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A Supreme Court Case That Could Give Tech Giants More Power

109 points by IntronExon 9y ago

laser 9y ago
In the case being tried, why is it not straightforward to demonstrate that higher costs for the merchants due to anti-competitive practices by credit card companies leads to higher costs for consumers, and therefore meets the two-sided market standard that the author fears? I'm not sure on the edges whether the concept of harming competition for the benefit of consumers is just, but at least in the example case I don't see how this is an issue. Are the standards for demonstrating harm so high that you can't make a strong legal case that higher costs for merchants gets passed to consumers?
- pravda 9y ago
  >higher costs for merchants gets passed to consumers? This is a common misconception. These fees come out of merchant profits. Otherwise, merchants would not care.
  - cmurf 9y ago
    Account wise, merchant fees are an expense taken out of revenue, not out of profit. The fee is a cost on goods sold. Merchants care because by contract it causes them to inflate the price of all products, they're disallowed from explicitly showing the customer the fee as a line item, even though it has the same effect on price as a tax. Most merchants would prefer the buyer have more information about why something costs what it does. Ergo the cash and debit card buyer would have no such fee on their receipt; someone with an ordinary credit card might have a 3% fee, and someone with a high kickback card might have a 5% fee. Rather than permitting freeloaders.
    - ExactoKnight 9y ago
      Not necessarily. Hiding how much something costs versus what you charge for it, is the secret sauce to making money in Business.
  - laser 9y ago
    Seems like six of one, half dozen of the other. The merchants are the ones directly paying the transaction fee, but merchants only provide services to consumers in the for-profit sector so long as they can make a profit. As a bit of an extreme to clearly demonstrate the principle, if a business is operating at a 3% profit margin on revenue before processing fees, and credit card providers demand a flat 3% + $0.30 fee per transaction, then the business becomes unprofitable, and loses $0.30 per transaction. Only one of three things can happen here. 1. The business eventually shuts down. 2. The business raises its prices. 3. The business cuts costs (lowers quality of product on average? Unless can take advantage of non-harmful cost-saving mechanisms, like informing consumers of cheaper transaction payment options, offering incentives for such, etc. which is what is being restricted anti-competitively). All three of these responses directly harm consumers. Case closed?
    - pravda 9y ago
      Well, there is theory, and there is real world. In the real world, reductions in debit card fees (in the USA, via the Durbin Amendment) have not lead to lowered prices, just increased profits. [1] This explains why merchants care about processing fees. [1] From page 27 of https://www.law.gmu.edu/assets/files/publications/working_papers/1418.pdf https://www.law.gmu.edu/assets/files/publications/working_pa... "In the year following Durbin’s implementation, gasoline retailers realized more than $1 billion in savings from reduced interchange fees. But 'while this should mean savings of roughly 3 cents per gallon, no savings have been passed on to consumers.' This is particularly remarkable and instructive given that the retail gasoline industry is highly competitive, and at least one other study has demonstrated that gasoline excise taxes are almost instantly and fully passed through to consumers"
      - argonaut 9y ago
        Your own report contradicts your argument all over the place. "There is little doubt that the Durbin Amendment had a major effect on consumers — and would-be bank customers — as issuers have, in various ways, passed on some of the costs of reduced interchange fee receipts, as discussed above" " retailers of smaller ticket items in particular have seen increased interchange fee costs as a result of the Durbin Amendment, and there is anecdotal evidence that these fees are being passed on to consumers" I didn't bother reading the entire report, either.
  - toast0 9y ago
    Consumer cost is basically the sum of all of the underlying costs, and all of the underlying vendors' profits. In the short term, if the cost of payment processing goes up or down, the merchant covers the change with its profits; however, prices can move. If I'm a merchant and my costs went up, I'm going to try to increase my prices to cover my costs and my profit target; if my costs go down, I may lower my prices to try to attract more customers, or because my competitors lowered theirs -- especially given all the merchants are paying similar fees, a big drop in processing fees would likely be reflected in consumer costs.
