are unicorns good for business

UUnicorns abound. In recent years, we’ve seen tech giants buying up successful startups and with them some of the intellectual property that could provide competition to these giant enterprises in the future.

While the fascination with unicorns (startups valued at over $1 billion) continues, are they necessarily good news for the world of new enterprise?

Are tech giants fueling inequality?

To be truly beneficial to society we need to see more startups, but not necessarily ones that are worth billions. Take San Francisco, home to Silicon Valley and some of the world’s largest tech companies. Recent years have seen a growing concentration of wealth in the hands of an elite few while poverty and crime rates are on the rise across the city.

Is the sharing economy a con?

Consider for a moment the recent trend in the so called “sharing economy”. Companies like Uber and Airbnb are both valued in the billions and yet both could be accused of being bad for local economies.

Airbnb is taking trade away from the traditional hotel sector- one which ordinarily looks after its employees, pays its taxes and complies with local and governmental regulations. In a similar way Uber allows unregulated drivers to rent out their cars as taxis and create unfair competition for established taxi companies.

While Uber and Airbnb both make use of under utilised resources, neither are subject to local taxes or safety regulations - the way more traditional hotels or taxi companies are. How many Airbnb vendors even pay taxes on their revenues or comply with fire safety regulations? Consider neighbours living in quiet residential blocks who are suddenly subjected to the constant comings and goings of Airbnb residents.

Innovation or exploitation?

Uber has recently faced legal disputes about not paying its drivers the minimum wage. It doesn’t make economic or common sense to allow certain business to get away with non-compliance just because they are internet based enterprises. Shouldn’t the same rules apply to online and offline businesses?

Is what we are seeing the rise of monopolies where tech giants can bypass laws and then buy up competitors to keep them out of the market?

Crazy patents or reasonable protection of IP?

Consider for a moment Apple's copyright of rectangles with rounded corners. It's true; the US Patent Office issued patent no. D670,286 whereby only Apply can produce rectangular shaped tech gadgets with rounded corners. Crazy or what? Developments like these are an impediment to real grassroots enterprise and benefit only the super giants like Apple who hold such ridiculously vague patents.

Not a level playing field...

Instead of seeing a trickledown effect of wealth, employment and innovation we are starting to see certain giants dominate the landscape- often buying up competitor patents just to keep them out of the market.

According to the Economist “the fruits of economic growth are being horded”. Mergers and acquisitions by the likes of Facebook, Google, Uber and Apple are stifling healthy competition. Small players simply don’t have the legal resources or deep pockets to compete.

Startups are a boon to the economy when they create jobs and pay taxes but in a world where tech giants are increasingly snapping up the competition one must ask whether more needs to be done to create a level playing field.

 

 

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