Big tech has two faces. One face presents a new form of company: inclusive, socially liberal, very much with the zeitgeist, supporting the Democrats rather than the Republicans, and different from anything that has gone before.
Strip away the makeup and a different face appears: the face of a monopoly seeking to protect itself from rivals. Over the years, the giants of Silicon Valley have used their financial clout to buy up smaller companies that might pose a threat to their market power.
Facebook’s acquisition of the online image platform Giphy was simply the latest example of big tech gobbling up the competition, because in their time Amazon, Google and Apple have all adopted the same tactic. This is not a new form of capitalism: it is the old form of capitalism tarted up.
To its credit, the UK’s competition watchdog has now seen enough of this sort of anti-competitive behaviour and insisted that Facebook sell Giphy in its entirety – the first time it has demanded a deal involving one of the big tech companies should be unwound.
The ruling by the Competition and Markets Authority said the acquisition would increase Facebook’s already “significant market power” in two ways – by driving traffic to Facebook-owned sites and by forcing rivals such as Twitter and Snapchat to provide more user data to access Giphy gifs.
Britain’s regulators are sometimes accused – often with justification – of being captured by the companies they are supposed to be keeping in check. That criticism cannot be levelled at the CMA, which has proved it is a watchdog with real teeth.
No question, the CMA’s decision to take on Facebook over Giphy represents an escalation of the battle between the regulators and big tech. At stake is more than simply a matter of ensuring competition between social media platforms and that innovation is encouraged rather than stifled – important though those issues are.
The new monopolists are as rich as the robber barons of yesteryear, but wield far more influence. The CMA decision is important because it suggests regulators are starting to ask themselves a simple question: can this power and influence be wielded responsibly or does the public interest require big tech to be broken up in the way Standard Oil was dismembered in 1911?
Turkey’s president, Recep Tayyip Erdoğan, must have been delighted by his country’s latest growth figures. Output was up by 2.7% in the third quarter, 7.4% annually, and is now 12% above its pre-pandemic level. For Erdoğan, that will be proof that the faint-hearts are wrong to doubt his unorthodox approach to economic policy, in which the response to rising inflation is to cut interest rates rather than to raise them.
Maybe Erdoğan is the maverick economic genius he clearly thinks he is. But after instructing the central bank to cut interest rates for three months running, inflation is approaching 20% and the currency is in freefall. Its latest fall on Tuesday took it to a record low against the US dollar.
Erdoğan’s response has been to say Turkey is fighting an economic war of independence. If that is the case, it is a war his country is losing. The third quarter growth figures are now ancient history and the economy is certain to contract in the final three months of 2021. Hyper-inflation looms and at some point the brakes will be slammed on. It is a question of when not if.