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Internet Companies: Market Concentration, Competition and Power

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Collectivity and Power on the Internet

Part of the book series: SpringerBriefs in Sociology ((BRIEFSSOCY))

Abstract

Based on a systematic review and evaluation of business reports, documents, statistics, literature and press releases, this article analyzes the market concentration and the expansion and innovation strategies of the leading internet companies Google, Facebook, Apple, Amazon and Microsoft. The findings invalidate any claims that a decentralization of the market and a democratization of the internet is taking place, or that research, development and innovation processes are becoming more open and collaborative. The five examined companies, as the operators of the core infrastructures of the worldwide web, shape the overall products and services offer of the internet, determine access to the web, structure the communication possibilities for users, and are the main drivers of innovation in this field. Not decentralization, democratization and open innovation but market concentration, control and power struggles are categories to adequately describe the fundamental dynamics of the commercial internet.

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Notes

  1. 1.

    The use of the term commercial internet refers to consumer-oriented economic offerings and markets, which is referred to as business-to-consumer (B2C) e-commerce in the economic literature. The internet companies examined here are predominantly active in this B2C sector. The latter is in fact relatively small compared to e-commerce as a whole, as that includes the economic activities taking place between companies (business-to-business e-commerce, B2B). “While the internet economy is generally thought of as enterprises selling to consumers, the vast majority of e-commerce is actually comprised of businesses selling to other businesses. In 2007, roughly 90% of global e-commerce was B2B” (Atkinson et al. 2010, p. 22).

  2. 2.

    The, at first sight, very low percentage of R&D in Apple’s total turnover (Table 1) should not be interpreted as a weakness. The group’s product portfolio, to which its R&D is dedicated, is fairly small. Moreover, its exorbitant growth rate over the last 15 years—from $5.4 billion in 2001 to just under $230 billion in 2017—invariably dwarfs the R&D intensity (as a percentage of R&D expenditure in relation to total revenue) (Apple 2001, 2017).

  3. 3.

    For example, Google itself points to “the vital role of open source software plays at Google” (https://developers.google.-com/open-source/) and Apple emphasizes that “Open Source development [is] a key part of its ongoing software strategy” (https://www.apple.com/opensource/). Amazon too uses “tons of Linux, not only to power all the servers that it uses for retail but also for Amazon Web Services—and in its own Kindle Device” (Brockmeier 2011).

  4. 4.

    The automotive industry, for example, has numerous suppliers; and in the pharmaceutical industry there are the many R&D-intensive start-up companies that exist alongside and in cooperation with the large pharmaceutical companies.

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  1. Institute for Social Sciences (SOWI VI), University of Stuttgart, Stuttgart, Germany

    Ulrich Dolata

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Dolata, U. (2018). Internet Companies: Market Concentration, Competition and Power. In: Collectivity and Power on the Internet. SpringerBriefs in Sociology. Springer, Cham. https://doi.org/10.1007/978-3-319-78414-4_5

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  • DOI: https://doi.org/10.1007/978-3-319-78414-4_5

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