9 ms·

Google, Facebook, and Amazon benefit from an outdated definition of “monopoly”

255 points by arctux 8y ago

pge 8y ago
for further reading on the history of monopolies and the change in approach to limiting them, in addition to the article’s author’s book, I recommend Cornered by Barry Lynn.
robertAngst 8y ago
Life is good today, people are panicking about tomorrow. Tech moves too fast, I dont think we will need to worry about a monopoly when FAANG stock starts falling.
- Apocryphon 8y ago
  Will AOL Own Everything? By Lawrence Lessig (Monday, June 19, 2000) http://content.time.com/time/magazine/article/0,9171,997265,00.html http://content.time.com/time/magazine/article/0,9171,997265,... (sadly paywalled)
  - abkumar 8y ago
    Pages 9-11 of this pdf [1] have the full text of the article [1] https://transition.fcc.gov/transaction/aol-tw/exparte/disney_exparte071100.pdf https://transition.fcc.gov/transaction/aol-tw/exparte/disney...
paulpauper 8y ago
BUT the vast majority of buyouts are small and are for the purpose of finding talent, and also the odds of a buyout producing a long-term impact are small. Look at all the acquisitions yahoo has done over the past 2 decades and they, I think, all failed. They bought Mark Cuban's company Broadcast.com for $5.7 billion in 1999, which is now a redirect to the yahoo homepage. Which I think makes it the most expensive domain name ever purchased.
- pavlov 8y ago
  HPE (Hewlett Packard Enterprise) owns autonomy.com which redirects to their website. They paid $11.7 billion USD for a company named Autonomy in 2011. HP was forced to make a $8.8B writedown on the purchase already the following year, and today nothing but the domain name remains at HPE.
drwl 8y ago
I'm reminded of Peter Thiel's take on this http://webcache.googleusercontent.com/search?q=cache:iG3YKf1yLKIJ:blakemasters.com/post/21169325300/peter-thiels-cs183-startup-class-4-notes-essay+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:iG3YKf1... cached because current link is unavailable
- dredmorbius 8y ago
  More durable: http://archive.is/ye5RY http://archive.is/ye5RY
  - jchw 8y ago
    Somewhat ironically, visiting this "more durable" link displayed a Cloudflare Origin DNS error page.
dredmorbius 8y ago
The change can be traced back further, to judge Richard Posner and "Natural Monopoly and its Regulation" (1968) (http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2861&context=journal_articles http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?artic... (PDF)), subsequently published by the anti-regulation, pro-monopoly Cato Institute, and earlier, judge Robert Bork, dating to earlier. In the 1960s, see: "‘Antitrust was defined by Robert Bork. I cannot overstate his influence.’' https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antitrust-was-defined-by-robert-bork-i-cannot-overstate-his-influence/ https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antit... https://www.cato.org/policy-report/julyaugust-1999/cato-books-posner-monopolies https://www.cato.org/policy-report/julyaugust-1999/cato-book... Bork's "landmark" treatise on monopoly remains curiously unavailable at many libraries: https://www.worldcat.org/title/antitrust-paradox-a-policy-at-war-with-itself/oclc/884476671?referer=di&ht=edition https://www.worldcat.org/title/antitrust-paradox-a-policy-at... This reflects earlier treatment of monopoly within Libertarian economics texts for popular consumption, notably Harry Hazlitt's Economics in One Lesson, which addresses monopoly by ... dispensing with it virtually entirely: https://fee.org/resources/economics-in-one-lesson/ https://fee.org/resources/economics-in-one-lesson/ Contrast Alfred Marshall, Principles, 8th ed, leading collegiate text at the time, with a 15 page chapter and a multitude of mentions. https://archive.org/details/in.ernet.dli.2015.149776/page/n485 https://archive.org/details/in.ernet.dli.2015.149776/page/n4... Barak Y. Orbach, "THE ANTITRUST CONSUMER WELFARE PARADOX": “Consumer welfare” is the only articulated goal of antitrust law in the United States. It became the governing standard following the 1978 publication of Robert Bork's The Antitrust Paradox. The consumer welfare standard has been instrumental to the implementation and enforcement of antitrust laws. Courts believe they understand this standard, although they do not bother to analyze it. Scholars hold various views about the desirable interpretations of the standard and they selectively use random judicial statements to substantiate opposite views. This article introduces the antitrust consumer welfare paradox: it shows that, under all present interpretations of the term “consumer welfare,” there are several sets of circumstances in which the application of antitrust laws may hurt consumers and reduce total social welfare. This article shows that, when Bork used the term “consumer welfare,” he obscured basic concepts in economics.... https://academic.oup.com/jcle/article-abstract/7/1/133/750979 https://academic.oup.com/jcle/article-abstract/7/1/133/75097...
roymurdock 8y ago
