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Posts Tagged ‘monopology

“Of course our lives are regulated. When you come to a stop sign, you stop; if you want to go fishing, you get a license; if you want to shoot ducks, you can shoot only three ducks. The alternative is dead bodies at the intersection, no fish, and no ducks. OK?”*…

 

Regulation

 

After a characteristically-clear explanation of the ways in which the “monopoly practice” concerns around Google, Amazon, and the other on-line giants are different from those the U.S. has traditionally tried to manage– they limit/manage choice– the ever-illuminating Tim O’Reilly argues for a fresh approach to anti-trust:

So how are we therefore best to decide if these Big Tech platforms need to be regulated?

In one famous exchange, Bill Gates, the founder and former CEO of Microsoft, told Chamath Palihapitiya, the one-time head of the Facebook platform:

“This isn’t a platform. A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it’s a platform.”

Given this understanding of the role of a platform, regulators should be looking to measure whether companies like Amazon or Google are continuing to provide opportunity for their ecosystem of suppliers, or if they’re increasing their own returns at the expense of that ecosystem.

Rather than just asking whether consumers benefit in the short term from the companies’ actions, regulators should be looking at the long-term health of the marketplace of suppliers—they are the real source of that consumer benefit, not the platforms alone. Have Amazon, Apple, or Google

earned

their profits, or are they coming from monopolistic rents?

How might we know whether a company operating an algorithmically managed marketplace is extracting rents rather than simply taking a reasonable cut for the services it provides? The first sign may not be that it is raising prices for consumers, but that it is taking a larger percentage from its suppliers, or competing unfairly with them.

Before antitrust authorities look to remedies like breaking up these companies, a good first step would be to require disclosure of information about the growth and health of the supply side of their marketplaces. The statistics about the growth of its third-party marketplace that Bezos trumpeted in his shareholder letter tell only half the story. The questions to ask are who profits, by how much, and how that allocation of rewards is changing over time…

Data is the currency of these companies. It should also be the currency of those looking to regulate them. You cannot regulate what you don’t understand. The algorithms that these companies use may be defended as trade secrets, but their outcomes should be open to inspection.

An important read: “Antitrust regulators are using the wrong tools to break up Big Tech.”

* Molly Ivins

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As we bust trusts, we might recall that it was on this date in 1974 that the Supreme Court handed down its unanimous decision in United States v. Nixon, ordering him to deliver tape recordings and other subpoenaed materials to a federal district court.  Special prosecutor Leon Jaworski had subpoenaed the tapes as part of on-going impeachment proceedings; the White House had sued to quash; and the decision is widely viewed as a crucial precedent limiting the power of any U.S. president to claim executive privilege.

nixon_sony source

 

 

Written by LW

July 24, 2019 at 1:01 am

“These days, the bigger the company, the less you can figure out what it does”*…

 

Late 19th-century Americans loved railroads, which seemed to eradicate time and space, moving goods and people more cheaply and more conveniently than ever before. And they feared railroads because in most of the country it was impossible to do business without them.

Businesses, and the republic itself, seemed to be at the mercy of the monopoly power of railroad corporations. American farmers, businessmen and consumers thought of competition as a way to ensure fairness in the marketplace. But with no real competitors over many routes, railroads could charge different rates to different customers. This power to decide economic winners and losers threatened not only individual businesses but also the conditions that sustained the republic.

That may sound familiar. As a historian of that first Gilded Age, I see parallels between the power of the railroads and today’s internet giants like Verizon and Comcast. The current regulators – the Federal Communications Commission’s Republican majority – and many of its critics both embrace a solution that 19th-century Americans tried and dismissed: market competition…

The current controversy about the monopolistic power of internet service providers echoes those concerns from the first Gilded Age. As anti-monopolists did in the 19th century, advocates of an open internet argue that regulation will advance competition by creating a level playing field for all comers, big and small, resulting in more innovation and better products. (There was even a radical, if short-lived, proposal to nationalize high-speed wireless service.)

However, no proposed regulations for an open internet address the existing power of either the service providers or the “Big Five” internet giants: Apple, Amazon, Facebook, Google and Microsoft. Like Standard Oil, they have the power to wring enormous advantages from the internet service providers, to the detriment of smaller competitors.

The most important element of the debate – both then and now – is not the particular regulations that are or are not enacted. What’s crucial is the wider concerns about the effects on society. The Gilded Age’s anti-monopolists had political and moral concerns, not economic ones. They believed, as many in the U.S. still do, that a democracy’s economy should be judged not only – nor even primarily – by its financial output. Rather, success is how well it sustains the ideals, values and engaged citizenship on which free societies depend.

When monopoly threatens something as fundamental as the free circulation of information and the equal access of citizens to technologies central to their daily life, the issues are no longer economic.

Stanford historian Richard White unpacks an important historical analogue; read it in full at “For tech giants, a cautionary tale from 19th century railroads on the limits of competition.”

[Image above: source]

* Michel Faber, The Book of Strange New Things

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As we wonder if The Invisible Hand is giving us the finger, we might recall that it was on this date in 1852 that Henry Wells and William G. Fargo joined with several other investors to launch their eponymously-named cross-country freight business.  The California gold rush had created an explosive new need, which Wells, Fargo and other “pony express” and stage lines leapt to meet.  It was after the Civil War, in 1866, when Wells, Fargo acquired many of their competitors, that it became the dominant supplier.  (Ever flexible, they adapted again three years later, when the transcontinental railroad was finished.)

From it’s earliest days, it also functioned as a bank, factoring the shipments of gold that it carried.  Indeed, when Wells, Fargo exited the freight business as a result of government nationalization of freight during World War I, the bank (which merged with Nevada National in the first of a series of “transformative transactions”) continued to operate as “Wells, Fargo,” as indeed it does (albeit under unrecognizably evolved ownership) today.

 source

 

Written by LW

March 18, 2018 at 1:01 am

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