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what job do you want the FTC to do here? I assume you think there is an antitrust angle on this potential acquisition? I am an economist and that is my field

what job do you want the FTC to do here? I assume you think there is an antitrust angle on this potential acquisition? I am an economist and that is my field. I disagree with your take, if that is what you mean. This is a vertical merger. Vertical mergers are quite different in their welfare effects to consumers than horizontal mergers. Vertical mergers can frequently be welfare-improving to consumers. Indeed, this is why vertical mergers are harder to regulate than horizontal mergers. The welfare effects are not obvious ex ante. This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. Most of the hate Amazon gets on this site for being a “monopoly” is extremely wide of the mark. If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence.

kingsuper20 5y ago
>Vertical mergers can frequently be welfare-improving to consumers. As can be horizontal mergers given economies of scale and/or network effects. It's an interesting area of the law (anti-trust) as it strikes me as one of the few really excellent uses for the heavy hand of the government. Lots of cooks in the kitchen of legislation. It does grate my ears to hear the word 'consumer' rather than 'citizen' but I suppose it's a natural side effect of a country that is made up of decreasingly self-sufficient individuals.
- charwalker 5y ago
  > given economies of scale and/or network effects. Other than competition, easily bought out when you're working with a $600 billion valuation of Amazon, or loss of consumer interest, what incentive does a for profit company have to shift any gains from economies of scale/etc to consumers? Why not make your product for 10% less, charge the same, and pass on the difference to shareholders? Apple is a great example. If they buy out the group making the M1 to reduce cost and improve supply chain efficiency, what incentive is there to lower prices especially for a company whose marketed image is all about premium? That money is going right into ongoing costs or to recoup the initial merger costs. Any improvement to consumers are either hypothetical, relate directly to fending off competition, listed as bullets on a PowerPoint slide between VPs, or carefully constructed to pass regulatory questions, not to help their customers save money.
  - kingsuper20 5y ago
    >what incentive does a for profit company have to shift any gains from economies of scale/etc to consumers? You'd have to have listen in to a Walmart upper management meeting to see why, but my guess is that all commerce is somewhat fungible. There's always a bit more growth to be eked by lowering prices or increasing value of products. I'm not saying that this always happens, or that it isn't shared with increasing profits. Gigantism in box stores could be used in areas for monopoly pricing where they have wiped out smaller competitors (who themselves wiped out smaller competitors) but there are numerous cases where it hasn't happened. I'd say that fear of anti-trust action is only part of the reason.
ignoramous 5y ago
> I am an economist and that is my field. I disagree with your take, if that is what you mean. This is a vertical merger. Vertical mergers are quite different in their welfare effects to consumers than horizontal mergers. Vertical mergers can frequently be welfare-improving to consumers. Not saying you're lying (I am out of my depth here, for once), but your post reminds of this piece on noahpinion.substack.com, "Experts will lie to you": https://archive.is/ErWwa https://archive.is/ErWwa
- ghaff 5y ago
  I suppose it depends on how you view Amazon. They are a (primarily streaming) content distributor although they're also a (primarily TV) studio. It's a reasonable argument that a distributor acquiring a large back catalog of film IP is a vertical merger. Although to the welfare-improving point, giving that back catalog a straightforward route to consumers is not necessarily a bad thing.
  - mnd999 5y ago
    It is a bad thing for the consumer because it means more exclusive titles which is gives rise to a false market. It looks like consumers have a choice of platforms with content, but when that content is exclusive the consumer ends up having to pay for all the platforms to see the content they want to see. This in effect means more costs for the consumer and less choice.
    - setr 5y ago
      Isn’t this already the mechanism in play? They’re all signing exclusivity deals between streaming companies, as the streaming companies strive to differentiate on really their only notable difference: their catalog. An MGM buy just further buys into the practice
- huitzitziltzin 5y ago
  > Not saying you're lying Thanks. You can read this material for yourself in any undergraduate industrial organization textbook!
ncallaway 5y ago
The vertical integration of the distribution of media and the production of media is extremely problematic because of the way copyright operates in this country. I think you have to examine vertical integration in copyright affected industries differently than you would in, say, the vertical integration of steel production with a company that consumes steel. The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate.
