DEFINITION of 'BAADD'

BAADD is an acronym used to describe the effect of the concentration of the technology companies in the 2000s. As a descriptor, BAAAD is related to calls for antitrust legislation.

BREAKING DOWN 'BAADD'

In less than two decades, social media, e-commerce, search engines, and the Internet in general has revolutionized not only how we buy and sell goods and services, but how we interact with each other. The Economist newspaper introduced the acronym BAADD as a way of outlining how technology companies could be viewed by governments and regulators, economists and investors, and the global population.

Regulators have been slow to adapt to the rise of such dominating technology companies. This has partially been because they had not faced companies with such consolidated power since Standard Oil, and had not been tested in their approach to the dominance of a single technology firm since the antitrust case against Microsoft in the 1990s.

Rather than controlling the market for a traditional product, such as oil, or the bundling of software, modern technology companies seek to monopolize data. As a product, data is not well-understood, though its value to the consumer seems to be far more limited than its value to companies like Facebook, Google, and Amazon.

The concentration of market power in the hands of so few industries has resulted in enormous profits, but has not resulted in a rush of competitors. This is because there is significant market power in having access to mountains of user data – the “B” in BAADD. The most powerful technology companies have moved beyond offering a single service – a search engine, social network, or e-commerce platform – and now offer a variety of platforms that connect different data sources into their larger data repositories.

Internet-connected devices – from mobile phones and active wear, to refrigerators and cars – are more useful in aggregate, giving technology companies access to even more data points that they can use to sell advertising and products.

Anti-Competitive Monopolies?

Monopolistic firms are also anti-competitive – bringing us to “BA” – in that they are the dominant players in their space. Facebook dominates social networks, Google online searches, and Amazon e-commerce to the point that it is hard for new entrants to be successful. This is predominantly due to network effects, as popular services become increasingly valuable as more people use them.

Having a lion’s share of the market increases profits, which allows large technology companies to purchase competitors – even competitors that would be considered indirect at the time. Facebook’s purchase of WhatsApp and Instagram allowed it to ensure that it had access to other avenues of communication, while also giving it more access to valuable consumer data.

Technology is also said to have become more addictive – bringing us to “BAA.” While research has shown a tenuous connection between a decline in real-world social social interactions and overall happiness with an increase in the availability and use of technology, the rise of insomnia, anxiety, depression, and unhappiness does not bode well for society at large. Smartphones in particular are associated with aspects of addiction, and operating a company that profits from this behavior can draw the ire of regulators.

Lastly, there has been a growing sentiment that large technology companies are damaging democracy – bringing us to “BAADD.” This has much to do with how technology companies have framed themselves as information providers, allowing them to shirk the responsibility that other information providers, such as print and television media, have accepted when it comes to attempting to make sure the information they provide has a modicum of truth. By saying that they are not responsible for the information provided by their users, technology companies have allowed governments to use them as avenues for propaganda and disinformation.

RELATED TERMS
  1. Social Data

    Social data is information shared publicly by social media users, ...
  2. Social Media

    Social media is a computer-based technology that facilitates ...
  3. Social Capital

    Social capital is the economic resources obtained from interactions ...
  4. Social Sentiment Indicator

    A social sentiment indicator analyzes aggregated social media ...
  5. Social Media Optimization (SMO)

    Social media optimization (SMO) is the use of social media networks ...
  6. Social Media Marketing (SMM)

    Social media marketing (SMM) is the use of social media websites ...
Related Articles
  1. Small Business

    What Facebook Owns That Other Social Media Do Not (FB)

    Examine Facebook's competitive advantage to understand how the network effect and application suite set it apart from other social media platforms.
  2. Investing

    Analyzing Porter's 5 Forces on Facebook (FB)

    Read about how you can use Porter's five forces to analyze Facebook's competition. This simple methodology looks at several different factors or forces.
  3. Trading

    Is Google Becoming A Monopoly?

    Learn about whether Google is becoming a monopoly. Monopolies are considered undesirable because they prevent competition and innovation.
  4. Investing

    Amazon Could Erode Facebook, Google Ad Dominance

    Facebook and Google may be the dominate players in online ads but Amazon's growing in that area and could steal market share, says BMO Capital Markets.
  5. Tech

    Facebook's Most Important Acquisitions

    Strategic acquisitions have been key to Facebook's growth and success, and the company has acquired more than 50 companies or properties since it's formation in 2004.
  6. Insights

    Is Facebook Positioned for Long-term Success? (FB, TWTR)

    Facebook is the world's dominant social ecosystem, with a massive reservoir of user photos and data
  7. Investing

    Facebook Is Launching a Subscription News Product

    The social network had problems with publishers earlier this year and is mending fences to drive more revenue toward them.
  8. Investing

    Capitalizing on Mobile Advertising: Twitter Vs. Facebook Vs. Google

    Learn how Twitter, Facebook and Google are faring in the race to dominate mobile advertising, and discover the differing successes the three companies are having.
  9. Tech

    How Much Can Facebook Potentially Make from Selling Your Data?

    How much does Facebook stand to make by selling user data? Hard to be sure since they will never tell, but we try to extrapolate based on what we know.
RELATED FAQS
  1. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  2. Who are Facebook's (FB) main competitors?

    Explore the different social media networking sites and internet companies that are competing directly with Facebook, such ... Read Answer >>
  3. Who are Google's (GOOG) main competitors?

    Explore Google's different revenue segments and its competitors in each, ranging from Microsoft and Yahoo to Moody's Investor ... Read Answer >>
  4. How important is advertising revenue in the Internet sector?

    Learn about the importance of advertising revenue in the Internet industry. Find out how much Internet firms rely on advertising ... Read Answer >>
Hot Definitions
  1. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  2. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  3. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  4. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  5. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  6. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Trading Center