Activity 5.5: The rise of giant multinational companies
The Economist
September 2016
Examples
Apple
Corporate empires
Positives
Innovation
Provision of 'free' services
Negatives
Stifles competition
Changes
Global trend
Mergers & acquisitions
Share of GDP generated by America's 100 largest companies has risen to 46% (2013) - 33% (1994)
Using darker arts of management to stay ahead
Doubled since 1990s
5 larges banks account for 45% of banking assets (25% in 2000)
Number of startsups < any time since 1970s
More firms dying than being born
Self-correction argument
Modern technology reducing entry barriers
leaner firms will replace ineffectual ones
Contradiction
Slower growth enables companies to buy their rivals and squeeze out costs
High tech companies attraction to customers increases when they attract more users and gather more data
Approx 30% global FDIs flow through tax havens
Routine use of "transfer pricing" to pretend profits generated in one part of the world made in another
Lobbyists
Laws penalise small firms more than larger ones
Larger firms seem able to avoid tax obligations
Profits no longer translate into jobs
Remedial steps
Address tax avoidance
Limit concentration
Facilitate transfer of data for consumers
Restrictions on mergers and acquisitions
Prevent tech firms exploiting platforms they control
Ensuring people have a choice of ways of authenticating their identity online
Encourage competition