Knowledge monopolies and the innovation divide: A governance perspective

https://doi.org/10.1016/j.infoandorg.2023.100466Get rights and content

Highlights

  • Technology shocks create new structures for creating monopolies attuned to suppressing competition in the economy.
  • Digitization enable knowledge monopolies by leveraging large scale data collection and machine learning technologies.
  • The power of knowledge monopolies derives from the imposition of the rights to data created by other platform participants.
  • Knowledge monopolies develop competitive insights and threaten the capacity of other platform participants to innovate.
  • Governing knowledge monopolies require a new perspective to regulate data obligations and data rights in digital platforms.

Abstract

The rise of digital platforms creates knowledge monopolies that threaten innovation. Their power derives from the imposition of data obligations and persistent coupling on platform participation and their usurpation of the rights to data created by other participants to facilitate information asymmetries. Knowledge monopolies can use machine learning to develop competitive insights unavailable to every other platform participant. This information asymmetry stifles innovation, stokes the growth of the monopoly, and reinforces its ascendency. National or regional governance structures, such as laws and regulatory authorities, constrain economic monopolies deemed not in the public interest. We argue the need for legislation and an associated regulatory mechanism to curtail coercive data obligations, control, eliminate data rights exploitation, and prevent mergers and acquisitions that could create or extend knowledge monopolies.

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Section snippets

The new knowledge monopolies

Large technology companies, or Big Tech, are often celebrated as exemplars of innovation and capital creation. However, these companies increasingly attract scrutiny and criticism because of monopolistic and antitrust behavior concerns (Khan, 2017). In the US, Senators Amy Klobuchar (Democrat) and Joshua Hawley (Republican) have published books addressing antitrust behavior (Klobuchar, 2021) and big tech's tyrannical power (Hawley, 2021). Germany, France, and the Netherlands want regulators to

The micro-dynamics of knowledge monopolies

Monopolies arise or are created by a capital or resource asymmetry. For instance, a mining company might own a mineral-rich lode that can be exploited at a much lower price per ton than any alternative. This natural capital asymmetry enables it to make excessive profits and pour these into maintaining its exclusive position. For many decades, De Beers enjoyed a natural capital monopoly in the diamond industry that enabled it to control the global supply of diamonds. It complemented this

Governance of knowledge monopolies

Monopolies, irrespective of their foundations, are not new. Economies continually evolve, and new technology, such as the Internet, analytics, and artificial intelligence, can result in new structures and methods for creating monopolies attuned to suppressing competition in a new economy. Consequently, legislators periodically develop governance structures in the form of laws and regulations to limit monopolies. Regulators, such as the US Federal Trade Commission (FTC), are assigned to enact,

Conclusion and contribution

Data can be a determinant of political and economic power. Thanks to digitization, the cost of generating and capturing data is effectively zero, and the accumulation of data can go unnoticed by the public. The Cambridge Analytica scandal shows how personal data can be readily redirected without individual consent for political purposes (Isaak & Hanna, 2018). Data are also a source of new knowledge-based monopolistic power than can stifle startup growth and suppress widespread innovation. A

Funding

This research received funding from the University of Georgia Terry-Sanford Summer Research Award and the University of Georgia Terry College of Business Seed funding for Business, Systems, and Technology Innovation Research.

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