- lotsofpulp 5y ago
  > The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate. And addressing it via enforcing separate distributors and producers allows the copyright issue (the real issue) to go unchecked, since politically, it’s harder to attack it as a problem. It might even be politically necessary for people to feel the pain before we can get back to decent copyright lengths.
  - ncallaway 5y ago
    To me, the problem with copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). So, from my perspective, any system that allows those powerful entities to continue to accumulate more power and wealth is always going to harm efforts to change copyright law. We need to weaken the power that companies wield over copyright law, and that's harder the more powerful those companies are.
    - huitzitziltzin 5y ago
      > copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). I fully agree w/ this criticism of copyright law. I do not think that has a substantial intersection w/ the competitive effects of this proposed acquisition.
jjcon 5y ago
> I am an economist and that is my field. I disagree with your take Maybe economists need to get a new take cause this shit is obviously ridiculous EDIT: see the already pending antitrust litigation against Amazon in EU and US
- ameister14 5y ago
  It can't be that obvious, because I don't see it. How does Amazon buying MGM create a negative outcome for consumers?
  - mnd999 5y ago
    Exclusive content.
    - huitzitziltzin 5y ago
      Netflix has exclusive content. ABC, NBC, Discovery, ... all have exclusive content. Why does Amazon buying MGM and getting some exclusive MGM content harm consumers?
      - jjcon 5y ago
        Less competitive marketplaces harm consumers. Consolidation means less competition. Amazon is already under antitrust charges and investigations in the EU and US for these types of misdeeds.
        NikolaeVarius 5y ago
        So literally any acquisition is bad?
        ameister14 5y ago
        >Less competitive marketplaces harm consumers. That's not a law. There are a lot of examples of more competitive markets harming consumers - the trick is regulating the products and the relationship between producer and consumer.
nerdponx 5y ago
> Indeed, this is why vertical mergers are harder to regulate than horizontal mergers. The welfare effects are not obvious ex ante. This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. I'm curious how this could possibly turn out to be anything but anti-consumer. I'm sure that in general and in the past there can be and have been welfare-improving vertical mergers. But this particular one seems questionable. > What job do you want the FTC to do here? I would like them to carefully and thoroughly evaluate the welfare effects of this merger, and block the merger if it's not obviously welfare-improving, and not in the Kaldor-Hicks sense.
- huitzitziltzin 5y ago
  > I'm curious how this could possibly turn out to be anything but anti-consumer. ... this particular one seems questionable. Again... why? The easiest vertical merger cases I teach to undergrads are welfare-improving. I don't see any reason to think that this one is anti-consumer. What do you think will go wrong here? > I would like them to carefully and thoroughly evaluate the welfare effects of this merger, They will b/c that's what they do. The OP to whom I was replying suggested that the FTC had "failed" us somehow. I would not expect the FTC to find any grounds to block this acquisition, though I could be wrong.
  - nerdponx 5y ago
    It's been a while since I studied industrial organization, but isn't the basic idea behind the "textbook" vertical merger that some of the reduced marginal costs of production get passed on to the consumer in the form of higher quantity and lower price? That probably would happen, by way of more MGM properties becoming available and costing less on the Amazon streaming platform. My concern is that "welfare of consumers who use Amazon to stream MGM movies" is not a useful proxy for "overall effect on society". Moreover, Amazon is already vertically integrated. They are already a movie and TV studio. They already own and produce a lot of their own content. What is the broader effect on the market? Will this snowball into further acquisitions that don't benefit consumers later? None of that is covered by the textbook model. Unless there's serious research that corroborates the textbook outcome in a "realistic" (messy) scenario like this, I can't set my prior to anything but "extremely pessimistic."
paganel 5y ago
> If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence. For what it's worth a company that is valued at between 1.5 and 2 trillion usd has to come with evidence of how it isn't a monopoly/abusing its monopoly position, we can't reasonably talk about a "free market" when those numbers are involved. I'm not an economist and I'm not good with remembering names, but I do seem to remember that there was more than one economist in the past who said that one of the few ways of getting/acquiring "value" is to reach a monopoly position. $1.5 trillion is a hell lot of value.
