- Position1 of 2›
- Tech monopolies have a financial incentive to innovate.
- Argument‹2 of 2
The power of data
Monopolies have an immense amount of resources at their disposal. These resources can be used to gather data, which is especially useful in the tech sector.
The argument
This argument holds that the size of the large technology companies is not an obstacle to innovation but the thing that enables it, because the resource innovation now depends on is data, and data accrues to scale. Data is an extremely useful tool for innovation, and the problem many smaller technology companies run into is simply not having enough of it. A small firm may have talented engineers and a good idea, but it can only observe its own limited pool of users, which is rarely large enough to reveal a reliable pattern rather than noise. Tech giants such as Facebook and Apple gather immense amounts of data as a direct result of their size and customer base. With it they obtain a far more complete understanding of a given person's habits, and they can innovate on the basis of consumer patterns rather than on guesswork about what users might want. That is the straightforward version of the claim: scale produces information, and information directs development. The argument then makes a second and less obvious point. The act of gathering the data is itself evidence of the innovative capacity of monopoly-like companies. Recording consumer activity across a customer base of that size, storing it and processing it into something usable is a substantial engineering problem in its own right, and doing it accurately enough to predict future activity is harder still. If these so-called monopolies can engineer a way to do both, that achievement demonstrates ingenuity and innovation regardless of what is subsequently built with the results. The conclusion drawn is that dominance and innovation are not in tension in this industry. The largest firms have the strongest position from which to innovate, and they have already demonstrated the capability in the process of reaching that position. On this view the power of data shows that tech monopolies have both the incentive and the capacity to innovate.
Premises
Counter-arguments
The tech giants Apple, Amazon, Google, and Facebook have been found to not be monopolies, though there are multiple probes still ongoing. Thus, they can not be used as examples of tech monopolies.
Rejecting the premises
[Rejecting P1] These companies are not really monopolies.