Hills Road student Keir Bradwell was recently awarded Highly Commended in the RES Economics Essay Competition 2018 http://www.res.org.uk/view/essayEduTraining.html
Keir’s title for the competition was “Some internet companies have become too big for the good of society and should be broken up”. Do you agree?
Keir said “I argued against the statement, instead suggesting that better regulation and more effective taxation would solve the issues some internet companies present, without also nullifying the benefits of letting internet companies grow.”
To do that, I looked at how traditional competition policy was unsuited to thinking about the altogether less well-established, and more dynamic, nature of internet businesses. The replacement of once-dominant search engines AltaVista, Yahoo! and Lycos with Google is testament to the continued importance of R&D for big internet businesses. If R&D remains vital in order for larger companies to survive, innovation will continue, and consumers will benefit.
I also looked at a few other areas in which having large internet companies is beneficial - for example, the potential for small, innovative firms to get purchased by larger ones incentivises investment from venture capitalists in those smaller companies, aiding the development of new technology which would otherwise be unprofitable in the short-run.
Finally, I looked at the downsides to allowing huge internet companies to remain the size they are (poor working conditions in places like Amazon, for example, alongside difficulties in taxing supranational businesses, and the anticompetitive side-effects of data collection). However, rather than break companies up to solve these issues, I made a case for using employment regulations, carbon and land value taxes, and GDPR-style data regulation instead, which I thought would do less damage to the consumer-friendly fundamentals of large internet companies’ business models.
There were 1300 entrants to the competition - well done on being awarded Highly Commended Keir.