Digital markets are becoming increasingly concentrated, with a small number of firms controlling a growing share of global activity. That’s the key finding from the latest Global Trade Update released by UN Trade and Development (UNCTAD) on July 8. This trend signals significant implications for competition, innovation, and global economic equality.
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Seven of the world’s ten most valuable companies are now digital giants, dominating not just one sector but spanning the entire digital economy, from cloud computing and e-commerce to artificial intelligence and advertising. This report highlights how their market power is rapidly increasing and the challenges regulators face in addressing this concentration.
Key Takeaways:
- The top five digital multinational enterprises more than doubled their combined sales share from 21% to 48% between 2017 and 2025.
- Generative AI further consolidates Big Tech’s power due to high resource requirements (computing power, data, talent) they control.
- Market concentration can lead to less competition, potentially resulting in higher prices, lower quality, and weakened privacy for consumers.
- Governments worldwide are increasing regulatory efforts, with actions surging from 14 in 2020 to 153 in 2024, though enforcement varies significantly by region.
- UNCTAD emphasizes the need for more robust, transparent, and coordinated enforcement, coupled with investment in infrastructure, especially for developing countries.
How Tech Giants Came to Dominate
The report underscores how a handful of powerful digital platforms now sit at the center of the global economy. These aren’t just large companies; they are integrated ecosystems that command substantial market share across multiple critical digital sectors.
Between 2017 and 2025, this dominance translated into tangible financial control. The combined share of sales held by the top five digital multinational enterprises surged from 21% to a striking 48%. Their share of total assets also saw a significant jump, rising from 17% to 35% over the same period. This financial consolidation reflects their increasing power and reach within the digital landscape.
Graph showing increasing sales share of top five digital companies
The Role of AI in Consolidating Power
The recent rapid advancements in generative artificial intelligence (AI) are adding another layer to this market concentration concern. Companies like Microsoft and Google are not only leading in AI development but are also consolidating their positions through strategic partnerships, such as Microsoft’s significant investment in OpenAI.
Generative AI demands massive computing power, advanced chips, extensive cloud services, specialized talent, and vast amounts of data – resources largely controlled by these tech giants. This creates exceptionally steep barriers to entry for potential competitors, making it difficult for startups or smaller firms to challenge the incumbents’ dominance in this critical emerging technology.
Impacts on Consumers and Global Equality
The dynamics of digital markets, driven by network effects (where a platform becomes more valuable as more users join) and control over data, inherently favor large, established players. This cycle of growth makes it incredibly hard for smaller rivals or new entrants to compete effectively and gain market traction.
When there is less competition in a market, the direct impacts on consumers can be negative. Reduced choice can lead to higher prices, lower quality products or services, and potentially weaker privacy protections as dominant firms face less pressure to innovate or prioritize user interests.
Furthermore, this high degree of market concentration reinforces existing global economic divides. Developing countries, often lacking the necessary infrastructure, regulatory frameworks, or capital, find it even harder to participate meaningfully in and benefit from the digital economy, risking being left further behind.
Governments Step Up Regulation, But Gaps Remain
Recognizing the potential harms of unchecked market power, governments worldwide are accelerating efforts to regulate digital giants and promote fair competition. Since the European Union enacted its landmark Digital Markets Act in 2022, aimed at preventing large “gatekeeper” companies from abusing their dominant position, 19 other countries have followed suit with their own digital competition laws.
Examples include Australia’s proposed new regime, India’s draft Digital Competition Act (mirroring the EU’s approach), and Japan’s targeted laws for mobile ecosystems. South Africa has also amended its Competition Act to specifically address concentration in digital sectors like e-commerce and food delivery. The sheer number of government actions aimed at restoring digital market competition globally has surged dramatically, from just 14 in 2020 to 153 in 2024.
Bar graph depicting the surge in government digital competition interventions
Despite this surge in regulatory activity, enforcement remains uneven. Europe and Asia are currently leading in implementing and enforcing these new rules, while regions like Africa and Latin America face significant challenges due to capacity constraints and limited access to necessary data for investigations.
World map showing regional distribution of digital market regulatory actions
Outlook: A Path Towards More Inclusive Digital Markets
UNCTAD emphasizes that tackling digital market concentration effectively requires more than just new laws; it demands robust, transparent, and coordinated enforcement of competition regulations across jurisdictions. This is particularly crucial for developing countries.
For these nations, strong competition frameworks must be paired with strategic investments in digital infrastructure, the development of essential digital skills, and improved financing opportunities for digital startups. Such comprehensive efforts are necessary to support digital industrialization, foster genuine innovation, and ensure that the significant benefits of digitalization are shared more equitably among businesses and citizens, rather than primarily accruing to a select few global tech giants.
As the UNCTAD report concludes, ensuring the digital economy works for everyone hinges on “Stronger enforcement of competition rules — paired with infrastructure investment, stronger regulatory systems, skills development and financing opportunities for startups in the digital economy”. The path forward requires a concerted global effort to create digital ecosystems that are inclusive, competitive, and truly oriented towards broad-based development.
