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The consequences of monopolistic behaviour

Some private investors might not care too much about what Elon Musk says or does, dismissing him as an outspoken maverick. Yet he is one of the world’s richest men (on paper at least) and also one of the most followed, with around 82mn followers on Twitter. 

Musk’s fans enjoy his audacious style, and in particular the handsome rewards his vision has reaped for them. He has driven Tesla to a market cap of more than $1tn in just 14 years, and has a string of businesses to his name. He’s never afraid of controversy or of sharing his views – this week he blamed Netflix’s dramatic share price drop on a “woke mind virus” making the streaming service unwatchable – and enjoys taking the markets on a merry dance. In the past, he’s been fined millions over misleading claims he was going to take Tesla private. 

Now his unorthodox approach to business has led him to set his sights on Twitter while at the same time mocking the company mercilessly on its own social media platform. He’s suggested it should be renamed Titter, and that if his bid succeeds the board’s salary would be $0 – “that’s $3m saved right there”. 

Although Musk belongs to that new breed of company boss – highly motivated entrepreneurs with vision and drive; think Jeff Bezos, Larry Page and Sergey Brin, Steve Jobs (and Steve Wozniak), Mark Zuckerberg – his provocative comments and unconventional approach set him apart. There is after all something quite bizarre about a $43bn bid (with drug references in the details) that no one is sure whether to take seriously. Nor do we have a clear picture what would happen if Musk gained control of Twitter. He seems to want to end censorship and bans on the social media platform, far more than he wants to unlock value.

If Musk is a true free spirit, the same cannot be said of his fellow superstar CEO club members. They too have grown their companies into entities of great wealth and influence, but the bosses of Amazon, Apple, Meta and Alphabet have also set in motion a dangerous monopolistic trend. They float above the rules that bind everyone else and run rings around the governments and authorities who are trying to end their stranglehold on markets and ease with which they snap up newly arrived innovators and rivals. Curbing their power is proving a very difficult task indeed. 

Their huge popularity among consumers and their exciting new technology helped distract regulators and other bodies from the dangers at first and enabled them to secure a degree of regulatory lenience as they grew. But the failure to challenge them until far too late has allowed the tech giants to cement their monopolistic position even further and to get away with a long charge sheet of abuses between them, stretching from avoiding tax, causing social harm, allowing surveillance capitalism (harvesting people’s data for profit) to develop, and stymieing rivals.

To be fair, it’s been hard to see the damage being done, and even harder to understand how to rein them in effectively. It’s why the task of breaking their hold on markets is so difficult and has been so ineffective despite a barrage of fines, warnings, legislative bills and acts, calls for their break-up, lawsuits, agreements and frameworks being flung at big tech in recent years.

Investors might not have minded any of this too much while they have been able to profit from it and have been caused little in the way of visible harm. But stifling competition is deeply damaging and goes way beyond the prices we pay for goods and services. It can destroy innovation and kill off economic growth. We should all be hoping that legislators targeting the tech giants are finally on the verge of offering real support for the delicate ecosystem that is the corporate world.