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jerryking : monopolies   24

Why the US economy isn’t as competitive or free as you think
November 14, 2019 | Financial Times | by Martin Wolf.

The Great Reversal: How America Gave up on Free Markets, by Thomas Philippon, Belknap Press RRP$29.95, 368 pages

It began with a simple question: “Why on earth are US cell phone plans so expensive?” In pursuit of the answer, Thomas Philippon embarked on a detailed empirical analysis of how business actually operates in today’s America and finished up by overturning much of what almost everybody takes as read about the world’s biggest economy.

Over the past two decades, competition and competition policy have atrophied, with dire consequences......America is no longer the home of the free-market economy, competition is not more fierce there than in Europe, its regulators are not more proactive and its new crop of superstar companies not radically different from their predecessors.

Philippon's argument:
(1) US markets have become less competitive: concentration is high in many industries, leaders are entrenched, and their profit rates are excessive.
(2) this lack of competition has hurt US consumers and workers: it has led to higher prices, lower investment and lower productivity growth.
(3) contrary to common wisdom, the main explanation is political, not technological: Philippon traces the decrease in competition to increasing barriers to entry and weak antitrust enforcement, sustained by heavy lobbying and campaign contributions.”....... the US economy has seen a significant reduction in competition and a corresponding rise in monopoly and oligopoly.

What should the US want? The answers, suggests Philippon, are: free entry; regulators prepared to make mistakes when acting against monopoly; and protection of transparency, privacy and data ownership by customers. The great obstacle to action in the US is the pervasive role of money in politics. The results are the twin evils of oligopoly and oligarchy. Donald Trump is in so many ways a product of the defective capitalism described in The Great Reversal. What the US needs, instead, is another Teddy Roosevelt and his energetic trust-busting. Is that still imaginable? All believers in the virtues of competitive capitalism must hope so.
antitrust  barriers_to_entry  books  book_reviews  campaign_contributions  Citizens_United  competitiveness_of_nations  crony_capitalism  dark_money  economics  economists  entrenched_interests  EU  FAANG  free_markets  French  gun_laws  healthcare  lobbying  market_concentration  monopolies  monopsony  oligopolies  oligarchs  regulators  Theodore_Roosevelt  uncompetitive 
november 2019 by jerryking
Lina Khan: ‘This isn’t just about antitrust. It’s about values’
March 29, 2019 | Financial Times | by Rana Foroohar.

Lina Khan is the legal wunderkind reshaping the global debate over competition and corporate power......While still a student at Yale Law School, she wrote a paper, “Amazon’s Antitrust Paradox”, which was published in the school’s influential journal..... hit a nerve at a time when the overweening power of the Big Tech companies, from Facebook to Google to Amazon, is rising up the agenda......For roughly four decades, antitrust scholars — taking their lead from Robert Bork’s 1978 book The Antitrust Paradox — have pegged their definitions of monopoly power to short-term price effects; so if Amazon is making prices lower for consumers, the market must be working effectively.....Khan made the case that this interpretation of US antitrust law, meant to regulate competition and curb monopolistic practices, is utterly unsuited to the architecture of the modern economy.....Khan's counterargument: that it doesn’t matter if companies such as Amazon are making things cheaper in dollars if they are using predatory pricing strategies to dominate multiple industries and choke off competition and choice.....Speaking to hedge funds and banks during her research, Khan found that they were valuing Amazon and its growth potential in a way that signified monopoly power..." I’m interested in imbalances in market power and how they manifest. That’s something you can see not just in tech but across many industries,” says Khan, who has written sharp pieces on monopoly power in areas as diverse as airlines and agriculture. " Khan, like many in her cohort, believes otherwise. “If markets are leading us in directions that we, as a democratic society, decide are not compatible with our vision of liberty or democracy, it is incumbent upon government to do something.” Lina Khan has had a stint as a legal fellow at the Federal Trade Commission, consulted with EU officials, influenced competition policy in India, brainstormed ideas with presidential hopeful Elizabeth Warren and — recently joined the House Subcommittee on Antitrust, Commercial and Administrative Law. The 2008 financial crisis she thinks “about markets, and the government’s response to them, and certain forms of intervention that they do take, and that they don’t take”.....Khan, Lynn and others including the Columbia academic Tim Wu have developed and popularised the “new Brandeis” school of antitrust regulation, hearkening back to the era in which Louis Brandeis, the “people’s lawyer”, took on oligarchs such as John D Rockefeller and JP Morgan.....Lina sees Amazon as not just a discount retailer but as a marketing platform, delivery and logistics network, a payment service, a credit lender, auction house, publisher and so on, and to understand just how ill-equipped current antitrust law was to deal with such a multi-faceted entity......a Columbia Law Review paper out in May 2019 will explores the case for separating the ownership of technology platforms from the commercial activity they host, so that Big Tech firms cannot both run a dominant marketplace and compete on it. via a host of old cases — from railroad antitrust suits to the separation of merchant banking and the ownership of commodities — to argue that “if you are a form of infrastructure, then you shouldn’t be able to compete with all the businesses dependent on your infrastructure”....“The new Brandeis movement isn’t just about antitrust,” .... Rather, it is about values. “Laws reflect values,” she says. “Antitrust laws used to reflect one set of values, and then there was a change in values that led us to a very different place.”

