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> The question is have we reached a point where technology and globalization provide such enormous returns to the economies of scale that we can't go back or is

> The question is have we reached a point where technology and globalization provide such enormous returns to the economies of scale that we can't go back or is all this corporate concentration just due to a lack of government enforcement? At some point, America decided that only horizontal monopolies counted, not vertical ones. Many of our concerns about antitrust would be assuaged if regulators started keeping separate markets separate. Like banning content distributors from buying content creators. Or requiring platforms to provide third-party-friendly APIs. Microsoft got in trouble for trying to vertically integrate its browser into its operating system. But Facebook isn't likewise called to task for treating Facebook live streams differently than others.

euyyn 9y ago
Microsoft got in trouble for a good deal of illegal things they did to protect the Windows monopoly from Java :) Integrating IE into the OS was fine in itself, but part of the bigger strategy for which they were sentenced.
- wdn 9y ago
  Microsoft biggest crime was they didn’t spend any money lobbying. Apple doing the same thing Microsoft did and worst, you cannot even change the default, yet no anti-trust on Apple. Different is Apple one of the biggest spender on lobbying.
  - euyyn 9y ago
    You should really read about the MS case, to understand in how many levels Apple isn't "doing the same thing".
stale2002 9y ago
Well so, thats because the concept of a vertical "monopoly" makes no sense. A monopoly means that you are the one major player in a certain market. It is in the word. It is definitely possible that a company could have excess market power in a certain SEGMENT of their vertically integrated market, but that is still a horizontal monopoly. Vertical integration isn't a threat to anybody as long as every segment of the market has competitors. For example, maybe facebook has a monopoly on the social network part of their product. And maybe they shouldn't be allowed to use that excess market power for bad purposes.
- humanrebar 9y ago
  Right. Semantic points aside, the claim is that non-trivial vertical integration is bad for market capitalism, bad for consumers, and bad for workers.
- khawkins 9y ago
  It's even worse than a monopoly, it's the elimination of a market. When you perform a vertical merger you no longer have to negotiate with people at that level of the market. The acquired business now only has to respond to the demands of the parent company and it is only through those demands that market forces act on the child business. Furthermore, since the parent company has removed its demand from the market, there is less money moving around. The less competitive businesses who contributed to the market forces keeping prices low end up folding or being vertically integrated into competitors. The market dies and the oligarchy strengthens immensely. Especially so because now startup competitors must have all segments of the market in order to compete.
  - stale2002 9y ago
    I mean, your argument is effectively that vertically integrated companies are so efficient, and lower costs so much, that they force competitors out of business. If I was a lawyer, fighting FOR the company, I would literally use your exact same argument as for why vertical integration is a good thing. Reducing costs, and making the market more efficient is a good thing, not a bad thing. Reducing prices is good, not bad.
    - vorotato 9y ago
      There's another explanation, that they have the capacity to drive price of entry up. That they have enough money saved that they can undercut their competitors and snuff them out before they can gain any market share. So this is true whether they are efficient or not. However I'd argue the damning blow is that centralization makes efficient but fragile structures. Its why everyone hates a monolithic codebase.
    - rifung 9y ago
nickik 9y ago
