Massive tech profits should increase competition, not kill it / by kevin murray

As it has been said, the rich get richer; of which, while this is true of well placed people, it is absolutely also true of some of the biggest and most gargantuan of corporations.  Most people, have an immense difficulty in truly comprehending how large, and how much business is conducted by companies such as Microsoft, Facebook, Alphabet (Google), and Apple which is demonstrated by the revenue so generated by each of them, each year; of which, in 2018, Apple did as reported by visualcapitalist.com, $265.5 billion in revenues, whereas the company of these four, that had the lowest amount of yearly revenue, was the free social media site, Facebook, which still did an outstanding $55.8 billion.  Keep in mind, that these revenues are just for one year, of which, each of this mighty technology companies are still growing and therefore increasing their revenues, year by year, which are already currently, enormous.

 

To put things in perspective, about profits and profit margin, we read as reported by aei.org, "the average profit margin is 7.9% for all companies," which was surveyed for more than 7,000 US companies.  As reported by, visualcapitalist.com, for 2018, Microsoft's profit margin was 15.0%, while Facebook's profit margin was an astonishingly high 39.6%, and Apple as well as Alphabet's profit margin was each 22.4%.  These profit margins for these mega-technology companies absolutely crushes the average profit margin as reported by US companies, in aggregate.  So then, if we lived in a true free enterprise world, of which, the barriers of entry for upstarts were non-existence, and favoritism for those that are well connected did not occur, and of which, there was an abundance of both capital and an abiding desire of budding entrepreneurs to go after the market share of these, super-big tech companies, than invariably those tech companies would see their profit margins inexorably come under attack from these well financed upstarts and thereby these mega tech companies would invariably see their profit margins become more in line with other US companies.  In fact, what is actually occurring is the exact opposite of this, which is that those that are in charge of the regulation of these hi-tech companies and in particular are in charge of the enforcement of robust anti-trust legislation are apparently asleep at the wheel, or effectively have been compromised by these tech companies.  We know that this is true, by virtue of the fact that each of these tech companies has been permitted, time and time again, to buy out competitors and to thereby to add those merged-in companies to their skill-set, so as to thereby strengthen their formidable businesses in order to maintain and to increase each of their dominant positions.

 

The capitalistic system is driven by the desire to make profits, and thereby to increase one's market share as well as one's dominance vis-à-vis those that compete against them.  While we can give credit to those that absolutely command their business niche, for being successful at such, it isn't good that there are in essence, a few that essentially monopolize market share, and thereby are able to reap additional unmerited profits, above and beyond, what would be occurring if that market was more evenly divided between and with other competitors of real strength and merit.  The fact that this is not the case for these colossal hi-tech companies is proof positive, that our capitalistic system is broken.