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21st._century  Amazon  antitrust  Big_Tech  digital_economy  financial_crises  FTC  lawyers  Lina_Khan  monopolies  multifaceted  paradoxes  platforms  policymakers  predatory_practices  Rana_Foroohar  regulators  Robert_Bork  Tim_Wu  wunderkind  Yale  values  value_judgements 
march 2019 by jerryking
Roger McNamee on how to tame Big Tech
February 7, 2019 | Financial Times | Roger McNamee.

Government intervention of this kind is a first step on the path to resolving the privacy issues that result from the architecture, business models and culture of internet platforms. But privacy is not the only problem we must confront. Internet platforms are transforming our economy and culture in unprecedented ways. We do not even have a vocabulary to describe this transformation, which complicates the challenge facing policymakers....Google, Facebook and other internet platforms use data to influence or manipulate users in ways that create economic value for the platform, but not necessarily for the users themselves. In the context of these platforms, users are not the customer. They are not even the product. They are more like fuel.....Google, Facebook and the rest now have economic power on the scale of early 20th-century monopolists such as Standard Oil. What is unprecedented is the political power that internet platforms have amassed — power that they exercise with no accountability or oversight, and seemingly without being aware of their responsibility to society......When capitalism functions properly, government sets and enforces the rules under which businesses and citizens must operate. Today, however, corpor­ations have usurped this role. Code and algorithms have replaced the legal system as the limiter on behaviour. Corporations such as Google and Facebook behave as if they are not accountable to anyone. Google’s seeming disdain for regulation by the EU and Facebook’s violations of the spirit of its agreement with the US FTC over user consent are cases in point......AI promises to be revolutionary. That said, it will not necessarily be a force for good. The problem is the people who create AI. They are human...McNamee recommends two areas of emphasis: regulation and innovation. As for the former, the most important requirement is to create and enforce standards that require new technology to serve the needs of those who use it and society as a whole. ...... The IoT requires our approval. Do not give it until vendors behave responsibly. Demand that policymakers take action to protect public health, democracy, privacy, innovation and the economy.
accountability  Alexa  antitrust  artificial_intelligence  biases  Big_Tech  consent  dark_side  Facebook  Google  Industrial_Internet  monopolies  personal_data  platforms  political_power  privacy  Roger_McNamee  sensors  surveillance  unintended_consequences 
february 2019 by jerryking
Big Tech in hiring spree for looming antitrust battles | Financial Times
Kiran Stacey in Washington DECEMBER 23, 2018 Print this page6
Big technology and telecoms companies have embarked on a hiring spree of former antitrust officials as their industries gear up for what experts warn could be an “existential” battle over whether they should be broken up.

In the last few months, Facebook, Amazon and AT&T have all hired senior antitrust officials from the US Department of Justice as they confront a new generation of regulators who are interested in preventing concentrations of economic power......Many of the biggest US technology companies have endured a difficult year, facing allegations of not protecting customer data, failing to prevent Russian interference in American democracy and showing political bias.

In response, several have beefed up their lobbying operations in Washington as they look to engage more with politicians, having previously preferred to operate under the radar. .....Experts say the hirings reflect a growing belief that competition policy could become the next significant political battleground....The European Commission has investigated US technology companies for alleged anti-competitive behaviour. Margrethe Vestager, the European Commissioner for Competition, is bringing cases against Google and is looking into Amazon.

Such cases have been more difficult to pursue in the US, where the law is focused more on whether anti-competitive behaviour is keeping prices artificially high.

