Zoom is the Exception Not the Rule

During the pandemic the importance of the tech industry as the main sector of future growth becomes ever more apparent. A prime example of this is the video conference platform Zoom, which is most likely going to have replaced many of the conference calls and in-person meetings that took place before the coronavirus outbreak. It is therefore surprising, that the current king of the hill for the video conferencing app war is not a subsidiary of the larger tech companies. While some may point to this as an example of innovation and competition in silicon valley, this is exception not the rule (at the time of writing this Zoom remained independent). Increasing the model for startups is to build only big enough to be bought by one of the large tech conglomerates leading to a big pay-day for the startup’s owners. This model is bound to lead to high market concentration and thereby less competitive market pricing and innovation. While it is true that tech monopolies such as AOL, IBM, and Microsoft have seen better days, the truth is that the tech monopolies failed because they could be outmaneuvered by slim startups that could delve into new spaces. In the current environment, the tech oligopolies have successfully created enough subsidiaries that there are no new markets to maneuver. Any new startups that do succeed, such as Zoom, are likely funded and run by the same insiders who control the major corporations that run the valley. The situation may continue to evolve and change, with the markets correcting themselves and getting back to a stable equilibrium. On the other hand, we may be witnessing the rise of the new (possibly more far reaching) corporate barons not seen since the gilded age.

About Brennan

Brennan is a fourth year economics major at the University of Puget Sound.

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