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Con — Big Tech Companies are Not Monopolies

They Say: Big Tech is a Monopoly/ Violates the Acts

Big tech companies aren’t monopolies

Ken Stephens, 6-10, 19, https://www.marketreview.com/news/should-investors-worry-about-big-tech-breakups/ Should investors worry about big ttech breakups?

We would at least think that this is always true, but with the concerns with Apple, Amazon, Facebook, and Alphabet, the parent company of Google, don’t really involve genuine accusations of restraint of trade, as they are instead about people just not liking how successful they have become. These companies are all now arguing that they do not have monopolies, and as long as we understand the concept of a monopoly, this is clearly not the case. The issue with a monopoly isn’t about market share per se, it’s using their market share or other means to stifle competitors and use this as a tool to artificially increase prices. This is what old John D. did with his oil company, for example by controlling the means of getting oil to the market and then denying his competitors access to it. If you need to send your oil by rail and your opponent controls the railroads, you either go out of business or sell it to the competitor at a reduced price, as you are trapped. The standard here isn’t quite that high, as merely interfering with the ability of your competitors to compete can be seen as enough to act upon. It doesn’t mean making phones that people like to buy, selling products at your site online that people love to shop at, creating a social media site that is immensely popular, or a search engine that people prefer over all others. We might think that we could construe a de facto monopoly out of arrangements such as YouTube being owned by Google, where YouTube is given preference in search results with Google’s search engine, and be seen as restraining other services similar to YouTube. This would involve a fundamental misunderstanding of what we are out to prevent with anti-monopoly laws, which is manipulation of prices. It does not involve intentionally backing off on what businesses do, which is to create value, and there is never an obligation to assist a competitor, only not intentionally restrain them. Otherwise, we get to run our businesses for the benefit of the owners, with no exceptions, nor should there ever be any. This is where the line is drawn, whether a company uses its power to limit its competitors directly, such as their competition being reduced by way of reciprocal acts between companies that infringe upon the right of outside companies to compete with them. If the intention is to just promote your own companies in a manner consistent with a free market, and the allegedly egregious acts are simply a manifestation of a company’s exercising their legal power, such as Google deciding how to run their own company without undue interference, this is not restraint of trade by any reasonable interpretation.

Government will stop total monopolization

New York Times, June 4, 2018, https://www.nytimes.com/2019/06/04/opinion/facebook-google-regulation.html

Consider, for example, Google’s 2008 attempt to take over Yahoo’s search in a deal that was clearly overreach. I was flabbergasted at the time that the government seemed to be hesitating to stop Google from amassing what amounted to an 80 percent share of the market. As I wrote then: Google “cannot be allowed to have a monopolistic share of the market. It is bad for advertisers, it is bad for consumers, it is bad for innovation.” In that case, federal regulators eventually blocked the move, but its timidity was to become a trend. There were many other acquisitions that could have used another look-see. Did they truly believe the F.T.C. consent decree in 2011 was enough to bring Facebook to heel? Was Uber’s follow-no-rules approach not enough of a clue that the “move fast and break things” mentality that pervaded tech was a problem? Editors’ Picks Naomi Wolf’s Career of Blunders Continues in ‘Outrages’ How Emma Boettcher Beat James Holzhauer on ‘Jeopardy!’ ‘The Prospect of Getting Up and Leaving Seemed Inconvenient’

Wal Mart is 4X the size of Google and sells online

Paula Rosenblum, co-founder and Managing Partner, RSR Research 6-10, 19, , Politicians and Certain Analysts Hate Amazon: Are They Woke? Or Knee-Jerk?, https://retailleader.com/politicians-and-certain-analysts-hate-amazon-are-they-woke-or-knee-jerk

So why am I confused? Both Mr. Sanders and Ms. Warren seem to have missed the most essential issues, and for reasons I don’t quite understand, are letting giants like Walmart and Exxon off the hook. Walmart is four times Amazon’s size in actual revenue. I’m going to be bold here and say it is doing a lot better job figuring out how to sell online than Amazon has thus far figured out how to sell in brick and mortar stores. I will also say the company has worked hard to improve its image over the past three years, and frankly, is doing a really good job of it. So good, that both Mr. Sanders and Ms. Warren forgot all about it.

Monopolies aren’t illegal

Michael Regan, June 6, 2019, https://www.bloomberg.com/news/articles/2019-06-06/big-tech-takes-a-hit-as-antitrust-zeal-spreads-to-the-u-s, Big Tech Takes a Hit as Antitrust Zeal Spreads to the U.S.

And just dominating your market isn’t against the law. “Obtaining a monopoly by superior products, innovation, or business acumen is legal; however, the same result achieved by exclusionary or predatory acts may raise antitrust concerns,” reads the FTC’s Guide to Antitrust Laws.

