Monopoly of Technocrats: How Digital Spaces Are Getting Eaten Up By The Giants

Posted on June 25, 2014 in Sci-Tech

By Rohit Sachdeva:

Facebook announced on March 25th that it had bought Oculus VR, a company which produces Oculus Rift, a virtual reality headset for around $2 billion. This deal which comprises $400 million in cash resting in Facebook stocks comes not long after Zuckerberg’s purchase of WhatsApp, a messaging application, for whooping $19 billion.

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Oculus, which got its start on the crowd-funding site Kickstarter, doesn’t have a consumer product in the market but it is just the promise of bulky virtual reality goggles that have generated a huge buzz in the video gaming community. Is this purchase at such a whooping price, justified?

In a span of 16 months, Mark Zukerberg has spent $22 billion on buying such start-ups (Instagram, WhatsApp and Oculus), with the exception of WhatsApp, which already had a well established market base.

“Mobile is the platform of today and now we’re starting to also get ready for the platforms of tomorrow. To me, by far the most exciting future platform is around vision or modifying what you see to create augmented and immersive experiences,” Zuckerberg said on a conference call discussing the deal. Indeed Zuckerberg’s speculation with Instagram proved to be correct when Researcher eMarketer released a report a few days back showing that Instagram at an average has 40.5 million active monthly users. Compare that to Twitter, which is set to grow to a little under 38 million active monthly users this year.

Like Facebook, Google’s trio, Larry Page, fellow co-founder Sergey Brin and Google Executive Chairman Eric Schmidt has made over 230 acquisitions since going public. Google’s biggest acquisition, a $12.4 billion purchase of troubled cell-phone maker Motorola Mobility, which further was sold owing to loss at $5.25 billion; YouTube purchase for $ 1.7 billion stock; and Android, world’s most famous buy in 2005; are few of the examples of major acquisitions which are yielding huge dividends.

This is what is happening in Silicon Valley but there is one more example of such acquisitions of technology in far east of the globe in Japan. Hiroshi Mikitani, CEO and Founder of Japanese e-commerce, Rakuten, paid $900 million for the Viber VOIP platform, which originally started as a competitor for Skype. But now, in Mikitani’s hands, it could become a competitor to Amazon instead.

In June 2013, Rakuten had bought a majority share in “citizen commerce” site, Daily Grommet, now The Grommet and US based logistics and services company Webgistix. Rakuten’s global presence has been reinforced through the acquisitions of leading online marketplaces Buy.com in US (now Rakuten.com), Priceminister (France), Ikeda (now Rakuten Brazil), Tradoria (now Rakuten Deutschland) and Play.com (UK), and investments in Ozon.ru, AHA Life and The Grommet. It also led a $100M round of funding in popular social sharing platform, Pinterest.

Few of the companies which dominate the global market have been mentioned in the table below along with number of acquisitions, mergers and revenue for the year 2013. Name the media app you are using and you will find the mention of it in these handful of companies. Baidu, Orkut, Friendster, Adsense, WhatsApp, Viber, Skype etcetera, all of these companies have been handled by the leading technology conglomerates.

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Another trend that these conglomerates have picked up is the acquisitions in the field of mobile technology and gaming softwares. Interestingly in the year 2013, majority of the companies have bought gaming and technology labs to spur the growth of innovative technology, assuming gaming technology will be a potential future market.

These activities are leading to the practice of monopoly of communication networks by few technology conglomerates. Not to mention, these companies have revenues which are equivalent to the GDPs of some developing countries of the world and further limited access to communication networks have created issues.

An example of it can be India’s helplessness during the Assam riots last year when Government of India wanted to access certain Facebook posts and get them removed but the delayed processing from the company became a cause of panic in the country.

Another problem which Cyber investigation Cell in India faces is the access of data of social networking websites. Numerous cases are pending in the Cell due to late reply from the headquarters of these social networking sites.

Edward Snowden in his NSA Security leaks pointed out this control of issues only where the whole network of communication, personal messages, pictures etcetera are handled by some companies, which when shared with the intelligence agencies, can pose a serious threat to Right of Privacy.

This monopoly of market in Technology is a threat not only to privacy but has serious implications in handling of data, which makes this data vulnerable to sophisticated hacking. In the world of technology, where everything will be on phone or some digital gadgets, such aspects of communication control will lead to detrimental effects.

This article was also published on the author’s blog.

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