this is a rehashing/summary of the much more in-depth research note by law school student Lina Khan that gained some attention earlier this year: https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado... changes to the economic definition and legal enforcement of anti-monopoly are one issue, but a general slowdown in the pace of technological innovation combined with globalization/spread of technology is the primary force driving consolidation/horizontal/vertical integration in many industries
- devindotcom 8y ago
  Khan's piece was incredibly interesting. I learned a ton. It's long (100pp or so) but full of great info, not at all difficult to read. I highly recommend checking it out. It's my understanding that the Chicago School types were not impressed, but that was probably to be expected.
amelius 8y ago
In my view, unfair competition practices begin when investors make a huge pile of money to "out-money" any competition. For example, how is it fair that a bunch of investors make a pile of money so big that it puts small bookstores out of business?
- AnimalMuppet 8y ago
  Nobody owed small bookstores a living. If Amazon can give people more choice at the same or better prices, why should the small bookstores survive? They're less efficient and therefore wasting resources. (Yes, I know, small bookstores provide a whole different experience than shopping on Amazon. The thing is, nobody cares. Or at least too few people care to make the small bookstores into viable businesses.) How did Amazon "out-money" small bookstores in a way that wasn't simply "more efficiently providing a competing service"?
  - matthewmacleod 8y ago
    I do generally agree, but capital can really distort fair competition in the long run. A large investment can be used to sell products at unsustainable prices until competitors go out of business, before jacking them up for the now-captive market. Classic predatory pricing. It’s often the case that this is harmful to the market in the long term.
    - AnimalMuppet 8y ago
      I agree. My objection is to amelius, whose claim seems to be that money is automatically or inherently unfair (as opposed to your statement, which is that it can be used that way).
  - xanipher 8y ago
    I don't know about the US, but in Europe the big one was taxes: Due to loopholes in tax regulations, weird accoubting practices, etc. Amazon pays next to no taxes, whereas small bookstores who can't afford to "Double-Irish with a Dutch" their taxes pay way more.
  - 8y ago
ucaetano 8y ago
It isn't outdated, it is an economics definition of a monopoly, and isn't even that: a monopoly is perfectly fine, AS LONG AS the economic power isn't abused to prevent competition which harms consumers. What the author is proposing is that regulation is no longer based on economics and economic power, but on a vague definition of monopoly, and people are absurdly trigger-happy when calling something a monopoly. The reason why anti-trust is based on precise economic definitions is that it leaves as little room as possible for the government to favor friendly players. When you need to prove harm to consumers, the bar is high, as it should be. Otherwise, any government in power will simply abuse their own monopoly on regulation to favor and transfer wealth from society to friends. The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No. If it had 100% of the cola market, would it have a monopoly? No. Because the cola market doesn't exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach.
- chrisco255 8y ago
  That would depend on the antitrust laws in said country. And if Coke had 95% market share in the U.S., it could easily be ruled a monopoly.
  - ucaetano 8y ago
    > And if Coke had 95% market share in the U.S., it could easily be ruled a monopoly. Nope. Because monopoly isn't just about market share. That's what people here don't seem to understand.
- Nullabillity 8y ago
  > The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No. Effectively, yes. Why is the market so disfunctional that a single company has effectively swallowed all competition? > If it had 100% of the cola market, would it have a monopoly? No. Err, yes. > Because the cola market doesn't exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach. And AT&T wasn't a monopoly, since you could just walk to the person you want to talk to. Oh, wait..
ImprovedSilence 8y ago
here's what gets me. per the article: >>"Google owns 92% market share of internet searches, Facebook an almost 70% share of social networks. " but us the searchers and friends are not the customer. FB and google are selling ads, and they are in direct competition with each other. If I want to buy advertising space online, I have plenty of options and the innovation for me to reach my target customers is astounding. The system is working exactly as it should. Or so it goes from a monetary point of view.
KaoruAoiShiho 8y ago