    - da_chicken 9y ago
      Yep. All costs are subsidized by the end consumer. That includes costs of service providers (aka, middle men) like shipping and credit card fees. The merchant sets their prices based on the cost of the product and the cost to bring the product to market. If their profit is too low to sustain the business, prices go up. It does not matter why profit is too low. Any cost to the merchant increases the price for the consumer.
  - temporalparts 9y ago
    The people who actually pays for this are cash and debit card users. Because there is a single price for merchants, the merchant charges marginally higher to cover the cost of the transactions. Credit card users are less impacted because credit card companies convert a portion of the revenue into incentives for their card users to continue using their cards. (Chase Sapphire Reserve anyone?) Here's a good paper that goes into this: https://www.bostonfed.org/publications/public-policy-discussion-paper/2010/who-gains-and-who-loses-from-credit-card-payments-theory-and-calibrations.aspx https://www.bostonfed.org/publications/public-policy-discuss... From the abstract: On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year.
aventrix 9y ago
With regard to the supreme court case itself, and the question of the credit card merchants having an oligopoly... What's stopping Paypal, Square, Stripe, or even Apple Pay from making the leap from payment processor to issuing their own Credit/Debit cards?
- kjksf 9y ago
  Bear in mind I'm guessing here. When you use your credit card or debit card in a store, you swipe it in a Point Of Sale terminal. That terminal connects, via network, with payment processing software managed by Visa (and other card suppliers) to authorize the payment and move the money from your balance to store's balance. If you were to create your own credit card, how would that processed? Visa is not going to process your credit card. In order to have your credit card processed you would have to convince stores to upgrade POS terminals to also talk to your card authorization network. That's just not gonna happen which is why Visa is not going to loose their lock on credit cards. The only viable solution would be legislation that forces Visa to process other people's cards, maybe via some standard protocol, at a reasonable price (and that price would have to be much, much lower that Visa's fees to make that workable, because you want to make money on processing fees too).
  - paulie_a 9y ago
    I work on a platform that actually has private labeled credit cards baked in. From my understanding this is not unusual, just under utilized
    - kjksf 9y ago
      What is "private labeled" in this context? I have a credit card from Wells Fargo. It's still made by Visa and Visa takes its cut of credit card processing fees. My point is that in practice you can't issue a credit card and avoid Visa (or Mastercard) processing fees. You would have to get most merchants to upgrade their POS terminals to support your payment network and that's not going to happen.
tabeth 9y ago
So if you wanted tech giants to have less power what exactly would you do? I suppose you could tell your representative, but then they'd have to somehow influence the senators of your state, but even if that happens you need a majority rule to do something, when it comes to an eventual vote, right? Even if they did have a majority, the Supreme Court, which is inherently stacked one way or another, could simply negate whatever decision was made, no? It's amazing that despite all of the technological growth, there are more middle people than ever skimming off the top. Somehow it feels that technology is simply making things even more inefficient.
- IBM 9y ago
  >So if you wanted tech giants to have less power what exactly would you do? It's really easy. This is the nuclear option, but it's very doable: eliminate their Section 230 immunity [1]. All of these internet businesses and platforms are running markets online, but they face zero liability for anything bad that happens on their platform. It's what gives Google and Facebook such high margins. They employ a relatively small number of highly paid software engineers and let the buyers and sellers take it from there on their marketplace. If they were actually responsible or liable for what happened on their platform, it would mean they'd have a lot more policing to do. And policing costs money. Customer service costs money (which is why there's no one to call at Facebook or Google when something's wrong with your account). Suddenly those highly efficient, zero liability two-sided markets have a lot more frictional costs, and that will ultimately limit their power because the flywheel won't snowball as much. [1] https://en.wikipedia.org/wiki/Section_230_of_the_Communications_Decency_Act https://en.wikipedia.org/wiki/Section_230_of_the_Communicati...
