Opinion | Playing monopoly in the digital age
The rise of tech monopolies creates a few winners and many losers
Recently, after years of dodging paywalls, I signed up for a New York Times (NYT) digital subscription. Paying ₹100 per month felt less burdensome than constantly clearing memory caches and using incognito mode plus a VPN. NYT had a circulation of slightly over a million at the turn of the 21st century, when physical editions still dominated the market. At that time, other major American cities like Los Angeles, Chicago, Washington, DC, San Francisco, Houston and Dallas each boasted a local newspaper with a daily print run exceeding half a million.
These figures did not convert to digital subscriptions in the same proportion. By 2019, The New York Times had 2.7 million subscribers online, The Washington Post counted 1.7 million, and next in line was the Los Angeles Times, with a mere 170,000. While NYT grew its newsroom, hundreds of local papers were forced to shrink theirs or shut down entirely.
The internet, once considered the herald of a democratic, decentralized discourse, has become the domain of monopolies. It gives everybody a voice but most remain unheard while a few garner a disproportionate amount of traffic and an even greater portion of revenues.
A decade ago, the four largest operating systems were installed on 60% of smartphones sold, while an assortment of smaller competitors held a 40% share. By 2019, virtually every new smartphone ran either on Apple’s iOS or Google’s Android. A similar consolidation has taken place across industries in most nations, although it is most prominent in technology and entertainment.
India is no exception. Single-screen cinemas are being replaced by multiplex operators, and local kirana stores superseded by supermarket chains. The telecommunications sector has witnessed Aircel and Reliance Communications file for bankruptcy, and Vodafone-Idea might be on its last legs, leaving the field to just two viable firms, Reliance Jio and Airtel. Indian e-commerce is dominated by Amazon and Flipkart, with only Reliance capable of grabbing a big slice of the market from them. Other duopolies include Uber and Ola in ride sharing and Zomato and Swiggy in food delivery.
The rise of monopolies (I use the term broadly, to include duopolies and oligopolies) has spurred antitrust investigations by bodies like the Competition Commission of India, but few result in more than a slap on the wrist for anti-competitive behaviour. One reason is that we tend to look at monopolies through the outdated lens of pricing, the idea that firms inevitably leverage dominance to overcharge customers. There is no evidence of this happening among contemporary monopolies, a few of which, like Google and Facebook, offer their services free. In fact, the rise of tech oligopolies has in many ways been a boon for consumers.
Reliance Jio’s cheap data plans gave millions of Indians their first taste of video streaming and online gaming. Amazon and Flipkart provide more choice at better prices than we could hope to find by trawling physical stores, and the ease of returning defective goods ensures customers rarely feel cheated. Uber and Ola taxi rides are priced competitively compared to conventional cabs and autorickshaws, while Zomato and Swiggy always have tempting meal discounts on offer.
There is, however, a bleaker side of our bargain with monopolies that deserves to be examined. When ride-hailing apps first came to India, they enticed drivers with lucrative promotions in order to achieve the required cab density. Later, while keeping the price of rides reasonable, they squeezed their “partners" to stanch their own losses. A number of drivers I spoke to during pre-pandemic rides complained they had to work 12-hour shifts seven days a week just to make ends meet while also paying off vehicle loans.
Zomato and Swiggy played a similar game with restaurant owners, who initially saw aggregators as an excellent means of boosting sales without significantly increasing costs. Eventually, the aggregators transferred more of the discounting burden to restaurants, whose regular business was suffering because of competition from those same food delivery services. As if this lose-lose situation was not bad enough, the aggregators used data they had collected on eating habits to create their own kitchens in direct competition with restaurant partners.
I can write about the conflict between Oyo and hotels, or the damage done to bricks and mortar retail by e-commerce, but all of it boils down to one fact: Power and wealth are increasingly concentrated in a few hands, leaving thousands of small business and self-employed workers at the mercy of monopoly operators.
There is no easy solution to the problem, and it would be hypocritical of me to pin the blame on monopolists, since I am an enthusiastic customer of so many of their products and services: I am typing these words on a Macbook Air laptop, using MS Office software purchased through Amazon. I will deliver the finished piece via Gmail, and post the published article on my Facebook timeline. Nor can I blame individuals like Amazon’s Jeff Bezos, Apple’s Steve Jobs, Facebook’s Mark Zuckerberg and Reliance’s Mukesh Ambani for winning a game played within widely accepted rules.
It is those rules we need to change, without throwing the baby of innovation out with the bathwater of inequality. To find new rules, we must first alter our mindset. We need to delink the fortunes of a few from those of the many, and stop treating the stock market as a proxy for the economy. The gap between the two has never been more apparent, with markets buoyant and the world mired in the worst economic contraction in decades.
Mukesh Ambani has moved steadily up the list of the world’s wealthiest individuals even as millions of Indians slip into poverty caused by a months-long forced separation from their livelihoods. It is facile to connect the two causally, but I wish we had less coverage of the former and more reporting about those facing the gravest crisis of their working lives.
Girish Shahane writes on politics, history and art.
FIRST PUBLISHED20.08.2020 | 09:00 AM IST