We do not have an exact metric to determine when a company`s size starts to become a problem. Today, the biggest 5 companies in the S&P 500, Apple, Microsoft, Amazon, Alphabet and Facebook account for more than 28% of the index weighting and more than 25% of s earnings, according to Goldman Sachs.
The US faced a similar scenario at the beginning of the century when Oil, Railroads, Steel and many other sectors were controlled by enormous companies, the resolution was to break the companies apart to benefit consumers and avoid rent seeking monopolies and predatory behavior.
Even after the breakup, many of the resulting companies still possessed an enormous amount of power, both economic and political. Take Exxon as an example, it was one of the emerging companies after The Standard Oil Company was broken up, which a t the time was the biggest company in the world.
Almost 100 years after it was born, Exxon was the biggest company in the world and also regarded as the most powerful unelected force by Steve Coll, the author of “Private Empire: ExxonMobil and American Power”, at the peak of its power in 2012, who also narrates how it helped steer US foreign policy and its influence on governments abroad.
Forward to 2020, Exxon was expelled of the Dow Jones index and now is worth less than Jeff Bezos, nobody could have predicted in 2012 that the demand for oil would suffer such a dramatic change. But as it happens in politics, in business, the void left by Exxon on government influence was quickly filled by todays tech giants.
Apple is an active player in US-China relations and has been an important intermediate for both governments; Facebook has recently been called out for its power to manipulate elections and for being fertile ground for extremist groups; Google has thousands of people in Washington ensuring regulations benefit them and Amazon has been many times accused for violating workers’ rights and for mismanagement of its client’s personal information.
All five of today’s biggest companies are in the spotlight, calls for a new regulatory framework that would limit the companies size and its influence are heard all over the press and academia. Maybe more important than its size, regulation should handle the way these companies interact with users, making privacy a priority, enforcing freedom of speech which includes banning racism, sexual content, and any networking for illicit activities and, finally, making it illegal to design software with the purpose of it being addictive.