BOC's Wilkins: Check Market Powers Of World's Huge Data Firms>

By Courtney Tower

     OTTAWA (MNI) - Bank of Canada Senior Deputy Governor Carolyn 

Wilkins has come out Thursday with a call for nations to check the 

market powers, and monopoly profits, of huge "superstar" firms that 

control user data. 

     She added that while technological progress will raise economic 

growth, policy choices should manage the downside effects of innovation 

"without stifling it." 

     A symposium of high-ranking civil servants of G-7 countries was 

told that they should find effective ways to "keep market power in 

check, particularly the power that comes from control of consumer data," 

by Wilkins. 

     Policy-makers in nations "need to dig into the technology," in 

order to better understand its massive power and to make better policy 

choices, Wilkins said. 

     Her speech at the G7 Symposium on Innovation and Inclusive Growth 

made no direct reference to the BOC's current policy stance. 

     --CHECK SUPERSTAR FIRMS 

     The present great wave of digitalization and automation is 

advancing overall economic growth in advanced economies but also 

creating in them great inequalities between skilled workers and the 

rest, Wilkins said. 

     "The share of income going to labor has been declining in many 

economies, including the G-7," she said. But at the same time, "the 

share of income going to the top 1 percent has nearly doubled since 

1980, in some of our countries, amounting now to as much as 20 percent" 

of national incomes. 

     What Wilkins called "superstar" firms that have arisen "can earn 

impressive monopoly profits" with their huge data networks, and "user 

data have become another source of monopoly power." 

     The five biggest technology firms in the world have a market 

capitalization of almost one-fifth of the United States economy, and 

their access and control of user data "could make some firms virtually 

unassailable." 

     --MONOPOLY PRICING LOOMS 

     Moreover, Wilkins said, "the biggest firms may well return to 

monopoly pricing in the long run." 

     And the rising inequality of incomes and opportunities between 

fewer numbers of skilled workers and increasing numbers of the rest, 

"may be one of the reasons why we have seen relatively weak wage growth 

in Canada and other G-7 countries despite improving labor market 

conditions," she said. 

     --CHECK MARKET POWERS 

     "We are not going to get the full benefits of innovation if we 

leave market power unchecked," Wilkins said. 

     Wilkins, top among Bank of Canada staff after Governor Stephen 

Poloz, said that government "policy-makers need to dig in and be 

proactive" in heading off the negative consequences of a world of 

digitalization and automation. 

     She noted that central banks don't have the tools or the mandate to 

influence the pace of technological progress but can play an advisory 

role. 

     She pointed out that the BOC is looking at how digitalization might 

be affecting labor markets and monetary policy transmission, and the way 

inflation pressures are generated. 

--MNI Ottawa Bureau; yali.ndiaye@marketnews.com

                         ** MNI OTTAWA **