He told guests that the two goliaths of the IT industry, Facebook and Google, effectively control more than half of all Internet advertising revenue and criticised their monopolistic behaviour. He said though these companies have in the past often played an innovative and liberating role, as they have grown their monopolies they have in fact become obstacles to innovation.
For Facebook and Google to continue to maintain their dominance, they need to expand their networks and increase their share of users’ attention, said Soros, adding that the more time users spend on these platforms, the more valuable these brands become.
He maintained that the exceptional profitability of social media companies is largely a function of the fact that they don’t pay for content on their platforms. However, he argued that they are near-monopoly distributors, which makes them public utilities and as such they should be subject to more stringent regulations “aimed at preserving competition, innovation, and fair and open universal access”.
Soros added that while the business model of social media companies is based on advertising, a new business model is emerging based on both advertising and selling products and services directly to users. “They exploit the data they control, bundle the services they offer and use discriminatory pricing to keep for themselves more of the benefits they would otherwise have to share with consumers. This enhances their profitability even further,” he said.
He criticised social media companies for influencing how people think and behave without them even being aware of it and pointed out that this induces users to give up their autonomy, which has far-reaching consequences for the functioning of democracy. He warned that people without freedom of mind can easily be manipulated.
Internet monopolies, he said, have neither the will nor the inclination to protect society against the consequences of their actions – which turns them into a menace.
Soros claimed that it will be only a matter of time before the global dominance of US IT monopolies is broken, saying that regulation and taxation would be their undoing.
Each year Soros makes a number of predictions at the annual World Economic Forum – but they don’t always play out as expected. Only time will tell whether this year’s predictions become reality.
The big take-out: Speaking at the World Economic Forum in Davos last week, George Soros delivered a blistering attack on Facebook’s and Google’s monopolistic behaviour and predicted that their days were numbered as governments start to regulate them more heavily.