- huitzitziltzin 5y ago
  > For what it's worth a company that is valued at between 1.5 and 2 trillion usd has to come with evidence of how it isn't a monopoly/abusing its monopoly position, There is no good evidence I'm aware of which suggests that Amazon is a monopoly or anything like one in any market I'm aware of: certainly not in retail to consumers, nor in AWS (to pick a frequent target of criticism that I see on this site). If you have evidence which suggests Amazon is a monopolist in some market it competes in, please cite it. Amazon is large because it is successful. It is successful because it generally offers products cheaply and delivers them quickly. Period. That is exactly the case that you do not want antitrust law to punish. Antitrust should preserve competition while not punishing successful firms. It is indeed true that one way to become valuable is to acquire a monopoly position in a market. That is not the only way. And it is not the way that Amazon has become such a valuable company.
- bhupy 5y ago
  It feels like the aversion to the "trillion" market value is strictly psychological in response to an arbitrary order of magnitude. Keep in mind that the total value of all US companies combined as of March 2021 is $49 trillion (https://siblisresearch.com/data/us-stock-market-value/); https://siblisresearch.com/data/us-stock-market-value/); Amazon represents just 4% of that. If we were to try to define Amazon's market, there's no reasonable definition you could come up with in which Amazon holds more than a 40% market share (https://www.ben-evans.com/benedictevans/2020/10/31/market-definitions-and-tech-monopolies https://www.ben-evans.com/benedictevans/2020/10/31/market-de...).
pessimizer 5y ago
https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....
wallacoloo 5y ago
> This has a decent chance to be pro-consumer. What does it mean to be "pro-consumer"? You can't reasonably use that metric to decide antitrust cases if you aren't directly querying consumers on whether they want the company to be broken up or not. When the FTC decides what is or isn't pro-consumer, that's the same as me claiming that I know how you're going to vote on issue X, and then claiming that you're "voting against your interests" when you vote the opposite way. Anyway, there's another lens besides consumer welfare and monopoly here: diversity provides protection against the unforeseen, as well as an increased rate of innovation. We see this in natural selection where species routinely go extinct and, on the occasion, whole classes of animals are wiped off the planet but life as a whole continues because of the diversity before any event. When we accept high concentration in our economy, we lose the safeguards that come with diversity. With enough concentration the unforeseen events become actual existential threats. I'm not going to claim we're there yet -- if Amazon failed we still have Walmart, and Azure, etc -- but I didn't see anything in your viewpoint that protects against a future where some things become "too big to fail". tl;dr diversity is a desirable property of most systems, and an antitrust framework should consider it.
360walk 5y ago
As an economist, what do you think of the Amazon Antitrust Paradox? https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado... > The current framework in antitrust fails to register certain forms of anticompetitive harm and therefore is unequipped to promote real competition—a shortcoming that is illuminated and amplified in the context of online platforms and data-driven markets. This failure stems both from assumptions embedded in the Chicago School framework and from the way this framework assesses competition. > Notably, the present approach fails even if one believes that antitrust should promote only consumer interests. Critically, consumer interests include not only cost but also product quality, variety, and innovation. Protecting these long-term interests requires a much thicker conception of “consumer welfare” than what guides the current approach. But more importantly, the undue focus on consumer welfare is misguided. It betrays legislative history, which reveals that Congress passed antitrust laws to promote a host of political economic ends—including our interests as workers, producers, entrepreneurs, and citizens. It also mistakenly supplants a concern about process and structure (i.e., whether power is sufficiently distributed to keep markets competitive) with a calculation regarding outcome (i.e., whether consumers are materially better off). > Antitrust law and competition policy should promote not welfare but competitive markets. By refocusing attention back on process and structure, this approach would be faithful to the legislative history of major antitrust laws. It would also promote actual competition—unlike the present framework, which is overseeing concentrations of power that risk precluding real competition.
- huitzitziltzin 5y ago
