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I was just watching an interview between Scott Galloway and Richard Kramer discussing if the big 4 will be broken up. An insight I hadn't heard before was that

by dwater 8y ago

I was just watching an interview between Scott Galloway and Richard Kramer discussing if the big 4 will be broken up. An insight I hadn't heard before was that anti-trust in the US is based on consumer harm, and since consumers get services from these companies for free, by this measure there can't be consumer harm. However, if you consider the advertisers (who are actually funding everything) are the consumers, they are being significantly harmed by the lack of competition. An advertiser has essentially no choice, if they wish to reach consumers online they have to deal with the big 4 on their terms. https://www.youtube.com/watch?v=jD7LyAJWkZ0 https://www.youtube.com/watch?v=jD7LyAJWkZ0

tracker1 8y ago
I think it works both ways... the advertisers are harmed by lack of competition (though is it really different than only 3 TV networks), and the users are harmed by mismanaged marketing, leaking personal information and as an attack vector.
mattmaroon 8y ago
I don't think it's logical to say that just because consumers don't directly pay they aren't harmed. What if increased competition would make it such that there would be a way better search engine than today's Google? It's certainly harder to prove harm than monopolistic price fixing though.
- clucas 8y ago
  In response to your argument, the U.S. courts would provably respond like the judge in My Cousin Vinny: "That is a lucid, intelligent, well thought-out objection. Overruled." Silly as it is, that's just not how antitrust law works in the U.S.
jerf 8y ago
That is by far the easier avenue. You can try to come up with some sort of amorphous definition of harm to the consumer w.r.t. excessive tracking and stuff, but you come up against the problem that the government is actually pretty cool with all that stuff. It'll be wrapped up in a prettier bow for public consumption, but that's the fundamental problem. If you don't look at the public face of the companies and look at their balance sheets and income statements instead, you get a very different view of things, and they certainly look monopolistic and/or monopsonistic in some key areas. (Monopsony is the buy-side equivalent of a monopoly, where a market has only one buyer.) Advertising is a pretty significant one. An example of monopsony is that right now, while there's a crapton of places you can host your own video streams, only YouTube is an effective mechanism for monetizing them, which is why they can get away with all their shenanigans. Once you look at it from the balance sheet perspective of these companies, and potentially from a monopsony perspective, there's a lot of avenues for a highly-active government attack against these companies, even if they never claim "the general public" is a direct victim.
rootusrootus 8y ago
Perhaps we need to update our laws to reflect that data has value. Certainly these companies understand how much value it has, so consumers are paying, but because it's more of a barter than actual cash transaction, we treat consumers as if they are getting something for free.
temporalparts 8y ago
Part of the complication is that it would be easy to argue that breaking up these companies built on large network effects will harm consumers (users mainly, but a case can be made for advertisers) because the consumers benefits from the size and robustness of that network. Half the network is worth less than half of the original network.
taurath 8y ago
From the video you linked, it seems like the primary argument from the start against breaking them up is: * We can't because they made their services so they can't be broken and * They're smarter than the regulators so its no use trying. I feel like both of those are cop-outs, and to be unchallenged makes me wonder if the two talking have a vested interest in keeping the bigs together (one as a marketing professor and the other being an equity researcher... it seems like they're not ones to push too hard against the status quo). Point 1 seems silly - if the whole business is structured in such a way to be anti-trust proof, doesn't that mean the management is so worried about a real possibility of being broken up that they've been working to shield it? "Well they've centralized their revenue generation so there's no way to take it apart"? It seems incredibly possible to do so. Point 2 is tactical - and that can change at any time. With the generational shift starting to happen in politics, the argument that representatives and senators don't understand the business or their products will cease to be true. I'm sure there's plenty of people in the justice department that understand it well enough as well.

by dwater 8y ago

tracker1 8y ago

I think it works both ways... the advertisers are harmed by lack of competition (though is it really different than only 3 TV networks), and the users are harmed by mismanaged marketing, leaking personal information and as an attack vector.

mattmaroon 8y ago

I don't think it's logical to say that just because consumers don't directly pay they aren't harmed. What if increased competition would make it such that there would be a way better search engine than today's Google? It's certainly harder to prove harm than monopolistic price fixing though.

clucas 8y ago
In response to your argument, the U.S. courts would provably respond like the judge in My Cousin Vinny: "That is a lucid, intelligent, well thought-out objection. Overruled." Silly as it is, that's just not how antitrust law works in the U.S.

jerf 8y ago

That is by far the easier avenue. You can try to come up with some sort of amorphous definition of harm to the consumer w.r.t. excessive tracking and stuff, but you come up against the problem that the government is actually pretty cool with all that stuff. It'll be wrapped up in a prettier bow for public consumption, but that's the fundamental problem. If you don't look at the public face of the companies and look at their balance sheets and income statements instead, you get a very different view of things, and they certainly look monopolistic and/or monopsonistic in some key areas. (Monopsony is the buy-side equivalent of a monopoly, where a market has only one buyer.) Advertising is a pretty significant one. An example of monopsony is that right now, while there's a crapton of places you can host your own video streams, only YouTube is an effective mechanism for monetizing them, which is why they can get away with all their shenanigans. Once you look at it from the balance sheet perspective of these companies, and potentially from a monopsony perspective, there's a lot of avenues for a highly-active government attack against these companies, even if they never claim "the general public" is a direct victim.

rootusrootus 8y ago

Perhaps we need to update our laws to reflect that data has value. Certainly these companies understand how much value it has, so consumers are paying, but because it's more of a barter than actual cash transaction, we treat consumers as if they are getting something for free.

temporalparts 8y ago

Part of the complication is that it would be easy to argue that breaking up these companies built on large network effects will harm consumers (users mainly, but a case can be made for advertisers) because the consumers benefits from the size and robustness of that network. Half the network is worth less than half of the original network.

taurath 8y ago

From the video you linked, it seems like the primary argument from the start against breaking them up is: * We can't because they made their services so they can't be broken and * They're smarter than the regulators so its no use trying. I feel like both of those are cop-outs, and to be unchallenged makes me wonder if the two talking have a vested interest in keeping the bigs together (one as a marketing professor and the other being an equity researcher... it seems like they're not ones to push too hard against the status quo). Point 1 seems silly - if the whole business is structured in such a way to be anti-trust proof, doesn't that mean the management is so worried about a real possibility of being broken up that they've been working to shield it? "Well they've centralized their revenue generation so there's no way to take it apart"? It seems incredibly possible to do so. Point 2 is tactical - and that can change at any time. With the generational shift starting to happen in politics, the argument that representatives and senators don't understand the business or their products will cease to be true. I'm sure there's plenty of people in the justice department that understand it well enough as well.