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Illustration: Sarah Grillo/Axios

Amid the worst stock market plunge since the financial crash, stark new questions are arising about the concentration of global profit and wealth in a few "superstar" firms, and the economic power that they wield.

Among concerns about Google, Facebook, Amazon, Apple and others is the historic scale of wealth at the apex of some industries, alongside decades-long wage stagnation for the middle and lower classes.

  • Such companies seem to be insulated from competition, when economic theory says rivals should arise in a more even fight over the wealth, according to reporting by Kaveh Waddell, Erica Pandey and me.

Driving the news: In a new report, McKinsey Global Institute points out that so-called "superstar companies," the 10% most valuable firms across industries around the world, are not only extraordinarily profitable, but are profitable compared with prior superstars.

  • They produce 1.6 times as much "economic profit" as superstar companies did 20 years ago (profit adjusted to correct for a company's size).

In short, today's big companies are dominating the economy to a degree not seen since the Gilded Age in the late 19th century, says Tim Wu, a law professor at Columbia University.

The big picture: Economists have increasingly linked market concentration with nagging economic problems, such as the stubbornness of relatively flat U.S. wages despite 3.7% unemployment, the lowest in almost a half century.

  • "Something is funny with the economy" when companies are earning the scale of profits of the most prominent U.S. tech companies, says Wu, author of the forthcoming "The Curse of Bigness."
  • "In a state of competition, you expect the profits to be competed away," he tells Axios. "If you have five companies selling widgets, they should keep lowering their price until it's close to cost."

Many economists link the superstar companies to stark inequality in the economy. Companies are so big that they can suppress wages, especially in more rural areas with relatively few places to work.

  • "Those companies create enormous profits, plus increase inequality in terms of exec pay — largely paid in stocks — to median worker pay," says Clair Brown, economics professor at UC Berkeley.

McKinsey also thinks something fishy is going on economically — but in the bottom tier of global companies, not necessarily the top, according to Sree Ramaswamy, co-author of the report.

  • The bottom 10% of firms generated 1.5 times the economic loss as such companies did 20 years ago, McKinsey says.
  • A fifth of such companies cannot pay the interest on their debt.
  • But rather than sell, declare bankruptcy or otherwise release their assets to the market, such companies are being kept afloat by investors or other lenders, Ramaswamy tells Axios.
  • "What is happening in the economy to allow this to go on?" he says. "They continue to grow larger even as they are destroying value."

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Illustration: Aïda Amer/Axios

Facebook's independent Oversight Board published its first set of decisions Thursday, overturning 4 of the 5 cases it chose to review out of 20,000 cases submitted.

Why it matters: The decision to go against Facebook's conclusions in 4 out of 5 instances gives legitimacy to the Board, which is funded via a $130 million grant from Facebook.

New York AG: State severely undercounted COVID nursing home deaths

Gov. Andrew Cuomo. Photo: Lev Radin/Pacific Press/LightRocket via Getty Images

Data from New York's public health department undercounted COVID-19-related deaths in nursing homes by as much as 50%, according to a report released Thursday by state Attorney General Letitia James.

The big picture: Gov. Andrew Cuomo's administration did not include nursing home patients who died after being transferred to the hospital in its tally of over 8,500 nursing home deaths, according to the report. Data provided to the attorney general's office from 62 nursing homes "shows a significantly higher number of resident COVID-19 deaths can be identified than is reflected" in the official count.

Trading platforms curb trading on high-flying Reddit stocks

Major trading platforms including Robinhood, TDAmeritrade and Interactive Brokers are restricting — or cutting off entirely — trading on high-flying stocks like GameStop and AMC Entertainment.

Why it matters: It limits access to the traders that have contributed to the wild Reddit-driven activity of the past few days — a phenomenon that has gripped Wall Street and the country.