  So: - I have read it. - It was a while ago (several years?). - I should probably read it again. But... I didn’t think much of it the first time. I don’t think the claims are well motivated. I think she assumes “Amazon bad” from the beginning and contorts some not-very-strong arguments in favor of that conclusion. I do remember the claim in the first quoted paragraph that there was something unique about the threat (I guess that’s how she sees it?) posed by Amazon. That had the potential to be an interesting claim, but I really didn’t see any evidence to back it up in the article. The second quoted paragraph contains one suggestion which is just completely false: that consumer product variety is limited by Amazon. I mean, have you ever tried to wade through pages of junk to find the thing you searched for? I have. There is an absolute profusion of goods on the site. That claim does not stand up to the slightest scrutiny. If the idea is instead that the fact that most consumers choose amazon instead of some other retailer is the channel by which variety is harmed, well... that also does not stand up to scrutiny in a world with Walmart and target and Etsy and a million other online retailers. The thing in the same paragraph about the “legislative history” of antitrust is Khan’s idea to try to reorient antitrust law with (from my recollection) a specific desire to punish or break up Amazon in particular in mind. The claim that Amazon does not compete in a competitive market which is supposed to justify this does not stand up to scrutiny either. I don’t agree (in the third paragraph) that antitrust should be reoriented away from a consumer welfare standard, but even if I did, I think Amazon does compete in competitive markets already! (Why would we orient away from consumer welfare anyway? Would we like (e.g.) all consumers to pay higher prices (lowering welfare) but have the “product variety” provided by hypothetical, post-break-up Amazons 1, 2 and 3? What would be the point of that?) My overall impression was that the entire article was written with the conclusion “Amazon is bad” in mind.
Red_Leaves_Flyy 5y ago
MGM controls a massive library of shows and movies. Many are or have been on Amazon videos competitors. These will, likely, all disappear from competitors in the same way Disney is rounding their carriages. The root of the problem is that all of these platforms users are harmed by the siloed nature of the industry, in more or less the same ways. A better solution for the customer would be something akin to the way licensing works in the music industry. Let everyone host everything, charge what they will, and pay fixed royalties out of their income. I'm not an economist, lawyer, musician or whatever. I'm just a very disgruntled consumer that's seen the potential of the streaming industry get destroyed by greed and overpaid lawyers. There are many shows and movies that are, for no good reasons, only available on aftermarket listings for old vhs, and sometimes dvd. Finding these alternatively is even difficult. Companies could be working on UX, social functions, or recommendation algorithms but instead they're lighting money on fire to license a revolving pile of meh that'll juice their subscribers enough to hit their quarterly metrics. I'm entirely disinterested in googling where to stream every show and movie and pay between mandatory ads, and North of $5/episode to watch a show on whichever provider has the rights to stream it. It's such a poor experience that I've returned to a personal media library and have opted out of the streaming industry entirely.
- sangnoir 5y ago
  > Disney is rounding their carriages. Completely off-topic - is there a term for such 'approximate' idioms? I sometimes can't quite remember the exact words in a turn of phrase - my mind goes blank and I substitute words with similar meaning. The more familiar phrase to parent is "Disney is circling their wagons"
  - Red_Leaves_Flyy 5y ago
    I have no idea, but am curious to know as well... Nice catch!
arrosenberg 5y ago
> This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. > If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence. You are going to need to bring some evidence to support that notion, it's not on average people to prove that your merger isn't going to cause harm. Thankfully the Borkist era is very quickly coming to its end. Consolidation should be blocked by default once companies reach a certain size. In order to proceed they should have to substantially prove that both consumers and labor are not going to be harmed by the merger. Any other arrangement results in speculative handwaving by lawyers and economists, and the supposed benefits almost never materialize, except for shareholders. > Most of the hate Amazon gets on this site for being a “monopoly” is extremely wide of the mark. What nonsense. Amazon has consistently used their platform anti-competitively to take over valuable product lines. They keep expanding into unrelated verticals in violation of federal law, and they are committing substantial, transnational labor abuses. Use whatever term you want to describe it.
modo_mario 5y ago
When every distribution platform does a ton of it's own content creation won't we end with monopsony like effects? Aka everything not produced by the few distributors will see more of it's profits taken in by these distributors who can afford to go without.

