5 ms·

How would you like the definition of a monopoly to change? Or to avoid sniping over details if you're not sure of a definition text, how would you like it to ch

by simonh 5y ago

How would you like the definition of a monopoly to change? Or to avoid sniping over details if you're not sure of a definition text, how would you like it to change and to what objective?

ethbr0 5y ago
Personally? I think we should get away from "monopoly" and move towards "excessively large market entity." The problems now have more to do with market capitalization / revenue than they do with physical control. Apple or Google aren't trying to buy all the railroad tracks between Cincinnati and Kansas City (app stores aside). They're trying to assemble a company that owns all the disparate but critical pieces in an ecosystem, then leverage those into extracting higher than free market rents. Consequently, remedies shouldn't be the same as for monopolies (read: breaking up companies). They should instead of targeted on (1) classifying corporations by their size & (2) placing limits on their actions, in places where that size provides its own monopolistic-esque advantage. Afaict, these should take the form of prohibiting acquisitions of competitors (Facebook shouldn't be able to buy Instagram or WhatsApp, but Instagram and WhatsApp should have been allowed to buy each other / merge) and stricter limits on market entry (FAANGM or SoftBank deciding they want to throw stupid money into a hole to poison the well and capture market share).
- adam_arthur 5y ago
  I'd rather stay away from focusing on the size of the org itself, and moreso on the "markets" that they create. When a platform or market is created by an entity, and that platform reaches a certain scale, they must allow free competition within that market. Here's an extreme example. Say somewhere down the line Facebook invents some metaverse or VR world. This becomes the primary form of interaction between people... 99% of interactions take place in this virtual world. It's clear the scale and extent to which this platform impacts people's lives is substantial. So Facebook logically would have to allow other sellers to enter this virtual world and compete to drive prices towards a free market equilibrium. Past monopoly legislation has focused on competition outside the walls, product vs product. But nowadays the walled gardens are getting big enough to the point that these companies have large control over our lives. Maybe that example just muddies things, but the important thing in my mind is to identify "private markets" and enforce that competition be allowed.
  - Retric 5y ago
    > 99% Your describing a monopoly. IMO the real question is what actually harms consumers. Requiring companies to open their platforms is one option for regulation, but perhaps not ideal. Great for tech companies sure, but possibly a huge opportunity for scammers. Consumers and companies are often at odds, banning app coins for example is great for gamers and the opposite of an open platform. A flat regulation that all software platforms are limited to X% fees might be a better option.
    - asdff 5y ago
      What probably harms consumers the most is that companies with large purses have an outsized influence on policy and typically write their own regulations that serve to generate additional profit and make it difficult for new entrants to the market to emerge. You don't need to have a monopoly for that, just a good old fasioned colluding industry and a politician who cares more about their individual wealth than the collective good of their electorate that they represent.
    - adam_arthur 5y ago
      You're right that the analogy was not quite right. Here's a better one. Facebook creates a virtual world where 50% of the population choose. Apple creates a different virtual world which the other 50% choose. If you simply look at the boundary/entrance you can say there's freedom of choice. But whether you choose apple or Facebook, there's 0 competition once you're inside that world. Further, once you've established a home and connections within one world, switching to the other becomes quite expensive. Competition at the gates, monopoly within. I might add that this is very similar to the concept of company scrip whereby the local coal mine had a monopoly over local jobs and gouged workers for basic necessities. Absolutely you could have moved a town over, but the cost to do so was deemed too high in many cases. When cost of switching is high, monopolistic power can be enforced upon customers. It's a similar situation with a lot of SaaS who have pricing power to strong arm their customers into high margins due to the cost of switching to alternative technologies. In a truly competitive market, SaaS margins should be close to 0. Obviously that's not the case today. Regulation will catch up to all of these tricks, just a question of the timeline. Capitalism only works well when there's an environment of competition, and leveraging high costs of switching or large gated systems to enable profit margins well beyond what a competitive market would bear is antithetical to this concept. That's why antitrust law is so important, and needs to evolve to handle modern business structures.
natpalmer1776 5y ago
I just want take the time to compliment this question. I find it difficult to articulate exactly what you've done here, but I wish I saw it more often.