  - AnimalMuppet 9y ago
    That's "easy", except for controlling the unintended consequences...
  - JoshTriplett 9y ago
    That isn't "give them less power", that's "kill all of them dead unless they're huge enough to tank a massive and never-ending money pit". What you're suggesting could be folded into an expensive but manageable cost of doing business for companies the size of Google or Facebook, but would utterly destroy a small company. That would shift the balance of power towards large companies and away from small ones, and large companies don't need any more advantages than they already have.
jakelarkin 9y ago
somehow in a case about the credit card industry, which actually extracts monopoly rent on most personal financial transactions its more important for author to talk about about "tech" bogeyman
- simplify 9y ago
  Personally I thought the connection to tech was a useful way of provoking thought on the ramifications of the potential court ruling.
- paulie_a 9y ago
  It's weird noting: Google is worth 3 times what Visa is, Facebook is 2x.
- rosser 9y ago
  What SCotUS decides here establishes precedent for future cases. Some of those cases will involve tech companies.
  - jakelarkin 9y ago
    some of those cases will involve healthcare providers or energy distributors, so what? The case potentially affects all transactions where there is processing or market-making intermediary. There's no specificity on how it applies to Google, Amazon or Facebook products even those are named in the headline. It's just a terribly written editorial with vague legal analysis and mentions tech firms for click-bait sensationalism.
    - jonny_eh 9y ago
      The article says that distrust of big tech is bipartisan. I imagine that's why they call attention to that industry.
    - rosser 9y ago
      No healthcare provider or energy distributor has as large a share of their respective markets as Amazon or Facebook do theirs. They're in the best position to abuse their market dominance. If this ruling is upheld, their ability to do that is directly affected — specifically, strengthened — significantly. Perhaps irreversibly.
abraae 9y ago
I don't live in the US or the EU, but the more you see situations like this (privacy legislation is a similar area), the more glad I am that the US does not dominate global commerce, and perhaps is even purposefully moving away from such leadership positions. This is a situation where competitors may be able to get started in the EU (or other large market), and grow to scale there, shielded from this kind of anti-competitive behaviour. Eventually, the existence of clearly successful businesses offering products at a lower cost outside the US might increase the pressure inside the US for change and for a fair playing field.
sqdbps 9y ago
[Deleted]
- adventured 9y ago
  Telecom doesn't even deserve to be in that batch. A $50 or $70 cell plan is close to meaningless next to the cost of home ownership, education and healthcare. Cell plans also have not gotten more expensive over 30 years inflation adjusted. When you include what you actually get in plans today, they've gotten cheaper vs 30 or 20 years ago. Cable Internet as another example, hasn't gotten expensive out of line with inflation over the last 20 years. While simultaneously what you can do with cable Internet has dramatically increased. Those other items on the other hand, have seen cost inflation dramatically beyond other consumer goods. Telecom costs a median American $100 to $150 per month. That's more like the cost of a home insurance policy.
  - deleted 9y ago
    [deleted]
  - jessaustin 9y ago
    Doesn't it seem as if, when amortized over all home residents and mobile callers, more resources would be required to build a home than to provide mobile service?
- rosser 9y ago
  It's not about whether big tech companies — or any companies — cause "market failure". It's whether their behavior is anti-competitive. Are they leveraging their market leadership in a way that hinders other players from participating in the market? Not just, are they making a better product, or have more users: are they interfering with other companies efforts to compete? How that question is answered regarding AmEx will shape how future similar cases, many of which will involve tech, are judged. There's no equation between them; it's just what this decision will mean.
  - sqdbps 9y ago
    [Deleted]
phkahler 9y ago
>> American Express, for example, charges both merchants who accept its cards and consumers who use them. Using this concept, the Second Circuit held that the government would have to show that any price increases for merchants also harmed cardholders, or at least didn’t benefit them. In effect, the court introduced a dramatically new rule, making it much more difficult to win important antitrust cases and to stop anticompetitive behavior. How is that even relevant? The issue is weather the card company can gag a merchant. Not just from disclosing their terms, but from recommending a competitors card. Sounds like the second circuit has some friends.