Anyone think overaggressive monopoly laws can sometimes harm innovation? For example when Intel was way ahead of AMD by natural instinct it should've wanted to push ahead and "finish off" the company. But perhaps because it feared being labeled a monopoly it took the foot off the pedal and expanded elsewhere instead, harming x86 innovation. However, that's not to say monopolies are ok. I think regulators should do more to stymie their powers but it's difficult for sure.
- markdown 8y ago
  I don't think you've thought that through. How would Intel destroying AMD be good for innovation? Once AMD was gone, they'd have no more incentive to innovate at all.
  - KaoruAoiShiho 8y ago
    AMD being destroyed would be bad for innovation in the long term but in the medium term it could create a pattern where Intel only stays barely ahead because going *too far ahead is actually detrimental. Regulations should perhaps be changed so that monopolies are incentivized to innovate and create good value instead of holding back. For a good while there browsers (IE6) were complete crap because MS feared regulations. You can think of the same thing happening to all MS windows software, from paint to windows movie maker. If MS were allowed to make good software for low cost the benefits to society could be pretty large. However, because MS was close to a monopoly everything they do was suspect. On the other hand modern day apple seems to profit immensely from being NOT a monopoly. By not having a monopoly in a single area they're allowed to vertically expand as much as they want. Imagine if apple weren't allowed to offer siri, or icloud, or facetime, or imessages? The vertical expansion turns out to be more profitable than horizontal domination while at the same time being as abusive as MS ever was.
  - pjmlp 8y ago
    With AMD gone we would all have been using some variation of Itanium by now, instead we got stuck with x86 because AMD found a workaround for 64 bit migration.
- 8y ago
j45 8y ago
In a way the new monopoly is owning the demand but not the fulfillment.. Apple - own device demand, not the apps (or the default search). Google - own search demand, not the content. Facebook - own social demand, but not the content. Airbnb - own lodging demand, but not the real estate. Uber - own transportation demand, but not any vehicles. Uber eats - own hunger, but not any food or restaurants
capsicum80 8y ago
It is weird that microsoft is never mentioned in these articles, despite their monopoly on software in public administration, education and healthcare.
- bepotts 8y ago
  Microsoft isn't mentioned because the world shifted in such a manner where Microsoft's monopoly is no longer as important. Nobody could have predicted this in the 80s and 90s, and this situation should be a learning lesson as to why antitrust measures should be extremely rare.
AndrewKemendo 8y ago
Look no further than the dozens of examples of major tech companies essentially "dumping" product to kill up and coming startups. Diapers.com was the ultimate example of this [1] Soon after, Quidsi noticed Amazon dropping prices up to 30 percent on diapers and other baby products. As an experiment, Quidsi executives manipulated their prices and then watched as Amazon’s website changed its prices accordingly. Amazon’s pricing bots—software that carefully monitors other companies’ prices and adjusts Amazon’s to match—were tracking Diapers.com. This is unambiguously Amazon using their Market power to stifle competition. Now, you might say something like - yea that's just competition, or to the victor go the spoils. However that's the whole point of this kind of advocacy - to prevent companies from taking significant market power and spreading out the competitive landscape. The language may not perfectly fit between "monopoly" or otherwise, but the end result is the same: Small players can't compete. Best thing you can hope for is an acquisition. This is especially bad in technology, where information advantages grow with the scope of the company. [1] https://slate.com/technology/2013/10/amazon-book-how-jeff-bezos-went-thermonuclear-on-diapers-com.html https://slate.com/technology/2013/10/amazon-book-how-jeff-be...
- knlinux 8y ago
  Please change my mind on that, but I don't understand the problem with the diapers store example (or any other product for that matter). Amazon lowers the price, so the consumers will get to buy cheaper diapers (sounds good). Apparently Amazon can sell them at a very low margin, it's just choosing one that's just below what competition can offer. Then of course you have an issue with dumping (selling diapers with profit < $0), but I guess Amazon can afford to sell them at $0+eps profit, so its end game is to sell diapers at a lowest price to outcompete diaper stores on a crazy low margin. Well, maybe there won't be online diapers stores anymore. Most likely Amazon will then bump up the price back.. Well, so the diaper stores will appear again (if the new bumped-up price is above a margin at which an individual store can again operate). What will Amazon do then? Go back to step 1? Great, more cheap diapers at "eps" margin. This, of course, requires the third party stores to have low "startup" costs. And maybe the bottom-line here is, that there is not going to be diapers.com and alike anymore. Well, maybe online diapers store is not a branch of industry one can enter in 2018 and expect to win big just by having a nicer website, without proposing something truly innovative that a giant like Amazon cannot offer (see how dollar shave club competed with Gilette/Wilkinson etc.)