by simonh 5y ago

How would you like the definition of a monopoly to change? Or to avoid sniping over details if you're not sure of a definition text, how would you like it to change and to what objective?

ethbr0 5y ago

Personally? I think we should get away from "monopoly" and move towards "excessively large market entity." The problems now have more to do with market capitalization / revenue than they do with physical control. Apple or Google aren't trying to buy all the railroad tracks between Cincinnati and Kansas City (app stores aside). They're trying to assemble a company that owns all the disparate but critical pieces in an ecosystem, then leverage those into extracting higher than free market rents. Consequently, remedies shouldn't be the same as for monopolies (read: breaking up companies). They should instead of targeted on (1) classifying corporations by their size & (2) placing limits on their actions, in places where that size provides its own monopolistic-esque advantage. Afaict, these should take the form of prohibiting acquisitions of competitors (Facebook shouldn't be able to buy Instagram or WhatsApp, but Instagram and WhatsApp should have been allowed to buy each other / merge) and stricter limits on market entry (FAANGM or SoftBank deciding they want to throw stupid money into a hole to poison the well and capture market share).

adam_arthur 5y ago
I'd rather stay away from focusing on the size of the org itself, and moreso on the "markets" that they create. When a platform or market is created by an entity, and that platform reaches a certain scale, they must allow free competition within that market. Here's an extreme example. Say somewhere down the line Facebook invents some metaverse or VR world. This becomes the primary form of interaction between people... 99% of interactions take place in this virtual world. It's clear the scale and extent to which this platform impacts people's lives is substantial. So Facebook logically would have to allow other sellers to enter this virtual world and compete to drive prices towards a free market equilibrium. Past monopoly legislation has focused on competition outside the walls, product vs product. But nowadays the walled gardens are getting big enough to the point that these companies have large control over our lives. Maybe that example just muddies things, but the important thing in my mind is to identify "private markets" and enforce that competition be allowed.
- Retric 5y ago
  > 99% Your describing a monopoly. IMO the real question is what actually harms consumers. Requiring companies to open their platforms is one option for regulation, but perhaps not ideal. Great for tech companies sure, but possibly a huge opportunity for scammers. Consumers and companies are often at odds, banning app coins for example is great for gamers and the opposite of an open platform. A flat regulation that all software platforms are limited to X% fees might be a better option.
  - asdff 5y ago
    What probably harms consumers the most is that companies with large purses have an outsized influence on policy and typically write their own regulations that serve to generate additional profit and make it difficult for new entrants to the market to emerge. You don't need to have a monopoly for that, just a good old fasioned colluding industry and a politician who cares more about their individual wealth than the collective good of their electorate that they represent.
  - adam_arthur 5y ago
    You're right that the analogy was not quite right. Here's a better one. Facebook creates a virtual world where 50% of the population choose. Apple creates a different virtual world which the other 50% choose. If you simply look at the boundary/entrance you can say there's freedom of choice. But whether you choose apple or Facebook, there's 0 competition once you're inside that world. Further, once you've established a home and connections within one world, switching to the other becomes quite expensive. Competition at the gates, monopoly within. I might add that this is very similar to the concept of company scrip whereby the local coal mine had a monopoly over local jobs and gouged workers for basic necessities. Absolutely you could have moved a town over, but the cost to do so was deemed too high in many cases. When cost of switching is high, monopolistic power can be enforced upon customers. It's a similar situation with a lot of SaaS who have pricing power to strong arm their customers into high margins due to the cost of switching to alternative technologies. In a truly competitive market, SaaS margins should be close to 0. Obviously that's not the case today. Regulation will catch up to all of these tricks, just a question of the timeline. Capitalism only works well when there's an environment of competition, and leveraging high costs of switching or large gated systems to enable profit margins well beyond what a competitive market would bear is antithetical to this concept. That's why antitrust law is so important, and needs to evolve to handle modern business structures.

natpalmer1776 5y ago

I just want take the time to compliment this question. I find it difficult to articulate exactly what you've done here, but I wish I saw it more often.