6 ms·

Historically, breaking up monopolies has been very good for the end consumer. Bell Labs and Standard Oil both ended up being good things. Instead of breaking t

Historically, breaking up monopolies has been very good for the end consumer. Bell Labs and Standard Oil both ended up being good things. Instead of breaking them up though, we should simply be more stringent with anti trust hearings and merger approvals. There have been a few mergers recently that absolutely shouldn’t have been approved.

zepto 5y ago
> Bell Labs and Standard Oil both ended up being good things. These are nothing like the current tech companies. Their monopolies were based on commodities. Oil hasn’t changed since standard oil was broken up. AT&T’s monopoly was based on access to real estate to build a network.
ABCLAW 5y ago
>Instead of breaking them up though, we should simply be more stringent with anti trust hearings and merger approvals. There have been a few mergers recently that absolutely shouldn’t have been approved. Recently? Competition bureaus have been green lighting consolidation in key industry sectors for bullshit reasons with bad evidence for decades. Also, if we acknowledge that bureaus have allowed the over-consolidation of a number of industries, then why wouldn't we break them up? The harm to competition is already done - we already have titans accumulating the lucre of uncompetitive margins. The market's health cannot be judged in respect of what margins currently are; they have to be judged in respect of what they would be under situations of proper competition.
- clairity 5y ago
  yes, and the focus on tech is a red herring distraction du jour. every company over $100MM should be scrutinized for breakup into smaller entities. m&a should be default deny, with extraordinary evidence required for approval, with penalties that pierce the corporate veil for not meeting stated fair market objectives. that would actually encourage competition and functional markets without harming substantive efficiency/productivity gains from economies of scale, which, despite the popular conception, tend to be sublinear rather than superlinear. that's because coordination problems scale superlinearly with size (a la mythical man month), which in turn is why there is a optimum firm size both for the firms themselves as well as for the markets they compete in. markets (independent actors loosely coordinating via price signals) actually specifically arose to solve these very coordination problems.
  - zozbot234 5y ago
    > yes, and the focus on tech is a red herring distraction du jour. every company over $100MM should be scrutinized for breakup into smaller entities. Or we could just levy punitive corporate taxes on large companies over $100MM, and let market participants figure out the most efficient breakup arrangement. Come to think of it, this doesn't look all that different from what the Biden administration seems to be planning re: global corporate taxation.
    - clairity 5y ago
      i'm absolutely in favor of progressive tax functions (minus the numerous loopholes, e.g., tax shields) for corporations. in fact, there's no reason to have differing corporate and individual tax functions (smoothly varying, as opposed to discontinuous, stepped rates), especially when corporations have gained favored personhood status, and are treated better and more deferentially relative to actual people. note that the biden global tax is a tax floor, and discontinuities just beg to be gamed. moreover there's no reason to preclude one for the other. let's do both, and more, to make markets competitive and work for the common welfare, rather than decidedly favoring consolidation and capital-holders.
rossjudson 5y ago
I wish basic IRS functions could be get the same level of attention as these efforts. What would be particularly good for consumers would be bringing some level of fairness to the tax system.
- javert 5y ago
  Why hurt the middle class to help "consumers"? Nah. If you wanted to make the tax system "more fair" it would mean lowering the outrageously high taxes on the middle class, but that's not within the Overton window and not what you're talking about.
asdfasgasdgasdg 5y ago
In both of those cases, consumers were being overcharged for good and services in a variety of concrete economic ways. It's not analogous to the current situation, I don't think. It's not like a broken up Google or Facebook would cease showing ads or show fewer ads. If anything, they'd show more, as we can see from all the random clickbait news sites that are more ad than material. It seems possible that a broken up version of these would be better for ad buyers, but (with my consumer hat on), I don't really care about ad buyers that much. It's hard to picture the broken up sites offering better services. It will be interesting to see! I'll be fascinated to see the degree to which congress is willing to take on these companies, and the degree to which their views on what should be done are congruent between the parties. I wonder the extent to which differing views on that subject could scuttle any legislation that would really address the concerns.
- tacotacotaco 5y ago
  > ... but (with my consumer hat on), I don't really care about ad buyers that much. Ad buyers are the consumers. You are the product.
  - dodobirdlord 5y ago
    No, ad buyers are businesses. As much as business interests have been trying to redefine negative impact on consumers as including out-competing rival companies, that’s not what it means.