username90 8y ago
My theory is that apple is intentionally targeting the profitable 10% and ignoring the rest just so they don't have to deal with monopoly laws. They still essentially have a monopoly on profit since they have the most profitable users, but nobody can say that 10% market share is a real monopoly.
- knlinux 8y ago
  Tim is first of all targeting the issue of privacy in that linked article (which has nothing to do with monopolies), and it does it because Apple handles that issue the best among the other big players by not being really interested in your personal data (selling $1000 iPhones is good enough). Using Tim's quote as a support for author's further claims seems manipulative. Also, note that more regulation hurts small business more (future Amazons and Googles). Large corporations are usually already profitable and can handle hiring "Privacy Engineers" or whatever the next big issue is going to be, a startup that struggles to be profitable, very often can't.
sytelus 8y ago
TLDR; Anti-trust laws gets only triggered if consumer welfare might be harmed. The way to measure consumer welfare is by prices. So if price of goods/services remain low then anti-trust lawsuits cannot be brought on. In Internet economy, price of many services provided by BigCos is zero. Personally I think this is only half of the story because consumer welfare is not just prices but also quality which depends on competition. The suppression of competition was primary clause used for free IE on Windows anti-trust lawsuit. So I think article is not well researched and is spreading half-truths.
iamgopal 8y ago
in a hypothetical scenario where all consumer goods sold via amazon, will amazon be able to get whatever price they want ? the answer is no, because consumer do not have infinite money to pay for it, monopoly or not. ( i.e. will all consumer goods produce via amazon, sold via amazon, and all people living doing job at amazon, works ? ) so on the side note, is there economic simulator, that can simulate such scenario ?
huffmsa 8y ago
The Marxist ideal won't come through violent revolution, but through corporations becoming so influential in daily life and robotics so much more efficient than humans that we no longer work. For reference, please see Pixar's WALL-E.
ryanwaggoner 8y ago
I find people's short term memory and myopia in this area to be amusing. Not to say that oversight and regulation aren't sometimes needed (probably more often than we get them in the US), but still, we should take a step back every now and then. I see a lot of people fretting that companies like Google, Facebook, and Amazon are becoming so powerful that they're crushing their competition and taking over entire industries, and they just can't be stopped unless the government steps in. Most of the companies people are wringing their hands about today effectively didn't exist 20 years ago. Back then it was another set of companies that were unassailable monopolies who were going to take over the world and rule with an iron fist for 1000 years, ruthlessly crushing all their upstart competitors. And in another 10-20 years, no one will be concerned about Google, Facebook, and Amazon, and they'll instead be screaming bloody murder for the government to break up the otherwise-unstoppable companies X, Y, and Z before they destroy all that is good in the world. Yes, yes, I know..."this time it's different!" So it goes.
knlinux 8y ago
> "Many new tech startups never get the chance to compete with the established companies, because as soon as they prove their technologies, they are acquired. But startups aren’t the only ones suffering." Some companies are willingly selling to some other companies, so let's forcibly break some companies apart. How is former a problem, and latter, a solution?
throw2016 8y ago
Choice and harm are two different concepts, the first is an economic context that is supposed to punish bad actors, the second is a societal concept of social harm which is an ethical concept like child labour. In many cases the economic concept of choice is idealized and doesn't work in the real world. For instance what choice does a consumer concerned about privacy have beyond Android and IOS, or in telecom, oil and other polluting industries and other dysfunctional markets? The network effects of social media cannot be ignored and one may often be forced to participate in a damaging environment that does not respect consumers privacy and basic rights. Consumers may want a privacy respecting Internet and products but there is no way for them to affect that outcome only through choice, so choice on its own is not empowering. You can only choose what is available. And this is where in democratic societies democratic institutions are expected to step in to limit harm.