A group of younger progressive regulators and politicians have argued in recent years, however, that technology companies that give their services away for free but dominate their markets should come in for as much attention.....Rohit Chopra, a Federal Trade Commissioner in his mid-30s, for example, recently hired Lina Khan, a 29-year-old policy thinker who has argued that large technology companies can both bring prices down and be harmful to society in general.
Amazon  antitrust  AT&T  Big_Tech  competition_policy  corporate_concentration  Department_of_Justice  FAANG  Facebook  FTC  hiring  Lina_Khan  lawyers  lobbying  market_power  market_concentration  monopolies  platforms  regulation  regulators  revolving_door  under_the_radar 
december 2018 by jerryking
Amazon’s Antitrust Antagonist Has a Breakthrough Idea - The New York Times
By David Streitfeld
Sept. 7, 2018

....... Ms. Khan wrote, that once-robust monopoly laws have been marginalized, Amazon is consequently able to amass so much structural power that let it exert increasing control over many parts of the economy. Amazon has so much data on so many customers, it is so willing to forgo profits, it is so aggressive and has so many advantages from its shipping and warehouse infrastructure that it exerts an influence much broader than its market share. It resembles the all-powerful railroads of the Progressive Era, .......The F.T.C. is holding a series of hearings this fall, the first of their type since 1995, on whether a changing economy requires changing enforcement attitudes.

The hearings will begin on Sept. 13 at Georgetown University Law Center. Two panels will debate whether antitrust should keep its narrow focus or, as Ms. Khan urges, expand its range.

“Ideas and assumptions that it was heretical to question are now openly being contested,” she said. “We’re finally beginning to examine how antitrust laws, which were rooted in deep suspicion of concentrated private power, now often promote it.”........Her Yale Law Journal paper argued that monopoly regulators who focus on consumer prices are thinking too short-term. In Ms. Khan’s view, a company like Amazon — one that sells things, competes against others selling things, and owns the platform where the deals are done — has an inherent advantage that undermines fair competition. “The long-term interests of consumers include product quality, variety and innovation — factors best promoted through both a robust competitive process and open markets,” she wrote.

The issue Ms. Khan’s article really brought to the fore is this: Do we trust Amazon, or any large company, to create our future?........ “It’s so much easier to teach public policy to people who already know how to write than teach writing to public policy experts,” said Mr. Lynn, a former journalist.

Ms. Khan wrote about industry consolidation and monopolistic practices for Washington publications that specialize in policy, went to Yale Law School, published her Amazon paper and then came back to Washington last year, just as interest was starting to swell in her work.... the F.T.C. needs to bring back a tool buried in its toolbox: its ability to make rules......“Amazon is not the problem — the state of the law is the problem, and Amazon depicts that in an elegant way,” she said......“could make sense” to treat Amazon’s e-commerce operation like a bridge, highway, port, power grid or telephone network — all of which are required to allow access to their infrastructure on a nondiscriminatory basis.
Amazon  antitrust  breakthroughs  FTC  heretical  ideas  lawyers  Lina_Khan  monopolies  platforms  retailers  regulators  reframing  Yale 
september 2018 by jerryking
This is the age of the Microsoft and Amazon economy
Tim Harford

the big digital players: Google dominates search; Facebook is the Goliath of social media; Amazon rules online retail. But, as documented in a new working paper by five economists, American business is in general becoming more concentrated.

David Autor and his colleagues looked at 676 industries in the US — from cigarettes to greeting cards, musical instruments to payday lenders. They found that for the typical industry in each of six sectors — manufacturing, retail, finance, services, wholesale and utilities/transportation — the biggest companies are producing a larger share of output..... “superstar firms” tend to be more efficient. They sell more at a lower cost, so they enjoy a larger profit margin. ....Superstar firms are highly productive and achieve more with less. Because of this profitability, more of the value added by the company flows to shareholders and less to workers. And what happens in these groups will tend to be reflected in the economy as a whole, because superstar firms have an increasingly important role.
Amazon  Big_Tech  corporate_concentration  David_Autor  economics  economies_of_scale  Facebook  Microsoft  monopolies  monopsony  network_effects  platforms  retailers  superstars  Tim_Harford 
january 2018 by jerryking
Have Americans Given Up?
MAR 5, 2017 | The Atlantic | by DEREK THOMPSON.
...this is a mirage, according to the economist and popular writer Tyler Cowen, whose new book is The Complacent Class: The Self-Defeating Quest for the American Dream. In fact, the nation's dynamism is in the dumps. Americans move less than they used to. They start fewer companies. Caught in the hypnotic undertow of TV and video games, they are less likely to go outside. Even the federal government itself has transformed from an investment vehicle, which once spent a large share of its money on infrastructure and research, to an insurance conglomerate, which spends more than half its money on health care and Social Security. A nation of risk-takers has become a nation of risk-mitigation experts...So, what happened? Cowen’s thought-provoking book emphasizes several causes, including geographic immobility, housing prices, and monopolization.....several studies have shown that many U.S. workers don’t start new companies because they’re afraid of losing their employer-sponsored health insurance. A single-payer system might increase overall entrepreneurial activity. As I read Cowen’s book, I thought of an acrobat show. No circus performer wants to leap between swings without a net to catch them as they fall. The trick is to design for safety without designing for complacency.
large_companies  dynamism  America_in_Decline?  self-defeating  Tyler_Cowen  economists  books  innovation  illusions  Silicon_Valley  geographic_mobility  economic_mobility  housing  Donald_Trump  elitism  restlessness  safety_nets  risk-mitigation  monopolies  the_American_dream 
march 2017 by jerryking
With Competition in Tatters, the Rip of Inequality Widens - The New York Times
Eduardo Porter
ECONOMIC SCENE JULY 12, 2016

