Throughout the global economy, big companies are getting bigger. They’re more productive, more profitable, more innovative, and they pay better. The people lucky enough to work at these companies are doing relatively well. Those who work for the competition aren’t.
How Software Is Helping Big Companies Dominate
Throughout the global economy, big companies are getting bigger. They’re more productive, more profitable, more innovative, and they pay better. The people lucky enough to work at these companies are doing relatively well. Those who work for the competition aren’t. Research links this trend to software. Even outside of the tech sector, the employment of more software developers is associated with a greater increase in industry concentration, and this relationship appears to be causal. The result is that large firms are gaining market share. The question is why some companies are so much better at developing software than others – and why their innovations don’t seem to be diffusing to their smaller competitors. And the challenge for policymakers worried about industry concentration, markups, and the power of giant companies is to spread the benefits of the digital economy – of software – more broadly. Antitrust may be able to help in extreme cases, including in reining in the tech platforms and their ability to buy up competitors. But policymakers should also consider ways to help software and software capabilities diffuse throughout the economy.