throwaway8995 9y ago
I don’t want to detract too much from this discussion, but I can provide insight into what kind of bullying company AmEx truly is, and how their ethos permeates throughout everything they do. I worked for AmEx for about 5 years. Everything was going great, and they announced a 5-month paternity leave program. I’m not going to lie, but it made it a lot easier to decide on having a child. Long story short, my son was born, I took paternity leave, and got laid off after 2 months into my paternity. I get that I’m an at will employee, which is what lawyers keep telling me. It’s true that large companies, not just tech companies exert a lot of power, especially when it comes to swaying what’s ethical and what’s not. That’s a whole separate discussion, but AmEx clearly used me to send a message- don’t act on our gesture... or else. Influencing future behavior is what AmEx is really good at. Not credit cards.
- tyingq 9y ago
  FWIW, I have had bad experiences with AMEX chargebacks. Even when it’s obvious their cardholder is committing fraud. There’s a sort of weird corporate swagger that says “yeah, so what?...we’re big, you aren't”. Lost a chargeback for non delivery when I had the cardholder’s signature on UPS paper.
  - mehrdadn 9y ago
    (Oops, seems I misread the above comment, sorry about that. Yes, similar experience here, but from the cardholder side.)
    - GauntletWizard 9y ago
      It's the same as your experience. They're "Consumer" friendly, where the customer is the one who holds the credit card, not the one getting paid. They will act like dicks towards merchants because they would rather not face the possibility of consumer backlash, even in the face of obvious fraud.
      - matte_black 9y ago
nokcha 9y ago
>A bipartisan consensus has formed around this idea. Senator Elizabeth Warren has charged tech giants with using their heft to “snuff out competition,” and even Senator Ted Cruz — usually a foe of government regulation — recently warned of their “unprecedented” size and power. >But the decision in a case currently before the Supreme Court could block off that path, by effectively shielding big tech platforms from serious antitrust scrutiny. The case before the Supreme Court concerns interpretation of statutory provisions, not Constitutional law. A bipartisan consensus in Congress could negate the Supreme Court ruling simply by amending the Sherman Antitrust Act.
- jakelazaroff 9y ago
  > A bipartisan consensus in Congress could negate the Supreme Court ruling simply by amending the Sherman Antitrust Act. Sure, but is that likely to actually happen? Just because Congress could possibly negate a court ruling doesn't mean there's nothing to see here.
- netheril96 9y ago
  Except that the "consensus" probably means only a handful of Senators behind it.
jessaustin 9y ago
Kudos to the Justice Department! This is the sort of thing they should do more of. Who the fuck is on the 2nd Circuit bench and where do they get off inventing "a new concept to create a special set of rules"? Has there never been a firm that served two distinct sets of customers? How long has Amex itself existed, and how did they conduct business before this new concept was invented by judges not legislators? Corruption on parade! Fortunately the Republicans have packed the SC with "originalists" who will be eager to slap down this new-concept bullshit... haha well one can dream, right?
hcnews 9y ago
Just consider this, Amazon refuses to sell (some) Google products because of their whims from time to time. Maybe this extends to other brands/companies other than Google that I haven't even heard about. Isn't this bad for the consumers? How has Amazon been able to make this decision without any consequences?
- gowld 9y ago
  Because Amazon hasn't been ruled a monopoly yet.
feelin_googley 9y ago
"An assessment of market power is the initial inquiry under the indirect method. In this case, the parties had stipulated 2013 network market shares of Visa, 45 percent, Amex, 26.4 percent, MasterCard, 23.3 percent and Discover (not a defendant here), 5.3 percent." "(The states did not seek review of the 2nd Circuit's decision that they failed to make a prima facie case under the indirect method.)" Have the states have conceded that Amex lacks market power? "Gorsuch reiterated that in the absence of market power, a vertical restriction "is not within the cognizance of the antitrust laws." And, without more, a 26 percent share of a market does not constitute power." How much direct harm can be caused by a firm that lacks market power?