    - webmaven 5y ago
      > No, ad buyers are businesses. As much as business interests have been trying to redefine negative impact on consumers as including out-competing rival companies, that’s not what it means. That's a bit of a non sequitur. Ad-buying businesses aren't, generally, rivals to the ad-selling platform. It isn't necessarily a bad model to treat them as consumers, or at least as proxies for actual consumers. The cost of monopoly rents being passed on to consumers isn't a particularly controversial proposition.
    - 5y ago
dantheman 5y ago
Not actually true - Bell Labs was a government created and enforced monopoly, so the break up definitely helped people but it did not earn its 'monopoly' status. As for Standard Oil at the height of it's market dominance the price of oil went down drastically, and by the time it was broken up it was nowhere near as dominant - iirc it was in the high 60%s of market share. The only monopolies that ever seem to truly exist and cause harm, are those that are granted special status and favors by the state.
- Retric 5y ago
  The big benefit was long distance calling. Breaking up the bells quickly resulted in dramatic price drops. Technology clearly helped, but you can adjust for that by compare to other countries telecoms which had the same benefits.
  - mech422 5y ago
    >>Breaking up the bells quickly resulted in dramatic price drops. I can't remember how different my bills were, but I do remember all the jokes about how breaking Bell up made things worse.
    - Retric 5y ago
      Local rates went up before stabilizing, long distance rates quickly tanked. In May 1984, AT&T implemented its first rate reduction in 14 years, knocking an average 6.1 percent off interstate long-distance prices. Long distance prices fell 38% by 1988 ignoring inflation. And continued to drop in the years afterwards. Now how much this was a net benefit at the time really depended on how much you used long distance calling. Longer term it paved the way for people to call long distance ISP’s which made a real difference in early internet adoption.
      - mech422 5y ago
        Heh..I actually did the long distance thing for BBSs with my lil C64 and a 300 baud modem. QuickMail with BlueWave offline reader, and TradeWarz2000! Heaven! :-) I don't remember having to call long distance for an ISP though - dial up/shell ISP's sprang up in every lil nook and cranny :-)
lend000 5y ago
The Standard Oil claim is historically false. Kerosene prices fell dramatically during Standard Oil's tenure [0]. The competition did not benefit from Standard Oil, but consumers benefitted dramatically. A malevolent monopoly needs government support to sustain itself for long (like today's telecoms/internet companies). All of the natural monopolies that have existed without rent seeking either greatly benefitted the consumer (Standard Oil, Google, Amazon), or became less consumer friendly and lost their monopoly (Microsoft). That isn't to say that the government shouldn't take extra steps to ensure powerful companies are upholding the spirit of the law (labor laws and liability laws, for example, at Amazon), but most of the anti-monopolist positions such as some described in the article seem horribly misguided and likely to have unintended consequences. Especially preventing acquisitions (how many talented founders start companies with the hopes of having an acquisition option) and preventing horizontal integration (would we have AWS and the rise of easy cloud computing if this law passed 20 years ago?) [0] https://en.wikipedia.org/wiki/Standard_Oil https://en.wikipedia.org/wiki/Standard_Oil
- zozbot234 5y ago
  Standard Oil is also a special case because a monopoly on the supply of environmentally harmful stuff is actually good for the environment - by the very action of charging a higher price, it helps compensate for a negative effect that would not be priced in otherwise. Breaking up Standard Oil was just a bad idea, all around.
  - mistrial9 5y ago
    > by the very action of charging a higher price, it helps compensate for a negative effect that would not be priced in otherwise that is charitable interpretation to say the least.. Once monopoly revenue is passing hands, who is to say that safety, service and responsible behavior strengthens? There are manifold examples of a whole range of outcomes. A defense of oil monopoly markets is particulalry distasteful in light of a global, literal crisis due to oil consumption by the billions of barrels, right?
    - Dylan16807 5y ago
SkyMarshal 5y ago
>Historically, breaking up monopolies has been very good for the end consumer. Historically the US was the largest economy with the largest monopolies, so yes that was true then. It's not necessarily true now or going forward since the US govt can only break up US monopolies but not their foreign competitors. That said, it sounds like this bill 1) does not break up US big tech, and 2) is applicable to any enterprise operating in the US, similar to how GDPR applies to all companies operating in EU.

zepto 5y ago

> Bell Labs and Standard Oil both ended up being good things. These are nothing like the current tech companies. Their monopolies were based on commodities. Oil hasn’t changed since standard oil was broken up. AT&T’s monopoly was based on access to real estate to build a network.

