Request Information from Booth

Loading...

  • Select
  • Submit
  • Success
Microchip in form of chessboard

The tech startup sector is full of new ventures jostling for funding, and only a handful of them become successful. But at the more mature end of the tech sector, a few giant companies control the vast majority of online advertising. Google and Facebook have tremendous power to limit competition while they benefit from user data harvested from “free” use of their services, argues Chicago Booth’s Luigi Zingales, director of Booth’s Stigler Center for the Study of the Economy and the State. Zingales and Chicago Booth’s Raghuram G. Rajan, find that big tech firms stifle innovation when they buy up promising startups.

The Stigler Center’s Committee on Digital Platforms has studied the degree of market power digital platforms enjoy and the way this market power harms consumers. The tech giants have less incentive to innovate, maintain the quality of their services, or refrain from even more aggressive data-collection practices if their users don’t have alternative services to turn to. Limited competition in the market for online advertising could also drive up costs for advertisers, which could in turn result in higher prices for those companies’ customers. And as Zingales has argued, tech firms’ dominant position threatens to distort not only markets but the political system as well.

What can we do about it? One important step we could take, Zingales says, is to draw upon the regulatory playbook from the dawn of the telephone industry, in which networks were made to work together to allow their users to call each other. Such forced interoperability between digital platforms could help restore competition online.

Are Google and Facebook Monopolies?

Facebook is efficient. But so was Standard Oil, Luigi Zingales argues, in this excerpt from Chicago Booth Review's The Big Question video series.

Interested in the Full Articles?

Discover these stories and much more at Chicago Booth Review.

Email icon

Insights to Your Inbox

YOUR PRIVACY

We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.

Sign Up for Booth Insights

Booth Researchers are Answering Questions and Questioning Answers

Through their data-driven insights, our researchers are tackling some of the world's biggest global issues. Explore more research from Booth.

Questioning Answers in the Classroom

The Chicago Approach to business education—Booth’s educational philosophy—will teach you how to turn any business challenge, no matter how small or large, into an opportunity. Learn how our transformative curriculum helps our students to ask better questions and discover better answers. No matter which MBA program you pursue—Full-Time, Part-Time, or Executive—you get the same transformative academic experience, the same world-class faculty, the same influential network, the same dynamic community.

MBA Programs

More Resources

The Executive MBA Program is registered under the Hong Kong Education Bureau. Registration No.: 262427. It is a matter of discretion for individual employers to recognise any qualification to which this course may lead.

Share With Your Network