kingsuper20 5y ago

>Vertical mergers can frequently be welfare-improving to consumers. As can be horizontal mergers given economies of scale and/or network effects. It's an interesting area of the law (anti-trust) as it strikes me as one of the few really excellent uses for the heavy hand of the government. Lots of cooks in the kitchen of legislation. It does grate my ears to hear the word 'consumer' rather than 'citizen' but I suppose it's a natural side effect of a country that is made up of decreasingly self-sufficient individuals.

charwalker 5y ago
> given economies of scale and/or network effects. Other than competition, easily bought out when you're working with a $600 billion valuation of Amazon, or loss of consumer interest, what incentive does a for profit company have to shift any gains from economies of scale/etc to consumers? Why not make your product for 10% less, charge the same, and pass on the difference to shareholders? Apple is a great example. If they buy out the group making the M1 to reduce cost and improve supply chain efficiency, what incentive is there to lower prices especially for a company whose marketed image is all about premium? That money is going right into ongoing costs or to recoup the initial merger costs. Any improvement to consumers are either hypothetical, relate directly to fending off competition, listed as bullets on a PowerPoint slide between VPs, or carefully constructed to pass regulatory questions, not to help their customers save money.
- kingsuper20 5y ago
  >what incentive does a for profit company have to shift any gains from economies of scale/etc to consumers? You'd have to have listen in to a Walmart upper management meeting to see why, but my guess is that all commerce is somewhat fungible. There's always a bit more growth to be eked by lowering prices or increasing value of products. I'm not saying that this always happens, or that it isn't shared with increasing profits. Gigantism in box stores could be used in areas for monopoly pricing where they have wiped out smaller competitors (who themselves wiped out smaller competitors) but there are numerous cases where it hasn't happened. I'd say that fear of anti-trust action is only part of the reason.

ignoramous 5y ago

> I am an economist and that is my field. I disagree with your take, if that is what you mean. This is a vertical merger. Vertical mergers are quite different in their welfare effects to consumers than horizontal mergers. Vertical mergers can frequently be welfare-improving to consumers. Not saying you're lying (I am out of my depth here, for once), but your post reminds of this piece on noahpinion.substack.com, "Experts will lie to you": https://archive.is/ErWwa https://archive.is/ErWwa

ghaff 5y ago
I suppose it depends on how you view Amazon. They are a (primarily streaming) content distributor although they're also a (primarily TV) studio. It's a reasonable argument that a distributor acquiring a large back catalog of film IP is a vertical merger. Although to the welfare-improving point, giving that back catalog a straightforward route to consumers is not necessarily a bad thing.
- mnd999 5y ago
  It is a bad thing for the consumer because it means more exclusive titles which is gives rise to a false market. It looks like consumers have a choice of platforms with content, but when that content is exclusive the consumer ends up having to pay for all the platforms to see the content they want to see. This in effect means more costs for the consumer and less choice.
  - setr 5y ago
    Isn’t this already the mechanism in play? They’re all signing exclusivity deals between streaming companies, as the streaming companies strive to differentiate on really their only notable difference: their catalog. An MGM buy just further buys into the practice
huitzitziltzin 5y ago
> Not saying you're lying Thanks. You can read this material for yourself in any undergraduate industrial organization textbook!

ncallaway 5y ago

The vertical integration of the distribution of media and the production of media is extremely problematic because of the way copyright operates in this country. I think you have to examine vertical integration in copyright affected industries differently than you would in, say, the vertical integration of steel production with a company that consumes steel. The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate.

