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Network effects mean that most internet platforms form natural monopolies, as a hypothetical scenario in which there are dozens of video websites with idiosyncr

by 4bpp 3y ago

Network effects mean that most internet platforms form natural monopolies, as a hypothetical scenario in which there are dozens of video websites with idiosyncratic communities, rules and technical constraints would add friction that most inhabitants of the current ecosystem would loathe. This arguably makes Youtube more similar to a public transportation service - imagine if New York's MTA having banned Russell Brand from using its services, and your proposed solution were that strong antitrust laws ought to have forced its deconsolidation and return to the '20s setup with the IRT, BRT and IND networks being separate, so a ban from just one of the public transport networks would not be so dramatic to the individual. More generally, I have to say that this commonly held idea of corporations enjoying First Amendment rights does not strike me as a natural or necessary interpretation of the FA; and moreover, it frequently seems to be invoked so selectively that the same people who consider a gargantuan public corporation's right to deny custom at will to be a "core First Amendment right" simultaneously snicker at the invocation of First Amendment rights for private individuals they are politically or morally opposed to, and consider instances of politically or morally motivated rejection of customers by small and completely fungible privately held businesses to be a civil rights issue that should definitively not be decided on a First Amendment basis.

phil21 3y ago
> Network effects mean that most internet platforms form natural monopolies I'm not entirely convinced. I think it's more "unlimited VC money so platforms could operate at a loss for a decade" had way more to do with entrenching these "natural" monopolies. I recall plenty of social media/video sharing/etc. sites back in the day. I hosted a number of them. They did not die due to lack of popularity, but due to lack of ability to pay for bandwidth and server costs. VC funded folks could just spam money for free, while being told to not even worry about revenue or monetization. This is around the time the word "startup" became a joke - and instead described a vastly funded corporate enterprise vs. a couple guys in a garage. Network effects are certainly a thing, but they are so warped by cheap money and the ability to operate for years at huge losses that I'm not convinced they are as strong as suggested. You had no way to compete with Youtube back then backed by Google money. They effectively had free bandwidth for a decade while they figured things out. Competitors actually had to pay bills and staff with actual revenue. The game was over before it began.
ncallaway 3y ago
> Network effects mean that most internet platforms form natural monopolies I don’t think these monopolies are nearly as natural as something like transportation on rail infrastructure. I think there’s a ton of regulation that can and should be applied to these companies that would bite away at how “natural” these monopolies appear (though, some of these require new legislation, for sure, which might be impossible given Congress in the modern area). We could regulate interoperability, and force major media organizations to provide interpretation to their competitors (similar to how MVNO’s are allowed to buy their backend infra from the major players at or near cost). We could prevent these “natural monopolies” from being embedded in a larger organization. YouTube’s monopoly might not appear nearly so natural if it was forced to be separated from the rest of Google and stand on its own. Facebook’s monopoly would not be so natural if it had been prevented from buying every apparent threat to its business in the last decade. If you split up Facebook into its data collection systems, Facebook itself, the ad sales business, Instagram, and WhatsApp, suddenly it’s monopolies aren’t so natural. Hell, the standard VC playbook of the 2010s was essentially the definition of anti-competitive practices: ignore the costs, ignore the revenues, just lose money on the business in an attempt to dominate the market to a degree that you can raise costs on consumers and no one will be able to stop you. That was the exact VC playbook, and also almost a perfect description of monopolistic behavior and anti-competitive practices. I don’t think these are natural monopolies at all. I think Congress and regulators were both asleep at the switch for decades while these monopolies slowly formed out of pretty standard anti-competitive practices. Tear down their walled gardens, separate these behemoths into their actual distinct lines of business, and prevent them from buying every competitor they see and they won’t be so unassailable.

by 4bpp 3y ago

phil21 3y ago

> Network effects mean that most internet platforms form natural monopolies I'm not entirely convinced. I think it's more "unlimited VC money so platforms could operate at a loss for a decade" had way more to do with entrenching these "natural" monopolies. I recall plenty of social media/video sharing/etc. sites back in the day. I hosted a number of them. They did not die due to lack of popularity, but due to lack of ability to pay for bandwidth and server costs. VC funded folks could just spam money for free, while being told to not even worry about revenue or monetization. This is around the time the word "startup" became a joke - and instead described a vastly funded corporate enterprise vs. a couple guys in a garage. Network effects are certainly a thing, but they are so warped by cheap money and the ability to operate for years at huge losses that I'm not convinced they are as strong as suggested. You had no way to compete with Youtube back then backed by Google money. They effectively had free bandwidth for a decade while they figured things out. Competitors actually had to pay bills and staff with actual revenue. The game was over before it began.

ncallaway 3y ago

> Network effects mean that most internet platforms form natural monopolies I don’t think these monopolies are nearly as natural as something like transportation on rail infrastructure. I think there’s a ton of regulation that can and should be applied to these companies that would bite away at how “natural” these monopolies appear (though, some of these require new legislation, for sure, which might be impossible given Congress in the modern area). We could regulate interoperability, and force major media organizations to provide interpretation to their competitors (similar to how MVNO’s are allowed to buy their backend infra from the major players at or near cost). We could prevent these “natural monopolies” from being embedded in a larger organization. YouTube’s monopoly might not appear nearly so natural if it was forced to be separated from the rest of Google and stand on its own. Facebook’s monopoly would not be so natural if it had been prevented from buying every apparent threat to its business in the last decade. If you split up Facebook into its data collection systems, Facebook itself, the ad sales business, Instagram, and WhatsApp, suddenly it’s monopolies aren’t so natural. Hell, the standard VC playbook of the 2010s was essentially the definition of anti-competitive practices: ignore the costs, ignore the revenues, just lose money on the business in an attempt to dominate the market to a degree that you can raise costs on consumers and no one will be able to stop you. That was the exact VC playbook, and also almost a perfect description of monopolistic behavior and anti-competitive practices. I don’t think these are natural monopolies at all. I think Congress and regulators were both asleep at the switch for decades while these monopolies slowly formed out of pretty standard anti-competitive practices. Tear down their walled gardens, separate these behemoths into their actual distinct lines of business, and prevent them from buying every competitor they see and they won’t be so unassailable.