Single companies never dominate

James Pethokoukis, May 25, 2018, Are America’s tech giants really permanently dominant ‘forever companies’?, http://www.aei.org/publication/are-americas-tech-giants-really-permanently-dominant-forever-companies/

So maybe this time is different because of, you know, AI. But strong claims require strong evidence. And in this case, the historical evidence at least argues for caution when making these claims. “Technology markets abound with examples of firms wiped away by technological disruption,” notes competition researcher Nicolas Petit in his paper “Technology Giants, ‘The Moligopoly Hypothesis,’ and Holistic Competition: A Primer.” Petit: Think of the demise of Kodak, a well-known monopolist of the 20th century; of famous web portals such as AOL, Lycos, Altavista, Yahoo! and MySpace; or of the predicaments of once-mighty mobile handset makers such as Motorola, Nokia or RIM (the maker of the Blackberry). . . . Even deeper than this, great innovative prowess is not synonymous of market clout, as evidenced by the poor competitive performance of IBM’s gigantic R&D programme or Xerox’s Palo Alto Research Center (PARC). And here is perhaps Silicon Valley’s favorite economist, W. Brian Arthur, making the same point on a recent a16z podcast episode: Eventually what happens in an increasing returns market is that the next invention comes along, and some other company comes to dominate. And you can dominate for a while in one large niche in the digital economy but then the next set of technologies come in and new players come in with that. Google recognizes this, and Google is trying to stay ahead by being in on the new technologies. But companies don’t always make that transition from one technology to the next very well. Apple has been very lucky. They invented some of the technologies, and they’re able to surf on that new board, so to speak. Lock-ins tend to last a certain amount of time and then they become obsolete and some new game comes along. As Arthur points out, Big Tech CEOs know the risks. They’re paranoid about their future. They’ve all read Clayton Christensen’s work on innovation and disruption. They’re not assuming they are Forever Companies. Far from it. Indeed, Petit has attempted to document their fears by looking at what tech firms do (invest a lot in R&D, including long-shot bets) and what they say, especially in SEC filings. So maybe these companies can avoid disruption or displacement. Maybe. But it would be imprudent given the historical evidence to assume they can and then employ that assumption when arguing we need to preemptively dismantle or regulate them, pre-crime style, when they are innovating hard and providing massive consumer value within their dominant core businesses. Indeed, some attempts at regulation, such as the EU’s new Global Data Protection Rule, may even cement Big Tech’s incumbency. Andreessen Horowitz analyst Benedict Evans is excellent on this issue, so I will give him the last word via a Twitter tweetstorm compilation: It’s a basic feature of the free market that dominant companies tend not to last. They fail, or are overtaken, or become irrelevant. It’s also a basic feature of the free market that sometimes you need state intervention to address this. “Market failure.” The difference in tech is that the cycle time can be really fast — we went from IBM to Wintel to [Google-Apple-Amazon-Facebook] in 20 year jumps. That has tended to mean dominance turns to irrelevance faster than antitrust processes can diagnose, pick a remedy, and apply it. Hence MSFT lost its dominance because of mobile, but antitrust didn’t do that (not indeed cause the failure of Blackberry or Nokia). And who cares about Microsoft Money now? In many other industries, the market matured and dominance is entrenched for generations. Once Standard Oil won, that was it. But tech isn’t mature, and probably won’t be in any of our lifetimes. It’s as though solar overturned hydrocarbons in the 1920. Finally, even if you are convinced we need action against Facebook or Amazon right now, it’s not entirely clear what that is. “Break them up!” makes good headlines but literally no sense. These companies aren’t bundles. That makes things like GDPR more interesting, as changing the dynamics of a space rather than trying to cut the newsfeed into pieces. The irony is that GDPR’s most obvious effects are to strengthen the incumbents.

Companies go away

James Pethokoukis, February 21, 2018, The New York Times offers another underpowered case for breaking up Big Tech, http://www.aei.org/publication/the-new-york-times-offers-another-underpowered-case-for-breaking-up-big-tech/

What’s more, we have no idea how the emergence of new technologies will affect business models. In “Debunking the ‘Network Effects’ Bogeyman,” David Evans and Richard Schmalensee note “the collection of dead or withered platforms that dot this sector, including Blackberry and Windows in smartphone operating systems, AOL in messaging, Orkut in social networking, and Yahoo in mass online media.” (Indeed, when the media isn’t describing how all-powerful these firms are, they are hyping various existential threats to them.) Why take preemptive action, with little evidence of current harm, against companies that the EU and China would love to call their own? Remember when we were supposed to break up forever-dominant Walmart?

Many competitors, new digital platforms

James Pethokoukis, February 21, 2018, The New York Times offers another underpowered case for breaking up Big Tech, http://www.aei.org/publication/the-new-york-times-offers-another-underpowered-case-for-breaking-up-big-tech/

But the Duhigg essay, like so many before it, fails to make the data-driven case for the sort of significant or systematic suppression of competition — leading to less innovation — that might justify some sort of new rationale for broad action. For instance: US productivity growth downshifted before the Era of the Megaplatforms. Many new fast-growing tech firms continue to be created, thanks in part to the services these digital platforms provide. And even in the area of search, Google has competitors, including Amazon’s 50% share of all shopping searches.