255 points by arctux 8y ago

pge 8y ago

for further reading on the history of monopolies and the change in approach to limiting them, in addition to the article’s author’s book, I recommend Cornered by Barry Lynn.

robertAngst 8y ago

Life is good today, people are panicking about tomorrow. Tech moves too fast, I dont think we will need to worry about a monopoly when FAANG stock starts falling.

Apocryphon 8y ago
Will AOL Own Everything? By Lawrence Lessig (Monday, June 19, 2000) http://content.time.com/time/magazine/article/0,9171,997265,00.html http://content.time.com/time/magazine/article/0,9171,997265,... (sadly paywalled)
- abkumar 8y ago
  Pages 9-11 of this pdf [1] have the full text of the article [1] https://transition.fcc.gov/transaction/aol-tw/exparte/disney_exparte071100.pdf https://transition.fcc.gov/transaction/aol-tw/exparte/disney...

paulpauper 8y ago

BUT the vast majority of buyouts are small and are for the purpose of finding talent, and also the odds of a buyout producing a long-term impact are small. Look at all the acquisitions yahoo has done over the past 2 decades and they, I think, all failed. They bought Mark Cuban's company Broadcast.com for $5.7 billion in 1999, which is now a redirect to the yahoo homepage. Which I think makes it the most expensive domain name ever purchased.

pavlov 8y ago
HPE (Hewlett Packard Enterprise) owns autonomy.com which redirects to their website. They paid $11.7 billion USD for a company named Autonomy in 2011. HP was forced to make a $8.8B writedown on the purchase already the following year, and today nothing but the domain name remains at HPE.

drwl 8y ago

I'm reminded of Peter Thiel's take on this http://webcache.googleusercontent.com/search?q=cache:iG3YKf1yLKIJ:blakemasters.com/post/21169325300/peter-thiels-cs183-startup-class-4-notes-essay+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:iG3YKf1... cached because current link is unavailable

dredmorbius 8y ago
More durable: http://archive.is/ye5RY http://archive.is/ye5RY
- jchw 8y ago
  Somewhat ironically, visiting this "more durable" link displayed a Cloudflare Origin DNS error page.

dredmorbius 8y ago

The change can be traced back further, to judge Richard Posner and "Natural Monopoly and its Regulation" (1968) (http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2861&context=journal_articles http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?artic... (PDF)), subsequently published by the anti-regulation, pro-monopoly Cato Institute, and earlier, judge Robert Bork, dating to earlier. In the 1960s, see: "‘Antitrust was defined by Robert Bork. I cannot overstate his influence.’' https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antitrust-was-defined-by-robert-bork-i-cannot-overstate-his-influence/ https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antit... https://www.cato.org/policy-report/julyaugust-1999/cato-books-posner-monopolies https://www.cato.org/policy-report/julyaugust-1999/cato-book... Bork's "landmark" treatise on monopoly remains curiously unavailable at many libraries: https://www.worldcat.org/title/antitrust-paradox-a-policy-at-war-with-itself/oclc/884476671?referer=di&ht=edition https://www.worldcat.org/title/antitrust-paradox-a-policy-at... This reflects earlier treatment of monopoly within Libertarian economics texts for popular consumption, notably Harry Hazlitt's Economics in One Lesson, which addresses monopoly by ... dispensing with it virtually entirely: https://fee.org/resources/economics-in-one-lesson/ https://fee.org/resources/economics-in-one-lesson/ Contrast Alfred Marshall, Principles, 8th ed, leading collegiate text at the time, with a 15 page chapter and a multitude of mentions. https://archive.org/details/in.ernet.dli.2015.149776/page/n485 https://archive.org/details/in.ernet.dli.2015.149776/page/n4... Barak Y. Orbach, "THE ANTITRUST CONSUMER WELFARE PARADOX": “Consumer welfare” is the only articulated goal of antitrust law in the United States. It became the governing standard following the 1978 publication of Robert Bork's The Antitrust Paradox. The consumer welfare standard has been instrumental to the implementation and enforcement of antitrust laws. Courts believe they understand this standard, although they do not bother to analyze it. Scholars hold various views about the desirable interpretations of the standard and they selectively use random judicial statements to substantiate opposite views. This article introduces the antitrust consumer welfare paradox: it shows that, under all present interpretations of the term “consumer welfare,” there are several sets of circumstances in which the application of antitrust laws may hurt consumers and reduce total social welfare. This article shows that, when Bork used the term “consumer welfare,” he obscured basic concepts in economics.... https://academic.oup.com/jcle/article-abstract/7/1/133/750979 https://academic.oup.com/jcle/article-abstract/7/1/133/75097...