lotsofpulp 5y ago
> The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate. And addressing it via enforcing separate distributors and producers allows the copyright issue (the real issue) to go unchecked, since politically, it’s harder to attack it as a problem. It might even be politically necessary for people to feel the pain before we can get back to decent copyright lengths.
- ncallaway 5y ago
  To me, the problem with copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). So, from my perspective, any system that allows those powerful entities to continue to accumulate more power and wealth is always going to harm efforts to change copyright law. We need to weaken the power that companies wield over copyright law, and that's harder the more powerful those companies are.
  - huitzitziltzin 5y ago
    > copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough). I fully agree w/ this criticism of copyright law. I do not think that has a substantial intersection w/ the competitive effects of this proposed acquisition.

jjcon 5y ago

> I am an economist and that is my field. I disagree with your take Maybe economists need to get a new take cause this shit is obviously ridiculous EDIT: see the already pending antitrust litigation against Amazon in EU and US

ameister14 5y ago
It can't be that obvious, because I don't see it. How does Amazon buying MGM create a negative outcome for consumers?
- mnd999 5y ago
  Exclusive content.
  - huitzitziltzin 5y ago
    Netflix has exclusive content. ABC, NBC, Discovery, ... all have exclusive content. Why does Amazon buying MGM and getting some exclusive MGM content harm consumers?
    - jjcon 5y ago
      Less competitive marketplaces harm consumers. Consolidation means less competition. Amazon is already under antitrust charges and investigations in the EU and US for these types of misdeeds.
      - NikolaeVarius 5y ago
        So literally any acquisition is bad?
      - ameister14 5y ago
        >Less competitive marketplaces harm consumers. That's not a law. There are a lot of examples of more competitive markets harming consumers - the trick is regulating the products and the relationship between producer and consumer.

nerdponx 5y ago

> Indeed, this is why vertical mergers are harder to regulate than horizontal mergers. The welfare effects are not obvious ex ante. This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. I'm curious how this could possibly turn out to be anything but anti-consumer. I'm sure that in general and in the past there can be and have been welfare-improving vertical mergers. But this particular one seems questionable. > What job do you want the FTC to do here? I would like them to carefully and thoroughly evaluate the welfare effects of this merger, and block the merger if it's not obviously welfare-improving, and not in the Kaldor-Hicks sense.

huitzitziltzin 5y ago
> I'm curious how this could possibly turn out to be anything but anti-consumer. ... this particular one seems questionable. Again... why? The easiest vertical merger cases I teach to undergrads are welfare-improving. I don't see any reason to think that this one is anti-consumer. What do you think will go wrong here? > I would like them to carefully and thoroughly evaluate the welfare effects of this merger, They will b/c that's what they do. The OP to whom I was replying suggested that the FTC had "failed" us somehow. I would not expect the FTC to find any grounds to block this acquisition, though I could be wrong.
- nerdponx 5y ago
  It's been a while since I studied industrial organization, but isn't the basic idea behind the "textbook" vertical merger that some of the reduced marginal costs of production get passed on to the consumer in the form of higher quantity and lower price? That probably would happen, by way of more MGM properties becoming available and costing less on the Amazon streaming platform. My concern is that "welfare of consumers who use Amazon to stream MGM movies" is not a useful proxy for "overall effect on society". Moreover, Amazon is already vertically integrated. They are already a movie and TV studio. They already own and produce a lot of their own content. What is the broader effect on the market? Will this snowball into further acquisitions that don't benefit consumers later? None of that is covered by the textbook model. Unless there's serious research that corroborates the textbook outcome in a "realistic" (messy) scenario like this, I can't set my prior to anything but "extremely pessimistic."

paganel 5y ago

> If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence. For what it's worth a company that is valued at between 1.5 and 2 trillion usd has to come with evidence of how it isn't a monopoly/abusing its monopoly position, we can't reasonably talk about a "free market" when those numbers are involved. I'm not an economist and I'm not good with remembering names, but I do seem to remember that there was more than one economist in the past who said that one of the few ways of getting/acquiring "value" is to reach a monopoly position. $1.5 trillion is a hell lot of value.

