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Do tech monopolies stifle or spur innovation? Show more Show less

A technological monopoly occurs when one company exclusively controls the right to sell a service or product. A company that holds a technological monopoly is free to set prices as high or as low as they want, due to the lack of competition in the given field. This debate is centered on the role of the government in the economy and whether tech companies have an incentive to self-regulate their innovative capabilities.

Tech monopolies lack competition and the desire to innovate Show more Show less

A monopoly allows innovation to be a choice. A company that innovates out of necessity is innately more innovative than a company that chooses to do so.
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Antitrust reasoning

Antitrust laws were created to encourage competition, and 120 countries have adopted some form of antitrust law.
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antitrust economy monopoly technology

Context

The Argument

120 countries have antitrust laws,[1] and a big reason for the adoption of most of these laws is the competitive markets that the laws create. The United States' Federal Trade Commission cites protecting the process of competition for the benefit of consumers as the main reason for U.S. antitrust laws. The FTC elaborates, stating that ensuring businesses operate efficiently, keep prices down, and keep quality up is also of primary concern.[2] To achieve these three things and maintain profitability, a company must be innovative. In short, antitrust laws across the globe help ensure innovation is not stifled by monopolies. Antitrust laws are the only way that the consumer can be certain that innovation is occuring. Tech monopolies allow companies to have a choice in innovating. If a company chooses not to innovate, they may do so. They have control of the market, and there is nothing driving them to improve on a proven concept. Thus, a tech monopoly may have adequate funding to innovate but it may lack the drive.

Counter arguments

Antitrust can slow down R&D: "Many U.S. companies that do business in Europe often face scrutiny from the European Union, under what it calls “competition policy.” For example, the European Union fined Google $5 billion in 2018, a significant amount of lost capital that could have created consumer value instead. Google’s parent company, Alphabet, spent $16.6 billion on research and development in 2017. If Google did not fear losing revenue to competitors, it would feel no need to spend such resources to improve its offerings." [3]

Framing

Premises

[P1] Antitrust laws have been implemented all over the world. [P2] This is in large part because monopolies stifle innovation.

Rejecting the premises

Proponents

Further Reading

References

  1. https://insights.som.yale.edu/insights/how-do-you-enforce-antitrust-law-in-global-marketplace
  2. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws
  3. https://cei.org/content/the-case-against-antitrust-law

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This page was last edited on Saturday, 9 May 2020 at 12:40 UTC