roymurdock 8y ago

this is a rehashing/summary of the much more in-depth research note by law school student Lina Khan that gained some attention earlier this year: https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado... changes to the economic definition and legal enforcement of anti-monopoly are one issue, but a general slowdown in the pace of technological innovation combined with globalization/spread of technology is the primary force driving consolidation/horizontal/vertical integration in many industries

devindotcom 8y ago
Khan's piece was incredibly interesting. I learned a ton. It's long (100pp or so) but full of great info, not at all difficult to read. I highly recommend checking it out. It's my understanding that the Chicago School types were not impressed, but that was probably to be expected.

amelius 8y ago

In my view, unfair competition practices begin when investors make a huge pile of money to "out-money" any competition. For example, how is it fair that a bunch of investors make a pile of money so big that it puts small bookstores out of business?

AnimalMuppet 8y ago
Nobody owed small bookstores a living. If Amazon can give people more choice at the same or better prices, why should the small bookstores survive? They're less efficient and therefore wasting resources. (Yes, I know, small bookstores provide a whole different experience than shopping on Amazon. The thing is, nobody cares. Or at least too few people care to make the small bookstores into viable businesses.) How did Amazon "out-money" small bookstores in a way that wasn't simply "more efficiently providing a competing service"?
- matthewmacleod 8y ago
  I do generally agree, but capital can really distort fair competition in the long run. A large investment can be used to sell products at unsustainable prices until competitors go out of business, before jacking them up for the now-captive market. Classic predatory pricing. It’s often the case that this is harmful to the market in the long term.
  - AnimalMuppet 8y ago
    I agree. My objection is to amelius, whose claim seems to be that money is automatically or inherently unfair (as opposed to your statement, which is that it can be used that way).
- xanipher 8y ago
  I don't know about the US, but in Europe the big one was taxes: Due to loopholes in tax regulations, weird accoubting practices, etc. Amazon pays next to no taxes, whereas small bookstores who can't afford to "Double-Irish with a Dutch" their taxes pay way more.
- 8y ago

ucaetano 8y ago

It isn't outdated, it is an economics definition of a monopoly, and isn't even that: a monopoly is perfectly fine, AS LONG AS the economic power isn't abused to prevent competition which harms consumers. What the author is proposing is that regulation is no longer based on economics and economic power, but on a vague definition of monopoly, and people are absurdly trigger-happy when calling something a monopoly. The reason why anti-trust is based on precise economic definitions is that it leaves as little room as possible for the government to favor friendly players. When you need to prove harm to consumers, the bar is high, as it should be. Otherwise, any government in power will simply abuse their own monopoly on regulation to favor and transfer wealth from society to friends. The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No. If it had 100% of the cola market, would it have a monopoly? No. Because the cola market doesn't exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach.

chrisco255 8y ago
That would depend on the antitrust laws in said country. And if Coke had 95% market share in the U.S., it could easily be ruled a monopoly.
- ucaetano 8y ago
  > And if Coke had 95% market share in the U.S., it could easily be ruled a monopoly. Nope. Because monopoly isn't just about market share. That's what people here don't seem to understand.
Nullabillity 8y ago
> The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No. Effectively, yes. Why is the market so disfunctional that a single company has effectively swallowed all competition? > If it had 100% of the cola market, would it have a monopoly? No. Err, yes. > Because the cola market doesn't exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach. And AT&T wasn't a monopoly, since you could just walk to the person you want to talk to. Oh, wait..

ImprovedSilence 8y ago

here's what gets me. per the article: >>"Google owns 92% market share of internet searches, Facebook an almost 70% share of social networks. " but us the searchers and friends are not the customer. FB and google are selling ads, and they are in direct competition with each other. If I want to buy advertising space online, I have plenty of options and the innovation for me to reach my target customers is astounding. The system is working exactly as it should. Or so it goes from a monetary point of view.

