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.
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.