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The new digital monopolies

The major players in the new digital economy are attaining tremendous positions of dominance.

This iconic 1904 political cartoon depicts the business colossus of its day, Standard Oil, as a far-reaching octopus.

Only the wildest dreamers of earlier generations could have imagined the everyday wonders we take for granted in the digital age.

In our purses and in our pockets, we carry devices that are exponentially more powerful than the computer banks that once filled entire rooms. While standing in line at the bank or having a drink at the bar, we can instantly summon virtually any bit of knowledge that’s ever been created by the human mind.

We’re never lost. We never lack answers. We’re never out of touch, unless we choose to be. You can call it a blessing, or call it a curse – I call it both.

But we’re so enraptured by our digital devices, and how much easier they make our lives, that I think we’ve failed to notice how much control we’re ceding to a handful of increasingly powerful businesses.

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In the late 19th and early 20th centuries, at the peak of the Industrial Revolution, dozens of U.S. industries were controlled by trusts that squeezed out competition for the benefit of that era’s “one percent.” The biggest trust of all, Standard Oil, made John D. Rockefeller Sr. the first billionaire.

I thought about the trust era as I read through “U.S. Digital Future in Focus,” an annual report on digital media issued by comScore Inc. Why? Because the major players in the new digital economy are attaining tremendous positions of dominance. For example:

  • Google has 68 percent of the Internet’s search traffic.
  • YouTube (owned by Google) has half the Web’s video traffic.
  • Facebook controls 28 percent of the Web’s display advertising and accounts for 1 of every 7 minutes consumers spend online.
  • Android and Apple combined have more than 75 percent of the smartphone market.

I understand why these companies have been able to attain such dominant positions. Simply put, they earned their success by building a better mousetrap.

And I also understand that things can change quickly in the digital economy. It’s easy to forget that Facebook didn’t launch until 2004 and YouTube until 2005. In 2003, pre-iPod and iPhone, you could have bought a share of Apple stock for about $7. That share today would cost you about $520.

Meanwhile, Blackberry maker Research in Motion has lost nearly 90 percent of its market value in the last three years. And the Palm Pilot, once a leader in personal digital technology, is extinct.

So, change is a given, and maybe we shouldn’t worry about the prospect of a few companies controlling the technology and social networks that we’ve all come to rely on as essential to the daily routines of life and work.

All I’m saying is, if we’re going to turn over the running of our lives to Apple, Facebook and Google, let’s at least be aware that we’re doing it.