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Modern Computing Alliance: a tech monopoly under another name?

Fri 18 Dec 2020

As Facebook faces allegations of illegally monopolising social media, other tech giants are forming a new alliance. But how is the Modern Computing Alliance, and other groups like it, different from monopolising technology to shut out smaller companies?

The recently-created Modern Computing Alliance is bringing together some of the biggest names, and largest budgets, of the technology world. Google, VMware, and Dell – along with remote-working staples such as Slack and Zoom, have combined their intellectual and financial powers to a common goal:

To drive “silicon-to-cloud” innovation – fueling a differentiated modern computing platform and providing a preferred choice for integrated business solutions.

This may raise concerns for smaller technology companies, hard-pressed to compete against the big names in tech. The five largest technology companies (Amazon, Apple, Alphabet, Microsoft, and Facebook) have combined revenues of $900 billion per year, equivalent to the GDP of the 18th largest country in the world.

How does this affect competition?

A small tech company, or startup – even one that has successfully secured funding – may be unable to compete with the resources of one of these companies alone. Antitrust legislation was created to ensure that some level of fair competition can be maintained in the market, to benefit consumers at large.

Competition benefits consumers by improving choice and innovation, while keeping prices low and the quality of goods and services high.

Antitrust charges are often levied against a single company, particularly when a merger or acquisition is proposed that would give the company too much power in the marketplace. One of the key points in the Federal Trade Commission’s (FTC’s) charges against Facebook is the acquisition of Instagram, which has been construed as providing Facebook a foundation for a social media monopoly.

U.S. Government investigates big four

In October, the U.S. government released a report that accused four of the largest technology companies – Amazon, Apple, Facebook and Google – of illegal monopoly; and called for sweeping changes to antitrust regulations.

Shortly after, the U.S. Justice Department accused Google of having an illegal monopoly over internet search and search advertising. In 2017, the EU levied a then record-breaking fine of 2.42 billion against Google for similar antitrust activities. Over the next few years, the EU followed up with a 4.34 billion fine for requiring Google installation on Android products, and 1.49 billion in 2019 for search advertising, again.

Can a consortium be a monopoly?

Antitrust allegations are not always levied at a single company– they can also be made against a group of companies that form an alliance to allow practices such as price-fixing. The mission of the Modern Computing Alliance is not focused on limiting price; however, it could have the long-term effect of limiting consumer choice. This would make it a monopoly, for considerations of antitrust legislation.

If the Modern Computing Alliance is successful, it will create a platform for integrated business solutions; one that will likely involve the integration of key members of the alliance. Google Chrome, VMWare virtual machines, Okta identity protection; Google Workspace, Slack & Zoom for distributed workforces: a single solution for SMBs and enterprises alike.

Combining these products into a single platform may have a similar effect to Facebook’s acquisition of Instagram: unfairly limiting competition among technology providers. The platform will be targeted at integrating across four main areas: security/identity, performance, healthcare, and workplace productivity.

Will the alliance welcome new members?

In a blog post announcing the alliance, John Solomon, Vice President of Google OS, said, “The technology industry is moving towards an open, heterogeneous ecosystem that allows freedom of choice while integrating across the stack.” However, it remains unclear as to how a group comprised of industry giants would be effective at creating an integrated full-stack platform that would be open to innovations from smaller competitors.

Solomon also shared with the Verge that the idea for the Modern Computing Alliance originated at the Consumer Electronics Show in Las Vegas last January. When COVID-19 struck, and businesses began a rapid shift to remote work, the Alliance invited Slack and Zoom to become members as well.

The Modern Computing Alliance hasn’t announced whether they will be inviting members from any other companies, but they have invited IT professionals to apply for membership individually. But somewhere between membership of technology giants, and membership of individual IT practitioners, small companies and startups are apparently left behind.

Tags:

competition modern computing alliance
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