The Collective Monopoly

Recently, I’ve been thinking a lot about how we’re treated by the corporations that are supposed to serve us. Back in the old days, the principal fear that we had about the power of corporations was that of Monopolies (with a capital M – I know, crazy, right?). The one thing we tried to avoid with all our might was the idea that a single corporation might control an entire market single-handedly and eliminate all possible competition.

This fear was, and is, well-founded. A corporation with a monopoly on a market has carte blanche to behave however it wishes. Imagine if all the bread in the world was under the control of a single manufacturer. They have the ability to charge whatever they want for the bread we buy. What would we do  if we didn’t like the price? We can’t choose to go elsewhere, and we can’t choose to ‘vote with our wallets’. We’re stuck with whatever price we’re told to pay, or cutting out bread from our diet altogether.

The Competition Commission (previously known as the Monopolies and Mergers commission) largely does a good job of preventing monopolies in modern Britain, and there are equivalent governmental departments all over the world. The odd problem gets through the cracks (Murdoch, anyone?), but by and large we manage to avoid monopolies these days.

The thing about a company behaving badly when it has a monopoly is this: in a twisted sense, it’s not really doing anything ‘wrong’ per se, if you assume a corporation’s role is to maximise shareholder returns. What we little people might decry as price-gouging or deliberate neglect of services, a corporation can point to rising turnover and lower costs. Which is why we prevent monopolies by statute – it is in the interests of individual corporations to seek a monopoly (or ‘maximise market share’ as they generally put it), but it is in the interests of the people to prevent it. This is one of those cases where we can’t just trust corporations to magically end up doing the right things for customers.

However, I believe there is a similar, and equally problematic issue in play today. I’ve termed it the Collective Monopoly. As a term, it’s not 100% accurate – it implies a conspiracy, I think, and I want to make it very clear that this is not a conspiract theory I’m putting forward here. But the phenomenon I’ll be discussing shares a lot of features in common with a monopoly and I certainly want to evoke the connotations of anti-consumer practice that the word monopoly has.

What is a collective monopoly? A collective monopoly is an group of competitive businesses in a single industry all behave identically in certain areas – removing consumer choice on those issues. I think this is best illustrated with an example. All four major banks, plus the two or three smaller ones and most building societies, will use your personal data for whatever ends they see fit. It is against the law for a bank to share your data with others without your consent, so all of the banks simply make consent for sharing of personal data a part of the terms and conditions on a current account.

Do you have a current account? Then you have given your bank permission to use your data for research, for market analysis or for any other use the bank can think of. If you don’t want your bank to be doing this, then you can always vote with your feet, withdraw your money and go to a different bank. But that other bank will be doing exactly the same thing. There is some truth to that refrain “they’re all the same.”

Of, banks are genuinely competitive with one another. It’s just that they aren’t competing on that particular behaviour. Consumers simply don’t have any real choice over whether they want their personal data shared or not. And since everybody has to have a bank account, all we can do is suck it up and select our bank based on some other factor.

I’m not suggesting that the banks are conspiring to share our personal data. But for each individual bank, it makes economic sense to do behave in this way. It’s easier to do risk/fraud analysis, it helps them market products to the ‘right’ people (that is, the people most likely to buy products, whether right for them or not). Essentially, it’s incredibly helpful in maximising revenue and minimising loss. But when each bank collectively makes the same decision on this behaviour, we lose our right to data privacy. There’s no point having a statutory right to data privacy if every product that is available requires us to waive it.

So that’s a collective monolpoly – a group of companies collectively displaying a behaviour which you might see when a single company has a monopoly. Particularly where such collective behaviour effectively removes customer choice.


I’m going to write a series of blog posts on this subject. Any criticism, thoughts or feedback are totes welcome. If you have any consumer stories which you’d like to share with me, please do. Especially if you have a feeling switching company wouldn’t help because they’re “all the same”, I’d love to hear it. I plan to cover some obvious criticisms of this idea which I can think of, plus any criticisms which come from elsewhere.

Please get in touch with any feedback via Twitter (@timballantine) or in the comments.

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