109 points by IntronExon 9y ago

In the case being tried, why is it not straightforward to demonstrate that higher costs for the merchants due to anti-competitive practices by credit card companies leads to higher costs for consumers, and therefore meets the two-sided market standard that the author fears? I'm not sure on the edges whether the concept of harming competition for the benefit of consumers is just, but at least in the example case I don't see how this is an issue. Are the standards for demonstrating harm so high that you can't make a strong legal case that higher costs for merchants gets passed to consumers?

pravda 9y ago
>higher costs for merchants gets passed to consumers? This is a common misconception. These fees come out of merchant profits. Otherwise, merchants would not care.
- cmurf 9y ago
  Account wise, merchant fees are an expense taken out of revenue, not out of profit. The fee is a cost on goods sold. Merchants care because by contract it causes them to inflate the price of all products, they're disallowed from explicitly showing the customer the fee as a line item, even though it has the same effect on price as a tax. Most merchants would prefer the buyer have more information about why something costs what it does. Ergo the cash and debit card buyer would have no such fee on their receipt; someone with an ordinary credit card might have a 3% fee, and someone with a high kickback card might have a 5% fee. Rather than permitting freeloaders.
  - ExactoKnight 9y ago
    Not necessarily. Hiding how much something costs versus what you charge for it, is the secret sauce to making money in Business.
- laser 9y ago
  Seems like six of one, half dozen of the other. The merchants are the ones directly paying the transaction fee, but merchants only provide services to consumers in the for-profit sector so long as they can make a profit. As a bit of an extreme to clearly demonstrate the principle, if a business is operating at a 3% profit margin on revenue before processing fees, and credit card providers demand a flat 3% + $0.30 fee per transaction, then the business becomes unprofitable, and loses $0.30 per transaction. Only one of three things can happen here. 1. The business eventually shuts down. 2. The business raises its prices. 3. The business cuts costs (lowers quality of product on average? Unless can take advantage of non-harmful cost-saving mechanisms, like informing consumers of cheaper transaction payment options, offering incentives for such, etc. which is what is being restricted anti-competitively). All three of these responses directly harm consumers. Case closed?
  - pravda 9y ago
    Well, there is theory, and there is real world. In the real world, reductions in debit card fees (in the USA, via the Durbin Amendment) have not lead to lowered prices, just increased profits. [1] This explains why merchants care about processing fees. [1] From page 27 of https://www.law.gmu.edu/assets/files/publications/working_papers/1418.pdf https://www.law.gmu.edu/assets/files/publications/working_pa... "In the year following Durbin’s implementation, gasoline retailers realized more than $1 billion in savings from reduced interchange fees. But 'while this should mean savings of roughly 3 cents per gallon, no savings have been passed on to consumers.' This is particularly remarkable and instructive given that the retail gasoline industry is highly competitive, and at least one other study has demonstrated that gasoline excise taxes are almost instantly and fully passed through to consumers"
    - argonaut 9y ago
      Your own report contradicts your argument all over the place. "There is little doubt that the Durbin Amendment had a major effect on consumers — and would-be bank customers — as issuers have, in various ways, passed on some of the costs of reduced interchange fee receipts, as discussed above" " retailers of smaller ticket items in particular have seen increased interchange fee costs as a result of the Durbin Amendment, and there is anecdotal evidence that these fees are being passed on to consumers" I didn't bother reading the entire report, either.
- toast0 9y ago
  Consumer cost is basically the sum of all of the underlying costs, and all of the underlying vendors' profits. In the short term, if the cost of payment processing goes up or down, the merchant covers the change with its profits; however, prices can move. If I'm a merchant and my costs went up, I'm going to try to increase my prices to cover my costs and my profit target; if my costs go down, I may lower my prices to try to attract more customers, or because my competitors lowered theirs -- especially given all the merchants are paying similar fees, a big drop in processing fees would likely be reflected in consumer costs.
  - da_chicken 9y ago
    Yep. All costs are subsidized by the end consumer. That includes costs of service providers (aka, middle men) like shipping and credit card fees. The merchant sets their prices based on the cost of the product and the cost to bring the product to market. If their profit is too low to sustain the business, prices go up. It does not matter why profit is too low. Any cost to the merchant increases the price for the consumer.
- temporalparts 9y ago
  The people who actually pays for this are cash and debit card users. Because there is a single price for merchants, the merchant charges marginally higher to cover the cost of the transactions. Credit card users are less impacted because credit card companies convert a portion of the revenue into incentives for their card users to continue using their cards. (Chase Sapphire Reserve anyone?) Here's a good paper that goes into this: https://www.bostonfed.org/publications/public-policy-discussion-paper/2010/who-gains-and-who-loses-from-credit-card-payments-theory-and-calibrations.aspx https://www.bostonfed.org/publications/public-policy-discuss... From the abstract: On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year.