KaoruAoiShiho 8y ago

Anyone think overaggressive monopoly laws can sometimes harm innovation? For example when Intel was way ahead of AMD by natural instinct it should've wanted to push ahead and "finish off" the company. But perhaps because it feared being labeled a monopoly it took the foot off the pedal and expanded elsewhere instead, harming x86 innovation. However, that's not to say monopolies are ok. I think regulators should do more to stymie their powers but it's difficult for sure.

markdown 8y ago
I don't think you've thought that through. How would Intel destroying AMD be good for innovation? Once AMD was gone, they'd have no more incentive to innovate at all.
- KaoruAoiShiho 8y ago
  AMD being destroyed would be bad for innovation in the long term but in the medium term it could create a pattern where Intel only stays barely ahead because going *too far ahead is actually detrimental. Regulations should perhaps be changed so that monopolies are incentivized to innovate and create good value instead of holding back. For a good while there browsers (IE6) were complete crap because MS feared regulations. You can think of the same thing happening to all MS windows software, from paint to windows movie maker. If MS were allowed to make good software for low cost the benefits to society could be pretty large. However, because MS was close to a monopoly everything they do was suspect. On the other hand modern day apple seems to profit immensely from being NOT a monopoly. By not having a monopoly in a single area they're allowed to vertically expand as much as they want. Imagine if apple weren't allowed to offer siri, or icloud, or facetime, or imessages? The vertical expansion turns out to be more profitable than horizontal domination while at the same time being as abusive as MS ever was.
- pjmlp 8y ago
  With AMD gone we would all have been using some variation of Itanium by now, instead we got stuck with x86 because AMD found a workaround for 64 bit migration.
8y ago

j45 8y ago

In a way the new monopoly is owning the demand but not the fulfillment.. Apple - own device demand, not the apps (or the default search). Google - own search demand, not the content. Facebook - own social demand, but not the content. Airbnb - own lodging demand, but not the real estate. Uber - own transportation demand, but not any vehicles. Uber eats - own hunger, but not any food or restaurants

capsicum80 8y ago

It is weird that microsoft is never mentioned in these articles, despite their monopoly on software in public administration, education and healthcare.

bepotts 8y ago
Microsoft isn't mentioned because the world shifted in such a manner where Microsoft's monopoly is no longer as important. Nobody could have predicted this in the 80s and 90s, and this situation should be a learning lesson as to why antitrust measures should be extremely rare.

AndrewKemendo 8y ago

Look no further than the dozens of examples of major tech companies essentially "dumping" product to kill up and coming startups. Diapers.com was the ultimate example of this [1] Soon after, Quidsi noticed Amazon dropping prices up to 30 percent on diapers and other baby products. As an experiment, Quidsi executives manipulated their prices and then watched as Amazon’s website changed its prices accordingly. Amazon’s pricing bots—software that carefully monitors other companies’ prices and adjusts Amazon’s to match—were tracking Diapers.com. This is unambiguously Amazon using their Market power to stifle competition. Now, you might say something like - yea that's just competition, or to the victor go the spoils. However that's the whole point of this kind of advocacy - to prevent companies from taking significant market power and spreading out the competitive landscape. The language may not perfectly fit between "monopoly" or otherwise, but the end result is the same: Small players can't compete. Best thing you can hope for is an acquisition. This is especially bad in technology, where information advantages grow with the scope of the company. [1] https://slate.com/technology/2013/10/amazon-book-how-jeff-bezos-went-thermonuclear-on-diapers-com.html https://slate.com/technology/2013/10/amazon-book-how-jeff-be...

knlinux 8y ago
Please change my mind on that, but I don't understand the problem with the diapers store example (or any other product for that matter). Amazon lowers the price, so the consumers will get to buy cheaper diapers (sounds good). Apparently Amazon can sell them at a very low margin, it's just choosing one that's just below what competition can offer. Then of course you have an issue with dumping (selling diapers with profit < $0), but I guess Amazon can afford to sell them at $0+eps profit, so its end game is to sell diapers at a lowest price to outcompete diaper stores on a crazy low margin. Well, maybe there won't be online diapers stores anymore. Most likely Amazon will then bump up the price back.. Well, so the diaper stores will appear again (if the new bumped-up price is above a margin at which an individual store can again operate). What will Amazon do then? Go back to step 1? Great, more cheap diapers at "eps" margin. This, of course, requires the third party stores to have low "startup" costs. And maybe the bottom-line here is, that there is not going to be diapers.com and alike anymore. Well, maybe online diapers store is not a branch of industry one can enter in 2018 and expect to win big just by having a nicer website, without proposing something truly innovative that a giant like Amazon cannot offer (see how dollar shave club competed with Gilette/Wilkinson etc.)

