Former International Monetary Fund chief and eminent economist Kenneth Rogoff has accused tech giants such as Amazon, Facebook and Google of squashing competition by buying up promising tech start-ups with the intention of killing them off.
"Once the big tech company buy something it's dead – they're looking to kill it," Mr Rogoff told an exclusive subscriber breakfast at The Australian Financial Review Business Summit on Wednesday morning.
He said while many promising tech entrepreneurs were offered "blinding" amounts of money by the big tech companies, they were also presented with a implicit threat that if they didn't sell up, their technology could be copied.
He provided the example of Facebook's 2014 example of virtual reality business Oculus, which he claimed was more about killing off the start-up's promising operating system than anything else.
Mr Rogoff said he was particularly concerned about the rise of artificial intelligence and the potential problems it could create around income distribution. However, he says there seems little nations can do about stopping the trend due to global competition.
One measure that may mitigate the rise of AI was to ensure that individuals retain ownership of their data, Mr Rogoff said, adding that data was "the heart and soul of the monopoly power" of big tech companies.
"If you own your data you can conceivably sell your data," he said.
Mr Rogoff, who famously dropped out of high school at the age of 16 to become a professional chess player, and joked that he still thinks too much about the game, was also firm on the future of Bitcoin, which he said would not exist in current form in 10 years, as governments clamp down on the use of digital currencies.
'Dirty little secret'
But Mr Rogoff, who says most new innovations in currency were driven by the private sector, said governments were prepared to sit back and watch how virtual currencies developed, before they moved in to regulate and appropriate.
"Trying to find better technologies for safer online transactions is important," said Mr Rogoff, who has argued in favour of a "cash-lite" economy, where high denomination bills are phased out to reduce crime and money laundering.
Mr Rogoff said the high level of printing of cash by central banks was a "dirty little secret" and made little sense given cash had fallen from about 16 per cent of all transactions in the US to just 7 per cent to 8 per cent in five years, and was likely to halve again in the next five.
While he concedes there is some need to small amounts of cash for privacy and convenience, holding huge levels of notes made little sense.
Mr Rogoff also backed calls for Australia's corporate tax rate, purely for reasons of global competition in the wake of the US tax cut.
"I do think Australian needs to lower its corporate tax rate, just to stay in line with what everybody else is doing."