The new merger amounts to another step in the long decline of competition in many American industries.

It is a decline that stunts entrepreneurship, hinders workers’ mobility and slows productivity growth. Slowing this trend has emerged as a tempting new avenue to address the plight of a beleaguered working class. Reviving flagging American competition might even help stop America’s ever-widening inequality.

In April, President Obama issued an executive order calling on government agencies to look for ways to bolster competition in the industries they monitor.....There is plenty of evidence that corporate concentration is on the rise. Mr. Furman and Mr. Orszag report that between 1997 and 2007 the market share of the 50 largest companies increased in three-fourths of the broad industry sectors followed by the census......Studies have found increased concentration in agricultural businesses and wireless communications as well.....but is competition policy about increasing the economy’s efficiency, or is it about changing the distribution of the spoils....should antitrust be a major tool for addressing inequality?....How did the American economy get so concentrated? Technology surely helped. Tech giants like Google and Facebook benefit from economies of scale and network effects. ....Government watchdogs also messed up....How to fix corporate concentration? In industries perceived to be fairly concentrated, presume future mergers will be anticompetitive, take the burden of proof off the regulator’s shoulders and putting the onus on the merging companies to prove it is not....Regulations can also be tool: How about demanding that the FDA approve generic drugs more quickly?
competition  antitrust  monopolies  anticompetitive_behaviour  collusion  market_power  corporate_concentration  economies_of_scale  network_effects  platforms  income_inequality  regulators  regulation  competition_policy 
july 2016 by jerryking
Europe should forget Google and investigate its own shortcomings — FT.com
APRIL 22, 2016 | FT | by Michael Moritz

There’s nothing new about this strain of anti-Americanism running rampant in Brussels. Some of its intellectual roots stretch back 50 years to Jean-Jacques Servan-Schreiber, the French publisher and journalist, who tried to galvanise Europeans into countering the threat from across the Atlantic with the publication, in 1967, of The American Challenge. Its echoes can be heard in this week’s press conferences in Brussels. Forget the fact that American ingenuity and daring has brought to hundreds of millions of Europeans phones cheaper and more powerful than the supercomputers of the 1970s, thousands of films and TV shows that can be streamed at the touch of a button, free text-messaging services, books that are delivered overnight and thousands of comfortable cars that can be summoned at a moment’s notice.

Rather than pointing across the Atlantic and seeking scapegoats, the Commissioners who have just launched another fusillade against one of their favourite American bogeymen may want to start a series of investigations into Europe’s own shortcomings. This may be a more fruitful exercise than reigniting the spent flames of the 1960s.
1967  Michael_Moritz  Google  Facebook  Silicon_Valley  anti-Americanism  monopolies  Europe  EU  shortcomings  Sequoia  ingenuity  daring 
may 2016 by jerryking
James Courtovich: What Uber and School Choice Have in Common - WSJ
By JAMES C. COURTOVICH
Sept. 28, 2014 6:57 p.m. ET
94 COMMENTS

Innovation also unlocks the value in idle cars, rooms, tools and hands—and opens a channel for billions of dollars of capital to spur economic growth and create new jobs. "Money is like blood; it must flow. Hoarding and holding on to it causes sludging . . . and, like clotted blood, it can only cause damage." Adam Smith ? Try Deepak Chopra, doctor and two-time Barack Obama backer.
sharing_economy  Uber  monopolies  idle_funds  capital_flows  cash_reserves 
september 2014 by jerryking
Competition Is for Losers - WSJ
By PETER THIEL
Sept. 12, 2014