username90 8y ago

My theory is that apple is intentionally targeting the profitable 10% and ignoring the rest just so they don't have to deal with monopoly laws. They still essentially have a monopoly on profit since they have the most profitable users, but nobody can say that 10% market share is a real monopoly.

knlinux 8y ago
Tim is first of all targeting the issue of privacy in that linked article (which has nothing to do with monopolies), and it does it because Apple handles that issue the best among the other big players by not being really interested in your personal data (selling $1000 iPhones is good enough). Using Tim's quote as a support for author's further claims seems manipulative. Also, note that more regulation hurts small business more (future Amazons and Googles). Large corporations are usually already profitable and can handle hiring "Privacy Engineers" or whatever the next big issue is going to be, a startup that struggles to be profitable, very often can't.

sytelus 8y ago

TLDR; Anti-trust laws gets only triggered if consumer welfare might be harmed. The way to measure consumer welfare is by prices. So if price of goods/services remain low then anti-trust lawsuits cannot be brought on. In Internet economy, price of many services provided by BigCos is zero. Personally I think this is only half of the story because consumer welfare is not just prices but also quality which depends on competition. The suppression of competition was primary clause used for free IE on Windows anti-trust lawsuit. So I think article is not well researched and is spreading half-truths.

iamgopal 8y ago

in a hypothetical scenario where all consumer goods sold via amazon, will amazon be able to get whatever price they want ? the answer is no, because consumer do not have infinite money to pay for it, monopoly or not. ( i.e. will all consumer goods produce via amazon, sold via amazon, and all people living doing job at amazon, works ? ) so on the side note, is there economic simulator, that can simulate such scenario ?

huffmsa 8y ago

The Marxist ideal won't come through violent revolution, but through corporations becoming so influential in daily life and robotics so much more efficient than humans that we no longer work. For reference, please see Pixar's WALL-E.

ryanwaggoner 8y ago

I find people's short term memory and myopia in this area to be amusing. Not to say that oversight and regulation aren't sometimes needed (probably more often than we get them in the US), but still, we should take a step back every now and then. I see a lot of people fretting that companies like Google, Facebook, and Amazon are becoming so powerful that they're crushing their competition and taking over entire industries, and they just can't be stopped unless the government steps in. Most of the companies people are wringing their hands about today effectively didn't exist 20 years ago. Back then it was another set of companies that were unassailable monopolies who were going to take over the world and rule with an iron fist for 1000 years, ruthlessly crushing all their upstart competitors. And in another 10-20 years, no one will be concerned about Google, Facebook, and Amazon, and they'll instead be screaming bloody murder for the government to break up the otherwise-unstoppable companies X, Y, and Z before they destroy all that is good in the world. Yes, yes, I know..."this time it's different!" So it goes.

knlinux 8y ago

> "Many new tech startups never get the chance to compete with the established companies, because as soon as they prove their technologies, they are acquired. But startups aren’t the only ones suffering." Some companies are willingly selling to some other companies, so let's forcibly break some companies apart. How is former a problem, and latter, a solution?

throw2016 8y ago

Choice and harm are two different concepts, the first is an economic context that is supposed to punish bad actors, the second is a societal concept of social harm which is an ethical concept like child labour. In many cases the economic concept of choice is idealized and doesn't work in the real world. For instance what choice does a consumer concerned about privacy have beyond Android and IOS, or in telecom, oil and other polluting industries and other dysfunctional markets? The network effects of social media cannot be ignored and one may often be forced to participate in a damaging environment that does not respect consumers privacy and basic rights. Consumers may want a privacy respecting Internet and products but there is no way for them to affect that outcome only through choice, so choice on its own is not empowering. You can only choose what is available. And this is where in democratic societies democratic institutions are expected to step in to limit harm.