aventrix 9y ago

With regard to the supreme court case itself, and the question of the credit card merchants having an oligopoly... What's stopping Paypal, Square, Stripe, or even Apple Pay from making the leap from payment processor to issuing their own Credit/Debit cards?

kjksf 9y ago
Bear in mind I'm guessing here. When you use your credit card or debit card in a store, you swipe it in a Point Of Sale terminal. That terminal connects, via network, with payment processing software managed by Visa (and other card suppliers) to authorize the payment and move the money from your balance to store's balance. If you were to create your own credit card, how would that processed? Visa is not going to process your credit card. In order to have your credit card processed you would have to convince stores to upgrade POS terminals to also talk to your card authorization network. That's just not gonna happen which is why Visa is not going to loose their lock on credit cards. The only viable solution would be legislation that forces Visa to process other people's cards, maybe via some standard protocol, at a reasonable price (and that price would have to be much, much lower that Visa's fees to make that workable, because you want to make money on processing fees too).
- paulie_a 9y ago
  I work on a platform that actually has private labeled credit cards baked in. From my understanding this is not unusual, just under utilized
  - kjksf 9y ago
    What is "private labeled" in this context? I have a credit card from Wells Fargo. It's still made by Visa and Visa takes its cut of credit card processing fees. My point is that in practice you can't issue a credit card and avoid Visa (or Mastercard) processing fees. You would have to get most merchants to upgrade their POS terminals to support your payment network and that's not going to happen.

tabeth 9y ago

So if you wanted tech giants to have less power what exactly would you do? I suppose you could tell your representative, but then they'd have to somehow influence the senators of your state, but even if that happens you need a majority rule to do something, when it comes to an eventual vote, right? Even if they did have a majority, the Supreme Court, which is inherently stacked one way or another, could simply negate whatever decision was made, no? It's amazing that despite all of the technological growth, there are more middle people than ever skimming off the top. Somehow it feels that technology is simply making things even more inefficient.

IBM 9y ago
>So if you wanted tech giants to have less power what exactly would you do? It's really easy. This is the nuclear option, but it's very doable: eliminate their Section 230 immunity [1]. All of these internet businesses and platforms are running markets online, but they face zero liability for anything bad that happens on their platform. It's what gives Google and Facebook such high margins. They employ a relatively small number of highly paid software engineers and let the buyers and sellers take it from there on their marketplace. If they were actually responsible or liable for what happened on their platform, it would mean they'd have a lot more policing to do. And policing costs money. Customer service costs money (which is why there's no one to call at Facebook or Google when something's wrong with your account). Suddenly those highly efficient, zero liability two-sided markets have a lot more frictional costs, and that will ultimately limit their power because the flywheel won't snowball as much. [1] https://en.wikipedia.org/wiki/Section_230_of_the_Communications_Decency_Act https://en.wikipedia.org/wiki/Section_230_of_the_Communicati...
- AnimalMuppet 9y ago
  That's "easy", except for controlling the unintended consequences...
- JoshTriplett 9y ago
  That isn't "give them less power", that's "kill all of them dead unless they're huge enough to tank a massive and never-ending money pit". What you're suggesting could be folded into an expensive but manageable cost of doing business for companies the size of Google or Facebook, but would utterly destroy a small company. That would shift the balance of power towards large companies and away from small ones, and large companies don't need any more advantages than they already have.