Adapted from Mr. Thiel's new book, with Blake Masters, "Zero to One: Notes on Startups, or How to Build the Future," Mr. Thiel’s “Zero to One,” offers three prongs of his philosophy: 1) It is better to risk boldness than triviality. 2) A bad plan is better than no plan. 3) Sales matter just as much as product.
Peter_Thiel  competition  economics  Google  monopolies  books 
september 2014 by jerryking
Review & Outlook: Microsoft and Nokia Were Giants Once - WSJ.com
September 4, 2013 | WSJ | Op-ed

Nokia itself has been the veritable avatar of corporate reinvention, starting out in wood pulp in the 19th century. As recently as the early 1990s, the company was an unwieldy Finnish industrial conglomerate, trying to make its pivot into mobile telephony. Few then predicted its meteoric rise, or its equally meteoric fall. In shedding its handset business, Nokia will become essentially a maker of network equipment for cellphone operators.

The larger point here is that corporate giants come and go in a competitive economy. No monopoly is permanent, unless it is enforced by government, which as everyone knows almost never changes. It thinks and usually behaves the same even as the rest of the world evolves or leaps ahead.
op-ed  Microsoft  Nokia  19th_century  boom-to-bust  Finland  Finnish  impermanence  monopolies  reinvention 
september 2013 by jerryking
Google's Turn to Quake? - WSJ.com
April 4, 2012 | WSJ | By ROBERT HAHN.

Google's Turn to Quake? IBM and Microsoft fought antitrust authorities on multiple continents, even as they lost their fleeting dominance....Antitrust policy is built on the notion that market concentration, collusion or nasty behavior toward rivals undermines efficiency by allowing producers to charge more and to block innovation. That's not a bad rule of thumb for "old economy" industries. Before Japanese auto makers broke through the barriers, Detroit charged too much, divvying up most of the surplus between workers and managers. Worse—much worse—auto industry technology and productivity stagnated, as stakeholders sheltered their pockets of privilege from the winds of change.

But high-tech industries in general, and information technology industries in particular, are an entirely different sort of beast. Market concentration and huge profits are typically a consequence of economies of scale and returns to intellectual property, not monopoly power. (It costs no more to produce 10 million copies of Microsoft Office than 10 copies.) And while the management of the current crop of winning companies may be as eager as monopolists of yore to bar the doors to rivals, rapid technological change denies them the opportunity.
Google  IBM  Microsoft  antitrust  competition  competitive_landscape  increasing_returns_to_scale  collusion  market_power  corporate_concentration  monopolies  economies_of_scale  intellectual_property  automotive_industry  productivity  winner-take-all  market_concentration  technological_change  returns_to_intellectual_property 
april 2012 by jerryking
A kick in the figurative pants
October 6, 2011 | Report on Small Business | Catherine Swift.

There are many government monopolies, besides Canada Post, that need a kick in the figurative pants to become more efficient and less costly, or be abolished. Here are a few to start: primary health care, education, workers' compensation and the Canadian Wheat Board (CWB).
postal_services  CFIB  monopolies  Canada_Post 
october 2011 by jerryking
Meet the New Monopoly, Same as the Old One
November 19, 2010 | Technology Review | By Brian Bergstein.
A New book argues that concentration of power is an inevitable result
of new communications networks.
Tim_Wu  monopolies  Information_Rules  corporate_concentration  market_power 
november 2010 by jerryking
Currents: Tim Wu on Communication, Chaos, and Control
October 11, 2010 | : The New Yorker: | Jeffrey Toobin talks
with Tim Wu, a professor at Columbia Law School and the author of “The
Master Switch: The Rise and Fall of Information Empires,” about how
forms of communication, from the telephone to the Internet, are
eventually controlled by monopolies; the battle between Apple and
Google; and the future of information technology.
web_video  interviews  monopolies  future  Tim_Wu  Information_Rules  competitive_landscape 
november 2010 by jerryking
In the Grip of the Internet Monopolists - WSJ.com
NOVEMBER 13, 2010 | WSJ | By TIM WU. In the Grip of the New
Monopolists. Do away with Google? Break up Facebook? We can't imagine
life without them—and that's the problem.
Google  Facebook  monopolies  Tim_Wu  Information_Rules 
november 2010 by jerryking

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