huitzitziltzin 5y ago
> For what it's worth a company that is valued at between 1.5 and 2 trillion usd has to come with evidence of how it isn't a monopoly/abusing its monopoly position, There is no good evidence I'm aware of which suggests that Amazon is a monopoly or anything like one in any market I'm aware of: certainly not in retail to consumers, nor in AWS (to pick a frequent target of criticism that I see on this site). If you have evidence which suggests Amazon is a monopolist in some market it competes in, please cite it. Amazon is large because it is successful. It is successful because it generally offers products cheaply and delivers them quickly. Period. That is exactly the case that you do not want antitrust law to punish. Antitrust should preserve competition while not punishing successful firms. It is indeed true that one way to become valuable is to acquire a monopoly position in a market. That is not the only way. And it is not the way that Amazon has become such a valuable company.
bhupy 5y ago
It feels like the aversion to the "trillion" market value is strictly psychological in response to an arbitrary order of magnitude. Keep in mind that the total value of all US companies combined as of March 2021 is $49 trillion (https://siblisresearch.com/data/us-stock-market-value/); https://siblisresearch.com/data/us-stock-market-value/); Amazon represents just 4% of that. If we were to try to define Amazon's market, there's no reasonable definition you could come up with in which Amazon holds more than a 40% market share (https://www.ben-evans.com/benedictevans/2020/10/31/market-definitions-and-tech-monopolies https://www.ben-evans.com/benedictevans/2020/10/31/market-de...).

pessimizer 5y ago

https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....

wallacoloo 5y ago

> This has a decent chance to be pro-consumer. What does it mean to be "pro-consumer"? You can't reasonably use that metric to decide antitrust cases if you aren't directly querying consumers on whether they want the company to be broken up or not. When the FTC decides what is or isn't pro-consumer, that's the same as me claiming that I know how you're going to vote on issue X, and then claiming that you're "voting against your interests" when you vote the opposite way. Anyway, there's another lens besides consumer welfare and monopoly here: diversity provides protection against the unforeseen, as well as an increased rate of innovation. We see this in natural selection where species routinely go extinct and, on the occasion, whole classes of animals are wiped off the planet but life as a whole continues because of the diversity before any event. When we accept high concentration in our economy, we lose the safeguards that come with diversity. With enough concentration the unforeseen events become actual existential threats. I'm not going to claim we're there yet -- if Amazon failed we still have Walmart, and Azure, etc -- but I didn't see anything in your viewpoint that protects against a future where some things become "too big to fail". tl;dr diversity is a desirable property of most systems, and an antitrust framework should consider it.

360walk 5y ago

As an economist, what do you think of the Amazon Antitrust Paradox? https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado... > The current framework in antitrust fails to register certain forms of anticompetitive harm and therefore is unequipped to promote real competition—a shortcoming that is illuminated and amplified in the context of online platforms and data-driven markets. This failure stems both from assumptions embedded in the Chicago School framework and from the way this framework assesses competition. > Notably, the present approach fails even if one believes that antitrust should promote only consumer interests. Critically, consumer interests include not only cost but also product quality, variety, and innovation. Protecting these long-term interests requires a much thicker conception of “consumer welfare” than what guides the current approach. But more importantly, the undue focus on consumer welfare is misguided. It betrays legislative history, which reveals that Congress passed antitrust laws to promote a host of political economic ends—including our interests as workers, producers, entrepreneurs, and citizens. It also mistakenly supplants a concern about process and structure (i.e., whether power is sufficiently distributed to keep markets competitive) with a calculation regarding outcome (i.e., whether consumers are materially better off). > Antitrust law and competition policy should promote not welfare but competitive markets. By refocusing attention back on process and structure, this approach would be faithful to the legislative history of major antitrust laws. It would also promote actual competition—unlike the present framework, which is overseeing concentrations of power that risk precluding real competition.