ABCLAW 5y ago

>Instead of breaking them up though, we should simply be more stringent with anti trust hearings and merger approvals. There have been a few mergers recently that absolutely shouldn’t have been approved. Recently? Competition bureaus have been green lighting consolidation in key industry sectors for bullshit reasons with bad evidence for decades. Also, if we acknowledge that bureaus have allowed the over-consolidation of a number of industries, then why wouldn't we break them up? The harm to competition is already done - we already have titans accumulating the lucre of uncompetitive margins. The market's health cannot be judged in respect of what margins currently are; they have to be judged in respect of what they would be under situations of proper competition.

clairity 5y ago
yes, and the focus on tech is a red herring distraction du jour. every company over $100MM should be scrutinized for breakup into smaller entities. m&a should be default deny, with extraordinary evidence required for approval, with penalties that pierce the corporate veil for not meeting stated fair market objectives. that would actually encourage competition and functional markets without harming substantive efficiency/productivity gains from economies of scale, which, despite the popular conception, tend to be sublinear rather than superlinear. that's because coordination problems scale superlinearly with size (a la mythical man month), which in turn is why there is a optimum firm size both for the firms themselves as well as for the markets they compete in. markets (independent actors loosely coordinating via price signals) actually specifically arose to solve these very coordination problems.
- zozbot234 5y ago
  > yes, and the focus on tech is a red herring distraction du jour. every company over $100MM should be scrutinized for breakup into smaller entities. Or we could just levy punitive corporate taxes on large companies over $100MM, and let market participants figure out the most efficient breakup arrangement. Come to think of it, this doesn't look all that different from what the Biden administration seems to be planning re: global corporate taxation.
  - clairity 5y ago
    i'm absolutely in favor of progressive tax functions (minus the numerous loopholes, e.g., tax shields) for corporations. in fact, there's no reason to have differing corporate and individual tax functions (smoothly varying, as opposed to discontinuous, stepped rates), especially when corporations have gained favored personhood status, and are treated better and more deferentially relative to actual people. note that the biden global tax is a tax floor, and discontinuities just beg to be gamed. moreover there's no reason to preclude one for the other. let's do both, and more, to make markets competitive and work for the common welfare, rather than decidedly favoring consolidation and capital-holders.

rossjudson 5y ago

I wish basic IRS functions could be get the same level of attention as these efforts. What would be particularly good for consumers would be bringing some level of fairness to the tax system.

javert 5y ago
Why hurt the middle class to help "consumers"? Nah. If you wanted to make the tax system "more fair" it would mean lowering the outrageously high taxes on the middle class, but that's not within the Overton window and not what you're talking about.

asdfasgasdgasdg 5y ago

In both of those cases, consumers were being overcharged for good and services in a variety of concrete economic ways. It's not analogous to the current situation, I don't think. It's not like a broken up Google or Facebook would cease showing ads or show fewer ads. If anything, they'd show more, as we can see from all the random clickbait news sites that are more ad than material. It seems possible that a broken up version of these would be better for ad buyers, but (with my consumer hat on), I don't really care about ad buyers that much. It's hard to picture the broken up sites offering better services. It will be interesting to see! I'll be fascinated to see the degree to which congress is willing to take on these companies, and the degree to which their views on what should be done are congruent between the parties. I wonder the extent to which differing views on that subject could scuttle any legislation that would really address the concerns.

