What you don’t know can hurt you: How market concentration threatens internet diversity

by Josh Fear and Richard Denniss

The internet today stands at a crossroads. Entry into the online marketplace is in theory open to virtually anyone with sufficient technological know-how and a viable business model. As a result, the World Wide Web is now the very model of diversity, with more information, more products and more opinions accessible more easily than through any other medium in history.

Conceivably, the internet could maintain this degree of pluralism indefinitely. But there is another possibility: that the internet will follow the path that various other information industries have gone down over the past century or so. In telegraphy, telephony, radio and television, a familiar pattern has unfolded: after an initial period of innovation and vigorous competition, a small number of players often end up enjoying almost complete control of the mainstream market.

This paper seeks to describe what kind of online environment we can expect if market power is allowed to grow unchecked, and shows how internet search engines can amplify the effects of market concentration in other areas. It has been written in order to prompt greater awareness of why market power online is just as important as in any other industry, and of how normal everyday habits can reinforce incumbent interests.

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