jakelarkin 9y ago

somehow in a case about the credit card industry, which actually extracts monopoly rent on most personal financial transactions its more important for author to talk about about "tech" bogeyman

simplify 9y ago
Personally I thought the connection to tech was a useful way of provoking thought on the ramifications of the potential court ruling.
paulie_a 9y ago
It's weird noting: Google is worth 3 times what Visa is, Facebook is 2x.
rosser 9y ago
What SCotUS decides here establishes precedent for future cases. Some of those cases will involve tech companies.
- jakelarkin 9y ago
  some of those cases will involve healthcare providers or energy distributors, so what? The case potentially affects all transactions where there is processing or market-making intermediary. There's no specificity on how it applies to Google, Amazon or Facebook products even those are named in the headline. It's just a terribly written editorial with vague legal analysis and mentions tech firms for click-bait sensationalism.
  - jonny_eh 9y ago
    The article says that distrust of big tech is bipartisan. I imagine that's why they call attention to that industry.
  - rosser 9y ago
    No healthcare provider or energy distributor has as large a share of their respective markets as Amazon or Facebook do theirs. They're in the best position to abuse their market dominance. If this ruling is upheld, their ability to do that is directly affected — specifically, strengthened — significantly. Perhaps irreversibly.

abraae 9y ago

I don't live in the US or the EU, but the more you see situations like this (privacy legislation is a similar area), the more glad I am that the US does not dominate global commerce, and perhaps is even purposefully moving away from such leadership positions. This is a situation where competitors may be able to get started in the EU (or other large market), and grow to scale there, shielded from this kind of anti-competitive behaviour. Eventually, the existence of clearly successful businesses offering products at a lower cost outside the US might increase the pressure inside the US for change and for a fair playing field.

sqdbps 9y ago

[Deleted]

adventured 9y ago
Telecom doesn't even deserve to be in that batch. A $50 or $70 cell plan is close to meaningless next to the cost of home ownership, education and healthcare. Cell plans also have not gotten more expensive over 30 years inflation adjusted. When you include what you actually get in plans today, they've gotten cheaper vs 30 or 20 years ago. Cable Internet as another example, hasn't gotten expensive out of line with inflation over the last 20 years. While simultaneously what you can do with cable Internet has dramatically increased. Those other items on the other hand, have seen cost inflation dramatically beyond other consumer goods. Telecom costs a median American $100 to $150 per month. That's more like the cost of a home insurance policy.
- deleted 9y ago
  [deleted]
- jessaustin 9y ago
  Doesn't it seem as if, when amortized over all home residents and mobile callers, more resources would be required to build a home than to provide mobile service?
rosser 9y ago
It's not about whether big tech companies — or any companies — cause "market failure". It's whether their behavior is anti-competitive. Are they leveraging their market leadership in a way that hinders other players from participating in the market? Not just, are they making a better product, or have more users: are they interfering with other companies efforts to compete? How that question is answered regarding AmEx will shape how future similar cases, many of which will involve tech, are judged. There's no equation between them; it's just what this decision will mean.
- sqdbps 9y ago
  [Deleted]

phkahler 9y ago

>> American Express, for example, charges both merchants who accept its cards and consumers who use them. Using this concept, the Second Circuit held that the government would have to show that any price increases for merchants also harmed cardholders, or at least didn’t benefit them. In effect, the court introduced a dramatically new rule, making it much more difficult to win important antitrust cases and to stop anticompetitive behavior. How is that even relevant? The issue is weather the card company can gag a merchant. Not just from disclosing their terms, but from recommending a competitors card. Sounds like the second circuit has some friends.