Facebook is not a monopoly, plenty of other ways to network

Tyler Cohen, June 13, 2019, Slate, Breaking Up Facebook Would Be a Big Mistake, https://slate.com/technology/2019/06/facebook-big-tech-antitrust-breakup-mistake.html, This essay is adapted from the recent book Big Business: A Love Letter to an American Anti-Hero, published by St. Martin’s Press.

It is commonly alleged that Facebook has a monopoly on social networking, yet unlike traditional villainous monopolists, Facebook has not raised prices—the service is free—or restricted output. And people do not use Facebook because the company has emptied their lives of alternatives. We can still connect with one another by text, email, telephone calls (yes, they still work), Pinterest, Twitter, LinkedIn, writing a blog and creating an online community (my own favorite), Twitch, Fortnite and other online games and platforms, Snapchat, messaging services (including for instance Apple’s iMessage, and also Facebook’s own WhatsApp, maximized for privacy), and last but not least, knocking on your neighbor’s door.

Monopolies Answers – Facebook Specific

Facebook is not a monopoly, plenty of other ways to network

Tyler Cohen, June 13, 2019, Slate, Breaking Up Facebook Would Be a Big Mistake, https://slate.com/technology/2019/06/facebook-big-tech-antitrust-breakup-mistake.html, This essay is adapted from the recent book Big Business: A Love Letter to an American Anti-Hero, published by St. Martin’s Press.

It is commonly alleged that Facebook has a monopoly on social networking, yet unlike traditional villainous monopolists, Facebook has not raised prices—the service is free—or restricted output. And people do not use Facebook because the company has emptied their lives of alternatives. We can still connect with one another by text, email, telephone calls (yes, they still work), Pinterest, Twitter, LinkedIn, writing a blog and creating an online community (my own favorite), Twitch, Fortnite and other online games and platforms, Snapchat, messaging services (including for instance Apple’s iMessage, and also Facebook’s own WhatsApp, maximized for privacy), and last but not least, knocking on your neighbor’s door.

Facebook is not a monopoly

Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism, 6-2-19, Facebook isn’t a ‘monopoly,’ so let’s not make it into one, http://www.thenewsherald.com/opinion/facebook-isn-t-a-monopoly-so-let-s-not-make/article_b895b716-7c09-11e9-806e-bf1997a2e3d1.html

What commodity or service is Facebook a “monopoly” in? Certainly not social media. You’ve probably heard of Twitter. You may have also heard of Diaspora, Minds, MeWe, Mastodon, Gab and a number of other companies, sites and apps offering the ability to post updates to friends and followers and discuss those updates. Advertising? Not even close. Does the name Google ring any bells? How about Microsoft? There are plenty of smaller web advertising networks you probably haven’t heard of, as well. Then there’s messaging and chat. Yes, Facebook owns Messenger and WhatsApp. But it doesn’t own Discord or Slack or Signal or Skype or Telegram or any of hundreds of other messaging/chat apps. Facebook has lots of users. Facebook makes lots of money. But Facebook isn’t a “monopoly” in any of the services it offers. It has loads of competitors, many of them doing quite well, and its users and customers have the option of using those competitors instead of, or in addition to, Facebook any time they like. More importantly, Facebook has no ability to prevent new competitors from entering the markets it serves. And therein lies a political paradox. While so far resisting the “breakup” talk, Facebook and its CEO, Mark Zuckerberg, have recently become increasingly receptive to government regulation. Why? Because Facebook is big enough and rich enough to cheerfully comply with whatever regulations its detractors can come up with, and to hire armies of lobbyists to “capture” and shape that regulation. It can probably even survive and profit from a supposed “breaking up.” Your brother-in-law’s basement social media or advertising or messaging start-up, on the other hand, probably isn’t well-financed enough to navigate a substantial federal regulatory regime or to successfully fight for its life if the regulators come down on its head even once. Facebook isn’t a monopoly. Facebook isn’t close to becoming a monopoly. But if the people incorrectly calling it a monopoly get their way, they’ll have taken the first giant step toward making it into one

Monopolies Answers – Google Specific

Large power/dominance in an area doesn’t mean that competition is undermined

James Pethokoukis, June 3, 2019, Washington’s War on Big Tech: Must there be a Google?, http://www.aei.org/publication/washingtons-war-on-big-tech-must-there-be-a-google/

Why would a company so dominant — with 90% of search activity — act so much like one in which competitors are hot on its heels. Maybe because in some key ways they are. In “Google’s Dominance Is No Longer a Sure Thing,” reporter Dan Gallagher points out that “Alphabet’s most recent quarterly results showed a significant — and surprising — slowdown in Google’s ad business” even as the challenge from Amazon grows. Moreover, everything Google tries hardly becomes a mega-success. From the same piece: “Its Pixel smartphone has less than 1% of the global market despite Google’s home-field advantage of owning the operating system that powers 85% of the world’s handsets. And Google trails both Amazon and Microsoft by a wide margin in the fast-growing market for cloud computing services.”