2aguy
Diamond Member
- Jul 19, 2014
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An article on busting up all the big tech companies...
Is Trust-Busting the Answer?
Our friend Glenn Reynolds has an op-ed in USA Today in which he urges antitrust enforcement actions against the dominant tech firms: “Donald Trump must bust Facebook, Amazon, Netflix, Google monopolies like Teddy Roosevelt.”
Roosevelt built a strong reputation by going after the trusts, huge combinations that placed control of entire industries in the hands of one or a few men. He broke up John D. Rockefeller’s Standard Oil, the Google of its day. He shut down J.P. Morgan’s Northern Securities Co., which would have monopolized rail transportation in much of the United States. And he pursued numerous other cases (45 in all) that broke up monopolies and returned competition to markets.
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Big monopolies aren’t just an economic threat: They’re a political threat. Because they’re largely free of market constraints, they don’t have to put all their energy into making a better product for less money. Instead, they put a lot of their energy into political manipulation to protect their monopoly.
An industry made up of 500 companies might want government protection, but it’s harder to get them to agree on a lobbying campaign. One made up of three companies, or one, can do so, and be sure that it will reap all the rewards of its effort.
Thus, as [Columbia Law professor Tim] Wu notes, “the more concentrated the industry, the more corrupt we can expect the political process to be.” And as he points out, these fears (and the realities) of huge companies wielding unchecked political power motivated the antitrust crusaders of a century ago every bit as much as concern about prices.
Perhaps so. But conventional antitrust theory assumes that the point of being a monopolist is to make more money by raising prices. Nothing in antitrust law, that I know of, contemplates the situation we have today, where companies like Facebook, Google, Twitter and YouTube are willing to make less money if it means they can suppress political views with which they disagree.
Today, things look a lot like Teddy Roosevelt’s era. A few monopolies occupy much of the tech world: Facebook, Amazon, Netflix and Google — FANG, as they’re often abbreviated. They gobble up potential competitors, as Facebook did with WhatsApp and Instagram.
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And these new tech monsters have a one-two punch that Standard Oil lacked: Not only do they control immense wealth and important industries, but their fields of operation — which give them enormous control over communications, including communications about politics — also give them direct political power that in many ways exceeds that of previous monopolies.
Is Trust-Busting the Answer?
Our friend Glenn Reynolds has an op-ed in USA Today in which he urges antitrust enforcement actions against the dominant tech firms: “Donald Trump must bust Facebook, Amazon, Netflix, Google monopolies like Teddy Roosevelt.”
Roosevelt built a strong reputation by going after the trusts, huge combinations that placed control of entire industries in the hands of one or a few men. He broke up John D. Rockefeller’s Standard Oil, the Google of its day. He shut down J.P. Morgan’s Northern Securities Co., which would have monopolized rail transportation in much of the United States. And he pursued numerous other cases (45 in all) that broke up monopolies and returned competition to markets.
***
Big monopolies aren’t just an economic threat: They’re a political threat. Because they’re largely free of market constraints, they don’t have to put all their energy into making a better product for less money. Instead, they put a lot of their energy into political manipulation to protect their monopoly.
An industry made up of 500 companies might want government protection, but it’s harder to get them to agree on a lobbying campaign. One made up of three companies, or one, can do so, and be sure that it will reap all the rewards of its effort.
Thus, as [Columbia Law professor Tim] Wu notes, “the more concentrated the industry, the more corrupt we can expect the political process to be.” And as he points out, these fears (and the realities) of huge companies wielding unchecked political power motivated the antitrust crusaders of a century ago every bit as much as concern about prices.
Perhaps so. But conventional antitrust theory assumes that the point of being a monopolist is to make more money by raising prices. Nothing in antitrust law, that I know of, contemplates the situation we have today, where companies like Facebook, Google, Twitter and YouTube are willing to make less money if it means they can suppress political views with which they disagree.
Today, things look a lot like Teddy Roosevelt’s era. A few monopolies occupy much of the tech world: Facebook, Amazon, Netflix and Google — FANG, as they’re often abbreviated. They gobble up potential competitors, as Facebook did with WhatsApp and Instagram.
***
And these new tech monsters have a one-two punch that Standard Oil lacked: Not only do they control immense wealth and important industries, but their fields of operation — which give them enormous control over communications, including communications about politics — also give them direct political power that in many ways exceeds that of previous monopolies.