of both parties supported this legislation and conducted active enforcement. Famously John D. Rockefeller’s Standard Oil was broken up in 1911 after decades of predatory anti-competitive price fixing and market manipulations.

In the last fifty years the Federal government has significantly decreased it enforcement. This has been a central policy plank of free-market capitalist politicians. The resulting changes in law and policy have lead to a significant increase of concentration in every sector of the economy.

The new digital economy is now following the same path of concentration

The new digital economy is now following the same path of concentration. This is of increased importance because the digital sector has become a large component of the overall economy. The big five, Apple, Amazon, Alphabet (Google), Facebook and Microsoft now represent more than $3.3 trillion in market capitalization. Their price growth in 2017 accounted for more than 25% of all S&P growth for the year.  And, of course, they are ever present in our day-to-day lives.

Google and Facebook are now approaching oligopoly status in their control over advertising spending. These two charts extracted from an article by Peter Kafka at, “These two charts tell you everything you need to know about Google’s and Facebook’s domination of the ad business: Scary! (If you don’t work at Google or Facebook.)“ are illustrative:Compound annual growth rate of domestic advertising


Nathanson notes: “You can see that the Facebook/Google duopoly ate the print guys’ lunch many years ago, and finally surpassed the TV guys last year. The good news for the TV guys is that their business has yet to collapse. Which is a pretty grim way to describe “good news.””

Spread the word: share this on Facebook, Twitter or your favorite social platform. Email your friends.