throwaway8995 9y ago

I don’t want to detract too much from this discussion, but I can provide insight into what kind of bullying company AmEx truly is, and how their ethos permeates throughout everything they do. I worked for AmEx for about 5 years. Everything was going great, and they announced a 5-month paternity leave program. I’m not going to lie, but it made it a lot easier to decide on having a child. Long story short, my son was born, I took paternity leave, and got laid off after 2 months into my paternity. I get that I’m an at will employee, which is what lawyers keep telling me. It’s true that large companies, not just tech companies exert a lot of power, especially when it comes to swaying what’s ethical and what’s not. That’s a whole separate discussion, but AmEx clearly used me to send a message- don’t act on our gesture... or else. Influencing future behavior is what AmEx is really good at. Not credit cards.

tyingq 9y ago
FWIW, I have had bad experiences with AMEX chargebacks. Even when it’s obvious their cardholder is committing fraud. There’s a sort of weird corporate swagger that says “yeah, so what?...we’re big, you aren't”. Lost a chargeback for non delivery when I had the cardholder’s signature on UPS paper.
- mehrdadn 9y ago
  (Oops, seems I misread the above comment, sorry about that. Yes, similar experience here, but from the cardholder side.)
  - GauntletWizard 9y ago
    It's the same as your experience. They're "Consumer" friendly, where the customer is the one who holds the credit card, not the one getting paid. They will act like dicks towards merchants because they would rather not face the possibility of consumer backlash, even in the face of obvious fraud.
    - matte_black 9y ago

nokcha 9y ago

>A bipartisan consensus has formed around this idea. Senator Elizabeth Warren has charged tech giants with using their heft to “snuff out competition,” and even Senator Ted Cruz — usually a foe of government regulation — recently warned of their “unprecedented” size and power. >But the decision in a case currently before the Supreme Court could block off that path, by effectively shielding big tech platforms from serious antitrust scrutiny. The case before the Supreme Court concerns interpretation of statutory provisions, not Constitutional law. A bipartisan consensus in Congress could negate the Supreme Court ruling simply by amending the Sherman Antitrust Act.

jakelazaroff 9y ago
> A bipartisan consensus in Congress could negate the Supreme Court ruling simply by amending the Sherman Antitrust Act. Sure, but is that likely to actually happen? Just because Congress could possibly negate a court ruling doesn't mean there's nothing to see here.
netheril96 9y ago
Except that the "consensus" probably means only a handful of Senators behind it.

jessaustin 9y ago

Kudos to the Justice Department! This is the sort of thing they should do more of. Who the fuck is on the 2nd Circuit bench and where do they get off inventing "a new concept to create a special set of rules"? Has there never been a firm that served two distinct sets of customers? How long has Amex itself existed, and how did they conduct business before this new concept was invented by judges not legislators? Corruption on parade! Fortunately the Republicans have packed the SC with "originalists" who will be eager to slap down this new-concept bullshit... haha well one can dream, right?

hcnews 9y ago

Just consider this, Amazon refuses to sell (some) Google products because of their whims from time to time. Maybe this extends to other brands/companies other than Google that I haven't even heard about. Isn't this bad for the consumers? How has Amazon been able to make this decision without any consequences?

gowld 9y ago
Because Amazon hasn't been ruled a monopoly yet.

feelin_googley 9y ago

"An assessment of market power is the initial inquiry under the indirect method. In this case, the parties had stipulated 2013 network market shares of Visa, 45 percent, Amex, 26.4 percent, MasterCard, 23.3 percent and Discover (not a defendant here), 5.3 percent." "(The states did not seek review of the 2nd Circuit's decision that they failed to make a prima facie case under the indirect method.)" Have the states have conceded that Amex lacks market power? "Gorsuch reiterated that in the absence of market power, a vertical restriction "is not within the cognizance of the antitrust laws." And, without more, a 26 percent share of a market does not constitute power." How much direct harm can be caused by a firm that lacks market power?