Do tech monopolies stifle or spur innovation?

Encyclopedia of Opinion

Question: Do tech monopolies stifle or spur innovation?
Position1 of 2›: Tech monopolies have a financial incentive to innovate.
Argument‹2 of 2: The AT&T example

AT&T's monopoly in the 20th century allowed it to make technological strides.

The argument

AT&T was a large tech monopoly during much of the 20th century, controlling most of the communication market in the U.S. and Canada. The ability to set prices allowed AT&T to fund long-term research and development for some highly-regarded innovations, such as the transistor. Without the ability to set prices, AT&T would not have had the necessary capital to fund long-term projects like the transistor. The transistor took more than 15 years before it began to develop into what it is today: hardware used in nearly every digital computer. A smaller tech company without a monopoly would not be able to invest the resources needed for long-term innovations like this because the effect it would have on their bottom line would not be sustainable. Further, these long-term innovations foster others: the transistor developed in the 1940's gave rise to the microchip developed in the 1960's.

Premises

[P1]As a 20th-century communications monopoly, AT&T's power to set prices gave it the capital to fund long-term R&D behind celebrated innovations like the transistor, which took more than 15 years to mature. [P2] A smaller company without monopoly pricing could not sustain such long-horizon investment, and these breakthroughs compound—the 1940s transistor gave rise to the 1960s microchip. [C] Because monopoly profits let AT&T fund innovations no smaller firm could, tech monopolies have a financial incentive to innovate.

Counter-arguments

This is assuming that the company relies solely on its monopoly for profit. If a company is large enough, it may have the ability to diversify its assets without innovation.

Rejecting the premises

[Rejecting P1] Though they may use some of the profit for innovation, the immense amount of capital at their disposal allows them to simply buy out competitors when they begin to appear.