False. The law actually changed because judges noticed that the law as it was in the books was pretty nonsensical and totally arbitrary. It was mostly created, pushed and used by a group of progressive to go after their political opponents. Its well documented (even if people choice not to remember this part) that this was very much PR and protectionism of businesses that were afraid to be driven of the market by the larger more efficient companies. The first anti-trust law in US history for example was quite explicitly passed to restrict the centralised slaughter house industry from driving all the local butchers out of businesses) The new interpretation that has been adopted requires that you can show consumer harm. I actually have credible evidence that people are getting overpriced. > Many of our concerns about antitrust would be assuaged if regulators started keeping separate markets separate. That is very easily said but practically impossible. And even if it is possible, it would be massively harmful because some of the largest changes in the history happened because or were at least massively supported by companies bridging, merging, combining, integrating different markets. In fact what you describe is pretty much called 'Indian Socialism' a form of 'Socialism' that was very in vogue with British elites after WW2 and India served as a nice place to test this since many of the Indian leaders had an English education and agreed with it. They had a sort of 5 year plan that attempted to plan how many companies could be in what market requiring licences to go into or out of different markets. Those licences were of course a perfect tool for the state bureaucracy to get bribes from all business people. > Or requiring platforms to provide third-party-friendly APIs. Again, said very easily. Have you considered what that would mean? It would mean government regulator would have to go threw each layer of the software and each application and define adequate rules about what sharing would mean. This is a political insanity specially in a democracy. Now you could argue, that it should all be made by some loosely controlled government bureaucracy like the Fed. An API tzar but how that would end is pretty easy to see. I would agree that it would make sense for government to support and insensitive the adoption of open standard that were created and adopted by people and companies in the market voluntary. If you want to use state power to force companies to support open standards it can not be on a ad-hook bases. You would need to think about a specific general law that could be applied to everybody and that does not involve concrete technologies or companies. That would be pretty hard because I think once such a thing is written most people (at least in here) would oppose it.
platz 9y ago
RE: Antitrust - on the right track. Consumer's can't solve this from the ground up. What's needed is to prevent certain kinds of key acquisitions. The law around acquisitions is too permissive in an age of network effects; acquisition laws were fine pre-internet but don't solve their intended purpose anymore. Normally, the market corrects against the biggest players because the biggest players are slow to change culture and their business. But, acquisitions are the mechanism by which the big players are preventing themselves from being disrupted by smaller, more nimble players. If the big players can simply buy up any new comers (who will want a deserved pay-out for their efforts) on the scene, they maintain complete control regardless of what consumers want. Otherwise, any "alternative practices" you try to foster will simply be crushed, if they ever become a large enough threat. Facebook acquiring Instagram is a perfect example.
- acover 9y ago
  What about a consumer group to assert pressure? Edit: a consumer group could have monopsony powers and be capable of negotiating concessions. Such as an open api.
  - briandear 9y ago
    Consumers already can do that — they can refuse to use FB products — but they don’t. So a consumer group is pretty useless without enough consumers to actually exert their power.
    - owly 9y ago
      This is exactly right. Consumers could organize a week without Facebook event, including deleting the app from their devices. If a significant number of people participated, FB would get the message.
    - acover 9y ago
      Boycotts aren't the only option. Consumers have boycotted products in the past. Consumer pressure has worked against Facebook in the past. I agree that it is an unlikely and difficult solution. I don't see an easy one.