huitzitziltzin 5y ago
So: - I have read it. - It was a while ago (several years?). - I should probably read it again. But... I didn’t think much of it the first time. I don’t think the claims are well motivated. I think she assumes “Amazon bad” from the beginning and contorts some not-very-strong arguments in favor of that conclusion. I do remember the claim in the first quoted paragraph that there was something unique about the threat (I guess that’s how she sees it?) posed by Amazon. That had the potential to be an interesting claim, but I really didn’t see any evidence to back it up in the article. The second quoted paragraph contains one suggestion which is just completely false: that consumer product variety is limited by Amazon. I mean, have you ever tried to wade through pages of junk to find the thing you searched for? I have. There is an absolute profusion of goods on the site. That claim does not stand up to the slightest scrutiny. If the idea is instead that the fact that most consumers choose amazon instead of some other retailer is the channel by which variety is harmed, well... that also does not stand up to scrutiny in a world with Walmart and target and Etsy and a million other online retailers. The thing in the same paragraph about the “legislative history” of antitrust is Khan’s idea to try to reorient antitrust law with (from my recollection) a specific desire to punish or break up Amazon in particular in mind. The claim that Amazon does not compete in a competitive market which is supposed to justify this does not stand up to scrutiny either. I don’t agree (in the third paragraph) that antitrust should be reoriented away from a consumer welfare standard, but even if I did, I think Amazon does compete in competitive markets already! (Why would we orient away from consumer welfare anyway? Would we like (e.g.) all consumers to pay higher prices (lowering welfare) but have the “product variety” provided by hypothetical, post-break-up Amazons 1, 2 and 3? What would be the point of that?) My overall impression was that the entire article was written with the conclusion “Amazon is bad” in mind.

Red_Leaves_Flyy 5y ago

MGM controls a massive library of shows and movies. Many are or have been on Amazon videos competitors. These will, likely, all disappear from competitors in the same way Disney is rounding their carriages. The root of the problem is that all of these platforms users are harmed by the siloed nature of the industry, in more or less the same ways. A better solution for the customer would be something akin to the way licensing works in the music industry. Let everyone host everything, charge what they will, and pay fixed royalties out of their income. I'm not an economist, lawyer, musician or whatever. I'm just a very disgruntled consumer that's seen the potential of the streaming industry get destroyed by greed and overpaid lawyers. There are many shows and movies that are, for no good reasons, only available on aftermarket listings for old vhs, and sometimes dvd. Finding these alternatively is even difficult. Companies could be working on UX, social functions, or recommendation algorithms but instead they're lighting money on fire to license a revolving pile of meh that'll juice their subscribers enough to hit their quarterly metrics. I'm entirely disinterested in googling where to stream every show and movie and pay between mandatory ads, and North of $5/episode to watch a show on whichever provider has the rights to stream it. It's such a poor experience that I've returned to a personal media library and have opted out of the streaming industry entirely.

sangnoir 5y ago
> Disney is rounding their carriages. Completely off-topic - is there a term for such 'approximate' idioms? I sometimes can't quite remember the exact words in a turn of phrase - my mind goes blank and I substitute words with similar meaning. The more familiar phrase to parent is "Disney is circling their wagons"
- Red_Leaves_Flyy 5y ago
  I have no idea, but am curious to know as well... Nice catch!

arrosenberg 5y ago

> This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. > If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence. You are going to need to bring some evidence to support that notion, it's not on average people to prove that your merger isn't going to cause harm. Thankfully the Borkist era is very quickly coming to its end. Consolidation should be blocked by default once companies reach a certain size. In order to proceed they should have to substantially prove that both consumers and labor are not going to be harmed by the merger. Any other arrangement results in speculative handwaving by lawyers and economists, and the supposed benefits almost never materialize, except for shareholders. > Most of the hate Amazon gets on this site for being a “monopoly” is extremely wide of the mark. What nonsense. Amazon has consistently used their platform anti-competitively to take over valuable product lines. They keep expanding into unrelated verticals in violation of federal law, and they are committing substantial, transnational labor abuses. Use whatever term you want to describe it.

modo_mario 5y ago

When every distribution platform does a ton of it's own content creation won't we end with monopsony like effects? Aka everything not produced by the few distributors will see more of it's profits taken in by these distributors who can afford to go without.