Debate Swirls As Power Of Tech Giants Grows… FACEBOOK Fail A Blow for Silicon Cult of Founder Control
With a handful of US technology giants growing more powerful and dominant, debate is intensifying on whether big tech’s growth is healthy or not.
Over the past few years, Apple, Google parent Alphabet, Facebook and Amazon have become among the world’s most valuable companies.
Along with stalwarts like Microsoft and rising stars like Netflix, the tech firms exercise enormous control over what people see and how they live.
Increasingly, policymakers and others have begun to consider breaking up or regulating the biggest technology companies, although imminent action appears unlikely.
While many consumers welcome innovation from the tech sector, critics have complained about the power of “gatekeepers” of information and other content.
Google holds around 90 percent of the internet search market in the United States and Europe. Facebook and Google scoop up some 60 percent of digital ad revenues and are eating up 90 percent of new ad growth in the United States.
Google’s Android and Apple’s iOS power the overwhelming majority of mobile devices. Amazon accounts for nearly half of US online sales and is expanding into new sectors.
– Concentration of power –
Barry Lynn, executive director of the Open Markets Institute, said three firms — Google, Facebook and Amazon — “have more power than any previous monopolies we’ve dealt with in the past century.”
“We have to be incredibly concerned about the power of Facebook, Google and Amazon,” said Lynn, who launched his research center last month after his team was ousted from the Google-funded New America Foundation.
“They have their hands on the flow of news, the flow of books and they are manipulating that flow in a conscious way to promote their interests.”
Even though the idea of taking on the tech giants appears extreme, the upheaval in US politics over the past year has brought together allies from across the spectrum worried about their concentration of economic power.
Facebook Fail Is Blow for Silicon Valley Cult of Founder Control
Zuckerberg scraps non-voting share class after investor suit
Key stock indexes are excluding poorly governed companies
Silicon Valley spent more than a decade finding ways to give company founders more control. When Facebook Inc. tried to follow suit, shareholders pushed back.
Google started it with a 2004 initial public offering that gave co-founders Larry Page and Sergey Brin voting rights well beyond their economic stakes in the search giant. Groupon Inc., Zynga Inc. and Facebook did it too, and this year Snap Inc. sold stock with no voting rights at all.
In each case, investors went along, buying into the argument that founders need control so they can carry out their long-term visions. Sometimes shareholders sued, and invariably lost.
In 2015, Facebook doubled down with a proposed new share class to solidify co-founder Mark Zuckerberg’s grip on the social media giant forever, even if he sold almost all his stock. Shareholders sued again, and this time they won. Facebook scrapped its plans on Friday, just days before a class action lawsuit challenging the move was set to go to trial.
“This really is the death knell for existing companies trying to adopt a non-voting share class,” said Ken Bertsch, executive director at the Council of Institutional Investors, a nonprofit group that advocates for strong corporate governance.