euyyn 9y ago

Microsoft got in trouble for a good deal of illegal things they did to protect the Windows monopoly from Java :) Integrating IE into the OS was fine in itself, but part of the bigger strategy for which they were sentenced.

wdn 9y ago
Microsoft biggest crime was they didn’t spend any money lobbying. Apple doing the same thing Microsoft did and worst, you cannot even change the default, yet no anti-trust on Apple. Different is Apple one of the biggest spender on lobbying.
- euyyn 9y ago
  You should really read about the MS case, to understand in how many levels Apple isn't "doing the same thing".

stale2002 9y ago

Well so, thats because the concept of a vertical "monopoly" makes no sense. A monopoly means that you are the one major player in a certain market. It is in the word. It is definitely possible that a company could have excess market power in a certain SEGMENT of their vertically integrated market, but that is still a horizontal monopoly. Vertical integration isn't a threat to anybody as long as every segment of the market has competitors. For example, maybe facebook has a monopoly on the social network part of their product. And maybe they shouldn't be allowed to use that excess market power for bad purposes.

humanrebar 9y ago
Right. Semantic points aside, the claim is that non-trivial vertical integration is bad for market capitalism, bad for consumers, and bad for workers.
khawkins 9y ago
It's even worse than a monopoly, it's the elimination of a market. When you perform a vertical merger you no longer have to negotiate with people at that level of the market. The acquired business now only has to respond to the demands of the parent company and it is only through those demands that market forces act on the child business. Furthermore, since the parent company has removed its demand from the market, there is less money moving around. The less competitive businesses who contributed to the market forces keeping prices low end up folding or being vertically integrated into competitors. The market dies and the oligarchy strengthens immensely. Especially so because now startup competitors must have all segments of the market in order to compete.
- stale2002 9y ago
  I mean, your argument is effectively that vertically integrated companies are so efficient, and lower costs so much, that they force competitors out of business. If I was a lawyer, fighting FOR the company, I would literally use your exact same argument as for why vertical integration is a good thing. Reducing costs, and making the market more efficient is a good thing, not a bad thing. Reducing prices is good, not bad.
  - vorotato 9y ago
    There's another explanation, that they have the capacity to drive price of entry up. That they have enough money saved that they can undercut their competitors and snuff them out before they can gain any market share. So this is true whether they are efficient or not. However I'd argue the damning blow is that centralization makes efficient but fragile structures. Its why everyone hates a monolithic codebase.
  - rifung 9y ago

nickik 9y ago

False. The law actually changed because judges noticed that the law as it was in the books was pretty nonsensical and totally arbitrary. It was mostly created, pushed and used by a group of progressive to go after their political opponents. Its well documented (even if people choice not to remember this part) that this was very much PR and protectionism of businesses that were afraid to be driven of the market by the larger more efficient companies. The first anti-trust law in US history for example was quite explicitly passed to restrict the centralised slaughter house industry from driving all the local butchers out of businesses) The new interpretation that has been adopted requires that you can show consumer harm. I actually have credible evidence that people are getting overpriced. > Many of our concerns about antitrust would be assuaged if regulators started keeping separate markets separate. That is very easily said but practically impossible. And even if it is possible, it would be massively harmful because some of the largest changes in the history happened because or were at least massively supported by companies bridging, merging, combining, integrating different markets. In fact what you describe is pretty much called 'Indian Socialism' a form of 'Socialism' that was very in vogue with British elites after WW2 and India served as a nice place to test this since many of the Indian leaders had an English education and agreed with it. They had a sort of 5 year plan that attempted to plan how many companies could be in what market requiring licences to go into or out of different markets. Those licences were of course a perfect tool for the state bureaucracy to get bribes from all business people. > Or requiring platforms to provide third-party-friendly APIs. Again, said very easily. Have you considered what that would mean? It would mean government regulator would have to go threw each layer of the software and each application and define adequate rules about what sharing would mean. This is a political insanity specially in a democracy. Now you could argue, that it should all be made by some loosely controlled government bureaucracy like the Fed. An API tzar but how that would end is pretty easy to see. I would agree that it would make sense for government to support and insensitive the adoption of open standard that were created and adopted by people and companies in the market voluntary. If you want to use state power to force companies to support open standards it can not be on a ad-hook bases. You would need to think about a specific general law that could be applied to everybody and that does not involve concrete technologies or companies. That would be pretty hard because I think once such a thing is written most people (at least in here) would oppose it.

platz 9y ago

RE: Antitrust - on the right track. Consumer's can't solve this from the ground up. What's needed is to prevent certain kinds of key acquisitions. The law around acquisitions is too permissive in an age of network effects; acquisition laws were fine pre-internet but don't solve their intended purpose anymore. Normally, the market corrects against the biggest players because the biggest players are slow to change culture and their business. But, acquisitions are the mechanism by which the big players are preventing themselves from being disrupted by smaller, more nimble players. If the big players can simply buy up any new comers (who will want a deserved pay-out for their efforts) on the scene, they maintain complete control regardless of what consumers want. Otherwise, any "alternative practices" you try to foster will simply be crushed, if they ever become a large enough threat. Facebook acquiring Instagram is a perfect example.

acover 9y ago
What about a consumer group to assert pressure? Edit: a consumer group could have monopsony powers and be capable of negotiating concessions. Such as an open api.
- briandear 9y ago
  Consumers already can do that — they can refuse to use FB products — but they don’t. So a consumer group is pretty useless without enough consumers to actually exert their power.
  - owly 9y ago
    This is exactly right. Consumers could organize a week without Facebook event, including deleting the app from their devices. If a significant number of people participated, FB would get the message.
  - acover 9y ago
    Boycotts aren't the only option. Consumers have boycotted products in the past. Consumer pressure has worked against Facebook in the past. I agree that it is an unlikely and difficult solution. I don't see an easy one.