Digital concentration of power: the potential threat of new tech monopolies

Large technology companies are constantly expanding their global market power through network and economies of scale and creating natural monopolies in the digital world: leading US companies such as Amazon, Apple, Google, Meta and Microsoft control a large part of the digital infrastructure, including communication networks, e-commerce platforms, search engines and cloud services. This enormous digital dominance is increasingly generating concrete political ambition. In the newly published analysis “Digital Power Concentration: Increasing Dominance and Impending Risks of a New Tech Oligarchy”, the FERI Cognitive Finance Institute examines the dynamics of this development and warns of growing dangers for politics and society.

Digital dominance encourages political and social abuse

“Although the economic market power of large tech companies restricts potential competition, it is not initially dangerous per se for democratic societies,” says Dr. Heinz-Werner Rapp, founder and director of the FERI Cognitive Finance Institute. “However, a real threat arises when powerful data and communication platforms are used for political purposes.” In the USA in particular, the founders and CEOs of large tech companies are increasingly using their economic and media power to advance their own political goals - as the example of Elon Musk and his Platform X shows. The algorithm-controlled playout of content or its deliberate manipulation makes it possible to influence and control social and political trends in a targeted manner. This gives autocratic politicians and other actors completely new incentives and tools to misuse digital technologies. “This ultimately leads to the emergence of a corrupt tech oligarchy, where politicians and powerful tycoons work hand in hand and pursue selfish goals based on digital dominance,” explains Rapp.

AI as a new driver with high dynamics - USA as a brake on regulation

Artificial intelligence (AI) will play a central role in the phenomenon of digital concentration of power in the future, which will be increasingly trained and expanded using data from its own users. “The tech billionaires not only sense the business of the century here, but are also aiming for an enormous increase in power - for themselves and their business models,” says Rapp. In order to limit the power of the tech giants, more regulation and increased international cooperation would make sense. However, as long as US President Trump in particular is aiming for massive deregulation of the digital economy and transforming the USA into a “buddy economy” without scruples, effective regulatory efforts are almost impossible. 

For investors, these developments primarily mean that they must carefully weigh up the enormous growth potential of digital business models and emerging technologies relating to artificial intelligence (AI) against the systemic risks resulting from the increasing concentration of power of large technology groups.

The new Cognitive Comment “Digital power concentration: Increasing dominance and looming risks of a new tech oligarchy” provides investors and entrepreneurs with deep insights into the underlying issues and helps them to assess future challenges. The analysis is available in German for download on this page.