tacotacotaco 5y ago
> ... but (with my consumer hat on), I don't really care about ad buyers that much. Ad buyers are the consumers. You are the product.
- dodobirdlord 5y ago
  No, ad buyers are businesses. As much as business interests have been trying to redefine negative impact on consumers as including out-competing rival companies, that’s not what it means.
  - webmaven 5y ago
    > No, ad buyers are businesses. As much as business interests have been trying to redefine negative impact on consumers as including out-competing rival companies, that’s not what it means. That's a bit of a non sequitur. Ad-buying businesses aren't, generally, rivals to the ad-selling platform. It isn't necessarily a bad model to treat them as consumers, or at least as proxies for actual consumers. The cost of monopoly rents being passed on to consumers isn't a particularly controversial proposition.
  - 5y ago

dantheman 5y ago

Not actually true - Bell Labs was a government created and enforced monopoly, so the break up definitely helped people but it did not earn its 'monopoly' status. As for Standard Oil at the height of it's market dominance the price of oil went down drastically, and by the time it was broken up it was nowhere near as dominant - iirc it was in the high 60%s of market share. The only monopolies that ever seem to truly exist and cause harm, are those that are granted special status and favors by the state.

Retric 5y ago
The big benefit was long distance calling. Breaking up the bells quickly resulted in dramatic price drops. Technology clearly helped, but you can adjust for that by compare to other countries telecoms which had the same benefits.
- mech422 5y ago
  >>Breaking up the bells quickly resulted in dramatic price drops. I can't remember how different my bills were, but I do remember all the jokes about how breaking Bell up made things worse.
  - Retric 5y ago
    Local rates went up before stabilizing, long distance rates quickly tanked. In May 1984, AT&T implemented its first rate reduction in 14 years, knocking an average 6.1 percent off interstate long-distance prices. Long distance prices fell 38% by 1988 ignoring inflation. And continued to drop in the years afterwards. Now how much this was a net benefit at the time really depended on how much you used long distance calling. Longer term it paved the way for people to call long distance ISP’s which made a real difference in early internet adoption.
    - mech422 5y ago
      Heh..I actually did the long distance thing for BBSs with my lil C64 and a 300 baud modem. QuickMail with BlueWave offline reader, and TradeWarz2000! Heaven! :-) I don't remember having to call long distance for an ISP though - dial up/shell ISP's sprang up in every lil nook and cranny :-)

lend000 5y ago

The Standard Oil claim is historically false. Kerosene prices fell dramatically during Standard Oil's tenure [0]. The competition did not benefit from Standard Oil, but consumers benefitted dramatically. A malevolent monopoly needs government support to sustain itself for long (like today's telecoms/internet companies). All of the natural monopolies that have existed without rent seeking either greatly benefitted the consumer (Standard Oil, Google, Amazon), or became less consumer friendly and lost their monopoly (Microsoft). That isn't to say that the government shouldn't take extra steps to ensure powerful companies are upholding the spirit of the law (labor laws and liability laws, for example, at Amazon), but most of the anti-monopolist positions such as some described in the article seem horribly misguided and likely to have unintended consequences. Especially preventing acquisitions (how many talented founders start companies with the hopes of having an acquisition option) and preventing horizontal integration (would we have AWS and the rise of easy cloud computing if this law passed 20 years ago?) [0] https://en.wikipedia.org/wiki/Standard_Oil https://en.wikipedia.org/wiki/Standard_Oil

zozbot234 5y ago
Standard Oil is also a special case because a monopoly on the supply of environmentally harmful stuff is actually good for the environment - by the very action of charging a higher price, it helps compensate for a negative effect that would not be priced in otherwise. Breaking up Standard Oil was just a bad idea, all around.
- mistrial9 5y ago
  > by the very action of charging a higher price, it helps compensate for a negative effect that would not be priced in otherwise that is charitable interpretation to say the least.. Once monopoly revenue is passing hands, who is to say that safety, service and responsible behavior strengthens? There are manifold examples of a whole range of outcomes. A defense of oil monopoly markets is particulalry distasteful in light of a global, literal crisis due to oil consumption by the billions of barrels, right?
  - Dylan16807 5y ago

SkyMarshal 5y ago

>Historically, breaking up monopolies has been very good for the end consumer. Historically the US was the largest economy with the largest monopolies, so yes that was true then. It's not necessarily true now or going forward since the US govt can only break up US monopolies but not their foreign competitors. That said, it sounds like this bill 1) does not break up US big tech, and 2) is applicable to any enterprise operating in the US, similar to how GDPR applies to all companies operating in EU.